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Konstantin Strukov is the Russian gold billionaire who faces asset seizure in Russia

The Russian state is seeking to take over the majority of Konstantin Strukov’s stake in Uzhuralzoloto, a major gold producer.

The Sovetsky District Court, in the Urals town of Chelyabinsk, will hear a case on July 8, which is the latest in an ongoing series of seizures of assets by the Russian government.

Who is KONSTANTIN STRUKOV?

Strukov was born in the Russian Orenburg Region in 1958. He began working in mining immediately after graduating Magnitogorsk State Technical University.

Uzhuralzoloto, founded in 1976 as a Soviet company, was privatised after the collapse of the Soviet Union in 1993. Strukov took over the enterprise in 1997 when production had nearly stopped.

The Svetlinsky Gold Deposit, the largest gold deposit in the Urals region, was transferred to a business with the same name.

Strukov acquired the assets of the company and shares of a new firm for 162,600 roubles.

Production was restarted after that thanks to the gold deposits they had acquired in Khakassia, Krasnoyarsk and other regions.

UGC increased its annual production from 3 tons to 10 tons between 2004 and 2012. The company owns 17 core assets, and has eight processing facilities spread across two regional bases.

Due to the closure of some mines at the regulator's request, production in 2024 will fall by 17%. This amounts to 10,6 tons. UGC anticipates that production will increase to up to 14.4 tons this year.

Strukov's fortune, estimated by Forbes to be $1.9 billion by Forbes, was put under sanctions by certain Western countries, including Britain. They did this after Moscow sent troops into Ukraine. Britain said that his role as director of a Russian extractives company supported the Russian government.

Strukov is a member of the legislative assembly in Chelyabinsk Region since 2000. He is the deputy speaker of Chelyabinsk Region's Parliament and a member the ruling United Russia Party.

What is the case against STRUKOV

The Chelyabinsk Court reported that the deputy prosecutor of Russia had filed a lawsuit accusing Strukov and other individuals of acquiring property "through corrupt means".

The statement did not provide any further details. However, Russian news agencies, citing an official source in law enforcement, reported that prosecutors are seeking to convert Strukov’s entire stake at UGC into state property.

Citing court documents, the Kommersant newspaper reported that prosecutors believed Strukov had used bankruptcy procedures and his position as an official of state to transfer assets to UGC. Kommersant reports that searches were carried out at UGC's offices last week for alleged violations to environmental legislation and industrial safety regulations.

Citing court documents, the newspaper reported that Strukov could have 200 billion roubles in assets confiscated, and that he used an offshore Cypriot company to hide his involvement with UGC.

Strukov was contacted by UGC for a comment.

Strukov owned 67.8% of UGC according to data from the company as of 2024. Gazprombank's company bought 22% of UGC shares late last year. The remaining 10% was floated at the Moscow Exchange between 2023 and 2024.

After a two-session decline of almost 30%, the central bank suspended UGC's Moscow listed shares trading on Friday.

In a blog aimed at investors, the company stated that Friday protecting minority shareholder rights was its top priority.

A commenter anonymously commented on the post: "The stock market is more volatile than the casino."

What is the impact on Russia's business climate?

Since Russia's troops entered Ukraine in February 20, 2022, foreign companies have faced the threat of state seizing their assets. However, Moscow has been increasingly focused on domestic assets, citing domestic security and strategic stability.

Why Strukov and UGC was targeted is not known.

Moscow sends mixed messages about foreign investment. It wants to portray Russia as an attractive destination for foreign capital while at the same time arresting business leaders. Since the beginning of the conflict with Ukraine, foreign investment has dropped sharply.

Vadim Moschkovich, billionaire founder and CEO of Rusagro - Russia's largest agriculture company - has been in pre trial detention since March, on charges of embezzlement, which he denies.

(source: Reuters)