Russia's Raiders

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Smarts’ Girev says his company has been a target of reiderstvo, or raiding Mikhail Metzel/AP Photo

Togliatti Azot's Budanov (left) and Korushev (right) and union boss Sevostyanova Alexander Gronsky/Agency.Photographer.RU

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These days life is calmer. While assassinations of businessmen and officials still happen, Samara has seen an economic revival in the Putin era. Crumbling 19th century buildings give the city an air of faded elegance, but the streets have been brightened by the arrival of big electronics chains, mobile-phone shops, and Western brands such as Citibank (C) and Adidas. Today, the region's businesses worry less about mobsters and more about cops and their bureaucratic masters.

That's certainly the case at Togliatti Azot. Surrounded by Russia's ubiquitous birch forests, the factory is one of Russia's most profitable petrochemical plants, producing ingredients for plastics and fertilizer. (Azot means "nitrogen.") Built in the 1970s with technical assistance from U.S. billionaire Armand Hammer, the plant is relatively modern by Russian standards. The perestroika economic reforms of the '80s hurt, but the company revived, helped by new partners and markets.

Many credit Togliatti Azot's survival to fugitive General Director Makhlai. He ran the company during the Soviet era and stayed at the helm when it was privatized in the early 1990s, becoming its largest shareholder. The plant's staffers are surprisingly loyal to their boss and have organized dozens of demonstrations. Their banners and placards—"Hands off Togliatti Azot!" and "We won't let the dirty raiders pass!"—make clear what the workers think of the accusations. "If the workforce has come to the defense of the manager, it's because he isn't guilty," fumes Olga Sevostyanova, head of the plant's trade union.

The police's case rests on the claim that between 2002 and 2004, the factory sold ammonia at artificially low prices to a trading company in Switzerland. The police maintain the Swiss outfit was a front for Makhlai, and that it resold the ammonia at market prices, pocketing the difference. The factory disputes this and has received backing from experts at the Justice Ministry who support Togliatti Azot's claim that the police case rests on insufficient evidence. The Samara police declined to comment, as did the Internal Affairs Ministry in Moscow. But Alim Dzhiganshin, investigations editor of the official police newspaper, Shield and Sword, says: "The position of the investigators is close to the truth. [Makhlai] crudely stole from his company, and now he's trying to blame raiders."

To be sure, the case against Togliatti Azot is complex, resting on such arcane matters as the fair export price for ammonia. Commentators note that such cases are rarely black and white. "Opening a criminal case is of course a kind of corporate war," says Boris Titov, head of Business Russia, a lobbying group. "You don't know who's attacking whom."

Murky as it is, the conflict has led to local outrage. "It's obvious that all signs point to a hostile takeover of the company—a so-called raider," says Anatoly Ivanov, a deputy of the pro-government United Russia party who represents the city of Togliatti in Russia's Parliament. He points a finger at Renova, a Moscow-based company owned by Victor Vekselberg, a tycoon with interests in the petrochemicals sector. Renova Group, a minority shareholder in Togliatti Azot, emphatically denies involvement in a corporate raid, while acknowledging past disagreements with the plant's management over dividends and shareholder rights. "The Renova Group can't have any connection with the investigation of Togliatti Azot by the law enforcement agencies, because it is a private Russian business group," Renova told BusinessWeek.