Russia May Invest Billions in British Busted Company

14.06.2012 Although Russian defense minister Anatoly Serdiukov is still going to equip Russian warships with British-made furniture, its manufacturer Strongbox Marine Furniture Ltd (SMF) is undergoing bankruptcy proceedings. According to documents available to Central Navy Portal, in Feb 2012 SMF was recognized insolvent and entered administration. However, bust of the small British company would unlikely entail collapse of Serdiukov's "English" plans.

Recall that the defense ministry's Resolution No. 235/1/1/5899 providing installation of imported furniture and sanitary equipment made by Strongbox Marine Furniture Ltd in all new Russian warships was endorsed by defense minister Serdiukov in Nov 2011. Among ships planned to be furnished with British-made products are frigates (Project 22350, Project 11356) and corvettes (Project 20380/20385, Project 21631, and Project 21630). Text of the resolution was earlier approved by the then Navy Commander-in-Chief ADM Vladimir Vysotsky, although it was rumored behind the scenes that the naval chief opposed that initiative. At the time, it was known nothing about financial standing of the company chosen by Serdiukov.

First report about Strongbox Marine Furniture Ltd undergoing bankruptcy administration since Feb 14, 2012 appeared in the British newspaper The London Gazette. Central Navy Portal found out that business and affairs of SMF passed into receivership of RSM Tenon. According to administrators, "throughout 2011 the Company's cash position deteriorated and in early January 2012 the Company were unable to pay its workforce and trade creditors". Nevertheless, backlog of SMF had a contract on metal furniture for the Royal Navy ships. Although Strongbox Marine Furniture Ltd had no formally signed contracts with Russian Navy at the time it entered administration, an undisclosed source of Central Navy Portal in London's business community say such agreement may be probably tied in the future.

This assertion is obliquely proved by the fact that on Feb 14, 2012 assets of the busted Strongbox Marine Furniture Ltd were purchased by a new company with similar name Strongbox Accommodation Furniture Ltd for GBP 250,000. The newly founded company was headed by ex-receptionist of SMF Julie Leaver and a Russian citizen Eduard Ivanov. The latter one used to work in Marine Complex Systems Ltd which is authorized dealer of Strongbox in Russia. According to unofficial information, director of SMF Stephen Edmunds retained control over the newly incorporated Strongbox Accommodation Furniture Ltd.

In London business community Mr. Edmunds has an unsavory reputation of a businessman whose companies went bust many times but he always managed to escape liability to creditors. By all appearances, it is Steve Edmunds who may become a business partner of Russian Defense Ministry, since the Serdiukov's resolution has not been annulled so far, and Marine Complex Systems Ltd is actively cooperating with Russian shipyards.

According to experts, one standard contract on production and installation of furniture and sanitary equipment for a warship (for instance, a Project 20380 corvette) may bring a supplier somewhat RUR 120-150 mln. And if the question is dozens of ships, the profit will be measured by billions.

Take note that it is not the first time when billions of rubles flow from Russian defense budget to foreign companies in conditions of non-transparent placement of orders. As was earlier reported by Central Navy Portal, it was decided to place a procurement request for a deep-sea diving system at the Tetis-Pro company group.