Theft of the Century: FSB uncovered a fraudulent scheme with Dagnefteprodukt

On Wednesday, August 6, it became known that the FSB of Russia, the Prosecutor General's Office and the Interior Ministry had stopped one of the largest fraudulent schemes since the 2000s. Within its framework, the federal oil transshipment enterprise Dagnefteprodukt was stolen from the state. According to the investigation, the former Secretary of State of Dagestan, Magomed-Sultan Magomedov, was involved in this. For more information about the fraudulent scheme, as well as the investigation of the case, see the Izvestia article.

Fraudulent scheme with Dagnefteprodukt

On August 6, it became known that Magomed-Sultan Magomedov, the former Secretary of State of the Republic of Dagestan, was involved in the theft of the Dagnefteprodukt enterprise from the state.

A major fraudulent scheme was uncovered by the efforts of the FSB, together with the Prosecutor General's Office and the Interior Ministry. According to the FSB, Magomed-Sultan Magomedov, "using an administrative resource, initiated administrative decisions in the authorities of the Republic of Dagestan, on the basis of which in 2001-2005 the state enterprise was illegally transferred to republican ownership and subsequently sold in favor of persons controlled by him at an undervalued price."

According to the latest information, the previously stolen Dagnefteprodukt oil transshipment complex has already been returned to the state, as well as the newly built Dagnotech LLC oil refinery, the total cost of which is more than 100 billion rubles.

In addition, property fraudulently obtained, worth more than 3 billion rubles, was seized from the defendants in the case.

The Investigative Department of the Russian Interior Ministry has already opened a criminal case on the grounds of crimes under Part 4 of Article 159 (committed by an organized group or on an especially large scale) and Part 4 of Article 174.1 (money laundering).

Progress of the investigation

It is reported that as part of the investigation, law enforcement agencies conducted 70 searches both in Dagestan and Moscow. During them, objects and documents relevant to the investigation of the criminal case were seized. Luxury goods obtained from illegal activities and especially large amounts of money were also confiscated.

Investigative actions, as well as civil procedure and operational investigative measures are continuing.

Manual factory: Dagestan Secretary of State suspected of illegal export of petroleum products

Magomedov allegedly exported them abroad at a zero VAT rate with a loss of 2 billion rubles for the budget.

Who is Magomed Sultan Magomedov?

Magomed Sultan Magomedov has held a number of positions over the years, including in the oil sector. In 1989, he was appointed director of the Makhachkala enterprise for the supply of petroleum products, and in 1991-2005 he was the general director of Dagnefteprodukt, when the enterprise was still owned by the state. In 2005, the company was privatized and later a new one was created on its basis — Kaspetrolservice, which became part of SME-Holding.

In parallel, in 1995-2021. Magomed-Sultan Magomedov also served as a deputy of the People's Assembly of the Republic of Dagestan, and was its chairman in 2010-2013. In 2021, he became the State Secretary of the Republic and held this position until July 1, 2025.

In July, he was dismissed from his post due to the start of investigative actions: the official was suspected of illegally exporting petroleum products. An inspection conducted in 2023 showed that the processed raw materials were exported at a zero tax rate, although they were excisable products. According to the investigation, oil products were exported via the Caspian Sea to Azerbaijan. The damage to the republican budget amounted to about 2 billion rubles.

Magomedov's arrest in a criminal case was reported on June 25. The next day, he was released on his own recognizance, and his assets worth billions of rubles were seized.