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Inskoy mine case: commercial interests of business against social obligations of regional authorities

15:02 18/07/2019

The administration of the Kemerovo Region about half a year unsuccessfully tried to get the enterprise-debtor to pay salaries to employees. When employees went on strike, tough measures ensued.

The Central Kemerovo City Court continues to hear the case of an alleged extortion of 51% of the shares of Inskoy mine.

The strike at the troubled company, whose employees were not paid for several months, led to the interference of the regional administration. When management of the mine failed to secure payments, the Investigative Committee joined in.

The owner of Inskoy was asked to pay off the debts by using cash from the sale of his controlling stake to some proficient businessman.

After accepting the offer, the owner of the mine filed a petition for criminal proceedings. He accused representatives of the administration, investigators and the businessman, who was ready to purchase the shares, of extortion. Moreover, he claimed lost profits exceeding one billion rubles, despite the fact that the situation at a loss-making mine was life-threatening.

 

Atmosphere of despair

By the beginning of July 2016 miners of Inskoy had not been paid for several months, and before that they got their salaries partially with delays for half a year. As a result, one of the workers’ shifts refused to go to work, starting a spontaneous strike. Witnesses said that miners took their minor children, parents and senior people with them, who had nothing to do with the Inskoy mine. The situation was described as “nervous and rather tense”.

Miners complained that all the equipment was broken, and they had to work with a limited number of shovels. Feeling exhausted, miners went to work in fact being for a long time on a sit-down strike.

Witnesses claim that “the condition of the equipment was at 6-7points out of 10”. “The equipment inside the mine was dangerous for the miners”, the cutter-loader was critically worn, while there was shortage of shovels and brooms, according to witnesses.

Wage arrears by July 2016 reached 60 million rubles, a number of witnesses claim. The situation was extraordinary for Kemerovo administration because no one wanted renewal of strikes of the 90s.

The problem was complicated because of the absence of trust of employees in the top managers of the mine. Complaints were filed to the prosecutor's office and the administration of the region – promises of the Inskoy top managers remained unheeded.

 

Administration rushed to help

Administration of the region tried to solve the problems at Inskoy mine for a long time. Wage arrears increased steadily, and by July 2016 debts were the largest in the region, despite promises of the owners of the mine to pay them off.

Representatives of the administration of the region, including vice-governor Alexander Danilchenko who now stands accused of extortion, arrived at the mine when they received the information about the strike. Moreover, officials responsible for resolving labour disputeswere asked for help, including those who were supposed to be on their vacations.

Miners met officials of the administration of the region with enthusiasm. The delegation was taken to the mine, its representatives were told about the problems. The results of the inspection of the mine were frustrating. Former chief of the coal industry department of the Kemerovo region said that there was not enough space in the mine, the equipment was so worn out that it was dangerous. Besides, there was litter, cigarette fags everywhere.

Witnesses claim that Danilchenko did his best trying to communicate with miners, explain the reasons for wage arrears and ways of how the administration could help to pay the arrears of Inskoy employees. The mechanism already existed because there was Miloserdie сharity foundation that transferred the money when it was needed.

Within a few days the administration was able to facilitate the payment of the greater part of the wage arrears. Businessman Alexander Shchukin, who is one of the defendants in the criminal case, gave the сharity foundation about 200 million rubles (over $3 million) at the request of Aman Tuleyev, then Governor of the Kemerovo region.

The officials of the Investigative Committee arrived at the mine later. They decided to seize documents and conduct their own examination of Inskoy mine. Investigatorslistened to the miners carefully. They came to the conclusion that the situation at the mine was getting out of control and it had to be resolved.

According to witnesses, Chief of the Investigative Committee Alexander Bastrykin personally gave  instructions to “deal straight with the owners of the enterprise, initiate proceedings in order to make decisions on their arrest” to finally resolve the issue of wage arrears at Inskoy mine.

 

Owner claims billion in profits, financial inspection shows losses

Anton Tsygankov who was indicated to be the owner of the mine and who was allegedly forced to give away 51% of its shares, testified in court.

He said at the hearings held behind closed doors that he expected to receive a profit of 1.5 billion rubles (nearly $24 million) from the mine by 2020-2022.

However, competent witnesses claimed that Inskoy mine was unprofitable as its cheap coal was used mainly at boiler stations.

At this point Inskoy mine goes through bankruptcy proceedings.

It was revealed in court that the mine received no money, its accounts were blocked, and even the smallest payments were made through the management company.

Former first deputy chief of the Investigative Committee in the Kemerovo region Pavel Mulin says that such a scheme is used to avoid current payments and taxes, it is usually deployed by companies with huge debts whose accounts are blocked. The scheme is a crime under Article 201 (Abuse of Authority) of the Criminal Code of Russia.

Thus, by July 2016 the mine could not attract loans even for the payment of the most problematic debts, including wage arrears of its employees.

Moreover, debts to suppliers automatically caused problems with salary payments at other enterprises.

According to witnesses with mining qualification, at least 50 million rubles were needed for repair works at Inskoy, while 150 million rubles were needed to resume coal production in full and start mining coal by September-October 2016. At that time Tsygankov could not find a single ruble, witnesses claim.

 

Case is unraveling

The Central Kemerovo City Court is now hearing this high-profile case dealing with two issues: an attempt to get the resources of the mine at any cost and the desire to help people out of a difficult situation. 

The administration of the region tried to resolve the conflict at Inskoy mine since the beginning of 2016 applying different instruments with no success. A heavy-handed approach was used when the strike began at the mine.

Tsygankov, the injured party in this case, claims that he could have made a big profit, so he accepted as a gift a controlling stake of the mine from its previous owner. 

Witnesses claim in their turn that the mine was in a critical condition, it posed a danger to lives of its employees, and the administration of the region had to interfere in the situation. Besides, the mine had multibillion debts (estimated at 5 - 9 billion rubles), and in these circumstances it was ridiculous to speak of profit, according to witnesses.

The court has to decide how to qualify the actions of the administration of the region and how to estimate the value of the shares of the mine in question. Position of Tsygankov can be seriously undermined if it is proved that the value of the shares was one ruble due to huge debts of the mine.


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Inskoy mine case: commercial interests of business against social obligations of regional authorities

15:02 18/07/2019 The administration of the Kemerovo Region about half a year unsuccessfully tried to get the enterprise-debtor to pay salaries to employees. When employees went on strike, tough measures ensued.
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