20 December 2021

Car dealership tycoon sells up amid criminal case

Former opposition deputy Sergei Petrov sold his Rolf car dealership to a competitor last Monday amid a long-running criminal case. The value of the deal (likely between $300 million and $500 million) was far less than the real value of Russia’s largest car dealership.

  • Rolf was sold to a competitor, Klyuchavto, the fourth largest car dealership on the Russian market with annual profits of $1.5 billion (compared to Rolf’s $3.5 billion). Multiple media reports suggested the company was sold at a discount due to on-going legal issues, with Forbes’ estimating the deal was worth up to $500 million and media outlet RBK’s reporting it was between $300 million and $400 million. When Petrov first put Rolf up for sale in 2019 he was seeking about $700 million.
  • The wrangling over a sale began after Petrov was named as a suspect in a 2019 criminal case. In July of that year, law enforcement carried out searches in Rolf’s offices and the homes of its top managers — and it was announced that Petrov and several colleagues were suspected of withdrawing 4 billion rubles (about $55 million) from Russia. The subsequent criminal case hinged on claims that Rolf acquired real estate from its Cypriot partner company at a sum investigators believed was inflated. Lawyers who spoke to The Bell at the time described the case as absurd, commenting that — following this logic — any currency transaction was a crime.
  • Petrov and most of Rolf’s senior management escaped jail because they were abroad at the moment when the police searches took place. Instead, they were arrested in absentia. For a long time, there were no further developments in the case, but the Prosecutor General filed claims last month for almost 12 billion rubles ($165 million) against Rolf and Petrov personally. The company’s accounts were frozen.
  • Petrov has identified two possible motives for all this: it’s either an attempt to wrest control of his company by a rival, or revenge for his political activities — the billionaire was a State Duma deputy between 2007 and 2016 and an outspoken critic of the authorities. He voted against several Kremlin cause célèbre such as the ‘Dima Yakovlev law’, which banned U.S. citizens from adopting Russian children, and abstained from the 2014 vote on the annexation of Crimea.

Why the world should care: It’s much more likely that the legal action against Petrov is the result of a business conflict. But Petrov’s politics made him far more vulnerable in such a conflict than he would otherwise have been — ultimately, this meant he had to sell his business at a big discount.