Former CEO of leading Russian investment group faces fraud charges

By Al Mayadeen English
Source: Agencies
23 Jun 2024 11:07

The financial impact of the former CEO's actions is estimated to be at least 710 million rubles ($7.98 million), as reported by investigators.

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Former president of the AFK Sistema investment company, Evgeny Novitsky,at court in Moscow (Telegram / Moscow courts press service)

A Moscow court has placed Evgeny Novitsky, the former president of the AFK Sistema investment company, under house arrest until August 20. He faces accusations of large-scale fraud related to an alleged attempt to embezzle funds from a now-defunct private pension fund.

Investigators claim that Novitsky, along with accomplices, devised a scheme to illegally obtain funds from the Ural FD private pension fund under the pretense of purchasing securities on the stock exchange.

Ural FD, which had approximately 19,000 clients, lost its state license and ceased operations in 2016. At that time, the total volume of pension savings entrusted to the fund was 890 million rubles ($10 million), with its pension reserves holding 117 million rubles ($1.31 million) by the end of 2015.

The court has also placed two additional suspects in the case under house arrest: Oleg Mezentsev, a businessman involved in securities administration, and a woman identified only as Olga Illarionova. Mezentsev is charged with fraud, while Illarionova faces accusations of a premeditated breach of contract. The court did not specify their exact roles in the alleged fraud scheme.

Novitsky linked to another fraud investigation

Novitsky, aged 66, rose to prominence within AFK Sistema in 1995, shortly after its establishment, eventually becoming its president by the end of that year and serving in that role until 2005. He remained on AFK Sistema's board until 2013.

Following his tenure at AFK Sistema, Novitsky held senior positions at PhosAgro, a leading Russian fertilizer manufacturer, as well as several defense industry firms.

According to a source cited by Russian business news outlet RBK, Novitsky is potentially linked to another fraud investigation involving businessman Aleksey Taicher.

Taicher, formerly associated with Transfin-M leasing company, faces accusations of engaging in fraudulent loan agreements without any intention of repayment. The financial impact of Taicher's actions is estimated to be at least 710 million rubles ($7.98 million), as reported by investigators.

AFK Sistema, a prominent Russian investment conglomerate based in Moscow, had its global depository receipts listed on the London Stock Exchange from 2005 until 2023. The conglomerate oversees numerous companies spanning diverse sectors such as banking, e-commerce, healthcare, pharmaceuticals, IT, telecommunications, and media. As of 2020, its various enterprises collectively employed more than 140,000 individuals, according to the Russian Union of Industrialists and Entrepreneurs (RSPP).