By Maria Kolesnikova
Nov. 18 (Bloomberg) -- Viktor Rashnikov, the billionaire owner of OAO Magnitogorsk Iron & Steel, agreed to buy a property development in Moscow’s new financial district from ousted Mayor Yury Luzhkov’s wife, Vedomosti reported.
Rashnikov will pay about $40 million for ZAO Inteco’s half of a 169,000 square-meter office complex in Moscow City that will house the municipal government’s wedding registration division, the newspaper reported.
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Last Updated: November 18, 2010 00:44 EST
Pressure mounting on Inteco
November 18, 2010
Moscow-based developer Inteco, owned by Yelena Baturina, the billionaire wife of former Moscow mayor Yury Luzhkov, could be put up for sale, Vedomosti reports.
Baturina has come under fire from officials following the dismissal of her husband from the mayor's post in September after an 18-year tenure. A high-ranking city hall official told Vedomosti about plans to sell Inteco to businessman Suleiman Kerimov, adding that the deal, to be financed by VTB Bank, was in the works.
Two sources close to Kerimov's investment company, Nafta-Moskva, confirmed the plan, although VTB said it was not conducting any due diligence work on Inteco's assets, and Nafta-Moskva declined to comment.
However, Inteco spokesman Gennady Terebkov insisted Inteco is not for sale.
Inteco Vice President Oleg Soloshchansky, the man allegedly conducting the talks, was unavailable for comment.
There are also reports that Inteco now faces criminal charges over the purchase of one of its Moscow properties.
The Prosecutor General's Office is investigating the ownership of a 40-acre plot of land in western Moscow allocated for development by Inteco. The grand larceny lawsuit against Inteco, filed by the Federal Agency for State Property Management, alleges that the property was acquired illegally.
The disputed property was allocated for the construction of Indian, Cuban and Chinese diplomatic missions by a presidential decree in 1993. However, investigators believe that the agricultural firm Matveyevskoye illegally obtained an ownership certificate for the land in 1992, before selling the land to Inteco.
Terebkov insists that his company did not violate any laws when buying the property. "In 1993, the plot was already private property and therefore could not be part of federal property allocated for government projects. Nevertheless, we are ready to discuss an out-of-court settlement with the federal agency," he said.
Pre-trial hearings have already been rescheduled several times because the agency failed to determine the exact area or the boundaries of the disputed plot.
The newspaper goes on to report that there are issues that Inteco will face. A former city hall official said the Moscow government may soon cancel its orders allocating two Moscow properties for development by Inteco. Inteco knows nothing of such plans, Terebkov said.
A major scandal is brewing in Moscow, where people are very unhappy with the policy of the new mayor. The ban on parking on Tverskaya Street, the major street in downtown Moscow, was only the beginning of the collapse. Now the residents will start having problems with food since prices for its transportation are to increase by 70% (due to the limitation on entry of trucks into the city).
The new mayor of Moscow Sergei Sobyanin again spoke about the mistakes of his predecessor, Yuri Luzhkov. According to him, "the Moscow transport hub has gathered all the town planning mistakes of the world." Of course, it is easy to criticize others but rather difficult not to make mistakes yourself.
Speaking about the transport issue, it is worth recalling some of the initiatives of the new mayor of Moscow. Take, for example, a ban on the movement of vehicles on the Ring Road with the capacity over 3.5 tons from 7am to 10pm. It would seem that this measure should help to overcome congestion. However, it had the opposite effect - increased transportation costs. In this case, it means increased cost of shipping for retailers, which would lead to rise in price.
"In fact, prices could start to grow as retailers need to change the logistics chain, which will increase costs and, eventually, the burden will be shifted to the buyer," an analyst of Investcafe commented.
Incidentally, the new mayor is not concerned with the fact that small businesses are experiencing devastating losses due to his order to shut down food kiosks in the city. According to the "updated" position of the mayor, he did not give orders to metropolitan officials to hastily demolish the kiosks. Instead, he instructed the Moscow Committee in writing to develop a new layout of small retail trade facilities "considering traffic situation, the needs of residents and the convenience of the location" before May 1 of 2011.
By the way, the mistake with the demolition of food kiosks has not taught the new mayor anything. Recently, he again orally ordered to take down all mobile payment terminals in the city. As it turned out, their demolition took place before the arrival of collectors, so many terminals "evacuated in an unknown direction" were filled with money.
Muscovites experienced a real shock when they learnt about a ban on parking on the Tverskaya street in central Moscow. It happened a few days after Sobyanin paid a visit there. During the first day of the ban, over three hundred cars have been towed away. Drivers occupied the adjoining streets. As a result, these streets became extremely congested. Interestingly enough, the ban did not solve the issue of traffic jams on Tverskaya Street because the main problem of this street is not the cars parked at the sides of the road, but traffic lights.
The ban on parking has affected the work of retail outlets on Tverskaya. Tverskaya Street, which appeared in Moscow in the 12th century, has always been a trade street and has kept its focus until today. However, knowing that they cannot park on Tverskaya, many shoppers have cancelled it from their route. Business owners on Tverskaya can only hope for the reversal of the decision to ban parking.
Traffic jams are, without a doubt, a frustrating phenomenon. On the other hand, the solution of the issue is not worth all the troubles that broke into the lives of Muscovites after the manifestation of the new government. Most Muscovites spend about an hour commuting, both driving and riding public transit.
Another question is why Sergei Sobyanin is so quick to make decisions? Would it be prudent to consult with experts first, before giving oral instructions in the course of conversation, cleaning purses of Muscovites and ruining businesses?
Was Luzhkov a thief? Perhaps. Did his wife become rich at the expense of Muscovites? It is quite likely. But certainly something looks painfully familiar in the way the new mayor's wife Irina owns a road construction firm, and the fact that 100 billion rubles were allocated for road construction in Moscow.
The Scandal Around Khimki Could Lead to a Standoff Between the Kremlin and Russian Nationalists
With the Kremlin’s gaze apparently shifting from the city of Moscow to Moscow Region, President Dmitry Medvedev will have to publicly take sides in the escalating confrontation between nationalists and civil society. The brutal attack on journalist Oleg Kashin, the latest in a series of attacks on critics of the municipal authorities in the Moscow Region town of Khimki, has become a Russian cause célèbre: Kashin’s name was the third most often mentioned name in the Russian news last week, following Medvedev and Prime Minister Vladimir Putin.
The investigation into the attack is now being conducted by the country's highest-ranking investigators from the newly-independent Investigation Committee. And in another sign of mounting political pressure on Khimki and Moscow, on November 13, the NTV television channel ran an investigative report into the situation surrounding Khimki, which was extremely hostile to the town's now notorious Mayor Vladimir Strelchenko. In recent months, similar critical NTV reports have been a sign of the Kremlin’s displeasure with, firstly, Belarusian President Alexander Lukashenko, and secondly with Moscow Mayor Yuri Luzhkov, both of whom combine neo-Soviet patriotism with corruption and authoritarianism.
The NTV report on Luzhkov immediately preceded the dismissal of the long-serving Moscow mayor. NTV’s Khimki report may indicate that the Kremlin will not wait for the results of the investigation into the attack on Kashin, but draw its own “organizational conclusions” about the situation in the region – conclusions that may not be limited to Khimki but may also impact Boris Gromov, the governor of Moscow Region, directly.
While public attention has been focused on Khimki and on Strelchenko, whoever speaks of Strelchenko has also to speak of General Boris Gromov, the governor of Moscow Region – and of Boevoe Bratstvo ("brothers-in-arms") – the country-wide organization of veterans of the Afghan and Chechen wars, which Gromov heads. Gromov himself was the last Soviet general to command the Afghanistan campaign, and the last Soviet soldier to leave Afghanistan in 1989. And like many of Gromov’s subordinates in the Moscow Region government and the administrations of the region’s towns, Strelchenko is also an Afghan veteran and an active member of Boevoe Bratstvo.
Officially Boevoe Bratstvo’s activities consist of patriotic acts, such as building war memorials across the country to servicemen who died in the Afghan and Chechen wars, and providing extensive material support to veterans. As such, the organization is an improvement on the Afghan veteran organizations of the 1990s, which were basically part of the organized crime scene thanks to their capacity for violence and group solidarity, combined with the extensive tax and customs benefits the government granted them as subsidies to charities.
Unofficially, the signs are that in the early years of holding office in Moscow Region, Gromov deployed Boevoe Bratstvo and a retinue of former army comrades to repress feuding organized crime groups and monopolize protection-racket rents, marked by a wave of violence from 2000 to 2004, which saw several heads of regional municipalities slain.
Mission accomplished and offices gained, Gromov’s people, especially in Khimki, seem to have turned from repressing crime groups to repressing criticism of the new order and its endemic corruption: Khimki, perched on the border of the city of Moscow, one of the world’s most expensive cities, has some of the most attractive real estate in Europe, with tens of millions of dollars worth of easy pickings for unscrupulous bureaucrats to privatize state-owned land plots and re-zone agricultural land.
And the list of names of Khimki-related activists and journalists who have fallen victim to violent attacks after criticizing the authorities is long: prior to the attack on Kashin – for which the Khimki link is not the only possible explanation – Khimki-based journalist Anatoly Yurov was stabled with a knife ten times in an attack in 2008; his colleague Mikhail Beketov was beaten so severely the same year that he is now severely disabled; and journalists Yury Slyusarev and Yuri Granin were also victims of beatings in 2008. Only days before the attack on Kashin, environmental activist Konstantin Fetisov had his skull broken in an attack on November 4.
Surveying this tragic list gives one the impression that the repeated ferocity of attacks has an ideological nationalist component. The only parallel for the brutal punishment meted out to journalists and activists linked with Khimki is that which has been meted out to journalists and activists by rightwing extremists: leftwing activist Alexander Rukhin was murdered in April 2007 by ultranationalists, while a rightwing extremist has been detained for the murder of human rights lawyer Stanislav Markelov in January of 2009. And there may have been ultranationalist involvement in the still unsolved murder of Anna Politkovskaya in 2006. Like Markelov, she had been active in exposing human rights abuses by Russian servicemen in Chechnya.
Whether the motive for the particularly brutal attacks on Khimki civil society activists is linked to the Afghan veteran networks prevalent in Moscow Region and the nationalist ideology they espouse will only be proved or disproved by an investigation. But a swift Kremlin crackdown on Khimki and on Moscow Region, on Strelchenko and on Gromov, for image purposes or out of genuine concern for civil society, could well add to growing nationalist resentment of the Medvedev administration – and force the Kremlin to finally take sides in the nationalism versus civil society clash, even at the risk of becoming a target of nationalist anger.
This is not far-fetched. Nationalist political violence already seems to have targeted state officials in at least two instances. In April 2010 federal judge Eduard Chuvashov, who had given a group of Neo-nazis lengthy sentences for the murder of over 20 immigrant workers, was shot dead in his doorway. In August 2010 a jury again acquitted a gang of nationalists charged with attempting to assassinate 1990s liberal reformer Anatoly Chubais, now the head of state nanotechnology corporation Rosnano, in 2005. The apparent ringleader of the group, retired Colonel Vladimir Kvachkov of Russia’s military intelligence service, while denying the charges, has made no secret of his hatred of Chubais for “selling out the country” and his wish to see Chubais dead. Nationalist rallies led by Kvachkov and rallies such as the November 4 Russian March feature hangings of Chubais in effigy.
Underlining the threat of anti-state violence from the far right, Russia's Federal Security Service (FSB) declared on November 11 that it had discovered an arms and explosives cache in Pskov kept by the Slavic Union far-right group. The weapons were apparently intended for an attack on an administrative building in the city on October 31, the date that democrats rally in support of freedom of assembly.
Nationalists like Kvachkov – who openly call for violence – are hostile not just to “pro-Western democrats,” but to the current regime as a whole, especially now that former President Vladimir Putin has symbolically handed the reins of power over to the liberal Medvedev. Kvachkov’s Web site even details a legal suit against Putin on charges of national treason.
Furthermore, the ongoing root-and-branch army reform has mobilized opposition among veterans’ organizations and the nationalists, especially after a public verbal clash in October between civilian Defense Minister Anatoly Serdyukov, the mastermind behind the reform, and a decorated colonel of an airborne regiment, over perceived irregularities. The resulting furor resulted in petitions and a 1,000-strong demonstration on November 7 of paratrooper veterans calling for the minister’s dismissal. In a disturbing twist, the head of the elite airborne troops division, General Vladimir Shamanov, who publicly sided with Serdyukov and supported the reforms, was hospitalized on October 30 after a lorry mysteriously swerved directly into his car. Investigators say it was an accident.
Apart from Serdyukov and Chubais, and potentially Medvedev, another nationalist hate figure among government officials is the long-serving deputy head of the presidential administration, Vladislav Surkov. Veterans accuse him of organizing what they regard as “show trials” of a handful of Russian servicemen for crimes committed against Chechen civilians, designed, they believe, to strengthen Chechen President Ramzan Kadyrov.
So in conjunction with these developments, if the Kremlin were to move decisively on Khimki and Moscow Region it could spark a backlash from the far right – even to the point of the Kremlin becoming the target of nationalist hate as it was in the 1990s, when nationalists lambasted Boris Yeltsin's administration as "anti-Russian."
Luckily, nationalists, especially those from the officer corps, lack popular credibility, not least due to their well-known extensive involvement in corruption. Journalist Mikhail Beketov himself provided a vivid illustration of their double standards in April of 2007: while Russia – and Boevoe Bratstvo – were up in arms against a decision by the Estonian government to demolish the “Bronze Soldier” war memorial to the Soviet World War II victims in Tallinn, Beketov wrote about Strelchenko’s people in Khimki simultaneously digging up a World War II memorial containing the remains of Soviet pilots, which had the bad luck of being located on a piece of prime real estate.
His article was seized on by international media and badly discredited Russia’s position in the dispute with Estonia. “Patriot” Strelchenko was exposed as a disturber of war graves and a vandal of memorials for commercial motives. In November of 2008 Beketov was beaten to a pulp, and is to this day unable to communicate