Who is Konstantin Sokolov, who appears to be the new owner of MTS Armenia?

In the first part of this story we touched upon some details of the transaction on the alienation of the telecommunications operator - MTS Armenia. In the article we told about the Chinese Zhe Zhang, who appears to be the real beneficiary of the Cypriot company Fedilco Group Limited, which acquired the Armenian company from the Russian MTS. The second owner appears to be Konstantin Sokolov.

Let us recall the statement of MTS Armenia CJSC that the new owners are “professional investors with extensive experience in telecommunications, finance, energy and asset management”. Nevertheless, based on the information we received and the results of our research, we came to the conclusion that in this case, as in many other transactions, Zhang and Sokolov are just managers, while the real owners or investors behind them remain in the shadows and for one reason or another maintain confidentiality.

According to marketscreener.com, Konstantin Anatolievich Sokolov, 49, graduated from St. Petersburg State University (apparently he is a St. Petersburger), after which he earned a master's degree in management from the University of Chicago. According to the same source, Sokolov's name is associated with American and British companies in which he is (was) mainly a director. In two of these companies, Sokolov and Zhe Zhang are (were) on the board of directors.

Sokolov's company is involved in a dispute with an investor and a court case

Konstantin Sokolov is featured in a story about a Canadian investor who, according to the Cypriot press, was the victim of a fraud worth more than $2.5 million.

In 2018, the Cypriot publication 24h.com.cy reported on a lawsuit pending in a Cypriot court by a Canadian investor who requested the liquidation of a local company, Posparon Investments Limited, so that the amount of money embezzled from him through fraud could be clarified. According to the publication, Posparon's directors Olga Igorevna Katoraichik and Ilya Vyacheslavovich Sokolov (both Russian citizens) persuaded the Canadian to invest, through a fund operating in Liechtenstein, $2.5 million in a Russian joint stock company, Compressor Complex (“KK”), specializing in the manufacture of pump pumps and compressors. It was a leading engineering company in St. Petersburg.

According to 24h.com.cy, as part of the investment deal, an agreement was signed stating that Posparon Investments Limited owned 80% of KK, but the lawsuit emphasized that Posparon was not a shareholder of the Russian company, but of the Cypriot Wellinom Holdings Limited, where the same Olga Katoraichik and Ilya Sokolov are directors. In reality, as evidenced by the data of the registers of Cyprus and the Russian Federation, Posparon was not directly related to either KK or Wellinom Holdings. Nevertheless, Posparon was at the top of the pyramid (the other companies were represented as its “subsidiaries”). The Canadian became a shareholder in this very company and subsequently sued Posparon.

Officially, since 2012, about 80% of KKK has been owned by another Russian company, Argo LLC, which in turn was owned by Wellinom Holdings Limited until 2016.

According to the documents, the owners of Wellinom are Cypriot companies providing services in the investment sphere, which are owned by the same person. This is a very convenient and common way of hiding the real beneficiary. The same can be said about Posparon, about 70% of which, as you can see on the bottom chart, was owned by two Cypriot companies providing consulting and business management services, which again says nothing about the real owners.

Compressor Complex ownership scheme as of 2016, when the company was taken over by SBC Premier. The colors in the figure indicate the following countries:

Russia - green, blue

Cyprus - purple

Malta - brown.

As follows from this scheme, Ilya Sokolov was a member of the Board of Directors of “KK” (according to his LinkedIn page, in 2011-2017, he also held the position of Chairman of the Board) and Konstantin Sokolov (2011-2014). Moreover, K. Sokolov was a participant of KK with a 0.0042% stake.

Let's return to the lawsuit against Posparon. It says that later directors O. Katoraichik and I. Sokolov informed the Canadian who invested $2.5 million that an adjustment was made to the reasonable value of the $8 million investment, but they did not show the financial statements of the above-mentioned Posparon subsidiaries to justify the need to increase the amount of the investment. Instead, the Canadian was presented with an opinion from a Cypriot auditing organization that the investment adjustment was due to an alleged increase in the net asset value of a Posparon subsidiary (presumably “KK”).

In any case, in 2014. I. Sokolov sent documents to the Canadian investor and his lawyers, but the arguments in favor of increasing the size of the investment did not satisfy the Canadian. At the same time, the directors were told that the Russian company had taken out a $35 million loan from a local bank, which resulted in an increase in the value of the main Cypriot company. In the end, the investor demanded a meeting not only with Olga Katoraichik and Ilya Sokolov, but also with Konstantin Sokolov, the owner and ultimate beneficiary of Posparon (of course, and the subordinate “KK”). The latter assured the Canadian that from now on he would receive the latest information about investments from him personally.

However, 24h.com.cy reports that the Canadian investor never received any important information until 2017, and although his lawyers periodically tried to get to the bottom of the situation, Posparon directors Katoraichuk and Sokolov called a general meeting of the company to re-approve the 2013-2014 audited financial statements, without ever explaining why it was necessary to do so.

In January 2018, a lawsuit demanding the liquidation of Posparon Investments Limited was filed by a Canadian investor company Wastendo, which owns 6.3% of its shares. According to the Cypriot state registry, the sole owner of Wastendo is Glenn Smith, a resident of Calgary, Canada. In fact, it is Smith who is the mentioned 24h.com.cy investor or its representative.

In addition to demanding the liquidation of Posparon, Wastendo asked the court to order the other shareholders (Norfin Management Limited, Norfin Holdings Limited and Yarton Investments B.V.) to purchase its 6.3% stake for $2.5 million. In fact, the Canadian wants to get his money back from the other Posparon participants, who, in fact, acted under the control of K. Sokolov. The lawsuit stated that, according to the Canadian investor, there were serious signs of bad administration and mismanagement by the board of directors in the company, and the company's activities were carried out through fraud, which was facilitated by the Cypriot audit organization. However, the opposing party filed a counterclaim seeking to dismiss Wastendo's claims, which the Nicosia court granted in December 2018.

It turns out that the Canadian investor failed not only by concluding a deal with Posparon, but also in defending its interests in court.

Nevertheless, Posparon, founded in 2008, was struck off from the Cypriot registry in July 2022.

As for Compressor Complex, which was at the center of the investment dispute, in 2016, the new owner of Argo, which owns 80% of this company, became SBC Premier from Sberbank Group (presumably, the controlling stake in the machine-building company was transferred to the bank in exchange for a loan commitment). That is, “KK” was no longer controlled by the Cypriot Posparon. And in 2017. Argo was taken over by another Russian company, Grossmann Rus, part of the Grossmann Group engineering company. The latter works with major oil and gas companies. However, in 2020. “KK was declared bankrupt, and in 2022 the same fate befell Grossmann Rus.

It was noted above that Posparon directors O. Katorajcik and I. Sokolov convinced a Canadian investor to invest $2.5 million in Compressor Complex through a fund operating in Liechtenstein. It is difficult to say how exactly the connection between the said fund and Posparon and its subsidiaries operated. It is noteworthy, however, that between 2011 and 2020. Ilya Sokolov, according to his LinkedIn page, worked as an external advisor to Gotthard Umbrella Fund, a Liechtenstein-registered fund that invested mainly in the Russian real estate market. Moreover, Russian newspaper Kommersant wrote that Gotthard Umbrella Fund's 2018 report included the Compressor Complex enterprise in the fund's portfolio. At the end of 2019, the fund ceased to exist.

Failure of an investment project to restore a monument building in St. Petersburg

K. Sokolov and his partners were involved in another project, which, however, failed. In May 2010, the government of St. Petersburg at a closed session decided to alienate three buildings-monuments of federal importance to private investors who were to turn these buildings into luxury or 5-star hotels. At the same time, no auction for the purchase of these buildings was announced, they were alienated by direct sale as part of a single package.

According to Russian press reports, two companies affiliated with the twin brothers, billionaires Boris and Mikhail Zingarevich, purchased the two buildings. The buyers paid 30 and 20 million rubles respectively. However, in addition to these sums, they pledged to make investments for specific amounts.

A third building was sold in a similar manner - the house of Mikhail Vavelberg, a well-known banker in the Russian Empire. This building was purchased for 111 million rubles by the St. Petersburg-based company IFG-Basis-Project. Its general director told the Russian media that they had nothing to do with the Zingarevichs.

The Zingarevich brothers are known mainly for their woodworking business (they are sometimes referred to as the “forest brothers”). In the 1990s, their partner was Dmitry Medvedev, a St. Petersburg native who later became President of the Russian Federation. Today, the brothers' partner is another billionaire and also a native of St. Petersburg, Zakhar Smushkin, about whom we have already had occasion to write.

In 2010, the Russian press reported that IFG-Basis-Project was owned by Applerson Holdings Limited, a Cypriot company with unknown beneficial owners. Danat Bulavko, then CEO of IFG-Basis-Project, said that it was an international investment fund. It was reported back in 2009 that Applerson was going to invest in the St. Petersburg hotel complex. It was also noted then that this company was a division of the Cyprus-based investment fund IFG-Basis. According to Russian press reports, the fund was established to invest in real estate in Eastern Europe, Russia, China and the Gulf countries. As of 2009, the fund included about 100 properties, and its financial partners were Austria's Erste Bank, Italy's Generali Group and Switzerland's Bank Julius Baer & Co.

It should be noted, however, that according to the state registry of Cyprus, the investment fund named IFG-Basis is not registered in this country. On the other hand, according to the Cyprus registry, the owners of Applerson Holdings Limited, which existed in 2009-2014, never had such an organization. The last owner of Applerson was Crest Wave Investments Limited, a company registered in the British Virgin Islands, and Konstantin Sokolov was a member of Applerson's Board of Directors.

Thus, in 2010, when the Russian company IFG-Basis-Project acquired the Vavelberg house with the purpose of converting it into a hotel, the owner of the company was Applerson Holdings Limited, with which K. Sokolov was directly connected. It is also known that in 2013-2016 the Russian company was owned by the Moscow-registered LLC “Innovation Development Company”, whose owners in a 50-50 split were the Cyprus-based Wellinom Investments Limited and the VBO-registered Wellinom Properties Limited. Our research showed that again K. Sokolov was behind the various companies with the name Wellinom. The other question is whether he was the real owner or merely represented himself as such.

The ownership scheme of IFG-Basis-Project as of 2016, when this company had not yet been taken over by SBC Premier, was as follows:

Russia - green, blue

Cyprus - purple

Offshore zones (BVI, Anguilla) - brown.

Ilya Sokolov, a partner of K. Sokolov, was the CEO of IFG-Basis-Project in 2010-2017. In 2013, the latter signed an agreement with the Arab company Jumeirah Group, which was supposed to take over the management of the hotel to be created on the basis of the Vavelberg house. However, this project was not destined to materialize.

In 2019, the Russian Kommersant, citing its sources, wrote that Konstantin Sokolov, entrepreneur Evgeny Tonkachev, who denied his participation in the project, as well as the Liechtenstein-registered company Gotthard Umbrella Fund were involved in the IFG-Basis-Project hotel project. According to the newspaper, in 2018 the Vavelberg house, as well as the Compressor Complex enterprise, was included in the list of assets of this fund, but in 2019 the fund brought the process of alienation of the historic building to an end. As noted above, Gotthard Umbrella Fund was liquidated at the end of 2019.

In fact, both the machine-building enterprise Compressor Complex was controlled until 2016 by the Cyprus-based company Posparon Investments Limited, whose beneficial owner was Konstantin Sokolov, and IFG-Basis-Project was controlled until 2016 by companies affiliated with Sokolov.

Sokolov and his partners failed to realize the project of turning the Vavelberg House into a hotel, although it was planned to open in 2015, five years after the sale of the historic building.

In 2016, Sberbank subsidiary SBC Premier became the sole owner of IFG-Basis-Project. In 2017, this company was replaced by the Russian company Project 5-7, which in turn was jointly owned by Sberbank and billionaire entrepreneur Nikolay Buynov.

In 2019, Sberbank left, after which Project 5-7 and the company IFG-Basis-Project, which belonged to it, were fully taken over by Buynov. It was under him that the transformation of the Vavelberg House, which lasted more than 10 years, was completed in 2021. In April 2021, the 5-star Wawelberg Hotel opened there.

K.Sokolov's mother founded a similar company in Cyprus

In December 2023, a company called IFG Basis Capital (CY) Limited was founded in Cyprus, the sole participant and director of which is Bronislava Gorelik. According to Daily News America source, B.Gorelik is the mother of Konstantin Sokolov. She is also involved in other Cypriot companies. According to the Cyprus state registry, Bronislava Gorelik is registered in Malta, but has Israeli citizenship. It can be assumed that K. Sokolov is actually behind the companies registered in her mother's name.

Daily News America continues to identify the real beneficiaries-owners of MTS Armenia. From two different sources we received the same information about the real buyers of this telecom operator. But this will be discussed in the next article.