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Wednesday, 24 January 2018, 11:41 AM GMT
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PART I

MAXIM VASILIEV. "MARTA" Holding and Prodmak - BAD BARGAIN

10.03.2014

In 2004 the former State Duma deputy M. Vasiliev and president of "Marta" holding G. Trefilov have reached an agreement on the sale of the store chain "Prodmak", later resulting in a transaction taking place between the structures to which M. Vasiliev and G. Trefilov belonged. The sale of 16 supermarkets to Trefilov caused their former owner M. Vasiliev numerous lawsuits, criminal proceedings against him and his assistants, arrest and several years in prison.

The process is remembered as being scandalous and absurd with dozens of media covering it. The accused and their relatives appealed to the ECHR, trying to prove that the case was purely civil in nature and that the criminal prosecution was illegal and "fixed", but all in vain - after 3 years of investigation Maxim Vasiliev was convicted.

Officially, the conflict arose because of the inventory that was left over in the "Prodmak" stores.  Within the sold stores remained about $ 2 million worth of alcoholic products with "Marta" holding not having the necessary license to sell alcohol.

Those were the products that have disappeared without a trace from the shops, after learning about it M. Vasiliev’s group debited the account for the amount guaranteed in the letter of credit, after which the conflict began, later growing into a criminal case. (According to another version - the dispute concerned the $ 500,000 received from "Marta" as a down payment for the unfinished building on the 54 Pererva Street, not included in the initial deal).

The first absurd episode of this case began with establishing and prosecuting of the persons, who actually stole the wine from the shops. They turned out to be police officers (one of them a colonel), and they were subsequently convicted of exceeding their official powers.

But the case of M. Vasiliev has already been given the “go ahead”, because the authorities have intervened. Well known is the fact that the civil conflict between the seller and the buyer turned into a criminal investigation after State Duma deputy G. Gudkov approached the then Minister of Internal Affairs R. Nurgaliev, who occupied the post from 2004 to 2012, and asked to deal with the matter.

The interest in the issue is simply explained - Gudkov received a letter from the "Marta" representatives with complaints and a request to intervene. In the appeal, it was stated that during a major business deal one of the structures belonging to "Marta" was being cheated out of $ 30 million by representatives of M. Vasiliev.

Also in the same letter addressed to G. Gudkov the German retailer appealed with their concerns. At that time the cooperation between Trefilov and REWE has just begun, and the German partner has not only helped in developing Trefilov’s business reputation, but also provided its patronage in obtaining loans.

In turn Mr. Trefilov extensively used at his own discretion the support and trust of REWE, as well as their connections.

Although recently, in 2013, it was suddenly "found out" that Mr. Trefilov expected from his German partner even greater participation and even claimed in the pages of Russian media, that the partner supposedly provided insufficient assistance in developing his own business.

But back in 2005, it is a fact that the cooperation of the giant REWE with the obscure businessman Trefilov was what decided the fate of the matter. Naturally, none of the decision makers wanted to "lose face" in front of the European investor, and so they intervened in the conflict.   

…And as for Trefilov, while solving his problems, once again he was able to confirm the strength of the printed word – the "Cooperation Agreement" magically affected many in the long years to come…

Despite the fact that the dispute concerned not $ 30 million, but about $ 2 million and the fact that the matter was fully resolved before legal action in the arbitration process (second and third absurd facts), the criminal case was filed in 2005(note: only after a second attempt) and then M. Vasiliev was arrested only 2 years later, in 2007.

The Internal Affairs investigation committee has seen signs of fraud in actions of M. Vasiliev. Moreover, the developed version was that the situation with the LC and the remnants of alcohol, which in general "is certainly not necessary" to "Marta", was planned in advance by the ex-deputy Vasiliev and his associates, as well as the parts in the contract where they originally made points of fraudulent behaviour. 

Do you recognize the script? In 2013, in an interview with A. Levinskaya, true to his role of "victim", Trefilov talked about the “contract-trap" signed with REWE in 2004. According to the latest version: within the "Agreement" the German lawyers allegedly made "in principle illegal settlements", thanks to which he was "cheated" through "the inexperience of his lawyers".

The fourth absurd fact - Trefilov could hardly be cheated. Because the contracts with "Prodmak" were compiled with the assistance of the international consulting and auditing company KPMG, which was involved by Trefilov to guarantee for their legitimacy. How in the contracts drawn up by the buyer could the seller have made fraudulent editions (?) is remained unanswered. Still the charges were brought against Vasiliev.

According to M. Vasiliev’s lawyers, the investigation of the case was flawed: One of the key points being that after the arbitration proceedings and in spite of the decisions made by them, even in violation of the legal framework itself, the investigation issued its own assessment of what has happened, at times contradictory. The committee ignored the fact that the transactions between buyers and sellers were fully concluded; even the terms of the investigation itself were violated.

During the process, there was other nonsense, this time with one of the investigators who conducted the case - Mr. Zaitsev. Zaitsev himself had a criminal case filed against him in connection with his work, and as the ex-investigator claimed, the case was "fixed".

He was accused of abuse of power and illegal detention and search during investigation of high-profile cases concerning furniture centers "Three Whales" and "Grand", whereby he found himself in the dock and received a suspended sentence. Later on Zaitsev, like his person under investigation (M. Vasiliev), also appealed to the ECHR on the illegality of his prosecution, after which he engaged in human rights activities.

Maxim Vasiliev himself made repeated statements during the process, according to which his family and companions were approached with suggestions to resolve the issue with the criminal case for $ 25 million. The "Help" was allegedly offered by Trefilov’s side. Vasiliev in vain tried to convince the justice department that one of the structures of "Marta" holding, namely "Elekskor", is on the verge of bankruptcy, and the money that the “victim" is trying to claim is vitally necessary to close the financial gap. "Elekskor", acting as the buyer of the "Prodmak" network, also was the receiver on bonds and credit obligations of the holding.

The statement by M. Vasiliev has been verified, but the case of extortion was still denied. However later, Trefilov’s company indeed became bankrupt, and a criminal case was made against him on initial charges of illegally obtaining loans (2008 – 2009).

Another ironic twist of fate - in 2008 the very same Pavel Zaitsev will carry out a ruling on conducting of investigative and operational actions towards "Marta" holding.

At the same time, Trefilov’s partners, both from the Russian and German sides, attempted to explain to the investigation and the court about some hidden circumstances of the Case and the details of the transaction itself. These findings confirmed part of M. Vasiliev’s testimony in favour of his defense (they included details about the debts and impending bankruptcy of Trefilov).

These testimonies were recorded in the case, but in court the state prosecutor and Trefilov’s lawyer both rejected the defense's request to summon "inconvenient" witnesses, because it was supposedly "inappropriate" for a hearing in their opinion.

The remaining trade goods were still paid for by LLC "Elekskor" (in the amount of 15 million rubles) as a result of lengthy proceedings. As for the general director of "Elekskor" and the top manager of Trefilov, in 2007 V. Kurdin was given a suspended sentence for failure to fulfill decisions made in courts of various tiers and willful refusal to pay multimillion accounts payable entrusted to him by the company.

And during all this time the investigation of the "Prodmak" case continued, with trials of M. Vasiliev and his assistants going on unabated.

Maxim Vasiliev was convicted in 2009 and received a sentence of 8 years imprisonment.

The final absurdity was the news that Trefilov himself was charged in 2010 under article 159 part 4 "Large Scale Fraud." But at that time M. Vasiliev was already imprisoned, while Trefilov hastily left Russia.

Maxim Vasiliev after several revisions of his case was released early on parole, and in 2013 his father Igor Vasiliev addressed the Russian Investigation Committee, trying to achieve a full rehabilitation for his son.

PLAYING THE VICTIM

 

PART II 

TREFILOV, REWE, OJSC RTM AND OTHERS

 

BUSINESSMAN TREFILOV or how perseverance is more important than intelligence

 

G. Trefilov got engaged in business with D. Oktyabrsky back in 1992; after creating the LLC "Marta", they started with the manufacture of furniture in one of the rented premises in a local school. Later on the production has first expanded, and then stopped after a few years - according to the official version, because of the financial crisis in the late 90's...

However, other reasons were made known - the final days of the "furniture" business were marred by numerous court appeals from the Consumer Rights Protection Society and other persons, with complaints about the quality of kitchen sets made by "Marta".

It is significant that even after the production was halted the court trials continued on for several more years - the cheap "Marta" kitchens had an exceedingly poor quality: They virtually fell apart after a while and became unusable. 

According to the words from one of the former lawyers of “Marta”, the claims for compensation for material and moral damages received by customers kept coming to the courts of Moscow up until 2003.

After tasting the hardships and “bitterness” of a manufacturer’s labour, the partners decided to develop in other directions, primarily in retail business.

As a result of great effort and searching, in 2001 "Marta" received sub-franchising on opening a branch of SPAR supermarkets. The short cooperation with the Dutch company ended mid-2004 due to major disagreements between Trefilov and the Dutch management.

But the “cooling off” began even earlier, and when in late 2003 it became clear that the end of the partnership was not far off, the businessman began to actively look for new partners.

As a “goodbye” Trefilov publicly (in the media) called out the Dutch top management as speculators, "slammed the door"... And, oddly enough, he quickly moved on to the next level - he began a collaboration with the German concern REWE Group. One more detail though, until the last moment Trefilov did not make SPAR aware of his plans. The partners were the last to learn that "Marta" withdrew from their agreement, without any advance warning whatsoever.

Trefilov was incredibly lucky when the German giant REWE has agreed to one of the dozens of requests sent by "Marta" to the large western retailers about finding a partner for a joint venture. And in 2004 a promising deal between the little-known holding "Marta" and concern REWE took place, which was memorable for the presence of top officials from both Russia and Germany.

Trefilov sent his letters in November 2003, and in January 2004 the REWE representatives have already visited Moscow. The bold plan succeeded because Trefilov always clearly and skillfully used the trends and the time to "catch the wave" - in those years for foreign investors the next trend after oil and gas was retail.

The fact of the matter is that the Russian legislation limited foreign companies in the amount of possible investments in the energy sector. And as for the retail market, things were completely different - all the conditions for the investment development in Russia were there, which of course attracted new major players.

And that is exactly the kind of serious players needed by G. Trefilov, as cooperation with them paved the shortest and fastest way to connections, credits and loans.

Prior to working with REWE, Trefilov cynically used the SPAR name for arrangements with the banks, to a point where he had a lot of debts and losses that needed to be "extinguished". This was ultimately the cause for parting with SPAR.

However, thanks to the loans Trefilov now also possessed an asset – 18 well placed within Moscow and sufficiently stocked supermarket properties, under the name of SPAR, for which banks lent to him willingly.

To achieve maximum investment (read - creditworthy) attractiveness and to raise the possible business sale price, he combined all these stores into a single retail network and tried to get the general franchise from SPAR. On the territory of Russia the general franchise owner was D. Maslov, who within his powers strived for appropriate administrative control, very inconvenient for Trefilov. By solving the issue in his favour, Trefilov at the same time was getting rid of unnecessary for him checks.

He suggested this scheme to the partners - who refused it, as not only did they know about the numerous debts "hanging" on the discussed outlets, but also they felt that someone kept trying to dip their hand in the corporate “pocket” way too often. At the time Trefilov was already credited by more than 10 banks, with the main ones being Zenit and Impeksbank.

By the early 2000s, Trefilov had a substantial debt package - he had to spend on maintenance of inefficient business structures, on loans, overheads, and not to mention personal costs, the lion's share of which were articles "to create and maintain" a proper "facade" - that is to say an attractive investment image.

Actually, for the sake of "facade", he didn’t refuse even unprofitable investments: to create a "business card" for a businessman with ambitions and a bold investor, it was necessary to show the market high "growth" and splurge. This is why in 2003 the company situation was almost at a stalemate.

Later Trefilov learned the banking system and used the information he got as efficiently as possible, but, unfortunately, not always legally. To easily attract the necessary funds, he built the business scheme so that in fact for the same properties (shops) and commercial equipment located in them multiple loans could be received from different financial institutions.

For example, Elekskor formally engaged only in trade, while the equipment and retail outlets, where the personal was, belonged to other entities, which were also organized by Trefilov.

Thus, LLC "Elekskor", LLC "Business group", LLC "Tehnoopt" and numerous other "technicals" could for the same collateral almost simultaneously attract large credit funds in different banks. In some cases rental agreements were forged, to "fix" the mortgaged property to a non-existent address.

The scheme was versatile and quite durable, as the extensive management staff of all two hundred LLCs belonging to Trefilov never had the complete business information. And no, we were not wrong – later investigation found that from 2002 to 2008 Trefilov organized more than 200 legal entities in order to illegally obtain credit and favorable conditions from banks.

100% of the information was only known to Trefilov himself, who not only organized the whole process of obtaining loans, but also acted in them as a guarantor.

Sometimes, managers were too savvy or just too timid and did not immediately rush headfirst into the "murky" scheme of their boss. Then he found ways to motivate them – usually through wealth - he could, for example, buy a flat for a poor family, or promise to help cure a sick child. Not for nothing of course. For a signature...

Quite often, for seemingly responsible positions he invited candidates without professional and higher education - for his activities needy, dependent and easily manageable people were more suited. Without a doubt, most of them just believed in Trefilov and performed all that was required of them, not particularly delving too deep into the essence of what is happening.

Especially since formally all went on as usual –new loans repaid the previous debts, deals kept being made; only on paper they were "general", but in reality just average executives, who, of course, could not influence the course of the situation.

With this approach even the banks for a long time could not figure out what was really going on. However, do not discount the personal interests of some representatives from the credit institutions, which could be possible too. One way or another, Trefilov received his loans, and the mechanism of repeated mortgages worked for a long time.

Especially since Trefilov had a trump card in his hand – the Cooperation Agreement with REWE and, most importantly, two successively carried out deals with this group. These deals were known by everyone as they were conducted by international standards, attracting vast business press and holding all the required events for such occasions.

No surprise that the banks believed him for so long. And among the "victims" were not only Russian structures - the list of deceived also includes large Western investment funds.

Important to note, that the businessman’s "schemes" themselves were not some sort of know-how, formed and bonded together with complex "corruption chains". Quite the contrary – it is surprising how simple Trefilov’s game was.

But it is worth emphasising that he possessed a remarkable scale and persistence in achieving set goals, and he easily stepped over the social norms and barriers, so that even in hopeless situations he got what he wanted, not neglecting to lie, distort facts or outright bribe. And few could resist this pressure, because unlike most Trefilov did not deviate from the planned and kept returning again and again until he found the "keys" to the right doors.

Returning to the first foreign partners of "Marta", it is safe to say that SPAR’s decision to refuse the consolidation and further cooperation on his proposed conditions was dictated primarily by better awareness of Trefilov’s situation and his approach to business in general.

The Dutch chose other partners, and, as it turned out, they were right in their decision as well as all those who chose not to interact with Trefilov or disassociated themselves in time, without waiting for the squabbling, court appeals and public insults in their address. The cooperation with SPAR barely lasted to three years.

REWE

It is necessary to clarify an important point; contrary to all sorts of rumors, Trefilov did not and could not use any connections, lobbies and key people to obtain from REWE the positive reply he got for his offer of cooperation. At least at that time he did not have any connections or opportunities of that level to speak of.

You could say it was fate itself and no other, and to the Russian ear it sounded like magic from a fairy tale. The story itself is very reminiscent of "The Tale of the Fisherman and the Fish" by A. S. Pushkin.

To carry out the classical deal of merger and acquisition (M & A) of one company (the one included in Trefilov’s Holding) by the other (REWE) through buying of shares, it was necessary to conduct a full audit of the target company (i.e. the object of sale). The company’s financial statements should be prepared in accordance with IFRS and then confirmed by international class auditors. Also a professional due diligence needed to be performed (it was done by the international company KPMG, which subsequently often accompanied Trefilov’s deals).

After REWE’s representatives got the results of the audit and the due diligence - it became obvious that the risks were too high proportionally for a classical transaction (i.e. purchase and sale of shares), when compared to the debt load on the company. Then it turned out that "Marta" Holding’s retail operator LLC "Elekskor" (one of the participants in the transaction, which at the time worked under the «SPAR» brand) was a “grey” company, i.e. was not paying all applicable taxes.

And so the Germans were faced with a choice - they certainly did not want to buy a "grey" and also critically debt-ridden company, but to waste time searching when the retail market was very attractive for investment was also unprofitable.

Besides, the stores offered by Trefilov were located in Moscow (and Moscow prices and assets grew very fast) – so the opportunities for a "running start" in Russia were seen as attractive and optimal by the foreign investors.

The situation in the Russian market was that the leading retailers at the time cost billions to buy, so they were no longer of interest. And among the smaller players, such like Trefilov, all had various problems and disadvantages. So the Germans were in fact interested in a speedy "technical" entry into the Russian market.

And that is why a compromise was reached.

The deal did not take place in its pure form (buying and selling of shares) for the above reasons. Deciding to err on the side of caution, REWE offered Trefilov to buy the company in parts, i.e. the properties, the equipment and the products – all separate.

After that they could start to create a new joint venture (REWE + Trefilov), clean of Trefilov’s debts and obligations (he could and should have sorted out his debts and obligations to banks after the sale of the first 18 stores), and then transfer into it the staff, separate from the real estate and equipment. It was assumed necessary to develop a branch network. That is why Trefilov was offered a stake in this company and the role of "local" player.

REWE’s offer to Trefilov to remain in the project was dictated not so much by real need for his knowledge of the market, but more out of caution - the German businessmen did not want to buy 100% of the business, fearing possible fraud.

According to the results of inspections and negotiations a decision has been made to make the Framework Agreement, which included a full list of conditions for the creation of joint venture "Billa Russia" and an agreement for partial acquisition of Trefilov’s commercial real estate, equipment and products.

As a result of the "matching deal" and the creation of a joint venture with REWE a new structure was created in Russia: LLC "Billa", which was responsible for business operations, LLC "Billa Realty" - equipment of the commercial network and LLC «Rem Immobilien" - real estate.

Under the agreement, 75% of the real estate was owned by Trefilov, 25% - the Germans, and in the operations it was the opposite - 75% owned by REWE and 25% by Trefilov. Initially he was glad with the result (property grew in value by itself, without any additional effort that was so disliked by Georgy Yuryevich), but then, apparently, it began to be "not enough" again. And so Trefilov decided to act on his own, regardless of the contract.

The Agreement stated in black and white that Trefilov was not allowed for 5 years to develop his own retail business so as not to create competition for the jointly made enterprise. 

According to the same Agreement the management control of the network BILLA Russia had to be done through the shared business managing bodies in Austria, who had the rights to make strategic decisions. Trefilov agreed to these terms, although later did not particularly follow them and openly ignored some of them.

Breaches of contract were numerous. We will mention only the three major ones for the 3.5 years:

The first time, bypassing the contract in 2004 (3 months after signing!) Trefilov begins to develop a retail business - thus appears the Grossmart network.

The second was when he transferred shops in common ownership with REWE to the balance of the OJSC RTM, while of course keeping his partners in the dark about it.

After which, without obtaining the mandatory permission from his partner, who lawfully possesses 75% of the shares in the Austrian JV and accordingly a larger number of votes in making decisions, Trefilov on his own pledges equipment owned by the joint venture to creditor-banks. And therefore he tampered with the mortgage documents.

And the third time was when he forged an agreement with signatures of both Russian and German management, with a clear goal to make REWE pay for nonexistent obligations to him.

Before submitting these "documents", Trefilov takes out loans on them from major European banks amongst others. And when it came time to pay the bills, he starts throwing accusations in the presence of one of the creditors (the debt amounted to $ 100 million received by Trefilov for completing a fictitious deal) in one of REWE’s offices.

Just like the business with the company SPAR and with E. Vyrypaev, the joint venture of REWE and Trefilov concludes after 3 years - such is the life cycle of a "big business" and partners’ patience. And as far as we know, none of them have anything good to remember about those years.

 

RTM and RUNNING FROM THE AVALANCHE

 

OJSC RTM was created in 2005 – 2006 by Georgy Trefilov’s holding "Marta” and Eduard Vyrypaev’s company "Vremya" and was specialized in development of commercial real estate. In spring 2008 Trefilov, experiencing serious difficulties in meeting his financial obligations to numerous creditors, sold his RTM stake (which amounted to 37.5%) to Vyrypayev for approximately $ 42 million.

Trefilov’s financial situation in 2007 - 2008 was further complicated by the fact that the principle of "money likes silence" was now disturbed - undesirable for Trefilov information often found its way through the media and into the market, and so many bankers have started to refuse him loans.

The money obtained from the deal with Vyrypaev fully and immediately went on handling and repaying of "Marta" holding’s current debts, which, however, did not save Trefilov’s company from its ruin. Moreover, the sale of shares was the starting point for the "avalanche" from Trefilov’s pyramid of debts. Neither banks, nor market participants, nor distributors, nor managers - no one any longer believed that Trefilov would "emerge unscathed” at the last minute.

In fact, it became clear that if Trefilov sold his main asset, which was the sole serious capital, then "Marta" had absolutely no money.

Actually, none of the professionals were particularly surprised by what was happening. Once more the respected market analysts noted that the level of debt for "Marta" was reaching a critical point (7 - 11 debt / EBITDA), and yet the company continues to attract more of it.

 

In the fields or one more time about fair journalism

 

Worth noting are publications of February 2008, where it is explicitly stated, from the words of Trefilov himself(during a conference call dedicated to the said event), that his shares were sold to Vyrypayev with the exact purpose of covering "Marta’s" current debts  and the sale price was roughly in line with the market price.

After explaining to the assembled journalists that the RTM shares belonging to him and a second shareholder B. Vasiliev (a minority shareholder through the parent company Marta) were sold to raise funds to meet the obligations on secondary and tertiary bonds, Trefilov emphasised that he went to this "unplanned step, because the asset could be quickly liquidated".

In addition, the sale of shares and Trefilov’s leave from the Board of Directors of OJSC RTM - was probably the only way to not "finish off" the Open Joint Stock Company’s reputation with "Marta’s" shadow of debts and not crash their price on the market. The most important thing was to preserve the credibility of the assets and the value on which Trefilov insisted.

Trefilov did not disclose the amount of the transaction, but noted that he was "satisfied with his investment in RTM". By making these statements, the businessman certainly was not just trying to save face, but also to continue his usual "activities", from which we can conclude that the creation of the pyramid was not only a criminal mistake, but brought him personally considerable profit. Otherwise, why would he do it for so many years?

And the subsequent "war" with Vyrypaev could have been caused not by the "losing" of shares as such, but with the loss of tools and screens for further construction of the financial pyramid, and along with them loss of control of partners and the situation.

In August of the same 2008, after allowing a number of defaults, he gave "angry" statements to the same media, to whom just six months before he told of "satisfaction with his investments and partners" in RTM. However these statements were as flimsy as the previous ones.

The deal made could not solve all of the financial problems, and so a few months later Mr. Trefilov followed by throwing allegations that the shares were transferred to E. Vyrypayev with the right to repurchase, and then things proceeded to numerous lawsuits in the courts of Moscow. After that there was a significant decrease in the share price of RTM on the stock exchange, while in the media Trefilov and his lawyers tried to hound Vyrypayev and other partners.

And this time sounded (necessary for litigation) routinely implausible, but now classic for Trefilov and his defense, accusations towards partners in RTM and "Marta" - another "deception" by former colleagues of the "naive" and "trusting", blind in his "enthusiasm" and "kindness" entrepreneur Trefilov. 

And there was already a lot of press like that, not only despite the patient explanations by Vyrypaev in media and available documents, but also despite the simple fact – the claims made against the former partner had been lost by the ex- owner of " Marta", because his side did not present any clear evidence that the transfer of shares held Vyrypayev in violation of law or was unfair in price. Moreover, there could be no evidence of that, if only because all of the properties owned by Trefilov were heavily burdened with debt, while holding "Marta" had unsecure debts with payments due on ongoing interest.

What could such behavior mean, other than an attempt to shift responsibility, "hide the tracks", or perhaps even create a "legend" for the future no longer associated with Russia? Anything but a trial in good faith.

The more so because later in addition to the claims there was a statement to law enforcement agencies, with the same absurd content and complete lack of documentary or other hard evidence.

In spite of everything, five years later Trefilov resumed his public speeches and in specially made materials confidently referred to events that never took place, mentioning that the RTM shares were received by Vyrypaev illegally. This, allegedly, prevented the deceived Trefilov from making a deal for the sale of "Grossmart" stores that were part of RTM, and thus kept him from paying off his debts to the banks and ultimately made him bankrupt. (See RBC 28.08.2013, "That's how I fell into the trap")

And the came the fabrications to create a desired and plausible background of information, where there were added "Raiders-siloviki" and an alleged "corporate conspiracy" of Vyrypaev with REWE. This would add the necessary "weight" to Trefilov’s deliberately childish and unsubstantiated allegations.

It's not a secret to anyone that many do not disdain from writing and printing lies for money (or for other reasons).

Surprising is that when you create these "new light biographies" of your customers, some journalists do not even consider it necessary to look in the archival media materials or visit the very same Forbes to see the ranking for 2011, to which they so "confidently" refer in their pathetic "human rights" statements. There is probably no sense in reminding I. Murtazin of how begins a conscientious rather than biased journalistic investigation. (MEDIAVIRUS)

Apparently, the absence of serious responsibility for their writing (or of legitimate interest to their stained newsmakers) creates a reluctance to take care of some "details". And in this way these artists are very similar to their clients.

And so, for the story about the failure of Trefilov in RTM to remain accurate and objective, we will start from the beginning.

 

ADRENALINE

 

RTM’s story began when Trefilov decided to develop his own project independently from REWE. After signing the cooperation agreement with REWE in 2004, Trefilov decided to not stop there and in violation of the contract continued to develop his retail business.

As was often noticed by media and sources in his circle, Trefilov had an uncontrollable tendency to juggle multiple simultaneous plans and realise projects literally "on the fly", therefore making himself the bearer of an inordinate number of responsibilities.

Not really considering the forecasts made by market analysts and without an economic education, he boldly threw himself anywhere he could, be it the expansion of regional trade networks, the development of retail business, the sale of building materials ("Marta Finishings "), the online commerce ("003" and others), cosmetics and jewelry (PUR PUR) or the manufacture of polymer BOPS film.

The fact that most of the projects turned out to be unprofitable from start to finish was certainly known to Trefilov. But it did not particularly discourage him, because the important thing for him was the fact of business continuity and self-advertisement, which served his main goal – fundraising for more and more new deals.

As investigators believe, these funds were used not only "for completing deals", but were also spent by internationally wanted Trefilov "at his own discretion".

And of course he was not the only one to know about the real situation. His reckless actions and gambler’s spirit have not found support among many of his circle, including his first partner and a childhood friend from school days D. Oktyabrsky, who left the business in 2005. In parting Oktyabrsky commented that "he tired of the fact that the company still survives on loans" and so he gave his shares to Trefilov "with a friendly discount", having lasted with him longer than all other partners.

Regarding the German partner - the unsavoury information about the mortgages on all of his businesses Trefilov hid from REWE representatives for nearly 2 years. How was it done… more on that later.

At some point the secret was out, and Trefilov was made aware that to maintain such a "business game" not only did not fit into the plans of the German side, but could also lead to the termination of their business relationship.

It is necessary to point out, that all this time the Germans were fulfilling their contractual obligations and did two large deals with Trefilov (at the end of 2004 and in summer of 2006) on merger and acquisition of retail chains, as was in their original intentions and contract objectives. As a result of the planned execution, Trefilov also received some tangible benefits; moreover, he still owned 75% of real estate in LLC "Rem Immobilien". What could be bad about this?

But Trefilov has no time for stable business relations. He knew that at some point he might just "crumble" and, apparently, for him stopping was like death.

Remember the movie "Crank"? Something like that was happening with G. Trefilov - like the main character in this movie, he stayed alive only by being in virtually constant motion, and at great speed too.  Only this version involves credits and loans.

Should the poisoned by mafia hero from "Crank" stop - he would start having a heart attack and would urgently need either a handful of strong stimulants, or a direct injection of epinephrine or an electric shock. And the doses that would be fatal for anyone else only let Chelios live for a few extra hours.

The difference between the hero of the film - Chev Chelios and George Trefilov was that the gangster needed drugs, while businessman Trefilov - borrowed money and at an increasing rate too.

From the film audience’s viewpoint it might seem that the chases, fights, races and endless running on drugs can save Chelios, and hence have purpose. Same can be said of Trefilov’s story, at least on the surface, but the reality was different.

Realising that he cannot assume that all of his numerous debts and huge expenses can be paid through systematic cooperation with REWE, Trefilov proposed a joint project to E. Vyrypayev, shortly after parting with D. Oktyabrsky. Said project was realised with great speed.

Trefilov himself in an interview with RBC daily in 2013 commented on his decision to create RTM: - "I got tired of this dragging on, so I decided to go ahead and do my own project". He was referring to the so-called "sluggishness" on the part of REWE’s representatives that spent too much time deciding about buying and renting retail space. He also blamed the German passion for order and coherence as the cause for him "not reinvesting quickly enough and as a result “Marta" "losing a lot of promising assets".

Also, he made it clear in a recent interview that his bankruptcy was in fact beneficial to all of his partners, both Russian and German.

But the German side was not putting any obstacles in business development for Trefilov (evidence to the contrary was never presented), and certainly could not be guilty of a mismatch in their methods and views of conducting business with the openly parasitic attitude to matters that Trefilov has. Given the situation, REWE’s representatives obviously were not fully satisfied with the "difficult" situation of the Russian side either. (However, as before his "strategy" satisfied neither SPAR, nor D. Oktyabrsky)

Judge for yourself, on one side a huge concern with a hundred-year history of development and an annual turnover of 41 billion euros and on the other a swamped with debts newfound entrepreneur - what could be more risky in terms of civilized business and reputation to a more senior, not to mention foreign, partner?

And it is not surprising that the concepts of "promising" opportunities and dubious schemes would by definition not match between the partners. The Germans of course refused to participate alongside Mr. Trefilov in a "race" for instant enrichment.

But wanting to appear positive and to show their support, more than once they tried to meet the businessman halfway – they practically created special "favourable" conditions for Trefilov, not to mention how the Germans "closed their eyes" on the violation of the agreement’s terms and thus granted the businessman leave to develop in his own direction.

Additionally for quite a long time the rational Germans considered Trefilov to be a promising businessman. They praised him in all of their interviews and certainly did not want to create obstacles to solutions of his financial problems, if only to avoid later on being responsible for another person’s obligations.

Being in this situation Trefilov not only sought to gain both legal and illegal income, but also came to a false conclusion that he can impose even more on the Germans, as long as he was with them.

Calculations of the German side have not come true; they no longer remained neutral. After naturally becoming bankrupt, Trefilov accused, and still does, all with whom he worked, while presenting mostly flimsy complaints to former partners.

All of said complaints boil down to one fact - that REWE was “guilty” of refusing to pay Trefilov’s gigantic debts (which was what the businessman was hoping for, with an excuse of selling at exorbitant prices unprofitable assets). And as for the Russians – they did not help to once again restructure his loans and find candidates for obviously bad deals.

 

The matter is not limited to just media

 

The incident was not without lies - Trefilov created several reasons for litigation and scandals against both Russian and German partners, demanding money that was not rightly his from the sales deal of Grossmart stores, which at some point partially belonged to RTM.

In addition to the trials with E. Vyrypaev in Russia, he brought to his former partners’ attention some extremely dubious contracts in one of the European countries, which then began a different investigation, now by the law enforcement and judicial authorities in Austria.

According to the "documents" presented by Trefilov, the former partner was obligated to buy his store chain Grossmart (including the assets that no longer belonged to him), but then broke off the deal without fulfilling the obligations. Not only did the partner cancel so one-sidedly, but he also allegedly failed to let the other party of the already signed contracts (!) know in advance...

About which "stunned" Trefilov (in his version) quite unexpectedly (?) learned from the Russian media. Of course, in this version clearly seen is a replay of Trefilov’s own experience and his unethical behavior with partners. But tell me, how one can believe it in principle when it comes to hundreds of millions of euros and a company-giant, which, by the way according to the same Trefilov in his words to RBC, spent “6 months collectively deciding whether to lease an additional shopping space”.

Among other things, the forgeries stood out with their horrible quality. And a year later after proceedings, in 2009 Trefilov was granted the status of "accused" for forging the three contracts. At the same time he was insistently summoned to the Investigative Committee of the General Prosecutor's Office, where instead of him lawyers came and claimed that their client was busy in Austria, "dealing with his assets".

Trefilov naturally denied his authorship in the production of forgeries, but the court rightly concluded that under these circumstances, only he, as the Seller, could have the motive for their manufacture, and definitely not the Buyer.

The investigation established that the signatures did not belong to the specified persons, i.e. they have been tampered with. This was stated by all of the supposed "signers". The signatures difference was clear even to the "naked eye", and one of the names was misspelled (!), which, for obvious reasons, the owner of the name would not do.

The contract was made in Russian and German. But the German version, which was supposed to be prepared by native speakers (!), contained semantic errors and, as noted during the trial, was similar to a "reverse" translation of one of the older versions of previously made contracts.

So, an old contract, which once had a version in Russian, was taken as a basis, then translated "back" into German and modified with the necessary changes. And also with a few mistakes, both legal and linguistic, which were not difficult to find for skilled specialists.

By the way, reputational problems after such "reverse" translations of documents happened to Trefilov before as well. So, in his case, we could be talking about learning disabilities or a fundamental disrespect for documentation or even more likely a deep misunderstanding of their true legal and social values.

And it is not surprising that the habit of counterfeiting papers, which stretches back from Russia, remained. But instead of the usual gullibility and carelessness in the homeland, it was faced with the careful attention of decision-makers in the West and suffered a fiasco.

Secondly, one of the managers representing the Buyer side, at the time of the signing for this mythical transaction, was not working in the specified company division for some time and was, in fact, in another country. Evidence that the employee has not been brought to the discussion of a possible deal, including statements about the change of work place, were presented to the court and the Austrian prosecutor's office.

Thirdly, the company, that was allegedly acting on behalf of the "buyer" in the specified by the "contracts" period of time (September - December 2007), also did not exist, as was shown during the proceedings with filed documents and statements from the government and commercial registries.

Therefore, we can conclude that those individuals who have made the presented copies clearly had indirect and distant information about the workings of companies within the structure of REWE.

But the most striking perhaps was the explanation given by Trefilov in court. To the question why they were given copies and not the originals of such important documents, being three Agreements worth 500 million euros, he said that he did not know where were the originals (missing or removed) and that the contract itself was signed in absentia (!), directed to him through representatives and by e-mail...

We think no point in commenting here.

The Case is great in size and it is not possible to fully describe all the details here and now. Besides, the courts are still going on – because of its large and detailed volume of proceedings; the final point in this case is yet to be made. Among other things, a year ago for another forgery of documents (passport) Trefilov was convicted within the UK and now he can not travel outside the country.

While in London and serving a suspended sentence, he is definitely not planning on stop: from time to time giving interviews, trying to act as a "victim of circumstances", a businessman affected by the corporate and corrupt wars.

And despite the fact that the history of the loan "pyramid" (recorded in the media, among other places), followed by the loss of his business and the chronology of events give definite conclusions – there are still those who support Trefilov and even finance his court "projects ".

Evil tongues from the fugitive’s circle argue that litigiousness became not only a way of life for Georgy Yuryevich, but also a new way to attract investment (and hence income)... So, until 2008 Trefilov attracted investments thanks to "the friendship" with REWE, and now he is "credited" "to conduct a war" with REWE and others.

With such names it is likely to be believed. But what if there were none?

Such is the "conjuncture" against the law and common sense, if not worse.

HOW IT WAS or HOW MUCH RTM and GROSSMART COST

    

So, in 2005 Trefilov and Vyrypaev agreed to merge assets, on the basis of which RTM was founded with the original distribution of shares being 50% each.

Since Trefilov could not stop anymore, he continued "picking up speed". Realizing that the "opaque" business and informally created "Marta" Holding do not give him any real room to expand in financial institutions, he decided to enter the IPO.

Indeed this was the only way that could attract a large amount of money and at the same time not require answering to obligations, because when buying stocks, the investors are initially accountable for their own risks, as holders of the securities.

Besides, by becoming a co-owner of a "transparent" company Trefilov could continue making trips to the banks (not to say "raids") for even larger sums.

At that time Vyrypaev had a number of shopping centers in different regions - Samara, Yekaterinburg, Lipetsk and others. Vyrypaev brought in a few large shopping centers , Trefilov - 52 regional stores, of them - 22 shops BILLA in Moscow, which were added by Trefilov illegally, since they were on the balance sheet of the joint venture with REWE, and their transfer was legally possible only with the written consent of the concern (remember - 75 % of real estate for Trefilov and 25% for REWE. And for business operations, which were carried out in all of these shops, REWE owned 75 %, while Trefilov - 25%).

Obviously, he continued to act rudely towards his partners, and as usual REWE’s representatives learned everything after the fact.

The remaining shopping areas were in other regions, some of them actually consisted of small shops that "did not make weather" in the pricing of shares when placing. In addition, some were located far from Moscow, so investors could not see them personally and got acquainted with them only "on paper". And thanks to that, the uninteresting assets were given as profitable and attractive investments.

And so the most important assets, equipped to the euro standards and renovated by Germans, - BILLA stores, were made part of RTM with serious violations.

Having learned about what was happening and not wanting an inevitable public scandal (loss of reputation was more important), the Germans raised the issue directly and quite generously - "Go on into the IPO, and then buy out our share of the real estate - the 25%." And that is exactly what E. Vyrypaev did in February 2008. Thus all of the "Rem Immobilien", which held the 22 stores, was legally transferred into OJSC RTM only in 2008, after Trefilov has already left the company. And it continued to legally lease, to the "loud" statements of the supposedly deceived businessman...

But at the time of placement of OJSC RTM on the stock exchange in 2007, these 22 stores were what gave its offered shares a considerable increase in value. This was actually 2 times lower than the ordered and paid for by Trefilov media projections and estimates made half a year earlier.

It is worth recalling that in December 2006 Trefilov made confident statements that as a result of him selling up to 30% of his shares during the IPO, he expected to receive at least $ 200 million in 2007.

But the results of the placements in May 2007, which were more than double in the negative direction, effectively denied the previous estimates for the Capitalization of OJSC RTM.

And without these 22 joint actives and shopping centers, added by Vyrypaev, the profit from the sale of shares would have been a lot less significant, especially given the volume of total costs for the organization and conducting of the IPO.

From placing the 26.8% of the shares Trefilov and Vyrypaev received $ 92 million. The total price of the entire OJSC RTM therefore was no more than $ 350 million. By the winter of 2007 the price briefly grew, but nowhere near $ 650 million, $ 750 million, or $ 1 billion - not after placing so by definition. And it definitely can not do so now.

Trefilov called different figures at different times. Moreover, there was a steady trend to it - with the passage of time the long lost to him assets continued to steadily "increase in price", however, as before - only on words. He obviously forgot that once he made public the debts for the very same RTM, while explaining that experts’ judgment was not in line with the real value due to the amount of debts, which in 2006 already equaled to $ 277 million for RTM alone.

Nonetheless, this is not just fiction - if read in context with the many publications for the past several years, it can be seen that the officially declared varied figures, the confusion, that is the incomplete and incorrectly provided selective information, and the spikes of dramatically positive PR, made when large loans were taken – were all likely a part of the larger scheme.

The Banks and the media were given "half" of the information - they saw only one side of the coin (obverse): assets are growing, deals are being made. But none of them knew what was on the other, the back side (reverse) - namely, how much actual accumulated debt was there on these assets. By and large this was the "know-how” of "billionaire" Trefilov.

We would like to stress that the entire RTM price was $ 350 million at the time of its placement. This included not only the owned by E. Vyrypayev assets, but also the JV BILLA Russia. Therefore, by making statements in the media that "my assets were worth half a billion dollars", Trefilov seems to not only deliberately exaggerate, but also denies his former partners in their right to profit and "forgets" that they owned a part of the asset.

He "forgets" to name the amount of debt accumulated by the beginning of 2008 as well (the final year of activity for the King of supermarkets). Meanwhile, they are quite impressive: OJSC RTM managed to owe almost $ 550 million, Grossmart - about $ 400 million and other businesses, a trivial amount – about $ 150 million.

And it seems, why stay silent about it - such debts require effort, and they turned out to be rather impressive as well. Some might even say they are royal debts. In fact, why be ashamed after years of twisting the truth inside out: saying that "black" is "white", calling an unprofitable business - growing and thriving, having a bestial attitude to other people that are fair and honest and making blatant greed - a search for justice?

According to this logic, Trefilov can be proud of such a "business" - "THE SUCCESS" is obvious. And the results of it no one will challenge or take away.

Indeed, in 2007 REWE considered the possibility of a partial repurchase of assets - to expand their regional portfolio. They were not going to buy all of the existing 189 Grossmart stores (part of which were included in RTM), as they carried out the necessary checks of the sites and got disappointing results.

Besides, a number of Grossmart stores were part of "Marta" since 2003. So the network from the start included assets that were of no interest to the German side even back when they were doing the first two deals with Trefilov.

The disadvantages of the network were apparent:

Part of the regional stores (the network had presence in 17 regions) was of poor quality. It presented itself as the usual "convenience stores" and demanded unpromising investments, as it was far removed from Moscow, in small towns and, as a consequence, had a customer base with low income and purchasing capacity. The payback period was not satisfactory for practical businessmen, so the acquisition of these stores was not even discussed.

Secondly - a big part of the network, 138 stores of the 189, so almost ? of the total number was on lease (lease rights were bought) and subleases, so accordingly it was not considered in the conventional sale.

Another part was in shared ownership, which in itself is not always convenient and likely reduces the price of the asset, rather than increases it. And that was what caused the additional problems when selling (link) even in dumping conditions.

Thirdly - Trefilov at some point inflated the value and quantity (arbitrarily) of his assets so much, that he came to believe it. Meanwhile, market’s excessive attention, which he drew to himself, did not cancel out the true state of things, and the debt/EBITDA relationship was steadily worsening. This was indirectly confirmed by the fact that the financial statements of the network for past 9 months of 2007 have not passed the audit, despite the active search for a buyer for Grossmart.

That is there were far more debts than needed, and their amount already exceeded the total value of the assets. Some of the companies had outstanding loans and credits issued by Russian banks 3 times (!) over their estimated value (among these were, LLC "Elekskor", whose general director V. Kurdin was held criminally responsible, LLC "Prodmaster", LLC "Marta Finance" (bankrupt) and many others).

In addition to all, the debt continued to steadily grow due to dozens of stores opening anew on the rented sites and correspondingly sharp increase in staff costs and their wages.

After 9 months of 2007, the credit burden on the network increased by $ 149 million, with a prevailing number of short-term loans. Funds were used to pay off the debts of affiliated companies (i.e. repayment of old loans) and for the funding of the network itself, which significantly increased the risks, since the payback period clearly did not coincide with the terms of the repayments. The level of possible negative consequences for failure to meet with debt obligations was reaching an alarming point.

No one hesitated to write about this. So no help was coming from the positive PR or the bombastic actions - such as the one arranged for the 15th anniversary celebration of the business in RITZ Carlton Moscow in the autumn of 2007, which, judging by the scope, cost "Marta" a pretty penny.

Among others, many famous and influential politicians and MPs were invited to the feast – about which the snob and fan of "hiding behind names" Trefilov immediately ordered to issue in a hasty press release.

And pointlessly so, as those who now appear in his fake "memoirs" for the BBC Russian Service, of course did not come, while the buyer for Grossmart network was still not found.

For one reason unrelated to PR-activities or favorable assessments of his business: Trefilov’s proposal was uninteresting, too unwieldy and inflated in price.

Except for the new credits attracted by the myth of the successful businessman Trefilov and by verbal "guarantees" of a supposed 100% probable future deal (including the obtained at that same time from the English Ashmore Group € 100 million, which he then told about to RBC on 28.08.2013) – the theme completely failed.

(Without taking into account that Trefilov could easily take these giant leveraged funds to overseas accounts. For today it is just a guess, with no solid proof.

Based on the statements made by him and comparing them with the facts - it at least becomes clear what it means "to build a machine that ends up crushing you". The only question that remains is: How did he "not expect it"?)

In the meantime the rise in prices for commercial real estate reached its peak, and then slowed down. And in accordance with the performance and quality of the proposed assets, as well as with the prevailing market situation, in summer of 2007 REWE offered him a realistic price and partial repurchase of those stores that had them interested, flatly refusing to buy the loss-making ones in the province.

The Buyer’s proposal did not correspond to the asking price set by the Seller, which was 1.5-2 times greater. And given the fact that the interest shown by REWE was only for the best assets, and those were few - Trefilov refused this counter offer from the German partners as well. And so the deal never took place.

 

CONCLUSION

 

Another half of the year Trefilov spent unsuccessfully seeking a buyer for Grossmart, not forgetting to mention at every opportunity that he already has a buyer in form of REWE, but because they do not quite agree on the price and volume of the transaction, he is considering other offers. At the turn of 2007 it came time to pay off the avalanche of debts, and when the spring of 2008 came, the sun melted the last of illusions that all of this "fakeness" really exists. Creditor banks and partners appealed where they should in such cases - to the courts and the police.

Both capitalists and bankers do not like forgeries and do not take them.

And since then Trefilov has been hiding, sometimes suing, but usually being sued.

And REWE stayed the same REWE. Having parted like in the tale by Pushkin:

Not a word did the fish reply.

She just slapped her tail on the water

and dived deep into the blue sea.

The old man waited and waited

But that was all the answer he got.

He went back — to a hut made of mud.

His old woman was sitting outside it;

And before her lay a broken washtub.

 

25.04.2014

THIS IS THE COPY OF THE ID CARD BELONGING TO GEORGE TREFILOV, WHICH IS NOW IN THE CRIMINAL DEPARTMENT OF AUSTRIAN POLICE IN SOLLENAU, WHERE TREFILOV WAS CHARGED WITH ATTEMPTED USE OF FORGED DOCUMENTS.

 

PLEASE NOTE THE ASSETS AND INCOME SECTION. 

THE "BILLIONAIRE" AND "KING OF SUPERMARKETS" GAVE VERY LITTLE INFORMATION ABOUT HIS INCOME AND ASSETS TO THE AUSTRIAN POLICE.

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