IBRC's Russian debt collector has a history of disputes with partners
The Alfa Group may be a match for the Quinn family asset-stripping scheme but will any wealth recovered be divvied up as agreed?
There is a mismatch between what the Irish Bank Resolution Corporation has said about its putative Russian partners in its plan to seize the property formerly owned by the Quinn family and what those who have done business with the Russians say of their experience.
The Alfa Group is Russia’s largest privately held conglomerate. It has investments in financial services, oil and gas, retail, telecommunications, water utilities and “special-situation” investments. It has assets in more than 30 countries, with a value at the end of 2011 of $64.8 billion.
IBRC executive Richard Woodhouse told the High Court recently that the bank opted to enter into a deal with Alfa’s asset recovery arm, A1, after coming to the conclusion that the Quinn family was not co-operating with the bank in its efforts to seize assets in Russia and the Ukraine.
The deal has been approved by the Minister for Finance, Michael Noonan, and the board of IBRC, with the latter being satisfied “with A1 and Alfa both reputationally and otherwise”, that there was an appropriate appointment process, and that A1 is an “appropriate partner for a State-owned entity”.
A1 was identified as the most suitable joint venture partner given its “experience, reputation and skills”, Woodhouse said.
“Alfa has previously entered into a number of partnerships with international blue-chip companies and companies in state ownership.”
He also said the Alfa Group had built up a reputation over the past 15 years as “formidable opponents in litigation”.
That comment is certainly one with which Norwegian state-owned telecoms group Telenor would agree.
It is an investor in Vimpelcom, one of the largest mobile phone companies in Russia, and the first Russian company to float on the New York Stock Exchange since the collapse of the Soviet Union.
In 1991, Telenor and Alfa Group were the two largest investors in Vimpelcom, with 25.1 per cent each. In 1996, slightly more than a quarter of the company’s shares were floated on the NYSE.
However, in 2004, when Vimpelcom began to consider a move into Ukraine by way of acquiring Ukrainian Radio Systems (URS), relations between the two shareholders took a nosedive, from which they have never recovered.
The move to purchase URS was initiated by Alfa; Telenor did not believe it made business sense. It believed the price being suggested was grossly inflated. Furthermore, it did not know who the sellers of the URS shares were.
The acquisition was resisted by Telenor, which had five directors on Vimpelcom’s nine director board. A supermajority of eight was needed for the acquisition to go ahead.
Then a man called Victor Makarenko, who owned two shares in Vimpelcom, took three successful cases against the company in courts in rural Russia in the months October 2004 to March 2005. Among the cases taken was one to force Vimpelcom to allow simple majority votes on acquisitions.
In June 2005, the Supreme Court of the Russian Federation overthrew the three lower court rulings.
A subsidiary of the Alfa Group, Eco Telecom, then took a case against Vimpelcom in a Moscow court, seeking to overturn a board decision rejecting the URS acquisition. These suits were subsequently withdrawn.