Fined Russian firm gets Ft. Ross
JULY 1, 2010
By ANTHONY PIGNATARO
Last week Gov. Arnold Schwarzenegger signed an agreement with the Russian corporation Renova Group to help pay for the upkeep of Fort Ross State Park, on the Sonoma coast, even though the company is facing an ongoing criminal investigation in Switzerland that’s already led to one conviction. When asked if Schwarzenegger knew of the company’s problems when he signed the agreement, governor’s office spokesman Jeff Macedo said, “We have no comment on that.”
Indeed, Schwarzenegger made no mention of the company’s problems when he signed the Fort Ross memorandum of understanding with Victor Vekselberg, Renova Group’s chairman of the board in San Francisco on June 22 while Russian President Dmitry Medvedev looked on. “It is exciting to see Renova get involved in preserving this important park and create a public-private partnership to increase the services at Fort Ross at no cost to taxpayers,” Schwarzenegger said.
Renova Group, which has vast oil, natural gas, aluminum, construction, telecommunications, nanotechnology and financial holdings and is valued at close to $25 billion, has been under investigation by the Swiss Federal Department of Finance for two years. The matter centers on Renova’s acquisition of stakes in two Swiss firms – OC Oerlikon and Sulzer.
In the case of electronics manufacturer Oerlikon, the Swiss FDF fined Renova 40 million Swiss francs (roughly $38 million) on Jan. 28 for violating disclosure laws concerning Renova’s stake in the firm, according to this Reuters story. Renova immediately issued a press release denying any wrongdoing, saying the fine “wrongfully punishes ordinary market behavior by investors and is arbitrary and biased.” The company added that the fine represents “around 20% of the current value of Renova’s stake in OC Oerlikon.”
Renova officials even went so far as to say the conviction may chill all business in Switzerland. “The decision of the Federal Department of Finance may cause massive damage to the overall investment climate in Switzerland and business of foreign companies in the country,” the release added. “Victor Vekselberg will contest this penal decision of the Swiss Federal Department of Finance in court.”
The ongoing case involving the Swiss engineering group Sulzer, which involves similar disclosure laws, is still pending. “The FDF came to the conclusion that there were sufficient indications to suspect that [former Vekselberg partners] Ronny Pecik, Georg Stumpf and Viktor Vekselberg had acted in concert when building a stake in Sulzer,” the agency reported in an April 6, 2009 statement. “[A]nd in doing so had violated their disclosure obligations.”
Renova, which also denies wrongdoing in that case, holds a controlling 31 percent interest in Sulzer. Reuters reported that Renova is facing a potential 2 billion Swiss franc fine in that case. A New York-based spokesperson for Renova did not return a call on that status of the Oerlikon appeal or Sulzer investigation by press time.
Vekselberg, whose $1.8 billion net worth ranked him #397 in Forbes’ The World’s Billionaires 2009, has long been fascinated by Russian history. Indeed, in 2004 Vekselberg bought nine Fabrege eggs from the Forbes family (though no purchase price was made public, they were valued at between $80 million and $120 million), then paid to exhibit them at the Kremlin.
Fort Ross, a Russian trading post from 1812 to 1841, seems a natural source of interest to Vekselberg. Little of the original fort remains today (most of the surrounding structure is a modern reconstruction) and the whole park has been struggling under recent budget cuts. Last year its expenses exceeded its fees by $800,000, forcing it to close four days a week.
Under the memorandum of understanding Schwarzenegger and Vekselberg signed, Renova will establish “the Renova Fort Ross Foundation” that will “work with the California Department of Parks and Recreation” and “provide substantial financial support” to the fort’s “programs and infrastructure.”
Photo courtesy of the California Department of Parks and Recreation.
No commentsWrite a comment
As the locus of the global high-tech boom, you would think some of that digital dexterity might rub off on the
Can we repeal AB 32 now? Both Gov. Arnold Schwarzenegger, who signed AB 32 (shown in the nearby picture), and