Panama Papers

 

By Tsira Gvasalia

In November of 2005, Stanton Equities Corporation acquired shares of two Georgian gold and copper mining companies – 97.5% of Madneuli JSC and 50% of Kvartsiti Ltd. — in a privatization deal.

Based on the information that was shared by The Georgia Ministry of Economy and according to the contract signed with Stanton Equities Corporation, the company was supposed to make investments and meet a number of conditions.

According to documents in the Panama Papers,  Russia businessmen Siman Povarenkin and Sergey Generalov were not interested in investing in the Georgian mining business. They just wanted to make a lucrative deal by selling them for a higher price.  The Panama Papers are internal data from the Panama law firm  Mossack Fonseca obtained by the German newspaper  Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ).

According to the agreement , the “manager of the resale” was supposed to be Siman Povarenkin. “Madneuli/Kvartsiti” would pay him a “manager salary” for the service. Povarenkin is a Russian businessman who began in Georgia and has since built a mining firm that operates in Russia and Armenia.

The amount of salary is not specified in the document. There is a note that Povarenkin would get an “yearly” wage. The document states the project would be completed when two companies, GP Shipping Investment Company LTD and Cuento Portfolio Corp., sold all the shares of Madneuli JSC and Kvartsiti LTD to a third party.

According to the document, If Generalov and Povarenkin would find it necessary to travel to the Georgian mine location in Kazreti from Moscow for managerial purposes, special charter flights would be booked for the purpose, and travel expenses would be covered by Madneuli JSC and “Kvartsiti LTD.

Generalov and Povarenkin also considered the possibility of buying a private jet. Madneuli JSC and/or Kvartsiti LTD would have been required to cover the payment.

In 2007, Generalov left the Georgian business.  Povarenkin, who stayed in the business, did not quickly sell the enterprise.  After the privatization in 2005, Georgian authorities were given positions in the gold mining company. Irakli Chogovadze, who was the Minister of Economy during privatization, became a member of the supervisory board of Madneuli JSC.

On May 8, 2006, Georgia businessman Koba Nakopia formed a company called Goldinvest. He took a $US2.1 million loan from the offshore company Cuento Portfolio Corp. On June 12, 2006, Nakopia used this new company to buy Tbilisi Jewelry Plant LTD for the slightly higher amount of $US2.202 million in another privatization deal.  

Based on 2007 documents,  in order to get a loan, Madneuli JSC  had a legal and financial audit, conducted by Denton Wilde Sapte LLP. By that time, company had already received loans from TBC Bank and Bank of Georgia.  When these documents were created, the company’s capital totaled $US12,830,195.

Documents list the general director of the company as Nakopia and a supervisory board consisting of three members:  Povarenkin, Akaki Chargeishvili and Russian citizen Marina Tarasova.

The company wanted to borrow $US180 million. The document states that loans would be sought from several unnamed financial institutions.

This is the only significant gold and copper mining site in Georgia. Based on calculations by the National Statistics Office of Georgia, between 2000-2015 Georgia exported copper and copper ore concentrates worth $US1.35 billion. Exports of unprocessed gold reached about $US1 billion. In the first quarter of 2017, copper topped all exports in Georgia.

Povarenkin and Nakopia met in Russia.  Nakopia was the vice president of Generalov’s company Promishlennie Investori [Industrial Investors]” from 2002-2004. Povarenkin was chairman of the supervisory board. In 2004, at the invitation then Minister of Economy Kakha Bendukidze, Nakopia became the director of Madneuli JSC and Kvartsiti LTD.

The connection between Nakopia and Russian businessmen was not known during the privatization process. Since Stanton Equities Corporation was registered offshore Cyprus it was difficult to identify the real investors. It turned out that Stanton Equities Corporation was a subsidiary company of Promishlennie Investori, the company owned by Generalove with Povarenkin on its board and Nakopia as its former vice president.

Nakopia was a member of the United National Movement political party and a Parliament member from 2012-2016. He was the producer of the movie “5 Days of War” about the 2008 conflict between Russia and Georgia.

Povarenkin is now actively involved in Armenian mining. He visits the sites, sometimes in the company of Armenian authorities.  

Presentation of a new technology called “Albion” at the Ararat mine of GeoProMining Gold. Siman Povarenkin is cutting the ribbon. To the left in blue tie, President of Armenia Serzh Sargsyan. April 28, 2014. Photo: http://www.president.am/
Siman Povarenkin (center, wearing white helmet) with the President of Armenia Serzh Sargsyan. Ararat ore-dressing factory. 2011.

At least two Georgians  who were in top management of Madneuli JSC and Kvartsiti LTD were also employed in Armenia.  From 2007-09, Dimitri Kalandadze was the director of Povarenkin’s company GeoProMining Gold LTD. Giorgi Devadze was the director of Agarak Copper-molybdenum CJSC from 2009-2015.

From 2010-2013, Kalandadze and Devadze were general directors first for Madneuli JSC and Kvartsiti LTD, and then for their successor company, RMG Gold.

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