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American Startup for the FSB General’s Son

How a financier сlose to Putin’s friends bought an American company with access to the data of millions of air passengers in the US and Europe — and made the son of the FSB’s First Deputy Director a partner in a similar project in Russia

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Date
13 Jan 2025
Author
Roman Katin
American Startup for the FSB General’s Son

IStories has found out that financier Mikhail Shelkov, close to the state corporation Rostec, bought the popular American mobile application App in the Air for millions of dollars, with the access to flight data of users from the US and Europe. Now, together with the app’s founder, he is developing a similar service in Russia. Their partner is the son of Sergei Korolev, the First Deputy Director of the FSB, one of the most influential generals at Lubyanka.

“Push with the money”

“I’m walking through London… and suddenly, with one transaction, I get a push notification with the money… I just stopped… Just stared. Basically, I was stunned… I took a screenshot and sent it to my parents and brother… And then I opened it and looked every minute. I immediately went to a pub, sat down to collect myself. I opened it, looked, and just sat there…” — this is how startup founder Bayram Annakov back in April 2024 described his impressions of selling the application he created.

The mobile application App in the Air was a personal assistant for air travelers. It was claimed to have “direct connections” with the largest American and European airlines. App in the Air allowed users to automatically check in for flights, receive information about any changes and delays, book airline tickets and hotels, track their flight statistics, order taxis, and better navigate airports. App in the Air was admired by the world press; in 2015, it was included in the top 100 best applications according to Business Insider. In 2018, the startup joined the Google Launchpad Accelerator program, which provided access to consultations with specialists from leading technology companies and venture capital funds in Silicon Valley.

App in the Air interface
App in the Air interface

The application has been installed by more than seven million users worldwide — mainly citizens of the US, EU, UK, and Russia.

Annakov created App in the Air back in 2012. As a business consultant and mobile developer, he lectured at Moscow State University and the Higher School of Economics. Initially, he and his students created the geolocation chat Squeek.

“What can four geeky developers come up with? Some kind of tool so you don’t have to talk directly to a girl, but can still meet her,” joked Annakov in an interview with nFactorial Podcast.

When he realized that the service was popular in universities and airports, he decided to follow a more affluent audience. This is how App in the Air, aimed at air passengers, came about. The name came from the movie Up in the Air starring George Clooney.

The headline of Annakov’s video interview mentions that he sold App in the Air for $50 million (he himself does not disclose the amount or the buyer in the interview). Now the startup founder lives in Seattle, Washington. And in Dallas, Texas, he has an older brother, grandmaster Babakuli Annakov, for whom he financed the creation of three chess academies.

When we asked Bayram Annakov who he sold his app to, he refused to answer and blocked our journalist on Telegram.

Bayram Annakov
Bayram Annakov
Photo: App in the Air

However, IStories found out that in 2018 the application was bought by Russian businessman Mikhail Shelkov, close to the head of the state corporation Rostec, Sergei Chemezov. And in 2021, 25-year-old Boris Korolev, son of the FSB’s first deputy director Sergei Korolev, became a partner of Shelkov and Annakov on a similar project in Russia.

In the fall of 2024, App in the Air suddenly announced its termination without explanation, causing sadness and bewilderment among its users.

How did Shelkov manage to buy an American company with access to flight data of millions of US and European residents?

Partner of Putin’s friends

Shelkov worked in the structures of Rosoboronexport (Rostec was created on its basis in 2007) since the early 2000s — he was personally invited there by Sergei Chemezov. Someone had to deal with the “soft (volatile) currencies” direction in the state-owned company’s settlements, and Shelkov was a banker and understood this issue.

Mikhail Shelkov
Mikhail Shelkov
Photo: Empathia Foundation

Chemezov is a retired KGB Colonel General; in the 1980s, he served in Dresden with Vladimir Putin. There they lived in the same house and were friends with their families. When Putin came to power, Chemezov became one of the most influential people in Russia. Since 2007, he has headed Rostec, which includes hundreds of civilian and defense scientific and manufacturing enterprises; like the state corporation itself, he is under American and European sanctions.

As IStories discovered, Shelkov is not just an acquaintance of the head of Rostec. He had a joint business with Chemezov’s son, Stanislav, as well as a partnership with Putin’s old friend, Arkady Rotenberg.

Shelkov became a billionaire when he received 65% of the world’s largest titanium producer, VSMPO-AVISMA, from Rostec.

Initially, the state seized it from the previous owners — state control over the strategic asset was deemed necessary. In 2005, as described by Forbes, a team from the Prosecutor General’s Office, supported by OMON, descended upon VSMPO-AVISMA. And in 2006, the shareholders were invited to Chemezov for a conversation involving the director of the FSB and the Deputy Minister of Internal Affairs. VSMPO-AVISMA co-owner Vladislav Tetyukhin immediately understood that “human life is finite, the state is infinite,” and agreed to the deal, while his partner Vyacheslav Bresht hastily left Russia. Shelkov flew to Germany for tough negotiations with Bresht. As a result, the issue of selling shares to the state corporation’s structures was settled in the same year, 2006, as reported by Forbes. Rosoboronexport received 66% of the titanium giant.

An acquaintance of Bresht, speaking on condition of anonymity, told IStories that although he received a good amount of money for his shares (as reported by Forbes, $680 million for 31%), even many years later he still feared retribution for his intransigence and suspected that Russian agents were lurking around.

Six years later, the state, represented by Rostec, suddenly decided to privatize the strategically important asset it had so fiercely pursued and ceded VSMPO-AVISMA to its top managers and Shelkov. They practically paid nothing of their own money, as the same Forbes article reported. The complex deal involved transactions with loans from Russian state banks and the assumption of debt obligations to them, which were to be paid from VSMPO-AVISMA’s dividends. As a result, Shelkov, who had never owned businesses of such scale before, became the owner of 65.27% of VSMPO-AVISMA.

Bresht’s acquaintance noted that, in his opinion, Shelkov is simply a convenient figure, a kind of “Chemezov’s viceroy.”

VSMPO-AVISMA plant in Sverdlovsk Oblast
VSMPO-AVISMA plant in Sverdlovsk Oblast
Photo: Poteryaev Sergei / Shutterstock.com

“It was an internal, club deal; in fact, the asset is not going to the outside,” Artur Shamilov, a partner at the Top-contact recruitment agency, told Kommersant in 2012. “The main person in this deal is Mikhail Shelkov, an old friend... of Sergei Chemezov.”

Where the money came from

In 2018, Shelkov’s Cyprus-based Norbase, of which he was the primary owner, bought the American App in the Air Inc from Annakov. As IStories discovered, the millions of dollars for this deal came as a loan from another of Shelkov’s companies, which was heavily indebted to state banks and owned VSMPO-AVISMA.

After the acquisition of VSMPO-AVISMA, Shelkov’s companies were saddled with debts to state-owned banks totaling nearly a billion dollars. Dividends from VSMPO-AVISMA were used to pay off these debts; these dividends suddenly became record-high, sometimes exceeding the company’s net profit. And Sberbank continued to lend hundreds of millions of dollars and tens of billions of rubles to Shelkov’s companies.

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Could some of this money have gone towards the American app? A former member of the Russian Forbes list says this scenario is unlikely.

“The privatization of VSMPO-AVISMA is an absolutely controlled process from the beginning until now,” he believes. If the money did indeed go towards the app, it was sanctioned at the level of the state corporation’s leadership.

Meanwhile, having bought the American App in the Air in 2018 for millions of dollars, Shelkov’s Cypriot company Norbase sold it immediately after the start of Russia’s full-scale invasion of Ukraine in 2022 for just two thousand dollars (this data is available in the Cypriot company’s financial report). The buyer was a Spanish citizen, a director of more than a dozen Spanish firms. In the fall of 2024, App in the Air informed users that their “journey together is coming to an end” — the app is shutting down.

What were the millions spent on?

New project with the FSB Deputy Director’s son

Bayram Annakov, as he mentioned in his interview, used the money received from the sale of App in the Air for his second major project — an e-commerce service for airlines, Life in the Air, headquartered in Bellevue, Washington. Annakov offered airlines equipment and software to facilitate the onboard sale of food and entertainment. This was a logical continuation of the business — not to attract app users individually, but, as Annakov said, to make the app “part of the aircraft” and focus on airlines. Then almost all of their passengers would become users.

“People are flying on a plane. They have nothing to do. And when people have nothing to do, they spend money, you just have to give them the opportunity… I want to give every [passenger] a remote control for the plane,” Annakov explained in the interview.

In Russia, Annakov and Shelkov are developing a similar project — Bortovye Sistemy (Onboard Systems). This is the same e-commerce platform as the American Life in the Air, also geared towards airlines. The clients of Bortovye Sistemy listed on the website are Russian airlines Smartavia, Azimuth, Ural Airlines, Nordstar, and Utair. At the same time, Smartavia used the Life in the Air platform.

Life in the Air is the follow-up to the startup App in the Air, settling directly into airplanes
Life in the Air is the follow-up to the startup App in the Air, settling directly into airplanes
Screenshot: Life in the Air website

Shelkov and Annakov own the Russian company Ais (Shelkov owns 84.52%, Annakov — 15.48%). It owns 85% of Bortovye Sistemy.

In 2021, IStories discovered, 25-year-old Boris Korolev became a partner in Bortovye Sistemy (with a 10% share). Boris is the son of the First Deputy Director of the FSB, Sergei Korolev, one of the most influential generals of the Russian intelligence community. A small share in the project (5%) is also held by the Altera Capital fund of former Deputy Minister of Economic Development Kirill Androsov, who manages the assets of Sberbank head, Putin's old acquaintance German Gref.

Korolev Jr., an IT specialist, was the founder of the Bastion startup. In 2018, three months after the company’s registration, 51% of it was acquired by Citadel, the largest supplier of SORM equipment (a system of technical means for ensuring operational and investigative activities of Russian law-enforcement and secret services). Boris Korolev is the owner of expensive real estate, premium cars, and also enjoys flying on a business jet.

Shelkov and Annakov did not respond to IStories’ questions.

The state corporation Rostec is known for its favorable attitude towards the children of Lubyanka generals. The son of recently retired head of the Fifth Service of the FSB, Sergei Beseda, Alexei, was a member of the board of directors of Avtovazagregat, a major supplier to AvtoVAZ, the main owner of which is Rostec. And in 2013, Alexei Beseda was practically gifted a business based on RostecPhotoelectronic Devices with the participation of the state corporation’s structure. His brother, Alexander Beseda, was a member of the board of directors of Rostec’s Tula Cartridge Plant.

Dmitry Velikovsky contributed to this article

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