15 May 2023 09:24

Zelensky imposes sanctions against individuals, cos linked to Zaporozhstal

MOSCOW. May 15 (Interfax) - Ukrainian President Vladimir Zelensky has signed an order to impose sanctions against a number of individuals and legal entities with ties to Metinvest Group's steel plant Zaporozhstal, Ukrainian media reported, citing Zelensky's Telegram channel.

There are several sanctions packages and the relevant orders have been signed, Zelensky said on Telegram. The first sanctions package concerns Zaporozhstal and the relevant order imposes "restrictive measures against [...] 13 individuals and 28 legal entities with the help of which the Russian Federation maintained control over the plant and hurt our economy," he said.

"We are launching the process of confiscating the Russian stake - it will work for Ukraine," Zelensky said.

The presidential order shows that the 28 legal entities affected include the direct owners of stakes in Zaporozhstal - Global Steel Investments Limited (UK), Kiev Securities Group LLC and Midland Capital Management LLC, as well as companies further down in the ownership chain - Gorlane Business Inc. (British Virgin Islands) and Eastrade Ltd. (Bahamas).

Furthermore, the order dramatically expands the sanctions imposed against Russian state development corporation VEB.RF back in 2021 and extends them from three years to 50 years. While before they only prevented capital from being taken out of Ukraine, now they include 16 items.

All of the 13 individuals listed in the order are citizens of Armenia.

In May 2010, Eduard Shifrin's and Alexander Shnaider's Midland Resources Holding Limited (Guernsey, UK) sold up to 50% of shares in Zaporozhstal to a group of Russian investors whose interests were represented by VEB and investment bank Troika Dialog and who also bought a controlling stake in Industrial Union Donbass (ISD).

In July 2012, Metinvest, which is 71.24% owned by System Capital Management (SCM) and 23.76% by Smart Holding, announced that it had consolidated 50.0032% of shares in Zaporozhstal with a group of investors, with Metinvest itself holding 49.032%. At the end of June 2012, the steelmaker's CEO Vitaly Satsky was replaced by the deputy director of Metinvest's steel division, Rostislav Shurma, who headed the plant until the end of November 2019 and is now the deputy head of the Office of the President of Ukraine.

Metinvest said that Zaporozhstal was in the process of integrating into the group. Metinvest said in its latest reports that it owns 49.99% of Zaporozhstal.

The National Securities and Stock Market Commission's disclosure system shows that the other major shareholders of Zaporozhstal at the end of 2022 were Global Steel Investments Limited with 12.3466%, Kiev Securities Group with 24.5003% and Midland Capital Management with 11.2224%.

As of August 2022, Gorlane Business Inc. was listed as the owner of Global Steel Investments Limited. British court materials from 2020 regarding a dispute between Sergei Taruta, Oleg Mkrtchyan and Vitaly Gaiduk stated that the Russian buyer of ISD wanted to acquire Gorlane Business, which owned almost 50% of Zaporozhstal.

Ukraine's state registry lists Eastrade Ltd as the owner of Midland Capital Management, but does not name the beneficiary of this company.

Zaporozhstal, one of Ukraine's largest industrial enterprises, specializes in manufacturing cold-rolled steel and hot-rolled coil, sheet, strip and roll-formed sections.

SCM carried out a reorganization a few years ago that made Cyprus-based SCM Holdings Limited the group's main investment company. SCM businesses and holding companies operate in Ukraine, Cyprus, the Netherlands, Italy, Bulgaria, Switzerland, the United Kingdom and the United States. SCM Holdings' sole owner is Ukrainian businessman Rinat Akhmetov.