Prosecutor’s office demands the return of the Ivanovo heavy machinery plant to the state

The department believes that in the 90s the plant was illegally privatized. For the same reason, the department is demanding the return of military-industrial complex enterprises in Chelyabinsk. A lawsuit is also being prepared in connection with the ammunition plant in Klimovsk.

The Prosecutor General’s Office demands the return of the Ivanovo Heavy Machine-Building Plant to the state. Deputy Prosecutor General Igor Tkachev filed such a lawsuit in the Arbitration Court of the Ivanovo Region, and the shares of the plant and its property, including accounts, have already been seized. Details of the lawsuit are provided by the newspaper “Kommersant”.

The Prosecutor General’s Office points out that in the 90s, the privatization of the plant took place illegally, without the permission of the Russian government. This caused damage to the country’s defense capability. The plant has been in operation since the 1950s and is currently experiencing difficult times.

The Ivanovo Heavy Machine-Building Plant is one of the largest in its industry in Russia. Founded in 1953 for the mass production of boring machines, the first phase was launched five years later. By the beginning of the 1980s, the Ivanovo plant was one of the main players in Soviet machine-building. It produced products for a wide range of customers—machines were used in auto factories, aerospace organizations, defense and energy enterprises. In addition, exports were established to Germany, Italy, Sweden, Finland, and Japan. In the 1990s, the plant was privatized, and a joint-stock company was established, with Vladimir Bazhanov becoming the director.

The plant faced serious financial problems after a major fire in 2008. Three years later, the Ivanovo plant unexpectedly became a guarantor for a loan to the “Avangard” bank, which lent money to a gambling company. It eventually went bankrupt, and the bank took two plant buildings—the woodworking and foundry—in lieu of the loan.

In 2014, the “Stan” holding, a subsidiary of “Rosteh,” acquired the two buildings of the plant. As a result, another legal entity, OJSC ISZ, became one of the owners. In 2019, things seemed to be going in the right direction—the equipment for the construction of construction machinery was purchased from one of the buildings. However, in the same year, another fire occurred, and one of the buildings, which housed a sewing workshop of an external enterprise, was destroyed.

According to open sources, in October 2020, the FNS appealed to the Arbitration Court of the Ivanovo Region with a petition to recognize the shareholder company “Ivanovo Heavy Machine-Building Plant” as bankrupt.

As stated in the deputy prosecutor’s lawsuit, the status and nature of the plant’s activities implied that the decision to privatize the enterprise would fall within the “exclusive competence” of the government, but such a decision was not made. The Property Management Committee of the Ivanovo Region Administration in 1992 approved a privatization plan, which, according to the Prosecutor General’s Office, “clearly exceeded its powers.”

When the joint-stock company was established, it issued nearly 200,000 shares worth a thousand rubles each, and the shares were distributed, illegally acquiring state property by Vladimir Bazhanov and his son Mikhail, who bought almost 82% of the shares. After that, the owners severed ties with defense enterprises, fragmented the plant’s property, and transferred it to affiliated organizations, the prosecutor’s office concludes. Currently, the plant does not carry out machine-building activities and leases its property “for the enrichment of the Bazhanovs’ ultimate beneficiaries,” the Department added.

The prosecutor’s lawsuit came as a shock to the owners, Business FM told the chief editor of the 1000inf.ru website, Alexey Mashkevich:

Alexey Mashkevich chief editor of 1000inf.ru

The deputy prosecutor’s lawsuit asks the court to demand in favor of the state not only the shares of the “Ivanovo Heavy Machine-Building Plant,” but also the papers of several other legal entities—”Investproject,” “Techinvest,” shares of LLC “Machines and Tools,” and the shares of several individuals.

Earlier, the Prosecutor General’s Office demanded the confiscation of three enterprises of the Chelyabinsk Electrometallurgical Plant due to the alleged illegal privatization 30 years ago. This includes the plant itself, as well as the Serovsky and Kuznetsk ferroalloy plants.

Earlier this year, the Prosecutor General’s Office began preparing a lawsuit for the expropriation of the shares of the Klimovsk Ammunition Plant in favor of the state, after a scandal with a malfunctioning boiler room on the company’s premises. The trend is clear, according to Managing Partner of the law firm “Business Fairway” Sergey Varlamov:

Sergey Varlamov Managing Partner of Business Fairway law firm

According to the Unified State Register of Legal Entities, the revenue and profit of the Ivanovo Heavy Machine-Building Plant in 2022 amounted to less than 2 million rubles. The indicators for the previous year were not disclosed by the enterprise.

The website of the Ivanovo plant is not accessible, and third-party aggregators indicate that the plant is engaged in the manufacturing of various types of machines on demand. However, it is stated that information about the range and prices has not been updated for over six months. Phone calls to the plant remain unanswered.