Sanctioned Chemezov runs conglomerate with many foreign partners

by Reuters
Monday, 28 April 2014 17:44 GMT

By Megan Davies

MOSCOW, April 28 (Reuters) - Sergei Chemezov, who worked in the old communist East Germany at the same time as President Vladimir Putin, sits atop sprawling conglomerate Rostec, which has stakes in some of Russia's largest industries and partnerships with foreign companies.

Encompassing weapons, cars and metals, Rostec was created in 2007 by Putin from assets of arms exporter Rosoboronexport to boost the non-resources sectors of Russia's economy. Chemezov had run Rosoboronexport, which is now 100 percent owned by Rostec.

Chemezov, 61, was sanctioned by the U.S. government on Monday over Russia's role in the Ukraine crisis.

He holds no stake in Rostec, which is 100 percent government-owned. Lawyers have said that in cases where an individual is sanctioned but not the company they run, international businesses can still deal with the company, although it could impact relations.

Brian Zimbler, partner at law firm Morgan Lewis, said under U.S. sanctions, a U.S. person should not do anything that benefits a sanctioned person, or provides value to him.

This could even "make U.S. companies ... reluctant to have meetings with (sanctioned) individuals or deal with them directly," he said.


Rostec, formerly known as Russian Technologies, holds a stake in titanium producer VSMPO-AVISMA, which supplies Boeing . It also has stakes in Russia's largest carmaker Avtovaz and Rosoboronexport.

Made up of more than 600 companies spanning military, industrial and civilian industries, Rostec companies employ more than 900,000 people - approximately 1.2 percent of the Russian workforce - according to its website.

The conglomerate has several ventures, partnerships or relations with foreign companies including Italy's Pirelli , Germany's Daimler, Italy's AgustaWestland , France's Alcatel-Lucent and U.S. company Federal Mogul, according to its website.

It also holds a share in automaker Avtovaz, maker of the Lada. Carmakers Nissan Motor Co and Renault have struck a deal to take control of Avtovaz by mid-year.

Rostec's Rosoboronexport has international contracts including supplying the U.S. Department of Defense with helicopters for use in Afghanistan. The Pentagon has paid Rosoboronexport over $1 billion for the Russian-made Mi-17 choppers. [ID nL1N0MO13K]

A group of U.S. senators in March called on President Barack Obama to impose sanctions on Russia's defence sector and urged him to cancel contracts with Rosoboronexport.

Chemezov, 62, was born in Cheremkhovo in Siberia and studied at the Irkutsk Institute of the National Economy and Russia's Military Academy.

He worked in East Germany in the 1980s, running a little known Soviet enterprise at the same time as Putin was serving there as an intelligence officer. When he took the helm of Rostec six years ago, Russian media reported he had the ear of the Kremlin and tipped him as a possible future president.

Chemezov sits on the board of Norilsk Nickel and airline Aeroflot.

He is married and has three sons and a daughter, according to Rostec's website.

Rostec declined to comment on the sanctions. (Additional reporting by Gleb Stolyarov; editing by Andrew Roche)

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