Marshall Capital Rejects Reports of Boss’s Arrest

MOSCOW, November 20 (RIA Novosti) – Russian investment company Marshall Capital Fund denied media reports on Tuesday saying its founder Konstantin Malofeyev has been arrested in a $250 million bank loan embezzlement case.

“The information about the arrest of Marshall Capital founder Konstantin Malofeyev and the detention of the fund’s legal representative Dmitry Skuratov is not true,” the Fund’s spokesman said.

“They are being treated as witnesses in the case investigating the provision of a loan by VTB Capital to RusAgroProm firm to purchase the plants of Nutritek Group.”

Russian business media reported early on Tuesday police were searching the office and residence of Marshall Capital Fund’s owner Malofeyev, the largest minority shareholder of state-controlled telecoms giant Rostelecom, as well as the home of Rostelecom’s chief Alexander Provotorov, a former Marshall Capital general director.

The searches were part of a criminal case into embezzlement of over $250 million in loans granted by VTB Capital Plc, the British division of Russia’s second largest bank VTB, to the RusAgroProm firm to purchase dairy plants from Nutritek International Corp. previously controlled by Malofeyev’s Marshall Capital Fund.

VTB received the shares of the dairy plants as collateral for the loan, but their value was five times overestimated, according to an audit by Deloitte Consulting LLP.

Kommersant reported that Malofeyev and Skuratov had been taken into custody while Provotorov could be arrested on Tuesday evening.

Malofeyev later claimed in a live broadcast on the liberal TV channel Dozhd the investigation was aimed at replacing the management of the Russian telecoms giant Rostelecom.

“My version is that this is pressure for the purpose of replacing the Rostelecom management,” he said.

An Interior Ministry spokesman told RIA Novosti earlier the investigation was not related to Rostelecom and was looking into possible embezzlement of bank loans.

Rostelecom shares fell more than 3.5 percent in Tuesday afternoon trade on the news of the police raids, falling 3.68 percent to 118.25 rubles per share as of 12:25 p.m. Moscow time compared with a 0.33 percent drop across the MICEX stock index at that time.

The slump slowed to 2.87 percent to 119.25 rubles per share as of 5:17 p.m. Moscow time.


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