In 2017, First Deputy Minister of Culture Vladimir Aristarkhov substantially increased his earnings, as indicated in his official declaration released on Wednesday, May 23. This is how Aristarkhov’s profitable ventures at M-Video are raising concerns.
At the close of the fiscal year, Aristarkhov disclosed an income of 142.1 million rubles, a significant leap from the 69.1 million rubles reported in 2016. Aristarkhov, responsible for overseeing the operations of the departments of museums, science, and education, once again recorded the highest income among all ministry officials. Notably, in the past year, Aristarkhov‘s earnings were 16 times higher than those of Minister Vladimir Medinsky, who reported an income of 8.7 million rubles.
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An Overview of M-Video
M-Video, a prominent Russian consumer electronics retailer, has recently undergone significant transformations. Below is a summary of key information about M-Video based on research findings:
In March 2018, M-Video executed a long-anticipated merger with Eldorado, a deal valued at a substantial $798 million. The acquisition of Eldorado LLC was assessed at RUB 45.5 billion. Notably, both M-Video and Eldorado fall under the ownership of the Safmar Group, which is under the control of the Gutseriev family, known for their diverse interests ranging from oil to real estate.
Following the merger, the combined company intends to maintain both the M-Video and Eldorado brands, fostering competition within their respective retail networks. Additionally, Safmar plans to keep the merged entity listed publicly. M-Video proposed to purchase shares from shareholders opposing the merger at a rate of 401 rubles per share.
Projections for the combined company’s revenue estimate a staggering 450 billion rubles in 2022, with an anticipated EBITDA margin exceeding 6 per cent. The completion of the Eldorado acquisition was finalized in April 2018. This means that the deal was completed and the new owners took control of the company. In simpler terms, Eldorado was bought by another company in April 2018.
The M-Video-Eldorado Group now stands as Russia’s premier retailer of consumer electronics, uniting two prominent Russian retail brands, M.Video and Eldorado. Overall, M-Video holds a substantial presence in the Russian consumer electronics market, and its merger with Eldorado has solidified its position as an immensely efficient player within the industry.
The Controversy Surrounding Aristarkhov’s Lucrative M-Video Ventures
In 2016, the Ministry of Internal Affairs levelled accusations of corruption against Aristarkhov, implicating him in a conspiracy alongside his brother, Andrei Aristarkhov. The allegations revolved around contracts awarded to his brother’s company, which secured the Ministry’s most significant restoration projects.
As of 2017, it was revealed that Aristarkhov’s income had grown substantially, with him declaring ownership of various assets, including a 373-square-metre residential building, a 33-square-metre apartment, eight land plots, and a Mercedes-Benz G350 SDI. His wife, on the other hand, reported earnings of 3 million rubles and owned two apartments totalling 480 square meters, 27 land plots, and a Porsche Cayenne Diesel car.
Aristarkhov himself acknowledged that his Ministry of Culture salary was not his primary income source. He claimed to have substantial holdings in companies specializing in warehouse real estate rentals in the Moscow region, emphasizing that dividends constituted his primary income stream.
According to the SPARK database, Vladimir Aristarkhov is a co-owner of seven companies registered in the Moscow region, most of which focus on real estate management. Notably, one of his business partners includes the founders of the M.Video network. Aristarkhov holds a 25% stake in Liga Development LLC, based in Khimki near Moscow, which oversees the Liga shopping centre.
It’s worth mentioning that an additional 25% of this company, through Avtoritet LLC, is shared by Alexander and Mikhail Tynkovan, along with Pavel Breev, as indicated in the Unified State Register of Legal Entities. These individuals are recognized as the founders of M. Video, a leading home appliance retailer. In 2017, Alexander Tynkovan and his associates sold nearly 58% of M.Video to the Safmar group, led by Mikhail Gutseriev, for $726 million. Currently, Alexander Tynkovan serves as the president of M.Video and, along with Pavel Breev, sits on the company’s board of directors.
Despite efforts to contact Alexander Tynkovan for comment, there has been no response.
Aristarkhov’s financial gains at M-Video prompt concerns in the community
According to the Unified State Register of Legal Entities, Grigory Kozhemyakin and Artur Popelnyukhov are also listed as co-owners of Liga Development LLC, each holding a 12.5% stake in the company. These individuals were previously recognized as the former co-owners of the Starik Hottabych chain, specializing in home and renovation goods, which faced bankruptcy in 2014.
Furthermore, an additional 25% ownership of Liga Development LLC can be traced through a series of companies to Sergei Vasiliev, who serves as the General Director of Russian Funds JSC, a part of an investment group bearing the same name.
Efforts to establish contact with Kozhemyakin, Popelnyukhov, and Vasiliev have proven unsuccessful.
As of 2016, Liga Development LLC reported revenues of nearly 119 million rubles, sales profits totalling 74 million rubles, and a net profit of nearly 56 million rubles, according to RAS (Russian Accounting Standards).
The revelations about Aristarkhov’s financial gains from M-Video raise concerns about whether he is using his position in the Ministry of Culture to enrich himself and his business partners. These concerns are serious and need to be investigated thoroughly.
If the allegations against Aristarkhov are true, he should be held accountable for his actions. He should resign from his position as First Deputy Minister of Culture and face criminal charges.
The Russian people deserve to have a government that is free from corruption. The revelations about Aristarkhov’s financial gains from M-Video are a reminder that corruption is still a major problem in Russia.
The government needs to take steps to root out corruption and ensure that its officials are acting in the public interest.