Kremlin denies political link to tycoon’s arrest

One of the embezzlement charges levelled at billionaire Ziyavudin Magomedov concerns the building of a stadium in Kaliningrad for the 2018 World Cup
AFP

Moscow (AFP) – The Kremlin on Monday dismissed any political element to the arrest of the billionaire owner of Summa Group on suspicion of embezzling state funding for construction and energy projects including a World Cup stadium.

Ziyavudin Magomedov, whose fortune has been estimated at $1.2 billion (975,000 euros) by Forbes magazine, was detained on Saturday in Moscow along with his brother Magomed. 

They have been jailed and charged with fraud, embezzling around $44 million and forming a criminal network.

Russian media focused on Magomedov’s links to Prime Minister Dmitry Medvedev, under whose presidency he won lucrative public contracts, and friendly ties with Deputy Prime Minister Arkady Dvorkovich, with whom he studied economics at the prestigious Moscow State University.

“Magomedov has had the reputation for many a year of being a businessman who is no stranger to Dvorkovich and Medvedev,” wrote Vedomosti business newspaper.

Some observers have suggested that the arrest, with its echoes of the 2003 arrest of oil magnate and Kremlin opponent Mikhail Khodorkovsky, could be part of a power struggle as Vladimir Putin enters his fourth Kremlin term and is set to form a new government.

The arrests “came before the announcement of a new government and consequently can influence its future makeup,” wrote Kommersant business newspaper.

Putin’s spokesman Dmitry Peskov said that he was not prepared to comment on such speculation.

“This is the chatter of political analysts,” he told journalists. “Let’s leave this to political analysts.”

Peskov said instead that the investigation showed the country’s “very tough, targeted” monitoring of state funds.

One of the counts of embezzlement concerns the building of a stadium in Russia’s westernmost city of Kaliningrad for this summer’s World Cup, a crucial prestige project for the Kremlin.

Magomedov’s Summa Group has interests in gas, grain, commercial ports and shipping, including the FESCO shipping company. The general director of Intek, one of the group’s companies, has also been arrested.

Magomedov is also a co-executive chairman in Virgin Hyperloop One, an innovative transportation project.

Stocks in companies in which Summa has major stakes, Novorossiysk Commercial Sea Port and FESCO, fell sharply Monday on the Moscow stock exchange.

In court on Saturday, Magomedov denied the accusations against him as “not standing up to any criticism,” TASS state news agency reported.

“I’m in a fighting mood,” he told journalists.

Magomedov and his brother, who come from the North Caucasus region of Dagestan, are being held in Moscow’s notorious Lefortovo jail.

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