Putin's Palace

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"Putin's Palace"

Exterior of the palace under construction
Putin's Palace is located in Krasnodar Krai
General information
Architectural styleItalianate
LocationGelendzhik, Krasnodar Krai, Russia
Coordinates44°25′09″N 38°12′18″E / 44.419191°N 38.205124°E / 44.419191; 38.205124Coordinates: 44°25′09″N 38°12′18″E / 44.419191°N 38.205124°E / 44.419191; 38.205124
Construction started2005
Cost$1 billion (estimate)
Design and construction
OwnerAlexander Ponomarenko
ArchitectLanfranco Cirillo
Main contractorSpetsstroy of Russia
 
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"Putin's Palace"

Exterior of the palace under construction
Putin's Palace is located in Krasnodar Krai
General information
Architectural styleItalianate
LocationGelendzhik, Krasnodar Krai, Russia
Coordinates44°25′09″N 38°12′18″E / 44.419191°N 38.205124°E / 44.419191; 38.205124Coordinates: 44°25′09″N 38°12′18″E / 44.419191°N 38.205124°E / 44.419191; 38.205124
Construction started2005
Cost$1 billion (estimate)
Design and construction
OwnerAlexander Ponomarenko
ArchitectLanfranco Cirillo
Main contractorSpetsstroy of Russia

"Putin's Palace" (Russian: Дворец Путина) is a name used by the media for a large Italianate palace located on the Black Sea coast near the village of Praskoveevka in Gelendzhik, Krasnodar Krai, Russia. It has been claimed that the dacha was built for the personal use of President Vladimir Putin, and that its construction began during his first Presidency. Detailed claims about the project, which allegedly made improper use of state resources, were made by Sergei Kolesnikov, a businessman with ties to Putin dating from his time in Saint Petersburg prior to entering Kremlin politics.[1]

In December 2010 Kolesnikov wrote an open letter to President Dmitry Medvedev detailing the involvement of himself and others in the project and calling for Medvedev to investigate and to take action against corruption in Russia.[2] Good quality photographs of the palace and its extensive grounds were subsequently published by the Russian language Wikileaks website in January 2011, which showed the apparently complete lavish interior decor.[3] Following the release of the photographs the site was temporarily blocked.[4]

Spokespeople on the behalf of Putin and the Russian government have consistently dismissed Putin's connections to the property and the related allegations of corruption.[5][6] In February 2011 the independent Russian newspaper Novaya Gazeta reported that it had seen documents which supported Kolesnikov by implicating Vladimir Kozhin, Head of the Presidential Property Management Department, who had denied any involvement.[7] A spokesman refused to comment on the Novaya Gazeta article.[8] The presence of Federal Protective Service (FSO) activity in the area has been claimed as further evidence of state involvement.[9]

In March 2011 it was reported that the palace had been sold for $350 million to Alexander Ponomarenko, a businessman with links to Putin who made his money by controlling the Black Sea port of Novorossiysk. Ponomarenko bought the palace from Nikolai Shamalov, another member of Putin's circle and the businessman at the centre of Kolesnikov's claims, and his partners.[10] While he did not reveal his plans for its use, Ponomarenko confirmed that the property's value would be close to $350 million.[11][12]

Contents

The whistleblower's claims

Kolesnikov's letter to Medvedev and subsequent media interviews, including to Novaya Gazeta, David Ignatius of the Washington Post and Masha Gessen of Snob.ru, give the following account of what the whistleblower revealed was known to its participants as 'Project South'.[13][14]

In early 2000, Nikolai Terentievich Shamalov, a representative of the multinational company Siemens AG in North West Russia and somebody thought close to Russia's new President Vladimir Putin, approached Kolesnikov with a business proposition. The two men had known each other through business since 1993-1994, when Kolesnikov was deputy director general of Petromed, a St. Petersburg-based firm that specialised in the procurement of medical supplies. It was also through Petromed that Kolesnikov had got to know Putin, on whose behalf Shamalov said he made the approach. Putin had been head of the St. Petersburg Council on External Economic affairs which when Petromed became a private company in 1992 held a 51% stake.

Putin's plan, as delineated by Shamalov to Kolesnikov, was as follows. Some extremely wealthy Russian businessmen were to provide large sums of money which were to be spent on improving Russia's healthcare infrastructure. They included Roman Abramovich ($203 million) and Alexei Mordashov ($14.9 million). It was arranged that a donation, in the first instance from Abramovich's Pole of Hope charity to the Sergei Kirov Military Medical Academy, would be directed to Petromed as the contractor for the modernisation programme. Kolesnikov said that 15-20% of its contracts with suppliers went to Siemens, run by Shamalov.

However, Putin stipulated that 35% of the funds should be held in offshore accounts rather than spent on the projects for which they were ostensibly intended. The source of these funds was invisible, because Petromed negotiated discounts from its suppliers (including Siemens) which it did not pass on, claiming that it had paid more than it actually had. Thus, according to Kolesnikov, Petromed claimed to have spent Abramovich's $203 million, but in fact spent $130 million. The remaining $70 million found its way to Switzerland, under Shamalov's control. Kolesnikov estimates that by 2007 $500 million had accumulated in Switzerland. In 2005, when around $200 million had been reached, Rosinvest, a subsidiary of the Swiss registered company Lirus Management, was established to invest the money in Russia.

Putin held 94% of shares in Rosinvest, with Kolesnikov, Shamalov and Dmitry Vladimirovich Gorelov (director of Petromed and another friend of Putin from his time in St Petersburg) taking 2% each. Rosinvest's interests included shipbuilding, construction, and lumber/timber processing. Kolesnikov is reported as saying that Abramovich and the other donors to health projects acted 'nobly', implying they were unaware that a significant proportion of their donations was being diverted into an investment vehicle run for the benefit of the President and his partners in Rosinvest. This is despite the huge sums involved and disputed claims that the relationship between Putin and Abramovich has been very close.[15]

'Project South', directed by Shamalov, was less mainstream as an 'investment project'. Part one, begun in 2005, was a small 'wellness centre' located at Praskoveevka in 73.96 hectares of protected forest; part two, begun in 2007, was a vineyard in the same area. In the aftermath of the 2008 world financial crisis funds were redirected to Project South from Rosinvest's other projects to facilitate its expansion. It was no longer to be a small 'wellness centre', as the photographs published online by RuLeaks.net show. By this stage, Praskoveevka was home to a Italianate palace of tens of thousands of square metres with casino, winter theatre, summer amphitheatre, church, swimming pools, sports grounds, heliports, landscaped parks, tea houses, staff apartments and technological buildings. Kolesnikov pointedly described it as a modern version of the Peterhof Palace, built on the orders of Peter the Great, and believes that by October 2009 the costs of construction (by the state company Spetsstroi) had reached $1 billion. In addition, it is alleged that money from the state budget was used to provide the complex with infrastructure — a gas supply pipeline, an electric power line, and a new mountain road.

Kolesnikov claims that in 2009 he and others were barred from the project when he objected to Shamalov's circumvention of customs regulations for supplies for the complex. Kolesnikov has expressed the view that the whole scheme was from the outset a balance between good and evil, but that in 2009 the closure of sensible investment projects in favour of the palace was a step too far. He claims that this order came from Putin, to whom he would give progress reports on Rosinvest. He alleges that Shamalov was sacked by Siemens for not answering bribery allegations but in 2009 was registered as the owner of the complex via the companies Indokopas and Rirus.

The official response

On 23 December 2010, a spokesman for the Prime Minister dismissed Kolesnikov's allegations against Putin as untrue, maintaining that he had never had any connection to the property.[5] In February 2011 Vladimir Khozhin listed the official residences operated by the Presidential Property Management Department and asserted that the government does not maintain any residence as described by the media.[6]

On 20 April 2011, Kozhin gave an interview to Pavel Korobov and Oleg Kashin of Kommersant, which included the following exchange:[16]

- Probably the most controversial episode in which the property management department figures is the so-called project "South", the residence in Gelendzhik. Do you have a position on this? What kind of residence is it? What is its status?

- I have already said and I can repeat that in terms of its construction and creation the Presidential Property Management Department had not, has not and will not have any connection to this project. In fact, the story is quite simple and clear. It began in 2004. Then the situation in the country was completely different, especially the financial situation, and so far as the complex is concerned, we then had a widespread practice of so-called investment contracts. We built housing in this way, we renovated some sites, because, frankly, there simply wasn't any money. We attracted investors' money and thus proceeded in order with their complexes, built housing, and economised on budgetary resources, which at times simply weren't there. So, the story began in 2004, and it concerned one of our sites — a small holiday home "Tuapse". At that time, this, like many of our sites, was in a very sorry state. And we were considering whether to close it or to do something with it — it was impossible to maintain in that condition. I must say that this leisure centre was always average. You know, in the old days there was such a detailed hierarchy of who went where — Sochi, the Crimea and the like, and this leisure centre was in, one might say, the "lower sector". But even within this sector, it had gone into decline. And we were approached by investors with a proposal not to repair it, but independently to use another plot of land to build a new guest-house. And we, as in all other investment contracts, were given a stake in this guest-house.

- Was the investor the same Sergei Kolesnikov of the cooperative "Ozero", who first said that the palace was being built for Mr Putin?

- No, it was a company.

- The company "PETROMED," in which the businessman worked?

- No. The investment contract was signed with the company "Lirus." Who was there among the founders, who came from where, I am not commenting on, we had dozens and dozens of such agreements. We, as always, controlled only the fulfilment of the agreement. The investor made an offer, we valued it and gave consent — this was the extent of our involvement. Hence our signatures in the documents your colleagues obtained. The rest — construction, design, all that was needed for construction, all approvals, permits, as well as all other analogous projects, the investor took on himself. We were in no way involved, while they designed and built it. Then 2008 arrived, the financial crisis, and the investor came and said: Gentlemen, the situation is clear, let's get connected to some financing. At that, accordingly, we said that if we had money, then we wouldn't need you, we would have built it ourselves. And we refused to finance it, and there was an official procedure to value the share of the Russian Federation, i.e. our share. Rosimushchestvo was involved, all the legal procedures were undertaken, and the investor bought out the Russian Federation, and directed to the "Tuapse" leisure centre a defined sum of money which was all to the last kopek invested in the reconstruction of the site. It was brought to order, and today you can go and see what it is. All of it! In late 2008, the investment contract was terminated, the procedure is completed, at the same time we parted ways with the investor. He took the land leased from the Rosimushestvo. What the investor next did there, how they redeveloped, redesigned that initial project — I do not know.

- But it has been written that the FSO has been protecting it.

- We are not the FSO.

- But it's possible to go from them, to look in your direction?

- In our direction? This is a private project, I repeat — from 2008, I did not even know what was there, I just read that there have been changes over there. I read these scandalous publications. Who its owner is today, into what it has been transformed, in that its appearance has altered, I can not comment, contact the person who owns this site. We now don't have any legal connection. That's the whole sensation, which has been exaggerated with such detail.

Other reports

In February 2011, environmentalists and a journalist visited the site to investigate concerns that the construction violated laws protecting the area's ecology. They report that they were harassed and detained by members of the Federal Protective Service (FSO), the agency responsible for guarding state property and high-ranking officials.[9] Despite the confiscation of their equipment they were able to publish additional photographs of the site.[17] Activists made another sortie into the property in June 2011, when they claimed to have found an illegally constructed marina.[18]

Gallery

References

  1. ^ Osborn, Andrew (14 Feb 2011). "Vladimir Putin 'has £600 million Italianate palace'". The Telegraph. http://www.telegraph.co.uk/news/worldnews/europe/russia/8323981/Vladimir-Putin-has-600-million-Italianate-palace.html. Retrieved 21 July 2011. 
  2. ^ Kolesnikov, Sergey (12 Dec 2010). "An Open Letter to President Medvedev from Dr. Sergey Kolesnikov". Corruption Free Russia. http://corruptionfreerussia.com/. Retrieved 21 July 2011. 
  3. ^ "Фотографии «дворца Путина» в Прасковеевке на Черном море [Photographs of "Putin's Palace" in Praskoveevka on the Black Sea]" (in Russian). RuLeaks − Russian Wikileaks. 18 Jan 2011. http://ruleaks.net/1901. Retrieved 22 July 2011. 
  4. ^ "WikiLeaks Russia website blocked over Putin palace pix". RIA Novosti. 19 Jan 2011. http://en.rian.ru/russia/20110119/162205412.html. Retrieved 28 July 2011. 
  5. ^ a b "Putin's spokesman dismisses report of palace on Black Sea". RIA Novosti. 23 Dec 2010. http://en.rian.ru/russia/20101223/161908045.html. Retrieved 28 July 2011. 
  6. ^ a b "Управделами президента РФ не строит дворцов ни для Медведева, ни для Путина [Business manager of the Russian president did not build palaces for either Medvedev or Putin]" (in Russian). Interfax. 7 Feb 2011. http://www.interfax.ru/txt.asp?sec=1483&id=176401. Retrieved 22 July 2011. 
  7. ^ Anin, Roman (14 Feb 2011). "740 square metre palace". Novayagazeta. http://en.novayagazeta.ru/data/2011/016/00.html. Retrieved 22 July 2011. 
  8. ^ "Хреков не комментирует публикации о дворце, строящемся на Черном море [Khrekov has no comment on report of the palace under construction on the Black Sea]" (in Russian). RIA Novosti. 14 Feb 2011. http://ria.ru/politics/20110214/334179991.html. Retrieved 2 Aug 2011. 
  9. ^ a b "АКТИВИСТЫ ЭКОЛОГИЧЕСКОЙ ВАХТЫ И ЖУРНАЛИСТ ЗАБЛОКИРОВАНЫ СОТРУДНИКАМИ ФСО, ПОГРАНСЛУЖБЫ И МИЛИЦИИ ВОЗЛЕ ПРЕДПОЛАГАЕМОЙ ДАЧИ ПУТИНА НА МЫСЕ ИДОКОПАС [Environmental activists and Watch staff reporter detained by FSO, and border policemen nearby imply Putin's dacha at Cape Idokopas]" (in Russian). Environmental Watch on North Caucasus. 11 Feb 2011. http://www.ewnc.org/node/6224. Retrieved 22 July 2011. 
  10. ^ "'Putin palace' sells for $350 million". The Telegraph. 3 Mar 2011. http://www.telegraph.co.uk/news/worldnews/europe/russia/8359527/Putin-palace-sells-for-350-million.html. Retrieved 22 July 2011. 
  11. ^ "'Putin's Palace,' $350 Million Mansion Reportedly Owned By Russian Prime Minister, Sold To Tycoon". The Huffington Post. 4 Mar 2011. http://www.huffingtonpost.com/2011/03/04/putins-palace-350-million_n_831480.html. Retrieved 29 July 2011. 
  12. ^ Oliphant, Roland (9 Mar 2011). "Oligarch Buys 'Putin’s Palace'". The St. Petersburg Times. http://www.sptimes.ru/index.php?story_id=33675&action_id=2. Retrieved 29 July 2011. 
  13. ^ Ignatius, David (23 Dec 2010). "Sergey Kolesnikov's tale of palatial corruption, Russian style". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2010/12/22/AR2010122203770.html. Retrieved 23 July 2011. 
  14. ^ "Сергей Колесников: Почему я рассказал про Дворец Путина. «Мы перешли границу между добром и злом в 2009 году» [Sergey Kolesnikov: Why I told her about Putin's Palace. "We crossed the border between good and evil in 2009"]" (in Russian). Snob. 23 June 2011. http://www.snob.ru/selected/entry/37367. Retrieved 22 July 2011. 
  15. ^ Harding, Luke (1 Dec 2010). "WikiLeaks cables: Roman Abramovich denies links with Vladimir Putin". The Guardian. http://www.guardian.co.uk/world/2010/dec/01/wikileaks-roman-abramovich-vladimir-putin. Retrieved 23 July 2011. 
  16. ^ "Вот чего-чего, а контролеров у нас хватает" (in Russian). Kommersant. 20 Apr 2011. http://www.kommersant.ru/Doc/1625310. Retrieved 2 Aug 2011. 
  17. ^ "Активисты ЭкоВахты посетили дворец Путина на мысе Идокопас [EcoWatch Activists visited Putin's palace at Cape Idokopas]" (in Russian). Environmental Watch on North Caucasus. 11 Feb 2011. http://ewnc.info/node/6001. Retrieved 22 July 2011. 
  18. ^ "Environmentalists crash 'Putin’s seaside palace'". France 24. 7 May 2011. http://observers.france24.com/content/20110705-russia-environmentalists-trespass-prime-minister-putin-palace-black-sea. Retrieved 23 July 2011.