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White Knight for Telegram: How Alisher Usmanov and his partners helped save Pavel Durov’s brainchild



The news that Telegram Group Inc., which owns the Telegram messenger, reportedly aims to attract at least $ 1bn through the placement of bonds among a limited circle of international investors, according to Russia’s newspaper Kommersant, put yet more spotlight on the rising messenger and on its mysterious founder Pavel Durov. If Telegram decides to IPO within five years, bondholders will be able to convert debt into shares at a 10% discount to the offering price thus letting them take a portion of the swiftly growing tech marvel that is now owned in entirety by its creator.

There is indeed much to place one’s bets on. Durov’s Telegram is seeing its userbase rise at pace: in January 2021, it reported reaching 500 million users, a number that apparently continues to grow at an accelerated pace. 

Pavel Durov

Over the past few years, Telegram has rapidly gained popularity, largely due to a consistent policy aimed at preserving the confidentiality and inviolability of personal information about its users.

Amid scandals involving the transfer of personal information belonging to WhatsApp to its mother company Facebook, Telegram remained true to its principles. The platform offers a messaging function encrypted with Telegram's self-developed MTProto Protocol. Encryption keys, which are split into parts so that they are never kept in the same place for extra security, are also exchanged when a secret chat is initiated. There are a number of other tech apps that can boast such a level of privacy, namely Signal, but Telegram was perhaps the first to tap into the mass influx of new users in the recent months. 

US-based outlet The Bell recently reported, citing unnamed investors, that Durov had refused a generous offer from a number of Western funds to purchase up to 10% of Telegram’s shares at a price that would put its total value at a staggering $30bn. Taking up this offer would have made Durov become the wealthiest Russian entrepreneur  listed on Forbes. Durov explained that his decision was in the interest of preserving independence of the resource from external participants. He presumably turned down approaches from Arabic investors for similar reasons

Alisher Usmanov

However, the success story of Telegram could have been much shorter, had Durov not received support from Alisher Usmanov, a well-known Russian entrepreneur and by that time a majority owner of Group, as well as his business partner Ivan Tavrin. Usmanov came to his aid when Durov found himself embroiled in a bitter tug-of-war over VKontakte (VK), the Russian-language equivalent of Facebook, seven years ago. That battle turned out to be pivotal for Telegram’s survival. 

The young and talented manager Pavel Durov, the actual founder of the VK network, earned Usmanov's attention from the very beginning, and Usmanov even nicknamed him “the Prince of the Internet”. At certain stage, Usmanov made it possible for group, one of the major owners of VK, to hand Durov the voting rights to its stake, although Durov owned only 12% of VK shares.

Ivan Tavrin

Usmanov’s business partner Ivan Tavrin, another shareholder of VK, always spoke highly of Usmanov's leadership style and his relations with the heads of the divisions under his control. Relations are always based on trust, he said, while Usmanov practically does not interfere in the management of his companies. This remained the case during his dealings alongside Durov, even during the worst moments of confrontation with more aggressive VK stakeholders.

The Uzbek-born Usmanov himself began his business career by producing plastic bags in the late 1980s, and by the early 2000s had become a metals and mining magnate. Bypassing a common wealth trajectory that led many Russian tycoons through the infamous “loans for shares” auctions – the privatization of former Soviet commodities assets – Usmanov instead went on to engage in a number of business ventures and trade, and with this capital paved the way to the top league. He later forayed into telecoms through acquiring Russia’s second largest mobile operator, MegaFon, and made significant investments into Internet unicorns. In 2010, Forbes described him as “the biggest Russian investor in the internet”.

The support from Usmanov’s Group came at a moment when Durov found himself under a hard pressure from Ilya Scherbovich’s United Capital Partners (UCP) which secretly acquired 48% stake from two other VK co-founders, Viacheslav Mirilashvili and Lev Leviev, and was struggling for a majority control. One of the UCP’s pressure levers was that Telegram, the increasingly popular messenger that Durov had founded with his elder brother, programmer Nikolai, in 2012, should belong to Vkontakte, as it was developed by VK’s employees.

In January 2014, in order to defend himself and Telegram, Durov sold his VK shares to Russia’s media manager and junior partner of Alisher Usmanov, Ivan Tavrin, who he has called his friend. With 52% combined Group’s and Tavrin’s stakes Usmanov could keep Durov remain as VK’s CEO, though not being the company’s shareholder anymore.

After one of his former business associates secretly sold American trademarks Telegram and Telegraph to UCP, Durov actually faced hijack-attempts from it. According to him, UCP "illegally gained access to American trading companies", which owned the trademarks in the United States.

UCP sued Durov claiming Telegram should belong to Vkontakte. Durov replied with the counter-claim which was joined by Usmanov’s Group’s subsidiary Bullion Development owning VK’s 11,9%.

After months of hard negotiations the situation finally changed in Durov’s favour. Soon after, Group bought out UCP’s share in VK for $1.47 bn, and part of the deal was an end to the litigation over Telegram. This was a generous move, because Durov wasn’t a shareholder already by that time, and there was nothing for Mail.Ru Group to expect from him. As a result, UCP called off its lawsuit and Durov managed to keep his control over the messenger. Later, Durov said complimentary words to Mr Usmanov and both men kept good relationships.

After the owner of Telegram fled to the West, Usmanov reportedly tried to convince him to return, but Durov never changed his mind.

Now based in Dubai, he is looking to expand Telegram further, and it seems he has all chances to succeed.

Corporate tax rules

Big-tech companies to be given historical changes to their international tax agreements



Recently, some of the richest landmarks and countries of the world, have come to an agreement concerning the closing of international tax loopholes that have been endorsed by the biggest multinational corporations. Some of these tech companies have the largest share prices within the stock market, such as Apple, Amazon, Google and so on.

While tech taxation has long been an issue that international governments have had to agree on between themselves, betting too shares similar problems, especially due to its increase in popularity and allowed legalisation globally. Here we have provided a comparison of new betting sites which follow through on the correct taxation laws and legalities necessary for international usage.

During the G7 summit- which our last reports spoke about the topic of Brexit and trade deals, representatives of the United States, France, Germany, United Kingdom, Canada, Italy and Japan, came to a unified agreement to support the global corporation tax rates of at least 15%. It was in agreement that this should happen as these corporations should pay taxes where their businesses are in operation, and to the land they operate in. Tax evasion has long been propagated using initiatives and loopholes found by corporation entities, this unanimous decision will put a stop to hold tech companies responsible.

This decision is believed to be years in the making, and the G7 summits have long wanted to reach an agreement to make history and reform the global taxation system for the rising innovation and digital age that is on the horizon. Making companies like Apple, Amazon and Google take accountability, will keep taxation in check for what is estimated to be the surge of their developments and involvement overseas. Rishi Sunak, the United Kingdom’s Chancellor of the Exchequer, has mentioned that we are in the economic crisis of the pandemic, companies need to hold their weight and contribute to the reformation of the global economy. Reformed taxation is a step forward in achieving that. Global tech companies such as Amazon and Apple have massively increased in shareholder prices for each quarter after the major drop last year, making tech one of the most sustainable sectors to obtain taxes from. Of course, not all would agree on such comments, being that taxation loopholes have long been a thing and issue of the past.

The deal agreed upon will put massive pressure on other countries during the G20 meeting that is to occur in July. Having a base of agreement from the parties of G7 makes it very likely that other countries will come to an agreement, with nations such as Australia, Brazil, China, Mexico etc. who are to be in attendance. Lower tax haven countries like Ireland will expect lower rates with a minimum of 12.5% where others may be higher depending. It was expected that the 15 percent tax rate would be higher at the level of at least 21%, and countries who agree with this believe that a base level of 15% should be set with possibilities of more ambitious rates depending on destination and region that multinational companies operate and pay taxes from.

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Corporate tax rules

Big countries' tax deal to reveal rift in Europe




4 minute read

European Competition Commissioner Margrethe Vestager wearing a protective mask leaves the EU Commission headquarters in Brussels, Belgium July 15, 2020. REUTERS/Francois Lenoir/File Photo

A global deal on corporate tax looks set to bring to a climax a deep-seated European Union battle, pitting large members Germany, France and Italy against Ireland, Luxembourg and the Netherlands. Read more.

Although the smaller EU partners at the centre of a years-long struggle over their favourable tax regimes, welcomed the Group of Seven deal on June 5. for a minimum corporate rate of at least 15%, some critics predict trouble implementing it.

The European Commission, the EU's executive, has long struggled to get agreement within the bloc on a common approach to taxation, a freedom which has been jealously guarded by all its 27 members, both large and small.

"The traditional EU tax holdouts are trying to keep the framework as flexible as possible so that they can continue to do business more or less as usual," Rebecca Christie of Brussels-based think tank Bruegel said.

Paschal Donohoe, Ireland's finance minister and president of the Eurogroup of his euro zone peers, gave the G7 wealthy countries' deal, which needs to be approved by a much wider group, a lukewarm welcome.

"Any agreement will have to meet the needs of small and large countries," he said on Twitter, pointing to the "139 countries" needed for a wider international accord.

And Hans Vijlbrief, deputy finance minister in the Netherlands, said on Twitter that his country supported the G7 plans and had already taken steps to stop tax avoidance.

Although EU officials have privately criticised countries such as Ireland or Cyprus, tackling them in public is politically charged and the bloc's blacklist of 'uncooperative' tax centres, due to its criteria, makes no mention of EU havens.

These have flourished by offering companies lower rates through so-called letter-box centres, where they can book profits without having a significant presence.

"European tax havens have no interest in giving in," Sven Giegold, a Green-party member of the European Parliament lobbying for fairer rules, said of the prospects for change.

Nevertheless, Luxembourg's finance minister Pierre Gramegna welcomed the G7 accord, adding that he would contribute to a wider discussion for a detailed international agreement.

Although Ireland, Luxembourg and the Netherlands welcomed the long-fought for reform, Cyprus had a more guarded response.

"The small EU member states' should be acknowledged and taken into consideration," Cyprus's Finance Minister Constantinos Petrides told Reuters.

And even G7 member France may find it hard to completely adjust to the new international rules.

"Big countries like France and Italy also have tax strategies they are determined to keep," Christie said.

The Tax Justice Network ranks the Netherlands, Luxembourg, Ireland and Cyprus among the most prominent global havens, but also includes France, Spain and Germany on its list.

Europe's divisions flared up in 2015 after documents dubbed the 'LuxLeaks' showed how Luxembourg helped companies channel profits while paying little or no tax.

That prompted a clampdown by Margrethe Vestager, the EU's powerful antitrust chief, who employed rules that prevent illegal state support for companies, arguing that such tax deals amounted to unfair subsidies.

Vestager has opened investigations into Finnish paper packaging company Huhtamaki for back taxes to Luxembourg and investigating the Dutch tax treatment of InterIKEA and Nike.

The Netherlands and Luxembourg have denied the arrangements breach EU rules.

But she has had setbacks such as last year when the General Court threw out her order for iPhone maker Apple (AAPL.O) to pay €13 billion ($16bn) in Irish back taxes, a ruling which is now being appealed.

Vestager's order for Starbucks to pay millions in Dutch back taxes was also rejected.

Despite these defeats, judges have agreed with her approach.

"Fair taxation is a top priority for the EU," a spokesperson for the European Commission said: "We remain committed to ensuring that all businesses ... pay their fair share of tax."

The Netherlands in particular has underscored a willingness to change after criticism of its role as a conduit for multinationals to move profits from one subsidiary to another while paying no or low taxes.

It introduced a rule in January taxing royalties and interest payments sent by Dutch companies to jurisdictions where the corporate tax rate is less than 9%.

"The demand for fairness has grown," said Paul Tang, a Dutch member of the European Parliament. "And now it is combined with a need to finance investment."

($1 = €0.8214)

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Global Europe: €79.5 billion to support development



The EU is set to invest €79.5 billion on development and international cooperation in neighbouring countries and further afield by 2027, Society.

As part of its 2021-2027 budget, the European Union is overhauling how it invests outside the bloc. Following a landmark deal with EU countries in December 2020, MEPs will vote during June's plenary session in Strasbourg on establishing the €79.5bn Global Europe fund, which merges several existing EU instruments, including the European Development Fund. This streamlining will allow the EU to more effectively uphold and promote its values and interests worldwide and respond more swiftly to emerging global challenges.

The instrument will finance the EU's foreign policy priorities in the coming seven years and support sustainable development in EU neighbourhood countries, as well as in sub-Saharan Africa, Asia, the Americas, the Pacific and the Caribbean. Global Europe will support projects that contribute to addressing issues such as poverty eradication and migration and promote EU values such as human rights and democracy.

The programme will also support global multilateral efforts and ensure the EU is able to live up to its commitments in the world, including the Sustainable Development Goals and the Paris climate accord. Thirty percent of the programme’s overall funding will contribute to achieving climate objectives.

At least €19.3bn is earmarked for EU neighbourhood countries with €29.2bn set to be invested in sub-Saharan Africa. Global Europe funding will also be set aside for rapid response action including crisis management and conflict prevention. The EU will boost its support to sustainable investment worldwide under the European Fund for Sustainable Development Plus, which will leverage private capital to complement direct development assistance.

In negotiations with the Council, Parliament ensured MEPs’ increased involvement in strategic decisions regarding the programme. Once approved, the regulation on Global Europe will retroactively apply from 1 January 2021.

Global Europe is one of 15 EU flagship programmes supported by the Parliament in the negotiations on the EU's budget for 2021-2027 and the EU recovery instrument, which collectively will allow the Union to provide more than €1.8 trillion in funding over the coming years.

Global Europe 

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