One of Russia’s wealthiest tycoons, Ziyavudin Magomedov, was arrested in March 2018 alongside his brother and business partner Magomed Magomedov. The reasons for their arrest were not officially disclosed (Forbes Russia, 31.03.2018) until early May, ostensibly to avoid any scandals before Putin's inauguration.
Last week, the allegations against the brothers Magomedov were finally made public. The brothers stand accused of large-scale fraud, embezzlement of state funds, and creating an organised criminal group.
Ziyavudin and Magomed Magomedov, whose companies have benefited from state contracts, are known to be affiliated to high-profile members of Russia's political establishment, in particular, Prime Minister Medvedev and his (now former) Deputy Arkady Dvorkovich. Nevertheless, it appears that these affiliations are unable (or not willing) to help the brothers fend off the prosecutors.
On 17th May, the Tverskoy court in Moscow ordered to freeze Magomedov’s assets worth U.S. $1.4 billion (Dozhd, 17.05.2018).
- The Magomedov brothers are the latest (and one of the most high-profile) victims of the pre-electoral elite infighting and resource distribution to hit Russia.
- Given that the Magomedovs are well connected to the political elite, their downfall can be interpreted as an indication of the evolving power balance in government, e.g. it was a harbinger of Dvorkovich’s dismissal from the Cabinet of Ministers.
- Investors should monitor how Magomedovs’ case evolves to understand the current elite dynamics in the country and within the infrastructure construction industry.