The FINANCIAL — Nothing has changed at Madneuli since the parliamentary elections, despite the fact that the company was known for its strong ties with the previous government.
The FINANCIAL — Nothing has changed at Madneuli since the parliamentary elections, despite the fact that the company was known for its strong ties with the previous government. The company was closely linked to the name of Koba Nakopia, himself close to Mikheil Saakashvili. Georgian society had expectations that the situation at the enterprise would improve and become more transparent following the government changes, but this has not yet proven to be so.
“Nothing has changed at the company and it continues to work according to its usual regime,” Koba Nakopia, former member of parliament and businessman, told The FINANCIAL. “Everything is going as planned and the parliamentary changes have not influenced the activities or circumstances of the enterprise at all.”
Nakopia participated in the privatization process in 2004. He sold the country’s largest mining company Madneuli for USD 120 million in June 2012 to a Russian company, interfax reported. But he is still cooperating with the new management of the company Rich Metal Groups. He is presumed to be an influential figure in Russian society. He also sponsored the film 5 Days of August, directed by Renny Harlin.
A month after the elections Ivane Machavariani, former representative of the Austrian side at Quartzite, said, “I knew that the privatization of the enterprise was made by a corrupted scheme. The buyer of the company paid USD 53 million and had no obligation to investing in modernization, looking for a new field etc. But this has not happened. The prices of gold and copper have grown and they received their investment back within a year. After this they have had huge profit but never made any further investments.”
“The price of gold was USD 350 per ounce at the time when the enterprise was sold. The price was predicted to grow and therefore lots of people advised the government not to sell the company. The sale did go ahead however, and the price then doubled in a year. The price is now about USD 1,700,” he added.
The Austrian partners, whose representative was Machavariani, owned 50 percent of the enterprise but have since sold their share at a nominal price.
It was said that the Committee of Sector Economy and Economic Policy at Parliament will investigate the privatization process of Madneuli, but Zurab Tkemaladze, Head of the Committee, has yet to comment on this.
Information about investments in the mining business is not public. According to the statistics of Madneuli, they paid GEL 271,334,782 to the budget and spent GEL 14 million on social projects. Nakopia said that their main achievement was growth of their manufacturing capacity, which included more employees and more money paid to the budget.
The FINANCIAL has tried several times (both before and since the elections) to understand the operating details of the enterprise, but the company’s representatives have always declined the opportunity to share such information.
At the end of December 2012 the Ministry of Finance entered Rich Metals Group for a special inspection. The company was accused of avoiding paying a significant sum of taxes and of filling their customs declaration with false data.
Official information about the enterprise states that all shares of Madneuli and Quartzite were sold on 14 June, 2012, and that Russian company Capital Group became the sole owner of them. Their name then changed to Rich Metals Group. The companies remained in the ownership of Russian businessmen as the shareholders of Capital Group are Russian businessmen Dmitry Korzhev and Dmitry Troitsky.
According to the Public Registry’s latest information the shareholders of LTD Quartzite are JSC Madneuli with 14.5 percent and LTD Rich Metals Group B.V registered in the Netherlands with 85.5 percent. The General Director of the company is Dimitri Kalandadze.
According to the information of the Public Registry, a month before 85.5 percent ownership of LTD Quartzite was acquired, J.P.M Georgia B.V was registered in the Netherlands as well. As for Madneuli, which is now named RMG Copper, the Public Registry does not have any information on its founders and stakeholders.
The shareholders of Capital Group are Russian businessmen Dmitry Korzhev and Dmitry Troitsky, both of whom are on the Forbes World’s Billionaires list. Forbes says the following about Dmitry Korzhev and Dmitry Troitsky: “They took Russian retailer O’Key Group public on the London Stock Exchange this fall; current market cap: $3 billion. Collaboration began as students; started out in car sales founding Mega-auto company in 1993, now one of the biggest dealers in Saint-Petersburg. In 1995 founded juice producing plant Multon, and after 10 years sold it to Coca-Cola for $500 million. In 2001, co-founded O’Key chain of supermarkets.”
According to Russian Forbes, Dmitry Korzhev owns USD 1 billion and holds 123rd place in the list of the country’s richest people.