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March 21, 2013 /PRNewswire/ -- Lawyers representing Togliattiazot (TOAZ), the world's largest ammonia producer, appealed in an open letter to Russian Prosecutor General
Yuri Chaika, head of the investigations committee Alexander Bastrykin, and chairwoman of the State Duma's anticorruption committee
Irina Yarovaya, bringing their attention to a possible multi-billion corruption scheme related to Togliattiazot. The investigation can affect the ammonia producer, according to the research note by RUXX Index that tracks Russian companies.
This is the second appeal to the Russian authorities issued by TOAZ lawyers, who requested the government intervention to help them fight off what they perceive as the raider attack on the company. The investigations committee of the
Samara region where Togliattiazot is headquartered issued a formal reply but no investigation was conducted and the company is still in the midst of the anti-raider effort.
In their letter, Togliattiazot lawyers assert that Uralchem, one of the minority shareholders, made a deal with an affiliated company to sell their TOAZ shares and that the deal was cancelled because TOAZ lawyers declined to provide a list of shareholders. Uralchem initiated a legal action against TOAZ asking for
$250mln in damages. Togliattiazot lawyers believe that there are no grounds for legal action because there were no damages in the first place.
"This looks like a case of 'legal abuse,' a standard procedure for Russian corporate raiders who employ Russian legal system because of its imperfection and corruption," says
Michael Thompson, senior analyst for RUXX Index. "It's relatively easy to initiate a criminal case against a company and file for massive damages. This is the typical approach for raiders who put pressure on the company forcing it to sell below market or pay off the raiders. That's what the TOAZ lawyers are trying to alert the authorities about," adds Thompson.
In his research note on TOAZ, Thompson says that "based on the facts contained in the ammonia producer lawyers' letter, it's likely that there is what they call in
Russia 'the corruption component' on the local level, meaning that the local authorities and police effectively back one of the parties."
TOAZ letters and research note on the company is available on RUXX website,
Michael ThompsonRUXX Index
SOURCE RUXX Index