Trump-Linked Oligarch’s Company Goes Bust as Intrigue Grows

By Kevin G. Hall and Ben Wieder, McClatchy

20 August 17

wo mysterious companies owned by the Russian oligarch who bought Donald Trump’s Palm Beach mansion filed for bankruptcy in North Carolina Friday, adding to the mystery about the firms and the rich Russian behind them.

Dmitry Rybolovlev has drawn attention not just for his 2008 purchase of Trump’s palatial home for close to $100 million, but also for the fact that his tricked-out Airbus 319 intersected with Trump’s plane on U.S. airport tarmacs on multiple occasions last fall. McClatchy revealed in March that his plane had been in the Charlotte area twice during the 2016 presidentical campaign at the same time as Trump’s. Rybolovlev’s spokesman first called the crossings coincidental, later confirming McClatchy’s reporting that he was the main shareholder of a high-tech battery plant in Concord, N.C., just outside Charlotte. (Trump and Rybolovlev deny knowing each other.)

The battery plant is the most prominent physical manifestation of the companies that just filed for bankruptcy, Alevo USA Inc. and Alevo Manufacturing Inc. — U.S. arms of Alevo, which is based in Switzerland and is part of the Rybolovlev empire. The oligarch’s far-flung holdings include the storied Monaco soccer club, a Greek island, pricey New York real estate and Trump’s former West Palm Beach mansion.

The Charlotte Observer broke news of the impending bankruptcy Friday, and Alevo’s website was replaced with a single page saying the two U.S. subsidiaries sought “to achieve an orderly liquidation of their assets and maximize value to pay their creditors.” Alevo filed under Chapter 11 of the bankruptcy code, allowing the company’s Alevo's new predominantly Russian management a say on which assets are sold off and how.

Very little about Alevo was ordinary, including its top shareholder and management team. Alevo Inc. was first established in Boca Raton, Fla., in January 2009. Later, Alevo USA Inc. and Alevo Manufacturing Inc. were registererd in Delaware, which requires little public disclosure about privately held companies.

In Concord, Alevo promised to make 40-foot lithium ion batteries that resembled shipping containers and stored solar-generated power. The company bought an old Philip Morris cigarette plant for $68.5 million and quickly sold it, then leased it back. But its production was far from the mid-Atlantic states where it was trying to sell.

Alevo’s management team had a few American energy veterans but was dominated by Russian cronies of Rybolovlev with no background in power generation, electricity markets or the grid. Few of the large batteries were delivered to clients: The Maryland city of Hagerstown is the only publicly acknowledged recipient of a GridBanks battery.

The Delaware coastal city of Lewes has been waiting for months to receive its battery, which it planned to use to fill in power supply during times of peak usage or outages.

“Our contract is such that we don’t have a lot of financial harm coming to us,” Darrin Gordon, who heads the public works department in Lewes, told McClatchy in a recent interview.

Last April, the U.S. Trade and Development Agency announced a $1.6 million grant to Alevo and a little-known British firm, Xago Africa, to study the feasibility of exporting its technology to a remote corner of Kenya. McClatchy has learned that the grant had been pursued by Xago Africa through the U.S. Embassy in Kenya. But no money had actually been provided as the proposal was held up by the agency in a secondary process.

McClatchy tried unsuccessfully to reach Xago Africa at its listed numbers and by email.

Rybolovlev remade Alevo’s corporate board with top executives of his former fertilizer company, Uralkali, which at its height controlled about a fifth of the world’s production of potash, which is mostly used as a fertilizer and in soap products. Rybolovlev sold it in 2010 for a reported $10 billion; some news reports have said Russian leader Vladimir Putin forced the sale.

But some of the individuals named to be officers and directors of Alevo had been in the news for all the wrong reasons. The new CEO, Vladislav Baumgertner, was CEO of Uralkali from 2003 to 2013, and was involved in an international scandal when arrested in Belarus for abuse of office. He was later extradited to Russia, where he was put under house arrest but eventually exonerated in a murky case. Uralkali’s chief financial officer, Kuzma Marchuk, who also recently joined the Alevo team, helped take Uralkali public on the London Stock Exchange, but later was the subject of controversy when it was revealed he received an outsized payout after Uralkali was sold.

Also brought into Alevo as a director was Mikhail Sazonov, Rybolovlev’s longtime aide who attended to affairs with the family business that controls the oligarch’s empire. Sazonov made international headlines during last year’s publication of the Panama Papers, which showed him as a co-director on some of Rybolovlev’s offshore companies. They were listed together in the Panama Papers on Xitrans Finance Ltd., a holding entity for Rybolovlev’s pricy art collection that includes works by Degas, Van Gogh and Monet.

(Rybolovlev’s ex-wife Elena, who won what is still considered the world’s largest divorce settlement at $4.5 billion — though it was reduced to about $600 million after a seven-year court battle — accused Rybolovlev of moving his wealth to offshore tax havens to hide it from her and others.)

Then there is the diamond connection. Alevo’s recently named new chief commercial officer, Oleg Petrov, had worked with Rybolovlev and Baumgertner at Uralkali, but in 2015 also led the acquisition arm of Alrosa, Russia’s state-owned diamond company. That company featured in secret State Department cables from the U.S. embassy in Kenya, published on the Wikileaks website, voicing concern about Alrosa.

One Jan. 9, 2009, confidential cable from then-Ambassador James D. McGree warned that the Zimbabwean military was cutting deals for diamonds smuggled into neighboring Mozambique. It also noted that Alrosa sought an exclusive deal with Zimbabwe’s longtime kleptocratic leader Robert Mugabe, who later traveled to Moscow to negotiate. A deal followed a year later giving Russia rights to a sought-after mining area.

When Petrov was at Alrosa he headed the United Selling Organization, the division that sorts and values diamonds at a state-run Russian agency in a country where such agencies are notorious for corruption.