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AMM
American Metal Market

January 15, 2014

GAA denies allegations of wrongdoing 

NEW YORK - Georgian American Alloys Inc. (GAA) has been petitioned in a lawsuit that alleges the ferroalloy company was linked to self-dealing transactions and illegally diverted assets and profits.

Victor Mikhaylovich Pinchuk and several associated companies have filed an application for discovery in U.S. District Court in Florida seeking financial and other information from GAA and its subsidiaries-Felman Production LLC, Felman Trading Inc. and CC Metals and Alloys LLC-as well as GAA chief executive officer Mordechai Korf.

The application is part of a court action filed in Cyprus under which Pinchuk is seeking injunctive relief from former business partners Igor Valeryevich Kolomoisky and Gennadiy Borisovich Bogolyubov. Kolo-moisky and Bogolyubov together hold a 50-percent interest in a ferroalloy holding company, established by the three men in 2006, in which Pinchuk holds a 25-percent interest, according to the petition.

Miami-based GAA and its subsidiaries are named as "corporate discovery subjects" in the application.

"The corporate discovery subjects are among the ferroalloy companies to which Kolomoisky and Bogolyubov are alleged to have illegally diverted ferroalloy assets and profits from Ferroalloy Holding. In particular, the corporate discovery subjects are alleged to have been parties to Kolomoisky's and Bogolyubov's self-dealing transactions, either by directly or indirectly selling raw materials at above-market prices to entities within Ferroalloy Holding or buying product at below-market prices from entities within Ferroalloy Holding," the application said. "By virtue of their involvement in these transactions, the corporate discovery subjects have financial and other information relating to the diversion of ferroalloy assets and profits in which the Cyprus petitioners have an interest; accordingly, discovery from the corporate discovery subjects is highly relevant to the claims in the Cyprus court actions." 

GAA denied the allegations. "GAA and its subsidiaries are not a party to the underlying dispute, but rather a third-party subject of discovery. Nonetheless, any implication or allegation that GAA and its subsidiaries have been the recipients of illegally diverted assets and profits is completely false. If such a claim were to be made in a proceeding against GAA and its subsidiaries, such claim would be frivolous and vigorously opposed. To date, no such claim has been made against GAA and its subsidiaries," the company told AMM.