Russia Arrests Transport Tycoon Magomedov for Embezzlement

(Bloomberg) -- Russia arrested Summa Group co-owner Ziyavudin Magomedov, who has been in talks to sell his stake in a key port, as part of case into suspected embezzlement of state funds for infrastructure and energy projects.

Moscow's Tverskoy District Court ordered Magomedov to be held for two months and declined his request to post as bail the 2.5 billion-ruble ($44 million) sum he is accused of stealing, Interfax reported. He was detained earlier, along with his brother Magomed Magomedov and Artur Maksidov, an executive at a Summa Group unit.

“All of the allegations against me don't stand up to logical criticism,” Interfax reported Ziyavudin Magomedov as saying in court. He'll appeal his arrest, his lawyer, Alexander Vershinin, was cited as saying.

The case against Magomedov could signal jockeying for influence and assets as President Vladimir Putin, who was re-elected earlier this month, decides on the configuration of his next government. The Dagestani-born tycoon's wealth surged under former President Dmitry Medvedev, in part thanks to state contracts. Medvedev has served as prime minister since stepping aside to let Putin return in 2012.

Summa and state-owned oil pipelines operator Transneft PJSC have been in a long-running dispute over control of Novorossiysk Commercial Sea Port. Together they hold 50.1% through a joint venture, while Transneft owns an additional 10.5% directly.

Transneft's board ordered management to reach a deal with Summa under “acceptable conditions,” Transneft said on March 19.

Calls to a spokeswoman for Magomedov and to Summa's office in Moscow weren't answered.

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net.

To contact the editors responsible for this story: Sonali Pathirana at spathirana@bloomberg.net, Nicholas Larkin, Steve Geimann

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