An Offshore Company is Suddenly in Love with a Cultural Heritage Site

July 29, 2013
Oboronservis. Source: RIA Novosti. Andrei Stenin

The Oboronservis case was opened in the fall of 2012. According to the investigation, real estate and land owned by the Ministry of Defense was sold off at reduced prices through a holding company (“Expert”) created to hide the officers’ economic activity. Oboronservis has been tied to several newsworthy scandals  involving corruption and the military which led to the removal of former Defense Minister Anatoly Serdyukov. Below is the translation of a new report which reportedly links Serdyukov and several other suspects and companies with new revelations of apparently fraudulent real estate transactions. – Ed.

As “Ъ” has found out, in 2011 Cyrke Holdings Limited, a Cyprus offshore company, affiliated with cronies of Anatoly Serdyukov, a former Defense Minister who also used to be in charge of the Federal Tax Service (FTS), had been involved directly in two high profile transactions on the resale of two buildings in the center of St. Petersburg belonging to the FTS. Privatization of the Gardener House in the Taurida Garden, that was also part of the criminal case against Oboronservice, by the offshore’s subsidiary, “StroyRent, LLC”, coincided with the acquisition by the LSR, a real estate development group, of Avtocombalt, LLC, from the same offshore, after the company, amid major controversy, demolished the Literary House on Nevsky that it had received without bidding. LSR was awarded the contract for an investment project to build a luxury apart-hotel for the construction of apartment luxury hotel, managed by Mr. Serdyukov’ former advisor, Lev Vinnick.

According to the Uniform State Registry of Legal Entities, Cyrke Holdings, Ltd., incorporated in Cyprus in 2010, owns about a dozen companies in Moscow and St. Petersburg. One of them, StroyRent, LLC, last week was subject to the investigation of a new episode in the case of Oboronservice, related to the acquisition by the company of a Gardener House and the land it’s located on, at the auction, held by the Ministry of Defense, for 386.4 million roubles (see “Ъ”, July 13, and 24). This federally owned historical building was first transferred to the FTS Department for the City of St. Petersburg, and later, in 2010 it was signed off to the Federal State Unitary Enterprise “InzhTechCenter St. Petersburg.” By that time the enterprise, itself managed by Valery Puzikov, the husband of Mr. Serdyukov’s sister, had been transferred from the jurisdiction of the Federal Tax Service to that of the Ministry of Defense, which coincided with the appointment of Mr. Serdyukov, at that time the top tax official, to the position of Defense Minister. Irregularities in the process of privatization of the Gardener Home, managed by Evgenia Vasilyeva, then the head of the Property Relations Department of the Ministry of Defense, were classified under Article 285, part 3, of the Criminal Code (abuse of power) by the Investigative Committee. And last spring the owner of the mansion put it up for sale.

Shortly before it bought the Gardener House in April 2011, Cyrke Holdings had acquired 100% ownership in Avtokombalt, LLC, which received notoriety after it demolished the Literary House (home to some famous artists in the 19th century) next to Anichkov bridge, in January of the same year. From 1993 to 2008 the building housed the district tax office, and at that time leading positions in the tax offices in St. Petersburg and Russia were occupied by Viktor Zubkov and his son-in-law Anatoly Serdyukov. Nevertheless, this building, in 1999 designated as a historic landmark by a local legislation, for some reason was never included by Smolny in the register of protected sites.

The first contender for the house was “Veda” holding company, at that time the largest vodka producer in Russia. In 2004, on the basis of its investment and tender documentation, the city government of Valentina Matvienko put the Literary House on the priority list of properties offered for sale. At the same time, Veda was promoting a project to develop a site in the Taurida Garden (located next to Gardener House), occupied by greenhouses, belonging to “Flowers” co-op. The flower growers were accused of failing to pay profit taxes, and after they were declared bankrupt the land was acquired by Basis, LLC (it’s believed it was done for the benefit of Veda) at a cost four times lower than its book value and comparable to the price of a one-bedroom apartment in the center (10.8 million roubles). Alexander Usov, the Chairman of the Board of Directors of the Union industrial group (a manufacturer of furniture components that could be of interest to Anatoly Serdyukov, who in the 1990s worked in the furniture trade business), became the owner of the main greenhouse in the Taurida Garden. According to SPARK-Interfax, Mr. Usov, as well as Valery Puzikov, Arthur Pozov, Alexei Ivanov, and Alexander Belyaev at different times owned Avtokombalt. It is possible that they could be associated with Cyrke Holdings: a number of offshore subsidiaries, as well as ISC-Tekhnostroy owned by Tatiana Kornukovа, the head of StroyRent, are registered at the same address as the entities owned by Messrs, Puzikov and Belyaev.

It was Avtokombalt that inherited the Literary House renovation project, after the death in 2005 of Kirill Ragozin, the founder of Veda and the State Duma deputy. The Government of St. Petersburg awarded the contract to Avtokombalt, without any bidding, with the only encumbrance: the investor undertook to build a new tax office building on Lermontov Avenue for 59 million roubles in 2000 prices (recalculated at prices as of 2008, the year it was constructed, that amounts to about 80 million roubles). After the historic building was demolished amid a scandal, Cyrke Holdings became the owner of Avtokombalt, and in the fall of 2011, the company, together with investment project, became the property of the LSR developer group owned by the then Senator Andrey Molchanov. According to the report for the first quarter of 2012, LSR owed to Cyrke Holdings 907.8 million roubles – that is many times the amount that Smolny got for the investment project. According to the same report, in 2011 LSR also invested 852.7 million roubles in Avtokombalt-authorized capital , and loaned another 488 million to its subsidiary. Thus, the total amount invested in the project exceeded 2.2 billion roubles. It is noteworthy that Alexander Vakhmistrov, the head of the LSR, who was the Deputy Governor in charge of construction at the time that the building was transferred to the investor in 2005, was authorized by Valentina Matviyenko to supervise this investment project. In his turn, in 2004, the current head of the Avtokombalt, Lev Vinnick, was in charge of the Smolny Investment Department, and then until 2010 worked as an advisor for Anatoly Serdyukov at the Ministry of Defense. Mr. Vinnick is also in charge of LSR-Construction, which has already built a luxury apart-hotel on the site of the former building of the Federal Tax Service. Now he is remodeling the Leningrad movie theater in the Taurida Garden in order to convert it to a show center with a cabaret theater under the contract with Yuri Kovalchuk, the owner of “Russia”, and his partner (see “Kommersant”, July 24).