Russian Execs Accused of Business Asset Heist

SAN FRANCISCO (CN) - A Russian nanotechnology company launched a predatory takeover of a solar energy startup that enabled it to transfer the smaller firm's value to an offshore entity, a shareholder lawsuit claims.

Neas Limited claims in a lawsuit filed in San Jose, Calif. last week that in 2004, it joined a group of scientists-investors in taking a unit of a formerly dilapidated Soviet-era chemical plant called Nitol and turning it into a major supplier of polysilicon for solar panels. The Nitol Plant became Nitol Solar Ltd.

By 2009, the lawsuit says, Nitol Solar was looking to expand and entered into two revolving credit facilities, one worth approximately $149,6 billion and held by Alpha Bank, and the other, worth approximately $89,7 billion with Rusnano, an enterprise established by the Russian government to promote the nation's nanotechnology sector.

Rusnano Group is currently headed by Anatoly Chubais, an influential member of the Russian government in the 1990s, and chief architect of the large-scale privatization of state-owned assets after the fall of the Soviet Union.

Among those also named as defendants in the lawsuit are Oleg Kiselev, another prominent member of Boris Yeltsin administration who is deputy chairman of RUSNANO's governing board, Vlaery Rostokin, the company's CEO, Sergey Polikarpov, its managing director, and Irina Rapoport, chairman of RUSNANO's advisory board.

Pursuant to an inter-creditor arrangement, Rusnano assumed the role of lead lender, and under that guise appointed Polikarpov and others as company directors to allegedly help manage Nitol's affairs.

However, "[i]nstead of running Nitol in a manner designed to maximize shareholder value, the Nitol Insiders grossly mismanaged Nitol's affairs, diverted valuable corporate assets and usurped for themselves valuable corporate opportunities with RUSNANO's knowledge and approval while drawing exorbitant compensation and benefits funded largely by the aforementioned credit facilities," the complaint says.

By 2010, Nitol Solar needed more money. Neas claims Polikarpov and Rostokin gave repeated assurances that an investment from RUSNANO was forthcoming.

"However, instead of procuring and/or providing the promised credit infusion, on September 26, 2011 RUSNANO suddenly and unexpectedly declared a default on the RUSNANO credit based on Nitol's supposed failure to pay accrued interest," the complaint says.

That defaulted interest was about $6 million.

Neas claims RUSNANO then moved in and began foreclosing on shares of Nitol's operating company in New Jersey, INSQU Production Limited, that had been pledged as collateral. RUSNANO transferred those shares to a company in the British Virgin Islands

Neas says RUSNANO then offered an equity stake in that company to Neas and other minority shareholders conditioned on an investment of roughly $121 million.

"Thus, on the pretext that Nitol Solar failed to pay accrued interest of approximately

$6 million dollars, which could have been easily paid from any number of sources that were ready and willing to advance funds, due acts of malfeasance and dissemblance carried out by disloyal insiders, RUSNANO acquired full control of a company then-valued at over $300 million dollars, all at the expense of legitimate shareholders like Neas," the complaint says.

According to the complaint, several RUSNANO board members have been criminally charged with misappropriation by the Russian government after a 2013 investigation by the Accounts Chamber of the Russian Federation, the auditing body for its government projects. Among other crimes, the ACRF's audit determined that RUSNANO officials had diverted funds from Nitol to offshore companies, "entered into transactions that lacked economic substance and were a sham designed to conceal underlying malfeasance."

Neither Neas' attorneys nor RUSNANO responded to a request for comment.

Neas demands actual damages of more than $10 million in addition to punitive damages and restitution for RICO, fraud, breach of contract, bad faith and violation of New Jersey and California business laws.

It is represented by Eli Goldin, Matthew Sweet and Jack Praetzellis of Fox Rothschild in San Francisco.

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