Putin’s “Oligarch with Bulgarian Passport” Made First Russian Smartphone

At first sight, the two news that came from Bulgaria and Russia on January 26, 2018, have no connection at all, unless one tracks the history of their main protagonists ten years back. So, in Sofia, the Anticorruption Fund (ACF) announced that a “Russian oligarch”, sued for fraud in the United States, has received Bulgarian citizenship in 2008 under suspicious circumstances. And in Moscow, the press service of the Russian state corporation Rostec reacted to the news of new US sanctions against its subsidiary Technopromexport: “We are used to living under sanctions.” Rostec’s “living under sanctions” habits date back to September 2014, when the corporation was blacklisted.

There is, however, a connection, as the “oligarch”, whose name the ACF did not reveal, is close to Rostec’s top management. He is telecom mogul Sergei Adoniev, Bivol was able to establish (on the header photo, to the right from Putin). Adoniev is the individual matching the description given by the ACF: “A person with business interests in the telecommunications sector, as well as in the extraction of minerals – coal in Russia and oil in Uganda. In his business activities, he uses offshore companies (Telconet Capital Limited Partnership, registered in the Cayman Islands) which makes him a risk factor in terms of preventing money laundering and tax evasion.”

Adoniev is not really a true “oligarch” as his wealth is currently estimated at below USD 1 billion. Maybe for this reason, he is not included in the so-called Putin List, published by the US Treasury Department on January 29, 2018. The list contains the names of 114 senior politicians and 96 oligarchs from President Vladimir Putin’s inner circle. Oligarch or not, the closeness of Adoniev to this circle of persons and companies is a fact, and the acquisition of a Bulgarian passport raises many questions.

Produce shop with reek of cocaine

Sergei Adoniev (or Sergey Adonyiev) did not appear on the Russian media radar screen until 2010. Influential Russian newspaper Nezavisimaya Gazeta (www.ng.ru) wrote in 2010 that prior to this date he had been a virtually unknown person. But eight years ago, scandals sparked in Russia around the company Scartel, which holds the rights to the Yota smartphone brand. The publication notes that: “His name (Adoniev’s – editor’s note) is all over the front pages of newspapers and magazines.” He is “the owner of a telecommunications innovation company providing access to mobile internet“. Over USD 0.5 billion had been invested by that time in the Yota project, which, according to the publication, makes it the “priciest start-up in this industry” (apparently in the Russian Federation).

The publication tracks the story of the entrepreneur, who, like most of the Russian political and oligarchic elite from President Putin’s era, was born in Sankt Petersburg, formerly Leningrad. During the Yeltsin rule, he had a modest business, dealing with imports of fruits for the Leningrad region. But not only with that.

In the early 1990s, Adoniev left for the United States, where he was arrested by FBI agents for financial fraud. The Los Angeles Times daily wrote in its March 29, 2000 issue the following: “Popov and his business partners bribed a top Kazakhstan official to help secure a contract to provide 25,000 tons of Cuban sugar to the former Soviet republic. But after receiving most of the $6.7 million due on the contract, the men never sent the sugar, the indictment alleged.”

According to the story “Popov’s partners, Serguei Adoniev and Vitaly Rashkovan, pleaded guilty in U.S. District Court in Los Angeles and received prison sentences. Adoniev was subjected to “voluntary deportation” to Russia.”

Popov fled to Russia, where he was allegedly shot and killed shortly after. Rashkovan and Adoniev received effective sentences from a Los Angeles court. Adoniev then agreed to “voluntary deportation” to Russia.

In its publication, Nezavisimaya Gazeta drew attention to the fact that, unlike his “colleagues” in Kazakhstan, Sergei Adoniev had gotten away with a much lighter punishment. “The American justice machine usually does not allow anything like that and it is presumed that a prison sentence must be served in the United States before deportation, unless the convict agrees to fully cooperate with the authorities. Very often, by the way, with people from the secret services as well.”

The deportation did not “attract much attention”. However, according to the Los Angeles Times, there had been a much more serious crime than bribing: “FBI documents showed Popov and Adoniev were believed to be connected to 1.1 tons of cocaine seized on the Russian-Finnish border in 1993.”

Russia’s technology mogul

After returning from to Russia the United States, Adoniev started a business with the key resource of that time – information. According to Nezavisimaya Gazeta, Adoniev and his company Scartel aggressively entered the information technology market, while the company became known only in 2008.

“Market participants say that this mobile operator, without attracting attention, has been buying for a long time regional companies that have a 2.4-2.7 GHz frequency resource in order to build a WiMax network.” – Nezavisimaya Gazeta.

What is suspicious in this case is that in Russia, since Soviet times to this day, these frequencies are owned by the military and secret services, and Scartel was enjoying exceptional exemptions, surprising the competition. In such cases, the notion is usually that there is a single monopoly license from the State to the particular entrepreneur, who therefore becomes oligarch. Thus, Adoniev’s company received WiMax frequencies in the range of 2.3-2.7 GHz and 3.4-3.6 GHz, as well as in the “most desired” range of 2.5-2.7 GHz in over 55 cities in Russia.

Scartel boasted of multi-billion-dollar investments and distributing the network across major Russian cities, and even in Venezuela, where President Hugo Chavez was a key US enemy in Latin America. Experts became uncomfortable. “It is very strange that a company that has never been on the market has received such high signs of confidence from investors. It is even more incomprehensible how they managed to get frequencies for mobile WiMAX in such numbers,” Nezavisimaya Gazeta quoted Oleg Tainov, Deputy Director General of the company Enforta.

It turns out that Adoniev had influential partners. In Telconet Capital, the majority shareholder of Scartel (Yota brand), he was partner with Albert Avdolyan. At the end of 2008, 25.1% of Scartel’s shares were bought by the State-owned Rostec Corporation. This fact only confirms unofficial information from Russian journalists that Sergei Adoniev is “the man” of the President of Rostec Sergey Chemezov, who is part of the Kremlin’s oligarchic inner circle.

In 2012, the majority owner of MegaPhone, Alisher Usmanov negotiated with the shareholders of Scartel the merger of their assets into a joint holding – Garsdale Services. As a result of this deal, Telconet and Rostec received shares in Garsdale.

“Man” of Russia’s Gray Cardinal” – ex-Deputy Prime Minister Igor Sechin?

In the spring of 2010, Scartel faced its first problems. Competitor Sergey Beryozkin wanted to buy a stake in this internet provider, and, according to Russian media, he had threatened Adoniev with the Kremlin. However, support for Adoniev has come not from just anyone, but from Igor Sechin, himself, the then-Deputy Prime Minister, who is now President of the State monopoly “Rosneft” and is seen as Putin’s “right hand”.

At that time, Beryozkin told Vedomosti daily that his company was simply not allowed into the circle of the monopolist Rostelecom and the oligopolistic mobile operators such as MegaPhone of oligarch Alisher Usmanov, “Getting through this blockade by the big ones failed,” said Beryozkin. According to him, there was no market competition on the telecom market and everything was monopolized:

“Competition is moving from the field of business to the political field, and the big three are winning very easily. They have received their frequencies without competition through such private decisions. If there were a level playing field, competition from the political terrain would have gone into the economic one,” Beryozkin claimed.

Putin’s top technocrat

However, Adoniev’s internet operator survived the distorted competition environment, and, in 2011, he personally greeted then-Russian Prime Minister Vladimir Putin at the office of operator Yota on behalf of the company’s shareholders.

Adoniev (left) with Chemezov, the boss of Rostec

The Yota smartphone features two screens: primary anda secondary black and white one, with e-ink technology that saves energy.

In December 2014, there was already confirmation that Sergei Adoniev is close to the Kremlin, at least from the list of people personally invited by President Vladimir Putin to a meeting of the Kremlin with business representatives. In the text to the video from the site of the President of the Russian Federation, there is a list in which he is number five, after Roman Abramovich and his longtime partner Albert Avdolyan (obviously, the attendants had been listed alphabetically).

The status of a Kremlin-affiliated businessman goes hand in hand with the growing wealth of Adoniev, who sold in 2016 30% of Telconet to the Chinese company China Baoli Technologies Holdings Ltd. In 2017, sources of the RBC Daily newspaper reported that the registered in the British Virgin Islands offshore company of Winston-Lee Trinity World Management, minority shareholder in China Baoli, had also bought the shares of State-owned Rostec (25.1%) in the company Yota Devices (manufacturer of YotaPhone smartphones). Rostec then confirmed that they were selling their stake against an undetermined amount of money and an additional share package for a total of RUB 3 billion (more than USD 50 million).

Adoniev and Alisher Usmanov

After these deals, in May 2017, the Forbes Russia magazine ranked Sergei Adoniev 124 among Russian entrepreneurs – his personal fortune was estimated at USD 800 million. His main funds came from the sale of his stake in Garsdale Holding, which combines 100% of Scartel’s shares and the controlling stake of one of the leading Russian mobile operators, MegaPhone, whose majority owner is oligarch Alisher Usmanov (wealth of about USD 17-18 billion; he is include in “Putin’s List”).

Russian Federation presidential candidate Alexei Navalny pointed in his film “Don’t call him “Dimon” at Alisher Usmanov as the main sponsor in the form of “donation” to one of the many “charity” funds controlled by people close to Prime Minister Dmitry Medvedev of the building one of the most megalomaniac villa resorts.

One of the richest Bulgarians?

Although “not quite an oligarch” in Russia, citizen Adoniev, with his USD 800 million, inevitably ranks among the richest Bulgarians. His close contacts with representatives of the Russian business and State elite included in the US sanctioning lists should raise serious concerns in the “Russian Sector” offices in Bulgaria’s National Security Agency (DANS).

In theory, the European “green light” for Bulgarian national Adoniev may be dimmed. Under Bulgarian law, citizenship acquired by naturalization can be withdrawn if the person has declared untrue data or if they have not made the promised investments in the country. In the case of the naturalization of Sergei Adoniev, both hypotheses are valid.

First, as the ACF notes, there are document flaws in the acquisition of citizenship by Adoniev. There is no notary certification of his signature under the written consent of citizenship, as required by law.

Second, he has not invested anything in Bulgaria. Sergei Adoniev has registered the company Sadko under his Russian passport at the end of 2007. Sadko’s capital is BGN 50,000 and it is supposed to be dealing with “telecommunication activities and services”. Only five months later, on May 23, 2008, Adoniev became Bulgarian citizen with Decree 56. The proposal for this came from then-Minister of Transport and Communications Petar Mutafchiev. The reason, according to the Minister, was “a distinct intention to make large-scale investments”.

Obviously, the large-scale intentions of Adoniev have disappeared in thin air after the speedy acquisition of a European passport. In the last 10 years, Sadko, registered in the second largest city of Plovdiv, has had not activity, except for one person’s health and pension insurance. At the same time, as already seen, in Russia, the career and wealth of Sadko’s owner and manager, Sergei Adoniev, are booming.

One of the many blank annual financial reports of Adoniev’s Bulgarian company.

In conclusion, without having invested more than the company’s required capital (BGN 50,000), for ten years now, Adoniev is enjoying his European passport, allowing him to travel around the world and live undisturbed in the European Union.

A few months remain until Adoniev’s passport is to become life-long. The possibility of withdrawing citizenship has a 10-year limitation unless the person is involved in terrorism. There is no such data about Adoniev and his prospects of remaining Bulgarian citizen forever after May 23, 2018, seem very good.

Author: Nikolay Marchenko

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