The “TOAZ case” will be considered by the third instance

The Samara Regional Court upheld sentences to the former top-managers of the company, despite the claims of the defense that there had been numerous violations during the trial, at the first instance and appeal court.

The lawyers tried to appeal against tough sentences to ex-managers of the Togliattiazot plant, who had been accused of products embezzlement worth 84 billion rubles and sentenced to long prison terms: from eight and a half to nine years. In its decision the Samara Regional Court upheld the initial verdict of the Komsomolsky District Court of Togliatti, which bewildered both the parties in the trial and employees of the company, who believe that their former leaders are innocent, and disapprove that TOAZ was recognized as a victim in court by force.

The criminal case has been investigated for five years, since early 2012. It was launched at the request of the OHK Uralkhim, JSC, a minority shareholder in the plant. Subsequently, the minority shareholder Evgeny Sedykin (0.00019% of the shares) was also recognized as victim in the case, and in 2017 he was sentenced to four years probation. He was accused of attempted fraud and raider seizure of TOAZ.

The most severe sentences were given to Vladimir Makhlai, the former head of Togliattiazot, Sergey Makhlai, the head of the plant’s board of directors and Andrew Zivi, the owner of the contracting company Nitrochem Distribution AG, nine years served in a general penal colony. Ex-CEO Yevgeny Korolev and Nitrochem CEO Beat Ruprecht-Wedemeier were sentenced to eight and a half years in prison.

The investigation claims that the management of TOAZ embezzled all ammonia and carbamide produced by the plant within 4 years. Allegedly, the directors were selling goods at a lower price to foreign counterparties, who were reselling the products at market prices. But the point is that the plant received more than 65.5 billion rubles from Nitrochem - that was the price of the contract, and the money was used to pay salaries and invest into the plant. However, the court agreed that Uralchem, as a shareholder of the company, had the right to part of the products. The damage to this company was estimated at 10 billion rubles – pro rata to the minority share in the plant.

The trial of the first instance saw a number of scandals: the prosecution brought some secret witnesses in the case, the proceedings were conducted with violations, they summoned no experts who had prepared an expert opinion on TOAZ lowering market prices (and the experts were replaced several times). Moreover, the materials of the criminal case have more than 550 volumes.

When considering the case in Samara, the judicial board chaired by Ksenia Melnikova scheduled hearings every day, thus preventing the defense from preparing documents of foreign defendants. The lawyers were also denied verification of any evidence of the prosecution, later the lawyers stated that the proceedings gathered pace “after a call to the court from the Presidential Administration of the Russian Federation”, and instead of two months, the case was considered in one and a half.

The lawyer Alexander Gofshtein, defending Sergei Makhlai, noted that the experts Natalya Semilyutina and Sergey Valentey in their expertise compared the incompatible things - TOAZ sales with spot supplies (much smaller in volume) of other manufacturers, and determined the cost of products by the date of the final customs declaration, which can be issued much later than the actual shipment of goods, according to Russian laws. Naturally, no one could predict the exact range of price changes within the period, but this is what the defendants are charged with,” the Kommersant reports.

Sergei Makhlai believes that the investigation created a dangerous precedent in the Russian judicial system, jeopardizing other businessmen who find themselves under raider seizure. Representatives of Togliattiazot did not agree with the conviction and will appeal the verdict of the Komsomolsky District Court of Togliatti and the decision of the Samara Regional Court in the manner prescribed by law. Representatives of Uralchem ​​agree with the court decision and do not intend to challenge it.