This article is the second in a series dedicated to the state-owned company Kraoma S.A.
The Forgotten Player in the Media
On August 8, 2018, the Malagasy state-owned enterprise Kraomita Malagasy S.A. (KRAOMA S.A.) signed a strategic partnership with Russian company Ferrum Mining LLC, establishing a joint venture known as KRAOMA MINING S.A.
The first article in this series and the ensuing media coverage focused on the terms of this strategic partnership, the amodiation (leasing) contract signed on September 12, 2018, between KRAOMA S.A. and KRAOMA MINING S.A., and reactions from key stakeholders—particularly KRAOMA S.A. employees, who ended a strike last week that had begun in late November 2018.
Reports in the Malagasy press also raised concerns about potential links between this partnership and Russia’s alleged support for former President Hery RAJAONARIMAMPIANINA’s reelection campaign, dating back to March 2018.
Yet Ferrum Mining itself has received little media scrutiny. And many unanswered questions about the company remain critical to understanding whether the partnership represents a genuine opportunity or a threat to KRAOMA S.A. and the Malagasy state.
Who leads this Russian company? Who owns it? Why was it selected as a partner by KRAOMA S.A. without a competitive bidding process? Was it chosen for its track record and reputation—or simply because of political ties or corruption? And is Ferrum Mining affiliated with Stork International GmbH, formerly KRAOMA’s main client and to whom KRAOMA is now heavily indebted?
A Meteoric Rise?
Ferrum Mining’s website touts its advanced expertise in the African mining sector. It claims the company holds “all necessary licenses and is currently operating on-site in Madagascar,” while also conducting geological exploration for promising projects in Zimbabwe, Sudan, and other countries.
However, information available from the Federal Tax Service of the Russian Federation tells a different story. Ferrum Mining was registered only in November 2017, initially under the name “Petroneft.” The company was founded by Alena Vladimirovna ZHEZHEROVA (ЖЕЖЕРОВА АЛЕНА ВЛАДИМИРОВНА) with a share capital of 10,000 rubles (approximately 520,000 Ariary).
According to the registry, Ms. ZHEZHEROVA owns 100% of Ferrum Mining and is listed as its only employee. However, the company is said to now employ at least nine Russian nationals deployed to Madagascar since September 2018.
Notably, the company’s registered office—located at Blagodatnaya Street 63, Building 1A, Office 23, in St. Petersburg—is shared with 17 other businesses.
Is this a small company with big ambitions or a larger entity deliberately keeping a low profile? Either way, the question remains: how did Ferrum Mining, in just nine months of existence, manage to acquire enough credibility and technical reputation to secure a partnership of this magnitude with KRAOMA S.A.—without undergoing any public bidding process?
Additional Red Flags
Had Ferrum Mining already completed other major projects in chrome or mineral extraction—whether in Madagascar or abroad—its swift selection might seem more justified. But our investigation uncovered no record of any previous activity by the company, nor any verifiable involvement in projects in Sudan or Zimbabwe.
Curiously, mining-related activities rank only 17th among the company’s declared business operations in the Russian corporate registry—just after “hunting and trapping of wild animals.”
Moreover, despite its website’s claims, Ferrum Mining appears to hold no actual mining license in Madagascar. According to the Bureau du Cadastre Minier de Madagascar (BCMM), no license has been granted to the company.
Simon Seva MBOINY, the CEO of KRAOMA MINING S.A., explained in our previous article that Ferrum Mining only serves as a financial backer for the joint venture with KRAOMA S.A., and therefore holds no license itself.
Is Ms. ZHEZHEROVA a Figurehead?
Doubts persist regarding the true role of Ferrum Mining’s sole owner and CEO. According to a Russian investigative journalism partner of the MALINA network, no relevant records or social media profiles of Ms. ZHEZHEROVA could be located.
Even more surprisingly, she is not mentioned in any of the partnership documents obtained by our team. Instead, a certain Evgeny OSIPOV signed the partnership agreement with KRAOMA S.A. on behalf of Ferrum Mining.
Mr. OSIPOV also serves as the Chairman of the Board of the joint venture, KRAOMA MINING S.A., and signed the amodiation contract in that capacity.
While it’s common in large firms for responsibilities to be delegated, it is striking that in Ferrum Mining’s first major foreign project, its founder and CEO is entirely absent from the paperwork.
This raises a legitimate suspicion: might Ms. ZHEZHEROVA simply be a front—rather than the true owner or operator of Ferrum Mining?
Other Similar Companies
This theory is reinforced by the existence of two other companies—Pion LLC and Transcom LLC—also reportedly founded and managed by Ms. ZHEZHEROVA. These businesses, according to official registries, share a nearly identical profile with Ferrum Mining: founded in St. Petersburg with a capital of 10,000 rubles each, with Ms. ZHEZHEROVA as sole shareholder and employee.
Their registered addresses are also highly suspect. For instance, Transcom LLC shares its location with seven other companies—inside a dilapidated residential building.
While Pion LLC has since been dissolved, Transcom LLC remains active in the timber and construction materials trade.
Despite reportedly generating annual revenues of up to $1 million, it maintains an extremely low profile. Our investigation found no internet presence whatsoever for the company.
A Suspicious Lack of Competitive Bidding
A formal bidding process could have addressed many of the lingering concerns around Ferrum Mining.
Indeed, Decree No. 2006-346 requires any bidder in a public tender to provide detailed identification and demonstrate technical, professional, and financial capacities.
Why, then, was no tender launched?
According to KRAOMA MINING S.A.’s CEO, this was because Ferrum Mining merely invested funds via the joint venture.
But does that explanation hold up? What about the three mining permits transferred from KRAOMA S.A. to the joint venture, or the nine Ferrum Mining employees in Madagascar providing technical support to KRAOMA staff?
Even if Ferrum Mining’s role were purely financial, an independent valuation of KRAOMA’s assets—transferred to the joint venture—would still have been required.
This is precisely what the Ministry of Finance and Budget emphasized in an October 23, 2018, letter addressed to KRAOMA S.A.’s management. Under Article 423 of Law No. 2003-036 on commercial companies, such a valuation is mandatory prior to any asset transfer.
Notably, the Ministry of Finance is legally responsible for managing the state’s shares in commercial companies—in KRAOMA S.A.’s case, 97.17%.
The question must therefore be asked: why was there no public tender? Was this favoritism by the HVM regime toward Russian partners? Corruption involving the former president and KRAOMA executives? And what of Ferrum Mining’s connection to Stork?
Webs of Influence and Russian Connections
It is no secret that former President RAJAONARIMAMPIANINA cultivated close ties with Russia during his final year in office.
In March 2018, he visited Moscow accompanied by Benjamin Ramarcel RAMANANTSOA—later appointed Chairman of the KRAOMA S.A. Board—and Ying Vah ZAFILAHY, then Minister of Mines and Petroleum, who became Madagascar’s ambassador to Russia in September 2018.
During that visit, RAJAONARIMAMPIANINA was awarded an honorary doctorate from the People’s Friendship University of Russia, where MBOINY also earned a degree and founded the alumni association for Malagasy graduates of Soviet and Russian universities.
Two months later, in May 2018, a memorandum of understanding was signed between ZAFILAHY and the Director General of Zarubezhgeologiya JSC, a subsidiary of ROSGEO—the Russian state-owned geological investment company.
The agreement outlined long-term cooperation in mineral resource exploration and geological studies in Madagascar.
Additionally, under RAJAONARIMAMPIANINA’s presidency, Madagascar signed a military cooperation agreement with Russia, and discussions began on a bilateral port redevelopment project in Toamasina.
Both of the last two chairmen of KRAOMA S.A.’s board—Eric Jean Noël RANDRASANA and Benjamin Ramarcel RAMANANTSOA—also served simultaneously as chiefs of staff to the president.
As for Stork International, its large outstanding claim against KRAOMA S.A. might well have motivated the push for the partnership—or even a complete acquisition by a Russian firm.
According to MBOINY, formerly Stork’s representative in Madagascar and now CEO of KRAOMA MINING S.A., Stork prepaid over $6 million for mineral deliveries that KRAOMA failed to fulfill.
Is there a formal link between Ferrum Mining and Stork? MBOINY says he does not know, though Stork has offices in Moscow. A company based in Russia’s Sverdlovsk region also belongs to the Stork Group.
Furthermore, Stork Group CEO Jugendra Singh RAGHAV is reportedly a former KGB agent who studied in Russia, according to The New York Times.
It was during these studies that he reportedly became acquainted with both MBOINY and ZAFILAHY—according to a report from Africa Intelligence.
What Comes Next?
Though it remains unclear which, if any, of these suspicions will be confirmed, the truth about the opaque partnership between KRAOMA S.A. and Ferrum Mining may soon come to light.
Fidiniavo RAVOKATRA, the newly appointed Minister of Mines and Strategic Resources under the RAJOELINA administration, and Nirina RAKOTOMANANTSOA, the new Director General of KRAOMA S.A., have repeatedly announced plans to audit KRAOMA S.A. and carry out an independent valuation of its assets.
Let us hope these measures help restore KRAOMA S.A. to its former status as a flagship of Malagasy mining—and ensure that those responsible for its downfall are held accountable.
The author acknowledges the contribution of reporters from the Investigative Dashboard, an initiative of the Organized Crime and Corruption Reporting Project (OCCRP), in the research preceding this article.
