The skyrocketing trend of illegal corporate takeovers in Russia is usually engineered by ruthless businesspeople, mafia types and corrupt public officials, two high-profile victims have told a German parliamentarian renowned for championing human rights.

Ilgar Hajiyev and Igor Bitkov told Marcus Held by videoconference April 16 that those who engage in corporate raiding – a practice the Russians call "reiderstvo" – often launder their ill-gotten gains by buying luxury properties in Europe and the United States.

“Parliamentarian Held listened intently to our discussion of the evils of 'reiderstvo,'” Hajiyev said. “This was a great start to educating Western political leaders about the evil of this practice, which affects their countries because those who engage in raiding often launder their illegal gains in Europe and the United States.”

A representative of the German company, Alcon Development GmbH, also attended the meeting.

The Azerbaijan-born Hajiyev, who now lives in Europe, is the founder of the London-based Center for Business Transparency and Countering Corporate Raids in Russia. Bitkov, a Russian who is in Guatemala fighting a request that he be extradited to his homeland to face trumped-up criminal charges, is director-in-absentia of the center.

Hajiyev told Held that a raid on the Moscow-area property of his company, SDI Group, was a textbook example of "reiderstvo."

The stage for the illegal takeover was set, he said, when he had a dispute in late 2018 with a business partner, Azerbaijan-born God Nisanov, over the mix of residential versus commercial property in three high-rises Hajiyev was building on Moscow’s outskirts.

In January 2019, Hajiyev said, armed men seized the complexes, which he was erecting with his own money after Nisanov secured the land and arranged the permits.

Later that month, armed raiders also took over SDI Group’s offices on Kutuzovsky Prospekt in downtown Moscow. Hajiyev fled to Germany in the face of death threats.

Investigative media, including the Russian publications Novaya Gazeta and TheBell and Radio Free Europe/Radio Liberty, have reported that Nisanov, Moscow’s largest real estate holder, personally ordered the raids.

Footage from more than 50 surveillance cameras at SDI Group’s properties showed the intruders receiving instructions from Nisanov and his team in person and by phone. Footage also showed the raiders wearing the uniforms of the Vityaz security firm, which is run by a Nisanov associate.

Additional video shows Nisanov’s team seizing down-payments that thousands of people had made on apartments they had agreed to buy from SDI. The money was transferred to other companies’ accounts and to the personal accounts of people associated with Nisanov. In addition, there was footage of cash from these escrow accounts being stuffed into a large duffle bag.

SDI has posted the footage to YouTube, where it has been viewed more than 141,000 times.

Alcon Development became party to the conflict after acquiring an 80-percent share in SDI Group.

The two companies began discussing a potential partnership as early as 2016, when Hajiyev expressed an interest in attracting German investment to his real estate development projects in Russia. Hajiyev is a friend, colleague and business advisor of Alcon Development's chief executive officer, Ziya Gaziyev.

The negotiations continued up until the raid — circumstances that would have deterred any other company's plans to enter into such a partnership. However, Gaziyev, a Germany-based Azerbaijani who once worked in the Bundestag, was taken aback by the lawless nature of the raid and vowed to proceed.

In a show of support for SDI Group and his partner, Hajiyev — and as a demonstration of his belief in the need to fight against corrupt business practices generally — Gaziyev offered to finalize a merger agreement with the company.

International media have reported that the conflict has the potential to sour Germany-Russia relations.

Nisanov is known for his close relationship with Moscow Mayor Sergei Sobyanin, Governor of the Moscow Region Andrey Vorobyev, and brothers Boris and Arkady Rotenberg, business tycoons whom the U.S. government has sanctioned.

In addition to disagreeing with Hajiyev over the amount of commercial and residential property in the high-rises, Nisanov demanded that Hajiyev give 12 percent of the projects’ profits to Sobyanin, according to a Russian news report.

Meanwhile, three sprawling retail marketplaces that Nisanov runs in the Moscow area – Food City, Sadovod and Moskva – have been the targets of police raids and temporary closures in recent years. Russian news organizations reported that authorities acted after finding evidence that the mostly-cash-transaction marketplaces were being used to launder millions of dollars overseas.

Russian and European news organizations have reported that Nisanov has extensive property holdings in Europe, including a huge villa in southern France.

In 2009, the French daily Le Express reported that a British billionaire had purchased a zoo in Saint-Jean-Cap-Ferrat that he planned to build a business on. When the zoo’s closure sparked protests, the business – which some reports said was to be a luxury hotel -- was never constructed.

Instead, the land – valued at an astounding 44,000 euros per square meters at the time – ended up in the hands of Nisanov, who built a vacation villa on it.

Saint-Jean-Cap-Ferrat and other areas of southern France are the favored location of Russian oligarchs, who have invested millions of dollars of dubious origin there, Hajiyev said.

Hajiyev told Held that European countries need to enact laws verifying that the money wealthy Russians use to buy property on the continent does not come from criminal activities, including "reiderstvo." The legislation could be similar to London’s unexplained wealth law, which forces luxury property buyers from Russia and other countries to show where their property-acquisition funds originated before a deal can go through.

Held commended Hajiyev and Bitkov on their efforts to curtail the flow of corrupt money into Europe. He also recommended that they come up with a strategy for working with the Bundestag and other European parliaments to tackle "reiderstvo" and other sources of illegal money laundering head-on.

The London-based Center for Business Transparency and Countering Corporate Raids in Russia held a meeting on April 8 with Member of European Parliament Miriam Lexmann.

The center’s founder Ilgar Hajiyev and its director-in-absentia Igor Bitkov participated.

The meeting was held by teleconference.

During the meeting, the participants discussed “reiderstvo” and corruption in Russia as a phenomenon that has far-reaching economic, human rights, and security implications.

Bitkov and Hajiyev also discussed their own personal stories of “reiderstvo” and the need for the EU and United States to advance existing – and propose new – safeguards to prevent individuals affiliated with raiding from investing their illegally obtained assets abroad. Such measures, among others, included: a) Making official public condemnations of “reiderstvo” and raiders; b) Letting the public know about, and publicly condemning, the most high-profile and outrageous examples of “reiderstvo,” including naming perpetrators; c) Passing legislation aimed at pressuring Russia to eliminate “reiderstvo”; d) Supporting lawsuits in Russia and the West aimed at helping “reiderstvo” victims get their stolen businesses back or compensating them for their losses; and, e) Proposing or supporting sanctions against businesses, government agencies and individuals who engage in “reiderstvo.”

They also discussed the center’s future plans and potential avenues of collaborating with the European Parliament and other political and media organizations throughout Europe.

Lexmann is a member of the parliament’s Committee on Foreign Affairs and Delegation for Relations with Belarus. She is an alternate on the Subcommittee on Security and Defense.

ABOUT THE CENTER

The London-based Center for Business Transparency and Countering Corporate Raids in Russia was founded to end the practice of individuals and organizations using dirty tricks and force to seize companies without compensation. The center’s founder is Ilgar Hajiyev. Igor Bitkov is the director-in-absentia. Lawyers and anti-raid specialists Damir Bashirov and Aleksei Sinitsyn are its Russia representatives.

ABOUT ILGAR HAJIYEV AND THE RAID ON SDI GROUP

In mid-January 2019, a group of armed individuals stormed onto a number of large-scale residential complexes under construction in the heart of the Russian capital of Moscow.

These real estate development projects include VernadSKY on Vernadsky Prospekt, Pirogovskaya Riviera in Moscow’s Mytishchi District, and Akkord Smart Kvartal in the Odintsovo District. They are owned and operated by SDI Group, a company operating mainly in Russia and the former Soviet Union, but also elsewhere abroad.

Later that month, on January 24, 2019, another group of raiders bounded into the SDI Group’s offices on Kutuzovsky Prospekt and demanded the keys to the building. Some were in ordinary clothes and some wearing uniforms of the Vityaz security company, the primary security provider of properties belonging to God Nisanov, Moscow's largest commercial real estate holder and a Russian oligarch of Azerbaijani descent. In a video recording, the raid's orchestrators can supposedly be heard receiving orders from Nisanov, a partner in the projects. Russian media have since reported that Nisanov ordered the raid after a dispute with his partner, Ilgar Hajiyev, the founder of SDI Group.

After the raid, Hajiyev received a number of death threats, prompting him to flee with his family to Switzerland. The overnight loss of three prime real estate developments was a rare but devastating setback for Hajiyev, whose rags-to-riches story has become legendary in the former Soviet Union.

Even more painful for Hajiyev and the SDI Group management were the crimes committed by the perpetrators after the fact. Millions of euros in down payments for apartments, which were paid to SDI Group by hardworking Russian families, were transferred outside of the company's accounts.

Over the past nine months, SDI Group has issued appeals to Russia's Presidency and Government, the Moscow Regional Government and Mayor's Office, and an array of law enforcement agencies in the hope of securing their support to bring Nisanov and his cronies to justice. The company has also launched a number of legal cases in Russia against the individuals involved in/behind the raid.

More information can be found in this investigative story by Novaya Gazeta.

ABOUT THE BITKOV FAMILY AND THE RAID ON THE NORTH WEST TIMBER COMPANY

Igor and Irina Bitkov have learned to their everlasting sorrow that ruthless people in Russia will stop at nothing — including kidnapping and assaulting a child — to steal a successful business.

The Bitkovs built the pulp and paper-making operation North West Timber Company (NWTC) from scratch, with their business spanning from Saint Petersburg to Kaliningrad to Novodvinsk, where Igor’s father worked at a mill during Soviet times.

Igor told a journalist that he developed clean technology for his operation because industrial pollution had killed too many people in the area.

As NWTC prospered, the Bitkovs borrowed money for expansion from three government-owned banks — Sberbank, Gazprombank and VTB. Borrowing from a state-owned bank can bring your operation to the attention of ruthless government officials on the lookout for ways to use their official positions to become rich.

A Sberbank executive told Igor he wanted to buy 51 percent of NWTC, but Igor said no.

In June 2007, the Bitkovs got the payback for refusing — and it was truly despicable.

Thugs kidnapped, drugged and repeatedly raped their 16-year-old daughter Anastasia over three days. Igor paid $200,000 for her return, but Anastasia’s psyche had been scarred forever.

In the face of more threats, the Bitkovs fled Russia in April 2008. The three banks immediately called in the loans and gobbled up NWTC.

The Bitkovs’ first overseas stop was Turkey, where Igor received a message from Russia’s security service, the FSB, demanding that he return home, where he knew he would face trumped-up criminal charges. The Bitkovs then established a secret life in Guatemala.

By 2013, Russians officials had tracked them down, however, and were demanding that Guatemala extradite them. Guatemala responded by convicting the Bitkovs of buying false passports and confining them.

Some good news came in 2018, when U.S. senators took up the family’s human-rights case. The Bitkovs are still in Guatemala, under house arrest.

Details can be found in this EU Observer investigative story.

The Rome-based ASRIE Analytica policy bureau has published a report on the Center for Business Transparency and Countering Corporate Raids in Russia and its upcoming meetings with Members of the European Parliament and other EU and U.S. political stakeholders.

In the report, ASRIE Analytica outlines the center's planned and prospective activities, which will include meetings with Members of the European Parliament in Brussels and the German Parliament (Bundestag) in Berlin, followed by similar meetings with U.S. Congressmen in Washington, D.C.

A number of meetings have already been scheduled.

The first meeting in the European Parliament will be held with MEP Attila Ara-Kovács, a human-rights champion from Hungary.

Ara-Kovács is a respected politician, philosopher and journalist. He is also a member of the EU Parliament’s Delegation to the EU-Russia Parliamentary Cooperation Committee and its Subcommittee on Security and Defense. He is an alternate member of the EU Parliament’s Committee on Foreign Affairs.

The center's directors, Ilgar Hajiyev and Igor Bitkov, will speak with Ara-Kovács by teleconference about reiderstvo in Russia and their individual cases. A representative of Berlin-based Alcon Development GmbH, whose business was impacted by the raid on Hajyev’s Russia operation, will take part in the discussion at Ara-Kovács’ office in Brussels.

Read the entire report from Italy's ASRIE Analytica here.

LONDON, United Kingdom — A torrent of defamatory fake news about Ilgar Hajiyev, who lost his real estate business in the Moscow area to armed raiders, began circulating in Russian media and social media last week.

The smear campaign started after Igor Bitkov, another high-profile victim of Russian corporate raiding, agreed to join Hajiyev’s anti-raiding efforts and after news surfaced that members of the European Parliament and U.S. senators had become interested in the issue.

Hajiyev lost his Russian business, SDI Group, in January 2019 when his partner, God Nisanov, sent armed guards to seize high-rises that Hajiyev was building in the Moscow area. The two had disagreed over the mix of residential and commercial property in the complexes.

Hajiyev, who fled in the face of death threats, said the smear campaign is aimed at falsely painting him as a criminal to try to divert attention from the fact that he is a victim of illegal corporate raiding, or reiderstvo. “It shows the raiders fear repercussions from the international community for what they did,” said Hajiyev, who is now living in Germany, where he has a business.

Bitkov, whose own corporate raiding story includes violence against his family and death threats, has become a poster boy of reiderstvo worldwide. Several weeks ago he agreed to join Hajiyev’s anti-raiding campaign by becoming director-in-absentia of Hajiyev’s London-based Center for Business Transparency and Countering Corporate Raids in Russia.

Bitkov lost his successful paper and pulp business in Russia to a raid orchestrated by well-connected bankers and others in the 2000s. His family fled to Guatemala, where Russian government pressure for their extradition to face trumped-up charges back home led to the Guatemalans putting them under house arrest.

The human rights violations against the Bitkovs were so appalling that several U.S. senators, including Florida’s Marco Rubio, have issued public statements of support for them. Bill Browder, who persuaded Congress to pass the anti-raiding-focused Magnitsky Act after losing his own business – Hermitage Capital – in a raid in Russia, has helped galvanize American political support for Bitkov.

The smear campaign against Hajiyev originated in blogs written by the discredited journalist Oleg Lure, who was convicted in the late 2000s of fraud and of extorting money from then-Russian Senator Vladimir Sloutsker and his wife, Olga. Unscrupulous journalists in Russia often take money to attack people in print, online, or radio or television.

One of Lure’s accusations was that Russian law enforcement agencies have several outstanding criminal cases against Hajiyev, including one for assault in mid-2018 that prompted him to flee the country. In fact, Hajiyev has never been questioned by Russian law enforcement officials on any matter, and lived in Russia until January 2019.

Another allegation was that Hajiyev swindled dozens of Russians who paid for, but had yet to receive, apartments in the Moscow-area high-rises he was building. In fact, reputable Russian news organizations have written investigative stories saying that people associated with Nisanov stole millions of dollars of the apartment owners’ escrow money from an SDI Group account that the associates seized during the raid against Hajiyev.

One of the conspiracy-theory claims in Lure’s blogs is that Hajiyev, Bitkov and Browder are part of a criminal syndicate behind the launch of the anti-raiding center.

Another is that stories in reputable Russian media that have supported Hajiyev were paid for by former Yukos CEO Mikhail Khodorkovsky, whose multibillion-dollar oil business was raided, and his Open Russia foundation. Western human-rights organizations maintain that Khodorkovsky’s eight-year imprisonment in the 2000s was on trumped-up charges. They contend that Khodorkovsky, who was released in 2013 and now lives in London, was actually a victim of political persecution.

In fact, Hajiyev does not know Browder or Khodorkovsky. The only thing that unites them is that they all lost their businesses to corporate raiding.

“To be mentioned in the same breath as Mr. Browder and Mr. Khodorkosvky actually lends credibility to my cause,” Hajiyev said. “Everyone in the world knows what happened to them.”

Using a typical disinformation strategy, those behind the false allegations against Hajiyev gravitated them step by step from Lure’s blogs to low-reputation Russian media and then to higher-reputation media. All of these disseminators ran the accusations and conspiracy theories, but offered no evidence that the allegations were true, and did not attempt to contact Hajiyev for commentary.

Hajiyev said his campaign to abolish Russian corporate raiding is just getting started. One of his SDI Group business partners will meet with a prominent member of the European Parliament in Brussels in April, with Hajiyev and Bitkov participating by teleconference. Meetings with four other MEPs have also been agreed to, although the exact date will be scheduled sometime next month due to the coronavirus situation.

Meetings with members of the U.S. Congress are also being arranged, with dates to be announced soon.

Raid Summary

One way that unscrupulous people in Russia lay the groundwork for seizing a publicly held company is acquiring a minority stake in it, then filing bogus grievances against management with regulators or asking police to investigate it for alleged criminal violations.

Regulators, courts and government officials — who have been paid off — then issue rulings that take the company from its owners without compensation.

This happened with Pavlovskgranit, Europe’s largest producer of crushed rock for construction.

In the late 2000s, its majority owner, Sergei Poymanov, borrowed 5.1 billion rubles — or $80 million — from state-owned Sberbank to buy the 45 percent of the company he didn’t own. He wanted to prevent anyone with designs on the company from acquiring a sizable minority stake that could be used to start a series of dirty tricks that took it from him.

The timing of his loan was awful, however. The global financial crisis that started in 2008 hammered Pavlovskgranit’s business, and Poymanov was unable to make his loan payments.

Sberbank’s chairman, Herman Gref, told Poymanov that he would restructure the debt for a 51 percent stake in Pavlovskgranit. This meant Poymanov would lose the company, so he refused.

Gref then obtained a court order that Poymanov repay the loan in full — immediately. Poymanov, of course, could not do so.

Gref then asked an outside appraiser to provide Sberbank with a current valuation for  Pavlovskgranit. It came in way below what Poymanov knew the company was worth.

Using the lowball valuation, Sberbank got a court to give it 51 percent of Pavlovskgranit’s shares as compensation for non-payment of the loan.

It later surfaced that Gref’s son, Oleg, and a friend, Yuri Zhukov, owned the appraisal company, Neo Center.

Poymanov has gone to court in Russia and the United States numerous times to try to recover Pavlovskgranit — to no avail.

LONDON, United Kingdom — One of the world’s most high-profile victims of illegal corporate asset grabbing has become co-director of the London-based Center for Business Transparency and Countering Corporate Raids in Russia.

Igor Bitkov, who lost his paper-making companies in St. Petersburg and Kaliningrad, Russia, to a bank-loan scam engineered by ruthless, well-connected business and political figures, is joining center founder Ilgar Hajiyev in spreading the word about illegal asset grabbing, or reiderstvo.

Hajiyev, who lost $50 million of his own to asset grabbing, not only wants to let the world know about the practice, but also help victims recover their losses through court proceedings, diplomacy and other measures.

“Igor Bitkov and his family have endured so much suffering from reiderstvo that the Bitkovs became a symbol of the harm that the practice wreaks on its victims,” Hajiyev said. “I am truly honored that Igor Bitkov is joining in the center’s efforts to counter this scourge.”

Bitkov will become co-director of the center in absentia because he is under house arrest in Guatemala. He, his wife and daughter fled there in 2008 after the loss of their company — North West Timber Company — to the bank-loan scam and after facing assaults, death threats and trumped-up fraud charges in Russia.

The Bitkovs lived under the radar in Guatemala until 2013, when Russian authorities connected to the bank-loan scam figures learned where they were. Although Guatemala refused to extradite them to their homeland, it first sentenced Igor to 19 years in prison and his wife and daughter to 14 years on trumped-up charges, all under coordination from the Kremlin. Later Guatemala placed them under house arrest.

Because the Bitkovs’ persecution has been particularly cruel, and their suffering prolonged, human-rights organizations have taken up their case. In addition, in 2018 various U.S. senators — Marco Rubio of Florida, Roger Wicker of Mississippi, Chris Smith of New Jersey and others — began championing their cause, starting with putting pressure on Guatemala to release them.

Hajiyev became a victim of reiderstvo in the Moscow area in early 2019. What triggered it was a disagreement he had with a partner in late 2018 over the mix of residential versus commercial property in three high-rise complexes that Hajiyev was building and paying for. The partner wanted more commercial property on grounds it would generate more profit.

As the dispute lingered, the partner sent in armed guards to seize the still-under-construction complexes by force, without compensating Hajiyev.

While the partner had arranged for the land and permits for the high-rises, he had put no money into them, so Hajiyev shouldered the entire loss.

Death threats prompted him to flee to Germany, where he was also doing business. There he decided he needed to do something to try to stop reiderstvo. The option he came up with was a center that could unite victims of reiderstvo, publicize the practice and help victims try to recoup their losses.