Sistema Explained

AFK Sistema PAO is a large Russian conglomerate company, founded by Vladimir Yevtushenkov, who was chairman of the corporation's board of directors until 2022. In April, Yevtushenkov's shareholding in Sistema decreased to 49.2%, and he also stepped down from Sistema's board of directors.^{[1] [2]}

Sistema has its headquarters in Moscow. The company's global depository receipts (GDRs) traded on the London Stock Exchange from 2005 until delisting in May 2023.^[3] It has been under US sanctions since November 2023.^[4]

History

In 1993,^[5] Evgeny Novitsky and Vladimir Yevtushenkov founded the holding company AFK Sistema, also known as Sistema JSFC, to group together several information technology (IT) and cell phone companies including MTS.^{[6] [7] [8] [9]}

Structure

Sistema operates several consumer service businesses in the areas of:

• IT and telecoms — Mobile TeleSystems, Moscow City Telephone Network, SkyLink, Sitronics (formerly known as 'Science Center Concern'), NIIME, Mikron, STROM telecom.^[10]
• Banking — MTS Bank, East-West United Bank
• E-commerce – Ozon
• House-Building and Real Estate — Sistema-Gals till the end of 2010.^[11] In February 2019, Sistema became the largest shareholder of Etalon Group^[12]
• Retail — Detsky Mir Group until September 2020^[13]
• Media — Sistema Mass Media until 2016^[14]
• Healthcare and Pharmaceuticals — Medsi, Binnopharm^[15]
• Agroholding - Steppe (ru|«Агрохолдинг Степь»), which, according to Forbes in June 2019, is the second largest land bank in Russia. It has holdings in Rostov Oblast and Stavropol Krai.^{[16] [17]}
• , a vertically integrated holding company in the timber industry, performs a full cycle of operations from logging to advanced wood processing
• Hospitality – Cosmos Hotel Group
• Other businesses — Intourist (Travel Services), until July 2021 RTI Systems (Radio and space technology), Olympic Sistema (Sport)
• Kronstadt Group until July 2021. In addition, on 07.27.2021, AO Kronstadt acquired 80% of the shares of NPP Strela (Research and Production Enterprise, Bykovo, Moscow Region), engaged in helicopter-type UAV work.^[18]
• The corporation also invests in innovation projects, such as green hydrogen, and venture businesses.

In November 2021, "Sistema" was included in "Khabarovsky Project" (in Khabarovsk Krai) for pilot production of green hydrogen with a projected 350 thousand tons per year, according to Ministry of Industry and Trade (Russia).^[19]

Interests and subsidiaries

Banking

In February 2005, AFK Sistema owned a 49% stake in East-West United Bank (Luxembourg), which was established in June 1974 as a "daughter" bank of the Central Bank of Russia and is one of the five Russian foreign banks of the VTB network.^{[20] [21] [22] [23]} In 2018, Sistema held a 100% stake in East-West United Bank (EWUB) with Sergei Pchelintsev (ru|Сергей Алексеевич Пчелинцев) as the CEO.^{[24] [25]} In 2021, the company's revenue amounted to 24 billion rubles.^[26]

Following the February and March 2022 sanctions issued against VTB and its subsidiaries which include the former daughter banks of the Soviet Union's State Bank Gosbank and later the Central Bank of Russia, EWUB in Luxembourg has become the principal Russian overseas bank in Europe after Gazprombank ceased operations in the region.^{[27] [28]} As of the end of March 2022, the Vladimir Yevtushenkov (ru|Владимир Петрович Евтушенков) controlled Sistema and its subsidiary East-West United Bank (EWUB) in Luxembourg have not been sanctioned due to Russian invasion of Ukraine.^{[27] [29] [30]} He no longer controls Sistema after reducing his stake in the corporation below control (49.2%), and voluntarily resigned from its board of directors in April 2022.^{[31] [32]}

Hotels

According to Arnold Tamm (Spivakovsky), both the Peking Hotel at Bol'shaya Sadovaya Ulitsa, 5 in Moscow, where Oleg Kuznetsov (ru|Олег Кузнецов) was the administrator from 2002 to 2016, and the Cosmos Hotel at 150 Mira Avenue in Moscow, are owned by Sistema.

Aerospace and defence

Until July 2021^[33] AFK Sistema PAO had an aerospace and defence subsidiary, Kronstadt Group, which was acquired in 2015 and developed uncrewed aerial vehicles, and flight simulators. AFK Sistema no longer controls any assets related to the defense industry.

Bashneft interest seizure and Rosneft lawsuit

In 2014, 72% of Sistema's interest in Bashneft was seized by the Russian government.^{[34] [35]}

On 3 May, 2017, Sistema shares plunged about 37% following a $1.9 billion lawsuit filed by Rosneft.^[36]

On 15 May 2017, the Arbitration Court of Bashkortostan registered a RUB 106.6bn claim filed by Rosneft and Bashneft against Sistema, a preliminary hearing of the case was scheduled for 6 June, Irina Nurislamova was appointed as a judge for the case.^{[37] [38]}

In December 2017, AFK Sistema reached an amicable agreement with Rosneft and agreed to pay out 100 billion roubles ($1.7 billion) to resolve the dispute.^[39]

According to a declaration given on 18 October 2018 in a Spanish court by Sergey Dozhdev (ru|Сергей Дождев), Igor Sechin uses his offshore companies to control Sistema through MTS and Bashneft.

Management

On 27 June 2020, Etienne Schneider became an independent director of Sistema, at which his close political friend Jeannot Krecké had been a director at Sistema since May 2012.^{[7] [23]} Positions they resigned in February 2022.

External links

• • Google Finance: Sistema

Notes and References

1. Web site: Ad-Hoc Notice . sistema.com .
2. Web site: Sistema announces decisions of the Board of Directors . sistema.com .
3. Web site: "Система" провела делистинг с LSE. ru. 2023-05-17. Интерфакс.
4. Web site: Russia-related Designations, Updates and Removal; Counter Terrorism Designation Update; Issuance of Russia-related General Licenses. 2023-11-02. United States Department of the Treasury.
5. Web site: In 1993 Sistema JSFC was founded and acquired its first assets . sistema.com .
6. Web site: Yevgeny Grigoriyevich Novitsky . . 3 August 2021 . 3 September 2017 . https://web.archive.org/web/20170903210734/https://www.bloomberg.com/research/stocks/private/person.asp?personId=9922052&privcapId=59375132.
7. Web site: Sistema Board Recommends to the AGM to elect three new Independent Directors . AFK Sistema . 31 May 2012 . 3 August 2021 . 3 September 2017 . https://web.archive.org/web/20170903211132/http://www.sistema.com/press/press-releases/detail/article/20100/.
8. News: Hoffman . David . In Moscow, Business and Politics Mix . . 19 December 1997 . 3 August 2021.
9. Web site: About Sistema: Success Story (history) . Sistema website . 3 August 2021 . 4 August 2021 . https://web.archive.org/web/20210804024709if_/https://sistema.com/about/history.
10. Web site: Феликс Евтушенков увеличивает инвестиции в стартапы . 2023-03-24 . CNews.ru . ru.
11. Web site: О продаже 27,6% "Системы-Галс" АФК "Система" сообщила в пятницу. Покупателями выступили компании Blairwood Ltd. и Stoneflower Ltd, каждая из которых получила по 13,8%. Сумма сделки составила $70 млн. . www.kommersant.ru . 6 December 2010 .
12. Web site: АФК "Система" приобрела 25% акций группы Etalon у семьи основателя девелопера Вячеслава Заренкова. После сделки у нее осталось 5,7% Etalon, а АФК "Система" стала крупнейшим акционером группы . www.vedomosti.ru . 20 February 2019 .
13. Web site: АФК "Система" перестала быть акционером "Детского мира": компания продала свою долю почти за 17 млрд рублей . www.forbes.ru . 2 September 2020 .
14. Web site: АФК «Система» продаст свои медиаактивы. Уже в начале 2016 года подконтрольная корпорации компания СММ будет преобразована в фонд прямых инвестиций, который займется инвестированием в технопроекты. . www.rbc.ru . 25 December 2015 .
15. Web site: Евтушенков Владимир: "Эпидемия коронавируса — это общая проблема и касается всех без исключения" . 2023-03-21 . Ридус.
16. News: Попов . Игорь (Popov, Igor) . Ляликова . Анастасия (Lyalikova, Anastasia) . Плешков . Максим (Pleshkov, Maxim) . Хозяева земли русской: 20 самых дорогих землевладений России. Рейтинг Forbes . The owners of the Russian land: 20 most expensive land holdings in Russia. Forbes rating . ru . . 17 June 2019 . 29 March 2022 . 30 March 2022 . https://web.archive.org/web/20220330022603/https://www.forbes.ru/milliardery-photogallery/378069-hozyaeva-zemli-russkoy-20-samyh-dorogih-zemlevladeniy-rossii-reyting. Alternate archive
17. News: АФК «Система» уходит в АПК: С 2011 года в российском агропромышленном комплексе появился новый активный игрок - Акционерная финансовая корпорация «Система», которая на протяжении пяти лет непрерывно наращивает своё присутствие и расширяет сферу деятельности в этом направлении. . AFK "Sistema" goes to the agro-industrial complex: Since 2011, a new active player has appeared in the Russian agro-industrial complex - Sistema Joint-Stock Financial Corporation, which has been continuously increasing its presence and expanding its scope of activities in this direction for five years. . ru . agroxxi.ru . 9 July 2016 . 29 March 2022 . 31 March 2022 . https://archive.today/20220331021721/https://www.agroxxi.ru/stati/afk-sistema-uhodit-v-apk.html.
18. Блог Missiles.ru - Беспилотные “Стрелы” вертолетного типа. 10.10.2021г.
19. Web site: АФК Система включена в хабаровский проект по производству зелёного водорода. ru. 2021-11-17. Интерфакс.
20. News: "Дочерние" российские зарубежные банки и сеть ВТБ: доли ЦБ, ВТБ и др. . Russian Foreign "Daughter" Banks and the VTB Network: stakes held by Central Bank, VTB, others . compromat.ru . February 2005 . 15 July 2021 .
21. News: Бирман . Александр (Birman, Alexander) . В советских сетях: Нефтедоллары пойдут по проверенным каналам загранбанков . In Soviet networks: Oil dollars will go through proven channels of foreign banks . Компании Деловой Еженедельник (ko.ru) . 21 February 2005 . 15 July 2021 . 13 March 2005 . https://web.archive.org/web/20050313182643/https://ko.ru/document.asp?d_no=11319&p=1.
22. News: Les 45 ans d'East-West United Bank célébrés . Celebrating 45 Years of East-West United Bank . fr . paperjam.lu . 19 September 2019 . 3 August 2021 . 4 August 2021 . http://archive.wikiwix.com/cache/index2.php?url=https%3A%2F%2Fpaperjam.lu%2Farticle%2F45-annees-presence-au-luxembou.
23. News: Étienne Schneider élu administrateur chez Sistema . Étienne Schneider elected director at Sistema . fr . paperJam (paperjam.lu) . 3 July 2020 . 3 August 2021 . 4 August 2021 . http://archive.wikiwix.com/cache/index2.php?url=https%3A%2F%2Fpaperjam.lu%2Farticle%2Fetienne-schneider-elu-administ.
24. News: EWUB – история . EWUB - history . ru . ewub.lu website . 3 August 2021 . 27 April 2021 . https://web.archive.org/web/20210427053840/https://www.ewub.lu/-Our-history-?lang=ru.
25. News: Управляющие директора . Managing directors . ru . ewub.lu website . 3 August 2021 . 28 April 2021 . https://web.archive.org/web/20210428052339/https://www.ewub.lu/-Authorized-Management-40-?lang=ru.
26. Web site: ПАО АФК "Система" . 2023-10-27 . www.rusprofile.ru . ru.
27. News: Fassone . Marc . SANCTIONS AGAINST RUSSIAN INTERESTS: East-West United Bank is in the clear for now . Delano (delano.lu) . 28 February 2022 . 26 March 2022 . 27 March 2022 . https://web.archive.org/web/20220327014520/https://delano.lu/article/east-west-united-bank-is-in-th.
28. Web site: Mishra . Shivam . 2022-10-11 . Russia's Gazprombank to cease operation in Switzerland . 2023-05-24 . Retail Banker International . en-US.
29. News: Strohecker . Karin . Explainer: How Western sanctions target Russia . . 25 February 2022 . 26 March 2022.
30. News: Auge . Louis . Russian oligarch who makes drone bombers to destroy Ukraine still not sanctioned: Evtushenko Makes Putin's Weapons. As the West looks to impose further sanctions on Russia and President Vladimir Putin's cronies more targets are being added to the "blacklist". Planes, boats and bank accounts - the prized assets of oligarchs around the world - are being squeezed tighter and tighter by a relentless America, United Kingdom, and EU. However, one billionaire appears to have slipped through - so far. . EU Reporter (eureporter.co) . 23 March 2022 . 31 March 2022.
31. Web site: Евтушенков сократил долю в АФК "Система" ниже контроля на фоне британских санкций . www.interfax.ru . 13 April 2022 .
32. Web site: Владимир Евтушенков вышел из совета директоров АФК "Система" . www.interfax.ru . 15 April 2022 .
33. Web site: АФК "Система" больше не контролирует два актива, связанных с оборонной промышленностью – концерн "РТИ" и группу "Кронштадт". . 15 July 2021 .
34. News: Natasha Doff and Ksenia Galouchko. Sistema Shares Soar as Putin Says Evtushenkov Charges Not Proven. https://archive.today/20141227183135/http://www.businessweek.com/news/2014-12-18/sistema-jumps-most-on-record-as-owner-freed-from-house-arrest. dead. December 27, 2014. December 27, 2014. Bloomberg News. Bloomberg Business News. December 18, 2014. Russia has seized 71.6 percent of OAO Bashneft from Sistema since ordering Evtushenkov's arrest on 16 September in a money-laundering investigation linked to the state's sale of the oil company in the previous decade..
35. News: Steven Lee Myersand Jo Becker. Even Loyalty No Guarantee Against Putin. December 27, 2014. The New York Times. December 26, 2014. Mr. Rakhimov's government privatized Bashneft, with most of its shares ending up in the hands of a company called Bashkir Capital.
36. News: Reuters. Sistema shares plunge a third after $1.9 billion Rosneft lawsuit. Moscow. 2017-05-03. 2017-05-04.
37. Web site: Предварительное заседание суда по иску "Роснефти" к АФК "Система" назначено на 6 июня. Ведомости. 15 May 2017 .
38. Web site: "Система" не признала обвинения "Роснефти". Ведомости. 18 May 2017 .
39. News: Russia's Rosneft reaches $1.7 billion settlement with Sistema. Reuters. 22 December 2017.