Tax dispute, the Tyazhstankogidropress claim and a Cyprus client suit

analysisAfter a field tax audit of 2017–2019, Interdistrict Inspectorate No. 22 of the Federal Tax Service for the Novosibirsk Region, by decision No. 2805 of 11 August 2022 (as amended on 16 January 2023), charged FG BCS LTD, which was then a Russian tax resident, additional profit tax of RUB 249,825,054 on profits of controlled foreign companies, penalty interest of RUB 112,355,981.40 and a fine of RUB 12,491,253; the courts' rulings describe the company as a Russian tax resident from 2016 to 2022. The regional tax directorate dismissed the company's appeal on 18 January 2023. On 31 August 2023 the Federal Tax Service cancelled the decision insofar as it charged penalty interest and held the company liable for the offence, with reference to Article 75(8) and Article 111(1)(3) of the Tax Code. ^{1 2 3}

analysisThe disputed assessment concerned dividends from the company's wholly owned Cypriot subsidiary BrokerCreditService (Cyprus) Limited, which the Russian tax authorities treated as a controlled foreign company. On 23 December 2019 FG BCS LTD, as sole participant, decided that the USD 20 million annual dividend for 2016, paid in 2017, was to be treated as an interim dividend for 2017, and that the USD 30 million dividend for 2017, paid in 2018, came from retained earnings of previous years. In amended profit-tax returns this reduced the subsidiary's 2018 taxable profit from USD 27,052,129 to USD 7,051,726; the tax authority found that tax had been understated by RUB 233,411,600. The first-instance decision states that the interdependence of the two companies influenced economic decisions with a predominantly tax motive. ^{2 3 1}

analysisFG BCS LTD asked the Arbitration Court of the Novosibirsk Region to invalidate the decision insofar as it demanded 2018 profit-tax arrears of RUB 233,411,600 and RUB 66,164,451 with the related penalty interest and fines (case A45-10537/2023). The company argued that it had revised the type, period and source of the dividends in 2019 to correct errors in the valuation of derivatives, and that the subsidiary had insufficient profit to distribute for 2016; the courts found these arguments unsupported, the first-instance decision noting retained earnings of the subsidiary of USD 112.9 million for 2015 and USD 117.9 million for 2016. The court dismissed the application on 13 September 2023; the Seventh Arbitration Appeal Court upheld that decision on 11 December 2023, and the Arbitration Court of the West Siberian District dismissed the company's cassation appeal on 2 April 2024. The retained record does not show whether the company appealed further to the Supreme Court. ^{1 2 3 4}

analysisRussian business press reported in 2022 that Nikolai Stepakin, another former general director of the Novosibirsk machine-tool maker PJSC Tyazhstankogidropress, owned all of SMC Stilline, which held 56.25% of the plant; that SMC Stilline had been declared bankrupt in February 2021 over debts to BCS Bank and Sberbank, with BCS Bank the main creditor; that the plant had guaranteed a BCS Bank loan; and that in May 2020 the Arbitration Court of the Novosibirsk Region ordered RUB 1.05 billion to be recovered from the plant by the sale of its real estate. Viktor Aranovsky had been the plant's director until 2016. ^{1 2}

analysisIn 2022 Aranovsky sued the plant, JSC BCS Bank, Azimut LLC, JSC Upravlyayushchaya Kompaniya Fondov and FG BCS LTD in the Arbitration Court of the Novosibirsk Region (case A45-33871/2022) for joint payment of RUB 90 million in damages, later increased to RUB 121,335,513.36. He relied on three contracts of 2 December 2016 under which he had sold Tyazhstankogidropress shares to FG BCS Ltd, Upravlyayushchaya Kompaniya Fondov and Azimut, and claimed that the buyers had breached representations that property worth RUB 90 million would stay outside the company sold, together with a ban on challenging its disposal. The allegations are the claimant's. In 2023 the court barred the registration of Azimut's liquidation as an interim measure, upheld up to a Supreme Court judge, and refused to add Oleg Mikhasenko as a co-defendant, a refusal upheld on appeal; no judgment on the merits was found in the retained record. ^{2 3 4 5}

analysisThe interim measure was granted on 17 March 2023; the Seventh Arbitration Appeal Court upheld the order on 17 May 2023 and the Arbitration Court of the West Siberian District on 10 August 2023, and on 23 October 2023 a Supreme Court judge refused to refer Azimut's further cassation complaint for hearing. Mikhasenko took part in the case as a third party. The claimant asked for him to be added as a co-defendant, arguing that he was the beneficiary of the BCS group, controlled the defendant companies and had given them direct instructions on the terms of the share purchases. The first-instance court refused on 2 October 2023, finding that the buyers under the contracts were legal entities rather than him, that any instructions he gave or could have given to group companies did not deprive those companies of legal capacity in the purchase, and that the motion came nine months into the case. On 10 November 2023 the Seventh Arbitration Appeal Court upheld the refusal, holding that the claimant had produced no evidence that Mikhasenko had taken actions with the shares that caused him substantial harm, or had derived any benefit from challenging the disposal of the company's property. Azimut and Mikhasenko had filed responses asking the appeal court to uphold the refusal as lawful and well founded. ^{3 4 6}

analysisA Russian business daily reported on 10 March 2022 that the Arbitration Court of the Novosibirsk Region had refused to include a RUB 124.8 million claim by Oleg Mikhasenko, described as president of the BCS financial group, in the register of creditors of Nikolai Stepakin. According to the report, the court found that a RUB 100 million loan agreement between the two men from December 2018 was a sham covering a loan from Mikhasenko to SMC Stilline, made so as to avoid a ban on borrowing without the consent of another creditor, Sberbank, and its ruling referred to an August 2020 ruling that had established the affiliation of BCS Bank, Mikhasenko, Stepakin and SMC Stilline. The ruling itself is not in the retained record; the account is the newspaper's. ¹

analysisIn a July 2023 article on a Novosibirsk news site, which reported that he had again complained to the Prosecutor General of unlawful actions by the investigators and asked for the prosecution against him to be ended, Aranovsky alleged that the criminal case against him had been commissioned by the BCS group, which in 2022 had a new head of Tyazhstankogidropress, in his description controlled by the group, report him and Stepakin to the police for theft of the company's property. He alleged that the group had deceptively lowered the price of his shares by RUB 90 million and, through pledges, refinancing, a controlled bankruptcy and sales of shares between affiliated organisations, had come to own the whole plant, valued at more than RUB 2 billion, for about RUB 45 million of actual cash. These are the allegations of a defendant in the criminal case; the retained record contains no response from the BCS group or the company to them. On 5 August 2025 the regional prosecutor's office announced that Aranovsky had been convicted. ^{2 3}

analysisAccording to the Novosibirsk regional prosecutor's office, on 5 August 2025 the Kirovsky District Court of Novosibirsk sentenced Stepakin to five and a half years in a general-regime penal colony and a fine of RUB 1.5 million, and Aranovsky to a suspended term of four and a half years with five years' probation and a fine of RUB 1.2 million. They had been detained in February 2022 on suspicion of fraud, and further cases for deliberate bankruptcy and laundering of criminal proceeds were opened later. Investigators said that from 2016 to 2020 they had arranged, without the knowledge of shareholders and directors, transactions that took a building, land, industrial equipment and an agricultural subsidiary worth more than RUB 200 million in total out of the plant's control at deliberately understated prices. The report does not say whether the sentences were appealed. ³

analysisThe group's statements for 2022–2025 record that it was the defendant in proceedings brought by one of its clients in Cyprus; they do not name the plaintiff or the subject matter of the claim. The group filed its defence on 22 February 2019, and the plaintiff obtained an injunction freezing about USD 2.6 million (USD 2,611 thousand) as security until final judgment, which the group appealed; the 2022 statements gave the maximum possible award as about USD 2.6 million plus interest. Under a settlement agreement of 27 December 2023 the group paid the plaintiff USD 999 thousand, plus legal expenses stated as 'EUR 60', for withdrawal of the claim, a settlement the statements describe as made without any admission of liability. On 25 January 2024 the Limassol District Court dismissed the case as settled out of court. ^{1 2 3}