The Tverskoy District Court of Moscow has found a resolution in the dispute between the General Prosecutor’s Office and the Investigating Committee of the Russian Federation Ministry of Internal Affairs with respect to the legality of a new criminal suit against Vladimir Makhlay, TogliattiAzot President, and Alexander Makarov, TogliattiAzot CEO, which was instigated by the Investigating Committee. V. Makhlay and A. Makarov are accused of fraud and tax evasion and are currently fugitives from justice. The new case against them was petitioned a month ago by the offshore company Tringal Equities Inc. whom are claiming 30 million rubles from TogliattAzot, in underpaid dividends. However, the General Prosecutor’s Office dismissed this case and the Court had approved the decision.

Judge Yelena Stashina examined the bill of complaint against the General Prosecutor’s Office filed by Tringal Equities Inc., a company registered in the British Virgin Islands who holds 2 million shares in TogliattAzot. A representative of the offshore company declared that on November 26,Viktor Grin a deputy prosecutor, dismissed a new criminal case against Vladimir Makhlay and Alexander Makarov. Both of whom have been staying in London for the past two years where they are hiding from the Investigating Committee, which in their absence has accused them of fraud related to the sale of 6% of the state share holding of TogliattiAzot to TAFCO and tax evasion to the amount of 2803 million rubles by means of ammonia sale via the Swiss company Nitrochem Distribution AG, which is under control of V. Makhlay.

The new case against V. Makhlay and A. Makarov was instigated by the Investigating Committee in accordance with Article 201 of the Russian Federation Criminal Code (Abuse of Authority). The Investigating Committee declared that they suspect   intentional non-payment of dividends for  the amount of 30 million rubles in 2005 to the claimant, i.e. Tringal Equities Inc., as well as 79.1 million rubles to another  offshore company – Mata Trading Inc. holding 5 million  shares of TogliattiAzot. The representative of Tringal Equities Inc. pointed out in his petition that, Mr. Grin; the deputy prosecutor had dismissed  the suit not with 24 hours of receipt of the document (24 hours is the  maximum period of time as defined by Article 146 of the Criminal-Procedural Code) but only after 22 days. The claimant believed that in spite of the lack of direct evidence of misappropriation of dividends by ToAz’s senior  managers this fact could have been examined only within the framework of a criminal case investigation.

Viktor Gvozdev, a Senior Prosecutor of the General Prosecutor’s Office, claimed that they had to ask for the case documents from the Investigating Committee several times and initiation of case had been immediately dismissed upon receipt of all documents. According to Mr. Gvozdev, the initiation of this case was dismissed as no pre-investigating examination had been carried out and the case had been initiated only on basis of Tringal Equities Inc. petition. He said that the Investigating Committee had no any reasons to suspect Messrs Makhlay and Makarov of intentional non-payment of dividends to the claimant and, moreover, the  requirement for this payment is under discussion  by these legal entities in the arbitration court.

Sergei Zamoshkin, an attorney defending Messrs Makhlay and Makarov, declared in the court that  Tringal Equities Inc. had previously initiated a similar suit against his clients in the Samara Region Court, which had also dismissed the case. According to Mr. Zamoshkin, “all these lawsuits are a part of campaign directed at a hostile takeover of TogliattiAzot assets or, in other words,  a tool for the  raider’s attacks”. Mrs. Stashina, a judge, had spent four hours in  the retiring room and then announced  the courts verdict: the claim of the offshore company is denied. The claimants have  not yet decided  whether to appeal this decision.. “This matter is under discussion now”, Samvel Karakhanyan, Tringal Equities Inc. attorney, said to a Kommersant reporter yesterday.