Petropavlovsk’s processing hub in eastern Russia

FTSE 250 gold producer Petropavlovsk is facing further turmoil after Russian prosecutors launched an investigation into its interim chief executive.

The Investigative Committee of Russia told the Financial Times it was “investigating a criminal case” against Maksim Meshcheryakov, who was appointed two months ago. It added that “a notification of the initiation of a criminal case was sent to citizen Meshcheryakov”.

The probe by Russia’s top investigative body will add to concerns about the ability of Mr Meshcheryakov to run one of the largest gold producers listed in London.

The committee provided no further details on the case. But a letter seen by the FT that was addressed to Mr Meshcheryakov and dated last month said it was investigating the executive and “unidentified individuals” in connection with their forced entry to Petropavlovsk’s Russian headquarters in August.

The letter cites “indications of criminal activities” under two parts of the country’s criminal code relating to theft and illegal entry.

Petropavlovsk said it would fully co-operate with the committee in its investigation.

“The company understands that the investigation into Mr Meshcheryakov's actions relates to a crime under article 330 of the Russian criminal code called 'arbitrariness',” it said in a statement on Thursday.

“According to legal advice received by the company, the crime of arbitrariness has a very broad definition, and may include actions that are commissioned to protect lawful rights or interests.”

The FT reported this month that Mr Meshcheryakov had forced his way into the company’s Russian HQ in August following a stand-off with staff. 

CCTV footage showed Mr Meshcheryakov and a group of men clambering over turnstiles to gain entry to the office. It also captured them inside the company’s computer server room examining IT equipment before one of them disabled the CCTV camera in that area. 

News of the probe comes just over a week after Petropavlovsk lowered its annual production forecasts and announced the departure of Alya Samokhvalova, its deputy chief executive.

The company was founded in 1994 by Pavel Maslovskiy and Peter Hambro, a scion of the London banking dynasty. In recent years it has been rocked by a succession of bitter shareholder spats.

Its Moscow office manages the company’s mines and its state of the art processing hub. This facility allows Petropavlovsk to produce gold from refractory ore, which is difficult to process but abundant in Russia.

Mr Meshcheryakov was appointed interim chief executive in August, surprising analysts given his limited experience in the gold industry. He is overseeing a forensic examination of all deals and transactions involving the company over the past three years.

His predecessor Mr Maslovskiy was ousted in June along with several other directors in a shareholder rebellion led by rival Russian miner UGC, which owns almost 25 per cent of the company.

Before Mr Meshcheryakov’s appointment, an attempt to reinstate Mr Maslovskiy, who has a loyal following among some Petropavlovsk staff in Russia, was defeated by UGC and other investors.

In September, directors at four Petropavlovsk subsidiaries raised concerns about Mr Meshcheryakov’s credentials and independence, and asked the board to scrutinise these issues.

Mr Meshcheryakov previously held a board position at Bank Vozrozhdenie, a Russian lender once controlled by Bonum Capital, a private investment vehicle with a stake in Petropavlovsk.

In its statement Petropavlovsk added: “Mr Meshcheryakov has encountered a lack of co-operation from some employees and ex-employees in certain of the Russian subsidiaries as he works to implement a robust and transparent controls framework across Petropavlovsk and its subsidiaries.

“That lack of co-operation included preventing Mr Meshcheryakov obtaining access to the group's office in Moscow while he was attempting, with the full support of the Petropavlovsk board, to safeguard the group's assets and information.”

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