Investigation into Interpipe’s operations in Russia
The published investigation into the operations of the subsidiary of Interpipe company in Russia, known as Interpipe-M, has exposed a number of significant facts. Specifically, even after the large-scale invasion of Ukraine, the Interpipe structure continues to operate in Russia, paying multimillion-dollar income taxes, value-added tax, maintaining an office (covering rent, salaries, awarding bonuses to employees), commissioning studies on pricing, and even filing a lawsuit in a Moscow court against another subsidiary of the Interpipe group (registered in the UAE), thereby attempting to recover nearly 50 million US dollars back to Russia.
Before the publication of the investigation, the editorial team of RBC-Ukraine sent a request to the press service of Interpipe Group, seeking answers to the following questions: Does the Cypriot owner of Interpipe Holdings PLC exercise control over the activities of LLC Interpipe-M in Russia? Did Interpipe Holdings PLC receive dividends from the Russian company LLC Interpipe-M for the years 2021 and 2022? Why did Interpipe Holdings PLC not withdraw from the founders of Interpipe-M after the start of the full-scale invasion? Does Interpipe Holdings PLC plan to withdraw from the founders or completely liquidate the said company?
Neither at the time of the investigation’s publication nor at the time of releasing this material did the Interpipe company provide any answers. However, after the publication of the investigation, the company posted a refutation on its website with the following content:
“Ukrainian media have seen the resurgence of a false and orchestrated malicious media campaign aimed at discrediting the image of Inetrpipe.
This week, Ukrainian media have witnessed a fabricated and orchestrated media campaign by unethical competitors aimed at discrediting the reputation of Interpipe, suggesting its alleged business activities in the Russian Federation after February 24, 2022.
Interpipe categorically denies these false accusations.
Following the beginning of the full-scale Russian invasion of Ukraine, Interpipe made the decision to liquidate its trading company in Russia. The personnel of the trading company were dismissed, leaving only two individuals involved in the company’s liquidation. This process began immediately, but it continues within an extremely unfriendly legal environment and is deliberately hindered by Russian state institutions.
After February 24, 2022, Interpipe ceased all business activities in the Russian Federation and is not associated with any decisions or actions of the trading company in Russia. It’s worth reminding that the Russian Federation had already imposed personal sanctions against the leadership of Interpipe back in 2018.”
After analyzing the statements from Interpipe, it can be concluded that it doesn’t provide any specific refutation of the facts presented in the investigation regarding the activities of the trading company Interpipe in Russia and its contribution to the Russian budget.
Since Interpipe considers the investigation to be a false and orchestrated malicious media campaign aimed at discrediting the image of Interpipe, it is important to evaluate this statement and demonstrate with concrete facts why it doesn’t align with reality.
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Let’s analyze it. The first claim: “After the beginning of the full-scale Russian invasion of Ukraine, Interpipe decided to liquidate its trading company in Russia. The personnel of the trading company were dismissed, leaving only two individuals involved in the company’s liquidation. This process began immediately, but it continues within an extremely unfriendly legal environment and is deliberately hindered by Russian state institutions.”
Contradictions in Interpipe’s statements and actions
After the onset of the full-scale invasion of Ukraine, Interpipe did not make a decision to liquidate its trading company in Russia, LLC Interpipe-M. According to Article 62 of the Civil Code of the Russian Federation, companies for which a decision on liquidation has been made have three days to notify the tax inspection about the liquidation. Subsequently, this information is entered into the registry of legal entities, and the company is marked as being in the process of liquidation.
Regarding LLC Interpipe-M, there is no data in the registry of legal entities in Russia indicating that it is in the process of liquidation.
This company is considered operational, meaning that it operates on regular terms. And although Interpipe claims that “this process began immediately, but it continues within an extremely unfriendly legal environment and is deliberately hindered by Russian state institutions,” the notification of the start of liquidation has an automatic nature. It can even be done through a notary, without engaging with the “unfriendly legal environment” of Russian state authorities.
According to Russian legislation, just as in any other country, the initiation of the enterprise liquidation procedure involves the establishment of a liquidation commission. This commission is responsible for carrying out necessary actions related to the liquidation and settling debts with the company’s creditors. Information about the activities of the liquidation commission is recorded in the state registry of legal entities. There is no data about the operation of such a commission or any references from Interpipe regarding its creation. The reason is clear — such a commission was not established.
To illustrate this visually, one can refer to the example of the international retail network IKEA, which also announced the winding down of its operations in Russia and the liquidation of its Russian division. In the Russian company registry, LLC Ikea Dom is indicated as being in the process of termination, and the section for director contains the note “liquidator.”
In contrast, LLC Interpipe-M is listed as an active company, and the section for director simply states general director. This means that LLC Interpipe-M operates as a regular company, and there have been no decisions made regarding its liquidation.
Furthermore, according to Russian legislation, the initiation of company liquidation requires a public announcement. This announcement is published in the Bulletin of State Registration.
And once again, such an announcement regarding LLC Interpipe-M has not been published.
The liquidation balance of a company is approved within no more than two months after the decision on its liquidation is made.
Interpipe states that the process of liquidating its Russian subsidiary began “immediately” after the full-scale invasion. However, Interpipe does not specify the exact date of such a decision. Even if Interpipe had decided to liquidate its Russian company a month after the start of the major conflict (let’s say, on March 24), the liquidation balance should have emerged no later than May 24, 2022. And this data should have been reflected in the public financial reporting submitted to Russian regulatory bodies. This reporting, in turn, would have formed the basis for the audit report for the year 2022.
The financial statements for Interpipe were prepared by Ernst & Young from the “Big Four.” However, neither in the financial performance results of LLC Interpipe-M, submitted to the tax authorities of Russia, nor in the audit report for the year 2022, is there any data regarding the liquidation balance.
Furthermore, the audit report accounts for the profit of LLC Interpipe-M obtained in Russia. This indicates that Interpipe itself does not separate from its Russian subsidiary and continues to consider it as part of its business.
It’s also worth reminding that during the process of company liquidation (in any country), the satisfaction of creditors’ demands occurs according to the established legal priorities.
The calculations published in the media by LLC Interpipe-M with its counterparties indicate not the winding down of activities and settling with creditors but rather ordinary economic operations (rent payments, communication services, transfer pricing studies, court fees). There is no evidence of creditor settlement within the framework of liquidation.
Furthermore, in its statement, Interpipe asserts that “after February 24, 2022, it ceased all business activities in the Russian Federation and is not associated with any decisions or actions of the trading company in Russia.
This statement is also not aligned with reality. LLC Interpipe-M, through a number of registered companies, is owned by Viktor Pinchuk. These companies, under the direction of Viktor Pinchuk (or according to the authority granted by him), appoint the director of LLC Interpipe-M and participate in the general meetings of participants (owners) of Interpipe-M, where they approve the results of financial activities and make decisions regarding registration actions.
The current director of LLC Interpipe-M was appointed in February 2023. For such an appointment, a general meeting of participants (owners) of LLC Interpipe-M should have taken place, during which the decision for his appointment would have been made. The chain of individuals participating in this voting process leads to Viktor Pinchuk as the ultimate beneficial owner.
A noteworthy aspect is the fact that LLC Interpipe-M filed a lawsuit against another subsidiary of the holding company — Interpipe M.E. FZE (UAE). The lawsuit for the recovery of nearly $50 million USD was filed in November of last year.
By the way, the next court session is scheduled for January 25, 2024. A company that plans to retrieve $50 million USD from an aggressor country doesn’t quite resemble a company that has ceased its operations.
How could Interpipe have acted to genuinely cease its operations in Russia?
In reality, there are numerous ways to divest a company. Firstly, one could initiate the voluntary liquidation process. Secondly, the company could be sold. Thirdly, all employees could be laid off, the office closed, and the execution of any contracts and obligations halted, citing the war as the reason. Taxes to the budget funding the war against Ukraine could go unpaid, and all financial operations could be terminated.
Originally posted by Oleksandr Khyshchenko on RBC-Ukraine. Translated and edited by the UaPosition – Ukrainian news and analytics website
