Originally Syndicated on July 21, 2023 @ 5:02 pm
As tensions escalate in the wake of Russia’s military actions in Ukraine, powerful figures within the Russian business community have faced the repercussions of international sanctions. Among them stands Alexei Mordashov, Russia’s wealthiest individual and the largest shareholder of Severstal, the country’s leading steelmaker.
Table of Contents
Early life and career of Alexei Mordashov
Alexey Aleksandrovich Mordashov is a Russian businessman worth billions of dollars. He is the primary shareholder and chairman of Severstal, which is the largest steel and mining firm in Russia. Cherepovets, which was then part of the USSR but is now part of Russia, is where he was born on September 26, 1965.
He began his professional career in the field of economics in 1988 at Cherepovets Metallurgical Plant, which is now known as Severstal. He was promoted to the position of financial director of the plant in 1992 after rapidly climbing the company’s levels. After taking over as CEO of Severstal in 1996, Mordashov is credited with transforming the company into one of the most successful steel businesses in Russia.
He received his undergraduate education from the Leningrad Engineering-Economical Institute, which is today known as ENGECON. He finished with a bachelor’s degree. Later, in 2001, he graduated with a Master of Business Administration degree from Northumbria University, which is located in Newcastle upon Tyne, England.
Building an Empire: The Growth of Severstal
Alexei Mordashov‘s breakthrough came in 1996 when he became the CEO of Severstal, a steel company that had been suffering from financial troubles. His astute leadership and strategic vision led to a remarkable turnaround for the struggling enterprise.
His innovative management approach, combined with prudent investments in technology and modernization, transformed Severstal into one of Russia’s leading steel producers. Under his guidance, the company expanded both domestically and internationally, establishing a strong presence in global markets.
Wealth Accumulation and International Recognition
As Severstal thrived, so did Mordashov’s wealth. The success of his business ventures enabled him to amass a significant fortune, propelling him to the top of Russia’s rich list. According to Forbes’ billionaires ranking, Alexei Mordashov‘s net worth soared into the billions, solidifying his status as one of the wealthiest individuals in the world.
Personal Life and Marriage
Mordashiv was married to Elena with whom he has a son named Iliya. However, in 1996 the couple fell apart and had a divorce.
He is currently married to his second wife, who coincidentally has the same name, Elena. They have two other children named Kirill and Nikita.
Ex-Wife’s Claim
Elena, Mordashov’s ex-wife filed a claim against him for half of his pre-divorce property in 2001 but lost the case and paid high legal costs. Later, reports found that Mordashov only provided $620 per month for support for his ex-wife and child.
What do the Pandora Papers say about Alexei Mordashov?
The Pandora Papers consisted of approximately 12 million confidential financial records that were leaked and compiled by the International Consortium of Investigative Journalists. The records contain information about a specific unit called “Cypriot” within the accounting firm PricewaterhouseCoopers (PwC) that assisted Mordashov in establishing the offshore infrastructure for his business empire.
The firm assisted in establishing more than 65 shell companies in different “secrecy jurisdictions,” like the British Virgin Islands, on behalf of a holding company associated with Mordashov. He utilized shell companies to effectively broaden his influence within Russia’s logging, coal, and media sectors.
Alexei Mordashov Net Worth
He narrowly missed a spot among the top 50 richest people in the world in 2021, according to Forbes magazine’s list of billionaires, with a number of 51.
His fortune included a 79.2% stake in Russian steelmaker Severstal, a significant stake in German tourism company TUI, industrial machine maker Siloviye Mashiny, and gold miner Nordgold. He also has stakes in the online retailer Uktonos and the plywood firm Sveza. Mordashov also owned 26% of the National Media Group, 7.3% of CTC Media, 5.5% of Bank Rossiya, and 2.8% of Tele2 Russia.
International sanctions against Alexei Mordashov after the Russo-Ukrainian War
Following Russia’s invasion of Ukraine on February 24, 2022, the European Union wasted no time in taking a strong stance against Russia. Just four days after the invasion, the EU added Mordashov to its list of sanctioned individuals. The primary reason for this action was his well-documented close relationship with Russian President Vladimir Putin, which raised concerns about his potential involvement in the crisis.
As a reaction to these sanctions, the authorities acted quickly by freezing Mordashov’s assets and imposing a travel ban. This effectively limits his ability to move around within the European Union and its affiliated regions.
Following a span of two weeks, the United Kingdom also took similar action by focusing on a group of individuals who are linked to the Russian government. His name was prominently featured on this list. The UK government made a strong decision by not only seizing his assets but also imposing a thorough travel ban, which prevents him from entering or leaving the country.
In order to further isolate Mordashov, the UK has also enacted a law that prohibits British citizens and businesses from engaging in any kind of commercial transactions with him. The international community’s determination to hold those closely tied to the Russian leadership accountable for their roles in the ongoing Ukrainian crisis was highlighted by these coordinated actions.
Ownership transfer amid sanctions
“I have absolutely nothing to do with the emergence of the current geopolitical tension and I do not understand why the EU has imposed sanctions on me.”
Alexei Mordashov
Mordashov wasted no time in making his first significant move on February 28th, 2022, coinciding with the day the EU imposed sanctions on him.
Without delay, he decided to move his ownership of 29.9% in the prominent German travel company TUI. This transfer was made from a holding company called Uniform, registered in Cyprus, to a shell company located in the British Virgin Isles.
After conducting a thorough investigation into the tightly guarded ownership system of the island tax haven, it was revealed that the shell company is registered under the name of Marina Mordashova, who happens to be the mother of his children.
Frozen Assets and Luxury Yachts
Under EU sanctions, certain assets belonging to him have already been seized. Italy took possession of a luxurious superyacht named Lady M worth $71 million that belonged to Alexei Mordashov. Additionally, they have also seized his property in Sardinia, which is valued at $116 million.
A superyacht worth $500 million, believed to be owned by Mordashov, arrived and docked in Russia.
Severstal Downfall
According to Anastasia Mishanina, a spokesperson for Severstal, the European Union imposed sanctions on Alexei Mordashov on February 28, 2022. As a result, approximately one-third of Severstal’s sales were cut off. According to her, the company sells approximately 11 million tons of steel annually, with a significant portion, ranging from 3 to 3.5 million tons, being supplied to countries within the European Union.
“We are now in the process of redirecting these volumes to alternative markets, including the Middle East, Asia, Africa, and South America.”
Mishanina
According to the company, Citibank has stated that they “froze” a test payment made by Severstal on March 16, 2022. This action was taken in response to ongoing regulatory investigations.
According to the company, Severstal was unable to make a $12.6 million interest payment on a $800 million bond due to certain circumstances.
Although neither the company nor Mordashov had faced any sanctions from the US, they still sought a license from the US Office of Foreign Assets Control. This license allows companies to handle payments associated with loan participation notes.
Severstal has also stated that it has applied for licenses from authorities in the EU and the UK.
Following the imposition of sanctions on Alexei Mordashov, several Western firms, including Severstal’s London-based PR company, decided to sever their connections with the company. Additionally, four directors chose to resign from Severstal’s board.
Impact on Norgold Mining Company
At approximately the same time, he found himself compelled to resign from his position as director of Norgold, a mining company listed in the UK. He then proceeded to transfer his significant controlling stake, valued at £1.1 billion, back to Marina Mordashova.
This incident occurred approximately two weeks before the UK finally implemented its own set of sanctions on the oligarch, which had a direct impact on the London-based company. By the end of the third week in March, the company was facing difficulties in locating a refiner who was willing to handle the gold produced in Burkina Faso and Guinea.
Adding to his troubles, Norgold delivered another blow just a few weeks later by announcing the closure of its Taprako mine in Burkina Faso. The company invoked force majeure, explaining that the security situation has been worsening due to the ongoing battle against armed militants associated with the Islamic State and Al Qaeda.
Alexei Mordashov’s Links to Putin-Connected Figures and Media Influence
Although Mordashov has repeatedly denied any involvement with the Kremlin, it is evident that he has maintained close relationships with people closely linked with Putin.
He bought a stake in Rossiya Bank two decades ago. This bank has shareholders such as Yury Kovalchuk and Nikolay Shamalov, who are considered proxies for Putin. It is interesting to note that Kirill, the son of Nikolay Shamalov, was previously married to one of the daughters of the Russian president.
Rossiya Bank, which has already faced sanctions for its involvement in Crimea, was now subjected to further measures that restrict its global operations.
The European Union claimed that Rossiya Bank served as the “personal bank” for influential Russian individuals who profited from the annexation of Crimea.
It is important to mention that Mordashov utilized his ownership in Rossiya Bank and the oil company Surgutneftegaz to establish National Media Group, which happens to be Russia’s largest private media holding.
Additionally, it is worth noting that Channel One, the primary state television channel in the country, holds a significant interest in this matter. The channel has been staunchly supportive of Putin’s “special operation” in Ukraine, thereby raising doubts about his alleged lack of involvement in Russian politics and the conflict in Ukraine.
Russian Oligarchs’ Wealth Loss and Concealment Strategies
According to reports, it has been stated that Russian oligarchs experienced an average loss of 27% in their wealth. According to Forbes, Alexei Mordashov, among all the oligarchs, had the largest financial setback on paper. They estimate that he lost $15.9 billion, a figure that accounts for 50% of his net worth.
Considering the current situation, when Russian Oligarchs are rushing to conceal their wealth from the public eye, it is possible to have some inaccuracy regarding the given figures.
It is highly likely that the combination of crypto assets and currencies, art and antiquities, as well as networks of family members and friends, along with the use of intricate and often difficult-to-trace shell companies, will effectively protect a significant portion of this concealed wealth from being discovered by curious individuals.
Blacklisted by the EU: The Reason Behind Sanctions
The EU’s decision to blacklist Alexei Mordashov was part of a broader effort to apply economic pressure on Russia and its allies amid the ongoing conflict in Ukraine. The sanctions targeted individuals deemed to have close ties to President Vladimir Putin, holding them accountable for Russia’s actions.
By blacklisting Mordashov, the EU aimed to restrict his financial transactions with European entities and isolate him from the continent’s financial system.
The Broader Context: Oligarchs and Geopolitical Dynamics
The blacklisting of Alexei Mordashov highlights the complex relationship between powerful Russian oligarchs and the country’s political landscape. These influential individuals often wield significant influence over the nation’s economic and political affairs, making them key targets for international sanctions during times of geopolitical strife.
Concluding Lines
To sum up, the situation involving Alexei Mordashov, a prominent oligarch in Russia known for his wealth and influence, reveals the complex network of relationships between influential business figures and the Russian government. Mordashov’s journey from working at the Cherepovets Metallurgical Plant to eventually becoming the CEO of Severstal is a testament to his exceptional business skills. With his guidance, Severstal underwent a remarkable transformation, emerging as a prominent player in the global steel industry. Alongside this success, he also accumulated significant wealth.
The Pandora Papers leak, on the other hand, brought to light the true scale of the offshore infrastructure that he utilized to extend his influence in different industries such as logging, coal, and media. This revelation has sparked concerns and raised doubts about his financial practices.
After the Russo-Ukrainian conflict, Mordashov found himself in the crosshairs of international sanctions. These measures included freezing his assets and imposing travel restrictions on him. As a result, his business ventures were significantly affected by these actions.
This case highlights the international community’s commitment to holding Russian oligarchs responsible for their ties to the Kremlin, which adds to the complex geopolitical situation. The sanctions imposed on Alexei Mordashov‘s business interests, including Severstal and Norgold, highlight the extensive consequences they can have. As Russia’s oligarchs face the current challenges, it is uncertain how they will manage to safeguard their wealth and adjust to the changing geopolitical situation.
