PJSC AFK Sistema
Sistema dates back to 1993, when the corporation acquired assets in the first telecommunications, electronics, tourism, trade, oil refining, construction and real estate. Today Sistema is a large private investor operating in the real sector of the Russian economy. Sistema's investment portfolio comprises stakes in predominantly Russian companies representing various sectors of economy, including telecommunications, retail, timber processing, agriculture, high technology, banking, real estate, healthcare services and hospitality. Sistema is the controlling shareholder in most of its portfolio companies. Sistema's competencies focus on improvement of the operational efficiency of acquired assets through restructuring and attracting industry partners to enhance expertise and reduce financial risks.
Sistema practically built Russian telecom sector, the latter also making a significant contribution into the development of Russian aerospace technologies and satellite systems and carrying out national projects in healthcare. Sistema is a major private investor in the real segment of Russia's economy. It has become an integral part of its development. The decisions made by the Corporation have a material impact not only on its portfolio companies, but also on the local communities and the operation of industries employing millions of people in Russia.
Chairman of the Board of Directors of Sistema Vladimir Evtushenkov, with 64.2% of shares, is the principal Sistema shareholder. Sistema’s global depositary receipts are listed under the “SSA” ticker on the London Stock Exchange. Sistema’s ordinary shares are in the first (highest) level of listing under the “AFKS” ticker on Moscow Exchange.
Vladimir Yevtushenko, the head of the company Sistema, is married to Natalya Yevtushenko, the sister of Yelena Baturina, the wife of long-time Moscow Mayor Yuriy Luzhkov. Baturina definitely had links to the criminal world, and particularly to the Solntsevo criminal group (widely regarded by Russian law enforcement as one of the most powerful organized crime groups in Russia).
Sistema was created with Moscow city government-owned shares, and Sistema initially focused on privatizing the capital's real estate and gas. Sistema's president, Yevgeny Novitsky, controlled the Solntsevo criminal gang. By 2010, Sistema had spun off into various companies, which implemented projects that typically include 50 percent funding from the Moscow city government. Russian President Dmitry Medvedev fired Moscow Mayor Yuriy Luzhkov at the end of September 201 because he was no longer trusted by the government.
Vladimir Yevtushenkov was investigated for money laundering. Yevtushenkov was arrested on 16 September 2014 over his suspected involvement in money-laundering. Prosecutors were investigating Sistema's 2009 acquisition of shares in Russia's Bashkortostan Republic's oil company. Prosecutors suspected that the shares were acquired at deliberately reduced prices, with a "discount" of $500 million. Sistema repeatedly stated that the allegations were ungrounded. Following the lawsuit filed by the Prosecutor General, on 30 October 2016 the Moscow Arbitration Court seized 71.6 percent of shares from AFK Sistema and its subsidiary firm, and handed them over to the government. Investigators were unable to find any evidence supporting money laundering charges against billionaire Vladimir Yevtushenkov, Russian President Vladimir Putin said 18 December 2014.
The dispute between Rosneft, Russia's largest oil company, and Sistema had rumbled along for some time. Russian authorities in 2014 seized control of Bashneft from oligarch owner Vladimir Yevtushenkov, who was charged with money-laundering and acquiring the company illegally. The chairman and co-owner of the Russian oil-telecoms-retail conglomerate AFK Sistema Vladimir Yevtushenkov, suspected of illegally privatizing the Russian oil company Bashneft, was released from house arrest 17 December 2017.
Yevtushenkov was freed after the Bashneft oil company he owned was re-nationalized and subsequently auctioned off to Rosneft. Critics called it an asset-grab by the state and reminiscent of the government’s seizure of Yukos Oil Company from Kremlin critic Mikhail Khodorkovsky in 2003. Most of the broken-up Yukos entities ended up controlled by Rosneft and Gazprom, Russia's state-controlled natural gas monopoly.
Rosneft claimed Sistema secretly removed assets from oil producer Bashneft before the purchase of Basneft by Rosneft for US$5.3 billion. In a battle of the oligarchs, Rosneft's boss Igor Sachin is thought to be closer to Vladimir Putin than is Yevtushenkov.
Yevtushenkov seemed to have somewhat mended his ties with the Kremlin. Andrey Dubovskov, President and Chief Executive Officer of Sistema, said: “In December 2017, Sistema, Rosneft, Bashneft and the Republic of Bashkortostan reached an agreement to settle all litigations related to Sistema’s ownership of Bashneft. In the first quarter of this year, Sistema fulfilled all its obligations under this agreement by securing the necessary financing and completing payments to Bashneft totalling RUB 100 billion. All parties have now withdrawn their legal claims against each other, and all of Sistema’s assets are free of the injunctions imposed as part of the previously filed claims.
“Despite the challenges of 2017, Sistema managed to not only preserve its portfolio, but to grow its assets and generate efficiencies. These achievements are reflected in the solid financial results we are announcing today. MTS benefitted from an improved operating and competitive environment, and grew revenue by 1.7% while improving its OIBDA margin and delivering very strong free cash flow. Even more important for us as a shareholder is that MTS has made excellent progress in its digital transformation, leveraging synergies with MTS Bank and also expanding in e-commerce, the Internet of Things and e-sports.
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