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PhosAgro hits back at share theft allegations

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Russian fertilizer group PhosAgro hit back at a former employee who has launched criminal proceedings over the alleged misappropriation of a sizeable tranche of shares.

PhosAgro is the world's third largest phosphate producer, is facing legal proceedings in a Cyprus court over allegations that the shares of a former employee were misappropriated.

The claims, if proven, might trigger a major shift in ownership in the $5bn company.

A court date of September 16 has been set, when a Cypriot court will decide in the case should go to trial.

"No legal basis"

Exiled oligarch Alexander Gorbachev has alleged that Andrei Guriev, the majority owner of PhosAgro, deprived him of a 24% stake in the company.

"We had an agreement that he would hold my shareholding in trust," said Mr Gorbachev, alleging the existence of a deal between the two tycoons, on which Mr Guriev had later reneged.

However, PhosAgro said on Friday that "the claim has no legal basis", adding that the group "will defend its position in any jurisdiction".

Criminal case

Mr Gorbachev was forced to leave Russia in 2003, and received political asylum in the UK.

Russian authorities sought his extradition for fraud, but this was refused by a UK court in 2005.

News of the proceedings were broken to PhosAgro shareholders last month, but a June 11 statement from representatives of Mr Gorbachev stressed that the proceedings were a criminal prosecution, rather than a civil dispute.

Mr Gorbachev states that "the case is not a civil action and is being brought by a criminal prosecutor".

"Misrepresented"

PhosAgro returned fire in its announcement on Friday, saying that Mr Gorbachev's statements "misrepresent the nature of the proceedings in Cyprus" by implying that they were commenced by Cypriot authorities, as opposed to being private criminal proceedings.

PhosAgro said that the proceedings have been "brought to the court by Gorbachev alone, and Cypriot prosecuting authorities are not pursuing any criminal cases in relation to these accusations".

Criminal proceedings can be bought by private individuals in Cyprus, which is a common law jurisdiction.

Shares up

PhosAgro was formed in 2003, out of a number of privatised state assets.

Depositary receipts for the company, a proxy for equity, were listed on the London stock exchange, in 2011, when Mr Guriev was revealed to be the majority owner.

The receipts stood at $12.35 in lunchtime deals in London on Friday, up 0.8% on the day.

Mr Guriev is one of Russia's richest men, who h a fortune estimated by Forbes at $3.8bn, and served in the Russian upper house until 2013.

Many of the company's assets are based in Cyprus, which is a common jurisdiction for Russian-asset holding companies.

By Agrimoney.com

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