Russian firm seeks $2bn from oligarch linked to Irish company

Damages of up to $2 billion are being sought by a Russian chemicals group in High Court proceedings involving a Russian oligarch it accuses of “corporate raiding” practices using an Irish company.

The claim is against, amongst others, Dmitry Mazepin (48), a Moscow-based native of Minsk, Belarus, and the majority owner of Uralchem, a major producer of ammonia. He is a former member of the Kirov regional Duma for the United Russia Party of Russian president Vladimir Putin.

On Monday, the High Court allowed summonses to be served outside the jurisdiction on Mr Mazepin and other defendants named in the action, by way of expedited service.

The case is being taken by shareholders in the massive ammonia-producing business Togliattiazot (Toaz), which is headquartered in Togliatti, in the Samara region of Russia.

Toaz, reportedly the world's largest producer of ammonia, is responsible for about 11 per cent of global production and has been designated as being of "strategic economic importance" by the Russian government.

The plaintiffs are alleging that Eurotoaz Limited, with a registered address at the offices of Arthur Cox solicitors, Dublin, is part of an illegal campaign being orchestrated by Mr Mazepin which they say is aimed at gaining control of Toaz, which would have a value of more than $3 billion were it not for the activities being complained of. The shareholders are alleging a conspiracy to defraud them of their Toaz shares.

Should Uralchem, which is already a 9.9 per cent shareholder in Toaz, gain majority control, it would be in charge of roughly 20 per cent of the world’s production of ammonia, a prime ingredient in the making of mineral fertiliser.

The plaintiffs in the case are: Trafalgar Development Ltd, of Antigua, which says it owns 15.95 per cent of Toaz; Instantia Holdings Ltd, of the British Virgin Islands, which says it owns 18.75 per cent; Kamara Ltd, of St Lucia, which says it owns 19.99 per cent; and Bairiki Incorporated, of Nevis, which says it owns 16.08 per cent of Toaz.

End of Soviet era

The chief executive of Toaz is

Sergei Makhlai

, son of the former chief executive

Vladimir Makhlai

. The Makhlai family has been involved with the company since the end of the Soviet era and are widely believed to still have a substantial if not controlling interest in the business. Vladimir Makhlai is understood to now live in London, while his son is understood to live in the United States.

The Toaz shareholders were represented in court on Monday by Paul Gallagher SC, instructed by McCann FitzGerald.

The defendants were not represented in court and have not yet had an opportunity to respond to the allegations being made.

The lawyers acting for the shareholders are the same legal team that acted for the Irish Bank Resolution Corporation when it was engaged in disputes in Russia and the Ukraine in relation to property companies there formerly owned by the family of the businessman Seán Quinn. The companies were the subject of a series of corporate raiding attacks.

‘Vexatious litigation’

In an affidavit on behalf of the shareholders,

Karyn Harty

of McCann FitzGerald, alleged that the Irish company Eurotoaz has been central to the conspiracy to defraud the shareholders of their shares and has “conducted a campaign of vexatious litigation based on false and/or sham evidence asserting variously that it holds or is entitled to the payment of dividends based on shares allegedly held in Toaz”.

The scheme being operated by the Irish company in Russia is "appropriately understood as part of an internationally well-recognised phenomenon known as raider attacks, a literal translation of the Russia term raiderstvo, the Russian Federation being the place where this unique practice of illegal raiding is prevalent".

The court agreed on the expedited service for the summonses to the foreign parties.