Sergei Makhlai

Sergei Vladimirovich Makhlai
Born (1969-02-16)February 16, 1969
Gubakha (Perm Krai), Soviet Union
Citizenship Russia
Alma mater Togliatti State University and the University of North Carolina
Occupation Businessman
Known for Chairman of TogliattiAzot

Sergei Vladimirovich Makhlai (Russian: Махлай Сергей Владимирович) is a Russian businessman who has been the chairman of TogliattiAzot,[1] one of the world's largest producers of ammonia, since 2011.[2]

Family, education, and early career

Sergei Vladimirovich Makhlai was born in 1969 in Gubakha, Perm Krai, where he also attended school. From 1987 to 1989, he performed mandatory military service. He then worked for several years in various middle management roles with construction companies in Togliatti. In 1993, he graduated from Togliatti State University with an undergraduate degree in engineering. He later obtained an MBA at the University of North Carolina.[2][3]

Since 2004, he has been a member of the board of JSCB Togliattikhimbank (Togliatti). Since 2005 he has been a member of the board of JSCB RTS (Togliatti). In March 2011, he was elected chairman of JSC TogliattiAzot. Makhlai was repeatedly re-elected to this position.[2][3]

Makhlai's father Vladimir is a former chairman of TogliattiAzot. Makhlai’s grandparents worked as miners in Gubakha after moving there from Kherson, a city in southern Ukraine. He has one brother, Andrei. Makhlai is married and has two daughters.[2][3]

TogliattiAzot

Main article: TogliattiAzot

After becoming chairman in 2011, Makhlai announced a large-scale modernization program of the plant’s facilities through 2020. With his arrival the quality of corporate governance improved while revenues, tax payments, and dividends increased.[4][5] In 2015, ToAZ spent 460 million rubles on environmental protection initiatives, such as enhanced water and air quality monitoring. The company plans to spend another 5 billion rubles on modernizing its waste water treatment plants.[6][3]

In 2016, ToAZ announced continued plans for development of an ammonia transshipment terminal at the Port of Taman in the Krasnodar region. The project was first announced in 1999. The terminal’s first stage, which is scheduled to start operations in 2017, will allow ToAZ to ship 2 million tonnes of ammonia a year. In an interview with Rossiskaya Gazeta in 2012, Makhlai explained that the terminal is a major project for TogliattiAzot. He stated that access to the Black Sea is an issue of strategic importance for the Russian economy. He noted that development of the Port of Taman is an announced goal of the Russian state.[6][7]

The second stage, which will allow for shipment of other goods, will be open in 2020. Turnover could reach 93 million tonnes annually by 2025, which is the same volume of the port of Novorossiysk and about the same of all Ukrainian ports in 2015. ToAZ will invest $300 million in the project and is not receiving government aid. As of 2016, no Russian ports have facilities to export liquid ammonia.[6][7]

Under Makhlai’s leadership, ToAZ increased its profits by 44% and revenue by 31% in 2015. The main factors driving growth were an increase in urea production, facility modernization, and an increase in export earnings due to the devaluation of the ruble. ToAZ increased tax payments to the Samara region by more than 50% over 2014, paying 7.3 billion rubles. The company paid 5.4 billion rubles that year in federal taxes. That same year, ToAZ hired 278 people, expanding its headcount to 5,271 employees earning an average of 43,000 rubles per year. The company recently announced that, despite the ongoing national economic crisis, starting in July 2016 the company will pay 100% of the premiums for all employee voluntary medical insurance policies.[6]

In December 2014, in response to a reporter’s question about whether TogliattiAzot has become a foreign company, Makhlai said that “Togliattiazot has been and will always be a Russian company. The plant is a major employer in Togliatti and is among top 3 primary tax payers of the Samara region.” ToAZ paid 7.3 billion rubles to the Samara region and 5.4 billion rubles to the federal government in the 2015 fiscal year.[6]

Illegal takeover attempts

Makhlai has repeatedly stated in interviews that since 1996 there have been several illegal attempts takeover TogliattiAzot, including one by Renova in 2005 and another by Uralchem in 2012. In 2005, criminal and tax investigations instigated by Renova, then a minority shareholder, were seen as part of a hostile takeover. Russian paramilitary police conducted searches and seized thousands of financial documents. The plant’s then-head, Yuri Budanov, called the investigation a “shakedown” by a rival company. In 2012, a similar actions were taken against ToAZ by Uralchem. Sergei Makhlai told Rossiskaya Gazeta that since 1996, there have been repeated attempts to exert unlawful pressure on TogliattiAzot shareholders and company management to gain control of the enterprise. He said that while the interested parties have changed over the years, the tactics used are repeated time and again. In an interview with Izvestia in 2014, Makhlai claimed that Uralchem’s owner, Dmitry Mazepin, had personally threatened him and that he took those threats seriously.[8]

As part of the attacks targeting the company, ToAZ has been a victim of repeated disinformation campaigns. Human rights activist Konstantin Golava posted on Russian social media site VKontakte in April 2016 claiming that he was approached by an organization in 2012 to attack TogliattiAzot and publish negative information about the company. He posted a link to an excel spreadsheet that allegedly documents more than 700 anti-TogliattiAzot articles placed by opponents of the company and the price paid for each article.[8]

Louise Shelley and Judith Deane of George Mason University described the judicial corruption surrounding the TogliattiAzot case in a report on illegal takeovers of enterprises in Russia. They documented three separate cases where judges in Russia were pressured by superiors to rule against ToAZ or face dismissal from the bench. One of the judges, Nadezhda Kostyuchenko protested her dismissal by filing a complaint with the European Court of Human Rights after failing to get proper redress through the Russian legal system. Kostyuchenko claimed that the chairman of the Samara court threatened both her and her children.[8]

The report notes that in November 2015, TogliattiAzot minority shareholder Evgeny Sedykin attempted to takeover ToAZ and gain access to corporate assets by submitting false information about an unauthorized annual general meeting of shareholders to the tax authorities in the Samara region. The federal tax authorities responsible for Samara declared Sedykin's complaints invalid on December 8, 2015. The Commercial Court of the Samara Region later invalidated that ruling and launched a criminal investigation for fraud. The Samara Region Arbitration Court confirmed that Sedykin’s actions were illegal and invalidated all information submitted to local tax authorities on April 19, 2016.[8]

Philanthropy and public service

Patriarch Kirill awarded Makhlai the Order of St. Sergius of Radonezh in October 2015 for his help in reconstructing the Moscow Church of Transfiguration, which was destroyed by Soviet authorities in 1964. He has also assisted with other church reconstruction projects, including the Murom Holy Transfiguration Monastery.[2]

Under Makhlai's leadership, TogliattiAzot increased its spending on local social initiatives. The company was named 2015 Philanthropist of the Year by the Togliatti Fund. ToAZ sponsors the Tremolo Music and Arts Festival in Togliatti and the Togliatti Philharmonic’s "Save the Steinway" campaign.[2][9]

ToAZ also finalized a sponsorship agreement with the Samara Region Basketball Federation. As part of the agreement, ToAZ will fully support the development of children’s and youth basketball in return for being the named sponsor of the Samara Region Championship for amateur teams in the 2016-2017 season. ToAZ also sponsored Volga Quest 2016, an international sled dog race, as well as a "Chess in Schools" program in 2015.[10]

As of 2012, Makhlai served on the board of Togliatti State University.

References

Links

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