TheChek News Flow

Ukraine’s richest oligarch launches lawsuit against Russia

Steel tycoon Rinat Akhmetov brings case in Europe over violations of property rights and seizure of assets

Rinat Akhmetov, Ukraine’s richest oligarch, has filed a lawsuit against Russia in the European Court of Human Rights, citing alleged violations of property rights and seizure of assets connected to its invasion.

Akhmetov is the majority owner of Metinvest, Ukraine’s largest steel producer and owner of two large mills including Azovstal. Located in the port city of Mariupol that Russian forces seized last month, Azovstal was the scene of some of the war’s most intense fighting.

The oligarch is a native of the occupied city of Donetsk, in the eastern Donbas region where Russia’s invading forces are concentrating their efforts to gain more territory.

Scores of steel industry businesses, coal mines and other assets in the region, as well as in southern Ukraine, that are owned by Akhmetov have been seized by Russian forces, he said.

The lawsuit seeks urgent “relief for Russia’s blockading, looting, destruction and diversion of grain and metals”, according to a statement issued by the oligarch’s System Capital Management group.

“Evil cannot go unpunished,” Akhmetov said in the statement.

“Russia’s crimes against Ukraine and our people are egregious, and those guilty of them must be held liable . . . This lawsuit is one of the first international legal steps against Russia to stop their ongoing crimes, destruction of the Ukrainian economy and the plundering of Ukrainian assets,” he added.

Before the war the country’s iron and steel industry was one of the biggest manufacturing sectors, responsible for nearly 10 per cent of gross domestic product and employing half a million people in its supply chain.

Ukraine was also one of the biggest exporters of finished steel products to the EU. Some producers, including Europe’s largest steelmaker ArcelorMittal, have managed to resume some exports in small volumes, but the loss of supply has driven up prices as customers from Italy to Bulgaria have scrambled to secure alternative sources.

The lawsuit comes after Metinvest last week urged customers not to buy any products made at its mills in Mariupol over fears they had been stolen by Russian forces. The company said that more than 234,000 tonnes of steel manufactured by its Ilyich Steel and Azovstal factories had been in storage when Russia’s invasion of Ukraine began on February 24, of which about 28,000 tonnes was already loaded on to four ships in the port of Mariupol.

The company told the Financial Times that 2,500 tonnes of that steel had since been taken by a Russian-owned ship that headed to the Russian city of Rostov-on-Don.

The company was “in the process of documenting the war damage and collecting the respective evidence,” Svitlana Romanova, chief legal officer of Metinvest, told the FT in an interview last week.

“The process is long and burdensome for lack of access to locations, lost documents, misplaced employees, etc. We have already lodged criminal complaints in Ukraine and are planning to proceed with the damage claims at Ukrainian courts soon,” she added.

It remains unclear, however, whether Metinvest’s legal challenges will be successful.

Dmitry Peskov, Russian president Vladimir Putin’s spokesman, told reporters on Monday that Russia had already withdrawn from the court’s jurisdictions and would not bow to its decisions. “The answer here is completely obvious,” Peskov told reporters when asked about the lawsuit from Akhmetov.

Atlas Merchant Capital secures commitment of $100mn from Qatar Financial Centre and seeks $1.5bn from other investors

The private equity group of former Barclays chief executive Bob Diamond has struck a deal with Qatar to fund a new distressed asset vehicle.

Atlas Merchant Capital, which was co-founded by Diamond almost a decade ago, has received a non-binding commitment of $100mn from the Qatar Financial Centre (QFC), the Doha-based site through which international companies tend to do business in the country.

The new investment fund, which will be advised by Atlas Merchant, is seeking to raise $1.5bn from other institutional investors ahead of closing next year.

Diamond established Atlas Merchant Capital in 2013 to acquire unwanted assets from banks. He founded the group with David Schamis, who previously worked at private equity firm JC Flowers, after Diamond was ousted from Barclays in 2012 over the Libor rate-rigging scandal.

Atlas Merchant invests in several financial services companies. It bought the stockbroker Panmure Gordon with QInvest, an investment vehicle of the Qatari royal family, in 2017 for £15.5mn.

Diamond installed his former Barclays colleague, Rich Ricci, as chief executive in 2020.

Diamond was chief executive of Barclays from 2011 and oversaw the bank’s opening of a regional office in Doha and a natural resources private equity fund in which Qatar invested $250mn.

The bank’s connections with Qatar have come under the spotlight in recent years after it received rescue funding from the country during the financial crisis.

This led to a high-profile court case involving three former bankers and the alleged funnelling of secret fees to Qatar in return for the emergency financing. The bankers were acquitted in 2020.

Ricci, who ran Barclays’ investment bank from 2009 to 2013, was dubbed one of the “three musketeers” along with Diamond and former colleague Jerry del Missier, for rapidly growing Barclays before the financial crisis.

Atlas Merchant confirmed the agreement. QFC did not respond to a request for comment, but said in a statement to Bloomberg that “recent global crises have created an opportunity for private investment in the sector”.

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Energy crunch in the capital and surrounding areas will revive debate on restarting nuclear reactors

The Japanese government on Monday called on businesses and the public in the Tokyo area to cut electricity use, saying a lack of generating capacity risked plunging the capital into a power blackout.

The blackout alert, the second this year after a warning issued in March, is likely to revive contentious debate about restarting Japan’s nuclear plants ahead of elections to the upper house of parliament in July.

The power crunch comes as countries worldwide reassess the need for nuclear plants following curbs on Russian gas exports caused by the war in Ukraine.

Japan’s energy policy has been in paralysis since the Fukushima nuclear disaster in 2011 prompted the shutting down of most of its nuclear reactors, which previously supplied about a third of the country’s electricity. The suspension of nuclear generation has deepened Japan’s heavy reliance on fossil fuels even as it pledges to achieve net zero carbon emissions by 2050.

After Russia’s invasion of Ukraine, European countries have also restarted old coal-fired power stations as an emergency measure. But some countries are reconsidering plans to shut down existing nuclear plants amid concerns about rising emissions.

With public opposition in Japan still strong, taking up the nuclear issue ahead of the July 10 upper house election would be politically risky for prime minister Fumio Kishida. But experts say the electricity shortage is likely to intensify the debate if the ruling Liberal Democratic party achieves a commanding electoral victory.

“The government is running out of options,” said Noriaki Oba, energy analyst and founder of Post-oil Strategy Institute.

“With the electricity shortage coincidentally happening before the election, there are people who think the issue can be taken forward if the election result is strong,” Oba said. But he cautioned that any resolution of the nuclear stand-off would require restoration of public confidence and reassessment of the safety screening of nuclear plants.

The ministry of economy, trade and industry asked businesses and residents in Tokyo and surrounding areas to reduce power usage, saying supply was particularly tight in late afternoon on Monday. The ministry asked households and companies to set their air conditioners higher than 28C. It said the public should avoid using irons and other power-hungry appliances.

Temperatures in the Tokyo area rose above 35C following a record-early end to the annual rainy season.

The warning, which was also issued for Tuesday, came after power reserves in the area were expected to fall below 5 per cent of total capacity. Between 4pm and 5pm, the ratio of electricity demand to supply capacity was forecast to hit 96 per cent, according to regional utility Tokyo Electric Power Company.

In March, that ratio reached 103 per cent after a strong earthquake in north-eastern Japan caused several thermal power plants to suspend operations.

The situation is less severe than in March since more electricity can be generated from solar panels during the sunny summer months. But tight supplies are expected to continue as the heatwave increases the use of air conditioners.

In an interview with the Financial Times in early June, the chief executive of Nomura, Kentaro Okuda, highlighted the threat of blackouts in Tokyo as one of a handful of signs Japan was entering a “new paradigm” that would force the government and companies to rethink how to manage change.

“If [a blackout in March] had happened, manufacturers could not have continued. So we need to make investments into new energy, and consider alternatives. We may need to invest in climate tech . . . new supply chains and business chains will need to be created,” said Okuda.