Trans-World Group

TransWorld Group was an association of commodities traders controlling stakes in most of Russia's aluminum smelters.[1] It was established by David and Simon Reuben.[2]

By 1996 TransWorld was the world's third-largest aluminum producer, behind Alcoa and Alcan.[3] In 1997 it controlled smelters across the former Soviet Union with revenues estimated in at $5-7 billion.[4] TransWorld was accused of involvement in illegal activities, including several murders.[3]

History

The aluminum sector was one of the most contested industries during the Russian privatization process.[4] David Reuben had been buying aluminum from the Soviet state since the late 1970s. In the post-Soviet turmoil, Reuben that found he could get the finished metal at low Soviet-era prices and then sell it at market rates.[4] To set up the scheme, he established a partnership with Lev and Michael Cherney.[4] Lev Chernoy's top aide was Vladimir Lisin, who, during the Soviet era, had been second-in-command to Oleg Soskovets when he was a steel-works executive.[4]

Oleg Soskovets, now Deputy Prime Minister, helped the firm in getting official approval for a tolling agreement.[2][5] Under the system, both the raw material and the finished product were the property of TransWorld.[2] The scheme maximized the cost of plant inputs and minimized the selling price for the metals.[2] Trans World concluded its first tolling agreement in 1992, with the BrAZ smelter in Bratsk.[2]

By 1994, Trans-World was selling more than 600,000 tons of aluminum a year, or a quarter of Russia's total exports.[4] As more of Russia's industry was privatized, Trans World bought stakes in the country's largest smelters, to prevent the rise of competitors which also might be interested in signing tolling deals.[4][6]

When the Krasnoyarsk Aluminum Factory, Russia's second-largest, refused to enter an agreement with Trans-World, the director of the plant began to receive threats.[4] Vadim Yafyasov, a deputy director, was killed in front of his Moscow home on 10 April 1995.[4] Felix Lvov, a Trans-World rival, was picked up by men with special services IDs as he was sitting in a plane at Sheremetyevo Airport. His corpse was found in a nearby wood several days later.[7] Trans-World eventually took control of the Krasnoyarsk smelter in cooperation with Anatoly Bykov,[1] described by the New York Times as "one of Russia's most infamous mobsters".[8]

Oleg Soskovets was dismissed from his government post in 1996, after falling out of favor with Yeltsin.[9]

A series of investigative reports broadcast by the NTV television network in 1996 accused TransWorld Group of working with the Izmailovsky gang of the Russian mafia, and of having committed a series of high-profile murders: in particular, those of Felix Lvov, Oleg Kantor and Vadim Yafyasov.[7]

In 1997 the company was investigated by the Russian police and the National Criminal Intelligence Service of Britain, but no charges were brought.[10] By late 1997 Trans-World Group was being squeezed out by Russia-based financial groups, and had lost control of parts of its holdings, including Novolipetsk Steel.[6]

In early 2000, Trans-World sold most of its aluminum holdings to Roman Abramovich, who merged them with Oleg Deripaska's company to create Russian Aluminum (today Rusal).[1]

In June 2000, an investigation into Trans-World's business was published in Fortune magazine; the article remarked that the company's history was filled with "more than a few corpses".[3] The Reubens brothers subsequently sued Richard Behar, the article's writer, for libel in a London court.[3] The magazine issued a clarification to the story in 2004, where they specified that "Fortune did not claim and does not claim that the Reubens were responsible for any murders".[3]

Fortune's findings were mirrored in the pages of the Financial Times, which in a 2000 article similarly noted that struggles over the control of the Krasnoyarsk smelter had resulted in dozens of murders.[11] While noticing that the victims included both allies and competitors of Trans-World, the story stressed that David Reuben "angrily denies any hint that they or their partners had any role in the violence".[11]

References

  1. ^ a b c Klebnikov, Paul (26 November 2001). "Gangster-free capitalism". Forbes. Archived from the original on 2004-09-19. Retrieved 8 October 2018.
  2. ^ a b c d e Adachi, Yuko (2013). Building Big Business in Russia: The Impact of Informal Corporate Governance Practices. Routledge. p. 67. ISBN 9781135147129. Archived from the original on 2018-10-10. Retrieved 2018-10-09.
  3. ^ a b c d e "Capitalism In A Cold Climate". Fortune Magazine. 12 June 2000. Archived from the original on 2014-10-19. Retrieved 8 October 2018.
  4. ^ a b c d e f g h i Banerjee, Neela (28 January 1997). "Amid Privatization, Controversy: Metals Firm Scores inRussia". WSJ. Archived from the original on 9 October 2018. Retrieved 8 October 2018.
  5. ^ Mobius, Mark (2012). Passport to Profits: Why the Next Investment Windfalls Will be Found Abroad and How to Grab Your Share. John Wiley & Sons. p. 148. ISBN 9781118153840. Archived from the original on 2018-10-10. Retrieved 2018-10-09.
  6. ^ a b "Glory Days Fading for Trans-World". The Moscow Times. 11 February 1998. Archived from the original on 9 October 2018. Retrieved 9 October 2018.
  7. ^ a b Latynina, Yulia (14 November 2001). "Parachute Accident Marks End of an Era". The Moscow Times. Archived from the original on 2 February 2019. Retrieved 8 October 2018.
  8. ^ Tavernise, Sabrina (20 June 2002). "A Russian Aluminum Mobster, Set Free, Gains Teflon Status". New York Times. Archived from the original on 2018-01-29. Retrieved 9 October 2018.
  9. ^ "Yeltsin fires key security officials". CNN.com. 20 June 1996. Archived from the original on 2005-04-29. Retrieved 9 October 2018.
  10. ^ "Siberia's great smelting pot". The Guardian. 18 February 2001. Archived from the original on 2018-07-05. Retrieved 2018-10-09.
  11. ^ a b Barker, Alex (2008-10-21). "Osborne on the Oligarchs". Financial Times. Archived from the original on 2022-08-24. Retrieved 24 August 2022.