As turmoil roils DC a Russian-linked battery company is embedding itself in the US energy sector
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As the House proceeds with the impeachment investigation and looking into possible Russian or foreign money funding U.S. politicians, another area that should be investigated is the potential national security risk posed by Russian or foreign investments in the U.S. energy sector.
One story that has been covered widely is a $200 million investment by Russian oligarch Oleg Deripaska’s company Rusal into the Kentucky aluminum company Braidy Industries, shortly after Kentucky Senator Mitch McConnell helped remove sanctions from Rusal. I further reported that Braidy leaders Craig Bouchard and Thomas Modrowski had previously done significant business with the Russian steel company Severstal. Another energy story to watch is the possibility that Russian state-run oil company Rosneft may acquire part ownership of a Texas-based Citgo refinery if Venezuela defaults on upcoming PDVSA bond payments.
However, a story reported on in 2017 and 2018 has, with the exception of a few trade publications, been under the radar of the U.S. mainstream media and should be looked at more closely. Dmitry Rybolovlev was the major funder of Swiss company Alevo, which owned an electrical battery plant in North Carolina that went bankrupt in 2017. Alevo assets were sold off, but part of the company has re-emerged as Innolith, with most of Alevo’s key management still in place, and a new board director at Innolith is a senior executive for Dmitry Rybolovlev. Innolith won’t disclose where their funding comes from and it’s not clear from the past failure of Alevo if Innolith’s business model has any chance of success. However, Innolith has partnered with some organizations which may give it access to proprietary data about the U.S. electrical energy sector.
House investigators should find out: Who funds Innolith? Is there more to see behind the many unusual financial transactions related to the company funding, bankruptcy, asset sale and massive tax incentives? And what proprietary or critical infrastructure data does Innolith, through its partnerships, have access to, such as data on usage modeling, infrastructure or weaknesses in the U.S. electrical grid?
I would like to note that researcher D. Dulany first brought this story to my attention and was invaluable in providing background information and sourcing for this article.
The shroud of mystery around whether or not Dmitry Rybolovlev continues to be a main investor in Innolith is a bit ironic, since he happens to be one of the most publicly visible Russian oligarchs — with his divorce, lawsuits and interactions with Trump splashed across the media.
Rybolovlev made his fortune in the potash business in Russia, and sold his company Uralkali in 2010–2011 for $6.5 billion. Previously in 1996 he had been jailed eleven months for murder until charges were later dropped. He has had a messy public divorce and various lawsuits that have exposed exorbitant spending on real estate, such as a record-setting $88 million apartment purchased for his daughter in NYC, a 300 million euro apartment in Monaco, and the Greek island Skorpios, previously owned by Aristotle Onassis. Rybolovlev has spent $2 billion on his art collection, and then sued his dealer Yves Bouvier, who he claims over-charged him by $1 billion. He is suing Sotheby’s as well.
Rybolovlev has deep business ties in Cyprus and was the largest shareholder in Bank of Cyprus with a 9.9% stake through 2013. In 2014 Treasury Secretary Wilbur Ross led a group of investors in a $1 billion recapitalization, became Vice Chairman, and helped install former Deutsche Bank CEO Josef Ackermann, who presided over a $10 billion Russian money laundering scandal at Deutsche, as the new chairman.
But Rybolovlev is best known in the Trump-Russia story for a transaction reported by James Henry — in 2008 Rybolovlev purchased a Florida mansion from Donald Trump, for more than $50 million over Trump’s 2004 purchase price. Trump had bought the property known as ‘Maison de L’Amitie’ (House of Friendship) after hearing about it from Jeffrey Epstein. The $50 million gain Trump made from Rybolovlev in 2008 came around the same time a payment for millions of dollars was coming due to Deutsche Bank.
During the 2016 presidential election, Rybolovlev’s plane was coincidentally spotted twice on the tarmac near Donald Trump’s plane — once in Las Vegas, and once in Charlotte, North Carolina, near the Alevo battery plant in Concord that was funded by Rybolovlev.
In 2018 there were some curious events I have amplified on Twitter related to Rybolovlev’s sale of Da Vinci’s Salvatore Mundi painting for $450 million, which shattered auction records, and was $300 million above his purchase price. The price was driven up by bidding between Saudi Arabia and the U.A.E. and the painting was ultimately purchased by a buyer on behalf of Crown Prince Mohammed bin Salman, and it then went missing.
Currently Rybolovlev is embroiled in a scandal in Monaco, where he resides, involving alleged bribery of government officials related to his lawsuit against art dealer Yves Bouvier. He has a Monaco-based and Cyprus-registered family holding company called Rigmora Holdings Ltd, which lists Montrago Services as secretary. The CEO of Rigmora Holdings is one of the key people who ties Rybolovlev to the new company Innolith.
It should be noted that in 2018 Dmitry Rybolovlev’s name appeared on an unclassified Treasury list of senior foreign political figures and oligarchs in the Russian Federation, in the appendix B list of oligarchs. But Rybolovlev is not listed in the Treasury department’s Office of Foreign Asset Control (OFAC) sanctions list.
Rybolovlev funded Alevo, but plans didn’t work out
The Alevo Group S.A. was founded in 2009 by Norwegian Jostein Eikeland with headquarters based in Switzerland. In 2014 Alevo USA Inc. bought the former Philip Morris cigarette plant in Concord, North Carolina for $68.5 million, and then sold it and became its tenant.
A story in Business North Carolina described Alevo’s plan to build container-sized electricity storage batteries called GridBanks, that could power 1,300 houses after being charged by conventional power plants or sun and wind power. Alevo touted that its technology used components that were noncombustible and the batteries could be recharged almost endlessly. The potential market size is estimated at $20 billion and competitors included Tesla and Toshiba. As Edward Martin reported in Business North Carolina, the GridBanks are meant to provide electricity during blackouts and can also serve impoverished hard to reach areas worldwide.
While the business potential of Alevo was exciting, the business leadership and funding behind the company was dubious at best.
In 2016 reporters Gøran Skaalmo and Knut Gjernes published an expose in Dagens Naeringsliv, called “Serial Billionaire,” that focused on Alevo founder Jostein Eikeland, and revealed his pattern of securing big investments in brash business ventures that never got off the ground and then crashed or went bankrupt. They describe Eikeland’s history with IT company TeleComputing in the 1990s, which lost 90% of it’s value after the tech bubble burst, and Tonsberg Magnesium Group (TMGI) which went bankrupt in 2008.
The original funding for Alevo raised by Eikeland is described in detail by Skaalmo and Gjernes with tens of millions of dollars funneled through a law firm, DLA Piper, to a shell company in the UK with multiple intermediary layers making it difficult to track. Five million euros came from Unaico in Hong Kong, a known pyramid scheme operator. And they revealed that Norwegian drug trafficker Gjermund Cappelen was among Alevo’s investors.
But the Alevo investor that caught the attention of the U.S. media was Russian oligarch Dmitry Rybolovlev. A lawyer at Alevo testified in a lawsuit protesting his ouster, that Rybolovlev’s takeover was “creepy” or “sneaky” because he purchased shares in Alevo through shell companies that masked his identity.
Initial plans for Alevo had included investing $350 million, employing 2,500 people and ramping up to 6,000 employees, and selling 16,000 GridBank units a year by 2020. Alevo was granted over $10 million in tax breaks in North Carolina.
In 2016 Dmitry Rybolovlev invested $126 million in Alevo Group in Europe, and shortly after that, Alevo founder Jostein Eikeland was ousted and replaced as CEO by Vladislav Baumgertner, who had previously been CEO at Rybolovlev’s potash company Uralkali.
While Rybolovlev invested funding and put key people in charge, the big plans for Alevo never materialized — the company reported selling only one GridBank unit that was shipped to Hagerstown, Maryland. In early 2017 the company announced an additional $251 million investment, and in April 2017 Alevo was still communicating positive projections saying they were “on track to meet or exceed job-creation requirements.” Then in August 2017 Alevo abruptly declared bankruptcy.
After the bankruptcy creditors claimed they were owed $127 million, but Alevo told the bankruptcy court it only had $92.5 million in assets, a low amount that experts found puzzling. At the end of 2017, bz Basel reported that a collection company, Kristall 205 GmbH, took over Alevo and then renamed itself Innolith Science and Technology GmbH.
Alevo goes away and Innolith emerges
Last year Jason Deign reported for Greentech Media that Alevo’s CTO Alan Greenshields and COO Sergey Buchin had arranged for Swiss registered Innolith to purchase the intellectual property from Alevo in Switzerland, its R&D facility in Germany, and the battery plant in Concord, North Carolina. The new company Innolith, formed in May 2018 with Greenshields as Chairman and Buchin as CEO, would focus on R&D and partner with other manufacturers.
However, Innolith Chairman Alan Greenshields has a track record of failed battery businesses. bz Basel reported that Greenshields had been Chairman of Swiss-based Fortu Holding AG, and had developed the battery technology in Germany with them that was later used by Alevo and now Innolith. Fortu Holding’s had planned to invest up to $670 million in business plans that included a Michigan battery factory, received over $100 million in tax credits, and then went bankrupt. Greenshields moved on to Alevo, which then went bankrupt.
The manufacturing assets of Alevo that were not sold to Innolith were sold after the bankruptcy to a battery development consortium called Imperium3 New York (IM3NY), which paid an incredibly low price of $5 million for equipment worth more than $200 million. The IM3NY consortium includes Australian member Magnis Resources and announced plans to launch factories in Australia, Germany, and upstate New York. Earlier this year IM3NY received a commitment of $13.25 million through a New York State Energy Advancement Agency initiative announced by NY Governor Andrew Cuomo to achieve 50% renewables by 2030. It’s not known if Innolith will partner with IM3NY.
However, per CleanTechnica, Innolith is partnering with a company called Acelerex to “define use cases that can improve the application of energy storage to grid stability and efficiency. Acelerex is a specialist consulting and software company that has worked with many of the global power utilities and regions.” A review of Acelerex’s website shows that they have provided analytics to the New York State Energy Storage Roadmap commissioned by the N.Y. State Energy Research and Development Authority (NYSERDA).
“The Acelerex study performed massive grid and economic modeling over a 10-year horizon to assess the net benefits of adding energy storage to the New York grid.” There’s no indication this study is connected to Innolith, but it shows the type of modeling data Acelerex monitors and could potentially share with Innolith.
A final item purchased from Alevo by Innolith was the one operational GridBank battery system they had made, nicknamed Snook, which had been hooked up for a year to the PJM Interconnection electricity network in Hagerstown, Maryland.(Note: earlier reporting indicated Alevo sold one GridBank unit and later reporting indicated Innolith purchased one GridBank unit from Alevo, so it is not clear that Alevo ever even completed the sale of the only unit it produced).
PJM Interconnection is a regional transmission organization (RTO) that operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 65 million people in DE, IL, IN, KY, MD, MI, NJ, NC, OH, PA, TN, VA, WV and D.C.
Innolith CEO Buchin described how Snook, which had been hooked up to the PJM network for a year, achieved a 98.5 percent score within the network and was “the top of the heap in PJM, based on accuracy, timeliness and precision.” This data cited by Buchin indicates that their one GridBank battery has provided Innolith management with some competitive data and comparison information about other U.S. battery companies, either directly from PJM or from other sources Innolith is using to determine their scoring.
The partnerships Innolith has with Acelerex and PJM raise questions about what types of data Innolith is collecting related to the U.S. electrical grid such as performance modeling and competitors — and who are the owners of Innolith that may ultimately access this data.
A review of one of Alevo’s prior businesses highlights how important this question is.
The company had a business unit called ‘Alevo Analytics’ which in an unusual financial arrangement described in Dagens Naeringsliv, had been sold by company founder Eikeland to Alevo for $30 million. Alevo Analytics was a conduit through which the company participated with several state and governmental agencies on various energy studies:
- Alevo Analytics had five staff members participate as one of five teams in a 2017 Massachusetts Energy Storage Initiative study that analyzed the national and Massachusetts storage industry landscape, economic development and market opportunities for energy storage, and potential policies and programs to better support energy storage deployment in the Commonwealth.
- Alevo Analytics participated in a 2017 Energy Storage Study for the state of Maryland (however a footnote in the study document says “Since the teleconference meeting with Alevo Analytics, the company filed Chapter 7 bankruptcy, which has ended communications with the company”).
- Alevo was announced as recipient of $1.4 million from the U.S. Trade and Development Agency for a study on energy storage in Kenya, described as the first study of its kind in Africa. However, per reporting in McClatchy, the award may have been held up.
- Alevo contributed to the nonprofit Interstate Renewable Energy Council on an April 2017 energy storage guide for state policy makers.
An article in the Charlotte Observer noted that Alevo had been trying to sell Alevo Analytics to Enovation Partners for $200,000, and on the Enovation Analytics website there are now several employees who previously worked at Alevo. The prior activity of Alevo Analytics provides an indication of how Innolith may potentially participate in state, federal or international energy studies. And it appears that the former head of Alevo Analytics is now with Acelerex, the data company partnering with Innolith.
Alevo, Innolith and Customized Energy Solutions
A Forbes article described how Alevo had signed a joint operational agreement with Customized Energy Solutions in 2015 and vaguely described plans to sell ancillary services to PJM.
According to their website Customized Energy Solutions provides energy management solutions and, per Open Corporates records, has a presence in the U.S. and India. It appears that the partnership they had with Alevo has transferred over to Innolith, which is listed as part of the ‘Leadership Circle’ on the Customized Energy Solutions website.
In November 2018 Innolith was a participant along with Customized Energy Solutions in a Battery Energy Storage Systems for Grid Applications Training organized by the U.S. Energy Association, USAID and India’s Ministry of Power.
A May 2019 Herald Mail Media article described a proposal by Innolith in collaboration with Customized Energy Solutions to expand upon the one GridBank in Hagerstown, Maryland, by adding two additional battery stations starting in July 2020. Innolith asked the city to waive business personal property taxes on all three of the projects.
Alevo leadership now at Innolith
While it is not known if Dmitry Rybolovlev has continued on as a funder of Alevo to become a funder of Innolith, most members of the leadership team from Alevo are now running Innolith. In an interview with Greentech Media, Innolith CEO Buchin would not disclose the source of funding for Innolith, except to say “the company was supported by a strategic investor.” He did not say if Dmitry Rybolovlev was still involved as a funder of the new company. In a separate Bloomberg interview Buchin said “Our funding for Innolith comes from a strategic investment, backed by a family office that has multi-million dollars’ worth of assets under management.” This description is similar to Rigmora Holdings, Rybolovlev’s ‘family’ holding company, and whose CEO and Chief Investment Officer is now a director of Innolith.
Following are key people who were in leadership roles at Alevo and who are now listed on Innolith’s website in leadership roles, with some highlights of their prior experience.
- Alan Greenshields — Chairman, Innolith, previously Chief Technology Officer for Alevo. He is affiliated with various U.K. companies, and the Think Tank on Energy Environment.
- Sergey Buchin — Chief Executive Officer, Innolith, previously Chief Operating Officer of Alevo. He was General Director CEO Intercomp and Managing Partner InvesTEK.
- Vladislav Baumgertner — Board Director, Innolith, previously Chief Executive Officer of Alevo. He was CEO Global Ports (Russia) and from 2005–2010 and 2011–2013 was CEO of Rybolovlev’s company Uralkali. In 2013 Baumgertner was arrested in Minsk, Belarus in a scandal related to the sale of Uralkali, but the case was later dismissed.
- Laurence Warpelin — Financial Director, Innolith, previously Group Chief Accountant at Alevo.
- Stephane Rogazy — Director Supply Chain, Innolith, previously SVP Operations and SVP Supply Chain at Alevo.
New Innolith director is a Rybolovlev company CEO
One person who was not previously involved in Alevo, but is listed as one of Innolith’s five board directors is Anna Kolonchina. According to Kolonchina’s LinkedIn profile she is currently CEO & Chief Investment Officer at Rigmora Holdings Limited — Dmitry Rybolovlev’s family holding company. It is common for large investors to have representation on a company’s board of directors, which makes the appointment of Kolonchina an intriguing new link from Innolith to Rybolovlev.
Kolonchina also has extensive experience working with other Russian oligarchs. She was formerly Chief Investment Officer of Renova Management, Viktor Vekselberg’s company. Vekselberg became the largest shareholder in the Bank of Cyprus after Wilbur Ross became Vice Chairman, and is a co-investor in Oleg Deripaska’s Rusal. Columbus Nova, the U.S. affiliate of Vekselberg’s Renova Group paid Trump’s former lawyer Michael Cohen $500,000. Kolonchina was also a director of Polyus Gold when it was owned by Russian oligarchs Mikhail Prokhorov and Suleiman Kerimov. And she worked for twelve years at Deutsche Bank Moscow and London.
In March 2018 the Department of Homeland Security and the FBI issued a joint alert on “Russian Government Cyber Activity Targeting Energy and Other Critical Infrastructure Sectors.” The alert contained information on Russian government actions targeting U.S. government entities and organizations in energy, nuclear, water, aviation and other sectors. The alert described cyber activity impacting domain controllers, and file and email servers.
While the U.S. is barely keeping up with cyber activity threats from Russia aimed at energy, infrastructure and the political arena, another vulnerability comes from Russian and foreign nationals and entities making direct investments to buy assets, gain a foothold, and potentially access proprietary information in the U.S. energy sector, technology sector and other areas.
The Alevo battery plant in Concord, North Carolina not only failed, it also displayed financial irregularities — large infusions of financial investment, unexpected losses, an abrupt bankruptcy and assets sold at bargain-basement prices. The new company Innolith was launched with many of the same assets and people on the leadership team. And a new board director was appointed to Innolith who runs Dmitry Rybolovlev’s family holding company. Many questions remain about the purpose of the business, the nature of the financial transactions, about what data Innolith may be collecting, who is funding the company, who are they partnering with, and who is approving financial incentives for their business.
UPDATE: On October 25, 2019, soon after this article was published, Innolith announced that they had appointed Konstantin Solodovnikov as Chief Executive Officer (CEO) and elected him to the board of Innolith AG. Solodovnikov previously worked at Rusagro, Alrosa, and for eighteen years at Uralkali.
END NOTE: Thank you to D. Dulany for contributing information and research. And thank you to Polly Sigh for additional Alevo research.
UPDATES: article was updated October 15, 2019 to include the section on Customized Energy Solutions. The article was updated December 30, 2019 to note Rybolovlev was the largest shareholder in Bank of Cyprus through 2013 and Wilbur Ross led a group of investors in Bank of Cyprus in 2014.
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