A jailed Russian oligarch is seeking almost $14bn in damages in London’s High Court from defendants including US private equity group TPG over an alleged Kremlin-led conspiracy to seize his assets.
Lawyers for Ziyavudin Magomedov claimed in filings made public this week that TPG founder David Bonderman was part of a conspiracy to sell a stake in Fesco, which controls the Pacific port of Vladivostok, that Magomedov was entitled to.
Magomedov, who is in prison in Moscow, alleges that he was also the victim of a conspiracy designed to take over his stake in the NCSP port in Novorossiysk for a knockdown price. The claim values his interest in Fesco at about $8.8bn and his interest in NCSP at about $5bn.
The claim accuses Russian state energy groups Transneft and Rosatom of participating in the alleged conspiracy, alongside alleged protagonists including TPG, Dubai-based ports operator DP World and former executives at Magomedov’s company.
The tussle over Fesco, which the Kremlin confiscated earlier this year, comes as Moscow is seeking to seize valuable assets and transfer them to loyalists as a reward for their support in the war on Ukraine.
The case is an attempt by Magomedov to recover his assets after he and his brother Magomed, a former senator, were arrested in 2018 in one of the largest-ever Russian security operations.
Late last year the brothers were sentenced to 19 and 18 years in prison respectively on organised crime and embezzlement charges. They remain in Moscow’s infamous Lefortovo prison, which the FSB security service uses for defendants in the Russian political elite, pending appeal.
Magomedov, whose fortune was previously estimated at $1.4bn by the Russian edition of Forbes, amassed a business empire during the presidency of Dmitry Medvedev, who stood in for Vladimir Putin from 2008 to 2012.
Magomedov is accusing TPG of backing out of obligations to give him pre-emptive rights to buy its 17.4 per cent stake in Fesco, as part of what he alleges is a scheme by the Russian government to rob him of his assets.
A spokesperson for TPG said: “We consider these claims, which relate to a legitimate and proper transaction, to be entirely without merit. We intend to defend ourselves vigorously against such allegations.”
Magomedov had taken over Fesco in a leveraged buyout alongside TPG and Russian private equity investor Mark Garber’s GHP Group in 2012.
Despite his arrest, Magomedov wanted to buy out the other partners, according to the claim.
The lawsuit alleges that TPG had a contractual obligation to offer its Fesco shares to him first, but instead unlawfully sold them to Mikhail Rabinovich, a Russian bank owner allegedly close to state nuclear power group Rosatom.
In 2020 Magomedov and associates sought to raise funds from an investor linked to Vladivostok’s governor and DP World to buy out TPG’s stake in Fesco, according to the filing. TPG was selling out of Fesco as part of a plan to exit Russia.
But Magomedov claims TPG sabotaged the deal because it had already agreed to sell the stake to Rabinovich, while DP World instead decided to partner on Fesco with Rosatom.
The potential deal fell apart the same year, as Magomedov’s representatives attempted to pay TPG via a bank account in Armenia, which the US buyout group returned according to the claim.
Magomedov claims the Russian government then made threats to have the FSB “work on” his associates, which he says scared off the investor.
The governor of Vladivostok subsequently told workers at the port that Rosatom was to become the operator and, ultimately, the owner of Fesco, according to the claim.
In a letter sent the following day, Bonderman told Magomedov that TPG had “not ‘colluded’ with any other buyers or indeed acted to favour any other buyer in any way”, according to the filing. Instead, he blamed “a lack of engagement from your team” for Magomedov’s failure to close the original deal.
“The transaction was without bias to any party,” TPG said. “The [Right of First Offer] was not completed because the monies sent to TPG came from a third party with whom TPG had not had any previous dealings and where TPG could not satisfy its relevant [anti-money laundering] protocols.”
Fesco announced that TPG had sold its stake to Rabinovich just over a week later. He continued to co-own the company until January 2023, when a Moscow court nationalised 92.4 per cent of Fesco’s shares.
Magomedov is also seeking compensation for the stake in the NCSP port he owned with his brother, which handles Russia’s oil and grain exports from the Black Sea.
He claims that Nikolai Tokarev, a former colleague of Putin’s in the KGB who runs state oil pipeline monopoly Transneft, threatened to ensure he would remain in jail unless he sold his stake for $750mn, half of what they had agreed before his arrest.
Transneft later said it bought the stake at a discount because the brothers failed to meet guarantees on the original agreement. It declined to comment on Magomedov’s lawsuit. The Kremlin and Garber declined to comment. Rosatom, DP World and Fesco did not respond to requests for comment. The Financial Times could not reach Rabinovich for comment.
Last year, a Russian court seized the $750mn proceeds on the grounds that Magomedov’s brother had corruptly obtained the stake during his time in the senate, which he denies.
Additional reporting by Jane Croft
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