Ziyavudin Magomedov remains in pre-trial detention
In March 2020, the Moscow City Court extended the pre-trial
detention period for Summa Group owner Ziyavudin Magomedov a longtime Russian
MMA patron and his brother Magomed, who allegedly embezzled more than $35
million.
The Magomedov brothers was detained in late March 2018 while
preparing to travel to the United States and were charged with racketeering,
embezzlement, and establishing an organized crime group. Magomedov had
reportedly been under investigation prior to his arrest to determine whether he
embezzled money during the construction of a World Cup stadium in Kaliningrad,
which his Summa Group company won the rights to build in 2014.
The Magomedov brothers have both pleaded not guilty to the
charges. If found guilty, they could face up to 20 years in prison.
While the Magomedov brothers’ arrest is one of the
highest-profile criminal cases of a Russian tycoon in many years, it also
happens to be a significant case for the mixed martial arts landscape in the
Russian Federation. Ziyavudin is a combat sports enthusiast who invested large
sums into Russian MMA. He owned a controlling share of Fight Nights Global, one
of the most successful promotions in the country, and has financially supported
several fighters, including current UFC lightweight champion Khabib
Nurmagomedov.
The Rise & Fall of an Oligarch
Born and raised in Dagestan, Ziyavudin emerged from a
troubled childhood on the streets of Makhachkala to become one of the
republic’s most prosperous businessmen. According to Forbes, he is the chairman
of Summa Group, a “conglomerate invested in port logistics, engineering, construction,
telecommunications, and oil and gas.” His estimated wealth fluctuates, but was
estimated at 1.2 bn prior to his arrest in 2018.
Summa Group, which employs over 10,000 people in
approximately 40 regions in Russia, prospered during Dmitry Medvedev’s
presidency. During that time, Magomedov’s net worth rose to $2.1 billion and
peaked at $3 billion in 2011. Medvedev, who was interested in establishing new
oligarchs and contacts loyal to him instead of Putin, offered Summa Group hefty
state contracts that helped the company flourish. In a matter of years,
Magomedov was elevated from a local Dagestani merchant to Russia’s oligarch
class.
However, once Putin regained the Russian presidency in 2012,
much of Magomedov’s influence began to wane and his fortune dropped back to
$800 million by 2013. Putin began by removing three of Medvedev’s ministers
from their positions in a move that was believed to be an attempt to weaken
Medvedev’s political resources should he seek re-election once Putin’s third
term as president was complete in 2018. Bloomberg reported that Putin stripped
Magomedov of his position as a representative on the 21-nation Asia-Pacific
Economic Cooperation group’s business advisory council - a position Medvedev
had appointed him to in 2010.
Over the next few years, Magomedov reinvented himself as a
venture capitalist and invested hundreds of millions in high-tech start ups, as
well as transportation, robotics, agricultural, industrial and consumer
projects. He became the co-executive chairman of Los Angeles-based tech firm
Virgin Hyperloop One, which is chaired by Richard Branson, and even fashioned
himself as a combat sports enthusiast and invested in various mixed martial
arts related projects.
Magomedov was clearly emulating some of the most successful
businessmen under Putin’s administration, such as Arkady and Boris Rotenberg,
the billionaire brothers who have a host of sports-related investments
throughout their extensive portfolios. They were once the Russian president’s
judo teammates, and later purchased the SKA St. Petersburg hockey club. Boris
is now co-owner of the Stroygazmantazh group, the largest construction company
for gas pipelines and electrical power supply lines in the Russian Federation.
Then in March 2018, Magomedov was detained and charged with
racketeering, embezzlement, and establishing an organized crime group. He
allegedly embezzled over 2 billion rubles ($35 million +) during the
construction of a World Cup stadium in Kaliningrad.
Apart from his alleged criminality during the World Cup,
Magomedov has also been accused of stealing 300 million rubles ($4.5 million)
during the construction of a highway in South Siberia in 2014, embezzling from
the Federal Grid Company, the Chusky tract (truck road) in the Novosibirsk
region, and of questionable business practices with the United Grain Company
project (part of Summa Group). This included allegedly ordering the assault of
a former employee– one of Magomedov’s private security guards – after he
refused to follow orders.
Since his arrest, several more charges have piled up, along
with ongoing investigations. Ziyavudin was accused of two more cases of fraud
amounting to 11 billion rubles, while his older brother, Magomed, was accused
of illegal weapon possession. French authorities have also opened a tax evasion
case against Ziyavudin’s wife, Olga, who owns several restaurants in France.
Two years removed from his arrest, Magomedov has been forced
to sell the vast majority of his assets and remains in pre-trial detention
awaiting his fate.
In the two years prior to his arrest in 2018, Magomedov
started to take an interest in mixed martial arts. He invested in Russian MMA
promotion, Fight Nights Global, and embarked on a wide-scale project that
involved building new fight clubs and expanding the promotion’s reach and
market share.
As part of his revitalization process with Fight Nights,
Magomedov paid legendary Russian heavyweight Fedor Emelianenko’s exorbitant
fight purse to compete last June at Fight Nights 50. Magomedov also financially
supports several fighters, including Khabib Nurmagomedov. Magomedov paid for
the UFC fighter’s back surgery in 2017, which was done in Germany, and funded
the majority of Khabib’s expenses during training camps.
Magomedov expanded into gyms and fight clubs to expand his
ever-growing MMA network. He recently established ‘Eagles MMA,’ a fight club
and training facility now home to some of the top Russian talents. Indeed, UFC
contender Khabib Nurmagomedov serves as the entity’s president. The concept is
similar to that applied at Prince Khalid bin Hamad Al Khalifa’s KHK MMA facility
in Bahrain, and the Akhmat MMA team sponsored by Ramzan Kadyrov in Grozny,
Chechnya.
The gym recently came under fire after it was reported that
one its executives, Denis Klopnev, was arrested in absentia for the attempted
murder of sambo fighter Shamil Kuramagomedov, a bronze medalist in the 2017
Russian Combat Sambo Championship.
The accusations against Klopnev come several months after a
group of fighters affiliated to Eagles MMA and Summa Group attacked
Kuramagomedov and beat him within an inch of his life. The fighter was
hospitalized with a concussion, a traumatic brain injury, and a broken nose but
opted not to report his assault to the police. According to the report,
Kuramagomedov and the suspects all trained at the same gym, which was also
owned by Summa Group.
While it remains unclear whether there were any political motivation
for Magomedov’s arrest, his high-profile case could be viewed as yet another
example of an ongoing power struggle within the Kremlin. According to The
Financial Times, the Magomedov appears to be caught in a Kremlin power struggle
that involves Igor Sechin, the CEO of the Russian state oil conglomerate
Rosneft and a man reputed to be “the scariest man on earth.”
Sechin, who has earned himself the reputation as Russia’s
“Darth Vader” for his ruthless approach to business, is believed to have been the
architect behind the demise of oil giant Yukos in 2003, as well as the arrest
of Mikhail Khodorkovsky, considered the wealthiest man in Russia at the time.
Reports suggest that Sechin was interested in some of Magomedov’s assets,
mainly the Novorossiysk Port so he can he expand his influence in the oil
industry.
The ongoing Kremlin power struggle involving Russia’s elite
will likely have a major effect on combat sports, including mixed martial arts.
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