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Russian Billionaire, Associates Arrested On Embezzlement Charges


Ziyavudin Magomedov appeared in court on March 31.

A Moscow court has placed billionaire businessman Ziyavudin Magomedov, his brother, and an associate under arrest for two months on charge of embezzling billions of rubles in state funds.

In one of the highest profile prosecutions of a tycoon in Russia in years, a judge in Moscow's Tverskoi district court on March 31 placed the three under formal arrest and ordered that they be held until May 30.

"I categorically disagree with the charges presented...The prosecution case does not stand up to scrutiny," Ziyavudin Magomedov said from a cage in a courtroom at the hearing.

The Interior Ministry said in a March 31 statement that Magomedov, co-owner of the Russian investment group Summa, was detained along with two partners, including his brother, Magomed Magomedov, and Artur Maksidov, the head of a company in the Summa group that was involved in construction of a soccer World Cup venue in the Russian exclave of Kaliningrad.

The three suspects appeared in court, where a judge placed them under formal arrest without bail, noting Magomedov had access to his own aircraft and assets abroad.

The day before he was detained, he had booked a flight from Moscow to Miami, the judge said. Magomedov said he needed treatment in the United States for a medical problem.

"The court has granted the motion of investigation that Ziyavudin Magomedov will be remanded into custody for two months, or until May 30," the judge said in reading out his ruling.

Summa Group said in a statement that it disagreed with the court ruling and "intends to appeal it, and is ready to cooperate with the investigators."

A prosecutor told the court at a hearing that the case entails seven instances "of embezzling from federal and regional budgets and from state-run companies."

"The stolen money is held in foreign accounts of offshore companies controlled by Magomedov," the investigator told the court, according to TASS.

A lawyer for the 49-year-old construction and logistics magnate asked for his client’s release on bail equivalent to the amount of losses, estimated by prosecutors at 2.5 billion rubles ($44 million) and said that the charges should be seen as a civil case and not a criminal case.

My client is "quite a wealthy man and can repay these losses," Alexander Vershinin, another of the businessman's lawyers, was quoted by Interfax as telling the court.

Forbes magazine listed Ziyavudin Magomedov's fortune at $1.25 billion as of March 31.

The U.S. Treasury Department in January listed him as one of 96 "oligarchs" close to President Vladimir Putin.

Magomedov's Caspian Venture Capital fund has investments in ride-hailing service Uber, Diamond Foundry, a company that produces man-made diamonds, and online leisure activities company Peek.

He is also co-executive chairman of Los Angeles-based tech firm Virgin Hyperloop One, which is chaired by Richard Branson. The firm is one of several developing a futuristic transport system that involves propelling people at high speed through sealed tubes.

He also is a co-owner of the Novorossiisk Commercial Sea Port with Russian oil pipeline monopoly Transneft and transportation group Fesco.

With reporting by Reuters and Interfax
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