Well then, it is time to tell you about our research into the business of innovation.
Unfortunately, I cannot promise anything original about the scheme itself—the “innovative business” in question also boils down to the familiar approach of “stealing money from the state budget and moving it offshore.” Still, the sheer brazenness of the operation and the rank of the people involved make this a rather extraordinary case.
It all began with this article in Vedomosti, which dryly described how the Country’s Chief Innovator and head of Skolkovo, Viktor Vekselberg, in blissful union with government officials, bought the former Hungarian consulate building on Krasnaya Presnya from the Hungarian government for $21 million, and then somehow managed to sell that same building to the Ministry of Regional Development for $116 million—about 2.5 times the market price.
As usual in our country, the newspapers wrote about it, everyone got indignant, and then forgot. But we decided to dig into the matter, obtain documentary proof, and finally force someone to be held accountable.
After today’s article in Vedomosti, there is no point in keeping our work under wraps. The investigation from this point on should be public and involve as many citizens as possible.
So, here he is: Viktor Vekselberg.
With his kind and gentle eyes, he is not looking at Fabergé eggs, as you might think. With those kind and gentle eyes, he is looking at Russian taxpayers’ money, which by the force of his innovative talent takes the form of golden eggs, buildings in central Moscow, or the Skolkovo center.
Viktor Feliksovich Vekselberg knows how to find ways to channel budget funds in the right direction.
So what happened? Watch closely.
On November 19, 2007, a meeting was held by Russian Deputy Prime Minister Alexander Zhukov (a member of the Supreme Council of the “Party of Crooks and Thieves” (a derogatory opposition nickname for United Russia)). Present were: Dmitry Kozak (Minister of Regional Development), Yuri Medvedev (acting head of the Federal Agency for State Property Management), and Viktor Vekselberg.
There were two items on the agenda: The Hungarians’ application to sell the building (in accordance with an intergovernmental agreement). The application was approved. Housing for the Ministry of Regional Development. Office space is needed. Measures are to be taken to acquire the building. It is announced that Vekselberg already has a preliminary agreement to buy it. So, ATTENTION: everyone at the meeting knew that the Hungarians were selling the building and that this building was suitable for housing the Ministry of Regional Development.
February 27, 2008 — Russian Government Directive No. 232-r. It grants consent to the transaction and instructs that the Hungarians be notified of that consent. Signed by Viktor Zubkov (then prime minister).
March 7, 2008. The Russian Embassy in Hungary, with the utmost diplomatic courtesy, informs the Hungarians of Zubkov’s February 27, 2008 directive.
And then comes an interesting shuffle of dates. Apparently Vekselberg is so innovative that he has bent time itself to his will—that must be why Medvedev invited him to head Skolkovo. The building is sold first, and only afterward put up for a sale tender. Needless to say, the tender was a sham.
March 14, 2008. That is the date on the purchase agreement between Diamond Air and the Government of Hungary.
Diamond Air is owned by Vekselberg through another company—“Renova Innovative Technologies.” (!!!) You can immediately see that these people are not strangers to a certain dark irony. They will not only steal the money, they will have a good laugh while doing it.
April 29, 2008. The transfer of ownership rights was officially registered.
In other words, the building fully and irrevocably belongs to Vekselberg.
June 26, 2008. The well-known international real estate agency Cushman & Wakefield issues a valuation as of June 23, 2008: $19.9 million, excluding VAT. At the same time, it states that the property could generate annual cash flow of $3,182,000, excluding VAT.
Experts say that a normal return for projects like this is 7%–10% annually, which suggests that the sale price was understated by at least a factor of two. And if you calculate the cash flow against the leasable floor area, the rate comes out to $400, which also looks artificially low.
Cushman’s hands do not look clean here—all the facts point that way.
How deeply involved they were can only be answered after a detailed review. We will deal with that separately. Their headquarters are in the United States, and we will pass this information to the U.S. Department of Justice so it can determine whether the Cushman people took bribes in exchange for bogus valuations.
No date. Invitation to participate in a closed tender issued by the Hungarian Ministry of Foreign Affairs. The document is undated, but states that it is based on a resolution of the Hungarian National Asset Management Council dated July 30, 2008. Invited: Diamond Air Gazprombank Invest LLC Mashinoimport OJSC Application deadline: September 10, 2010.
At this point, we have documentary grounds to accuse Viktor Feliksovich Vekselberg of fraud. His company, Diamond Air, took part in a knowingly fictitious tender for a building of which it had already become the official owner several months earlier. But for the time being, this fraud—although committed on Russian territory—caused damage only to the Hungarian budget.
September 10, 2008 — the bid envelopes are opened (Mashinoimport and Diamond Air). Vekselberg becomes the owner of the building for the second time.
And after that, the part of the scheme involving the theft of our money begins to unfold:
November 10, 2008 — amendments to the budget are introduced, allocating 3,000,000,000 rubles for the purchase of this exact building: 3 Krasnaya Presnya Street.
December 10, 2008. The date contract No. 159 was signed for part of the building with an area of 15,271.5 square meters. A happy and satisfied Viktor Vekselberg sells us a building with a market value of about $50 million for $116 million, after buying it from the Hungarians for $21 million.
An interesting and important fact: the theft of budget money was carried out so brazenly that it caused a minor scandal even within our battle-hardened government. Here is Kozak’s instruction dated September 3, 2010.
To sum up:
The Russian Ministry of Regional Development bought a building at 2.5 times the market price using budget funds, through an intermediary—an offshore company owned by Viktor Vekselberg. This happened despite the fact that three senior officials (Zhukov, Kozak, and Medvedev), along with the intermediary Vekselberg, were aware of both the planned scheme and the ministry’s needs. The fictitious nature of the Hungarians’ sale tender became the subject of a criminal investigation in Hungary. The fraudulent nature of the building purchase has been officially acknowledged at the level of a Russian deputy prime minister. And as usual, not a damn thing happens. No one is punished. The money is gone.
What we are doing in this situation:
We spent an enormous amount of time collecting all the documents, but we did collect them, organize them, and bind them into folders.
At this point I would like to thank one of our volunteer experts, who for now wishes to remain anonymous. He is an excellent real estate lawyer, and without his help we would never have sorted through this heap of registration paperwork. His contribution to this investigation is invaluable. After that, as usual, we drafted long and thorough crime reports.
I have already been summoned to give a statement to the Main Investigative Directorate of the Investigative Committee in Moscow.
Since the Ministry of Regional Development refused to answer our letters on the merits (saying that an internal review could only be initiated at the request of a member of the Civic Chamber, the leader of a registered party, a member of parliament, etc.), we sought help and asked YABLOKO leader Sergei Mitrokhin and State Duma deputy Sergei Petrov of A Just Russia to submit formal inquiries.
Petrov has already received a highly interesting reply:
Funny, isn’t it. Everyone seems to acknowledge that the law was violated, yet no criminal case has been opened. Some kind of directive has apparently been issued. And the point of conducting operational-search measures is completely unclear. Their key feature is secrecy, whereas this has already been written about in the newspapers.
A case needs to be opened, and everything needs to be established through a proper investigation.
And this is where we need your help.
As I already said, the review is being handled by the Investigative Committee in Moscow. At that level, it cannot be effective.
An investigator at that level is never going to summon a minister for questioning.
The authorities must be forced to investigate this obvious crime.
The Investigative Committee of the Russian Federation. These people are pretending that nothing is happening, even though this is obviously 100% within their jurisdiction—by formal criteria, by the rank of the crooks involved, and by the public danger of the case.
Let’s give them a little public pressure:
Anyone willing to help can go here: www.sledcom.ru/internet-reception/
Click “I agree,” fill in the form fields, and copy-paste the following text into the “message text” box:
(if you want to write your own complaint, you are welcome to do so)
*From numerous media reports, I have learned that the actions of the well-known businessman and president of the non-profit “Foundation for the Development of the Center for Research and Commercialization of New Technologies” (the Skolkovo Foundation), V.F. Vekselberg, members of the Government of the Russian Federation, and employees of its Executive Office may contain elements of crimes under Articles 159, 285, 286, 290, 292, 293 of the Criminal Code of the Russian Federation. Specifically, documents available in the public domain show that on November 19, 2007, Deputy Prime Minister of the Russian Federation A.D. Zhukov held a meeting concerning an appeal from the Ministry of Foreign Affairs of the Republic of Hungary requesting consent for the sale of the trade mission building (Moscow, 3 Krasnaya Presnya St., Bldg. 1). Present at the meeting were D.N. Kozak, Minister of Regional Development of the Russian Federation; Yu.M. Medvedev, acting head of the Federal Agency for Federal Property Management; V.F. Vekselberg, chairman of the board of directors of the Renova Group; as well as responsible staff members of the Government Office of the Russian Federation A.G. Knyazev, A.E. Barannikov, and O.A. Akhinin. Following the meeting, the request of the Hungarian Ministry of Foreign Affairs was supported, and the Federal Agency for State Property Management was instructed to take the necessary measures aimed at acquiring the above-mentioned building as property of the Russian Federation in order to urgently resolve the issue of housing the Russian Ministry of Regional Development there, bearing in mind the “principal consent to this transaction by the Renova Group, which under a previously reached agreement with the Republic of Hungary is currently the purchaser of this building without the use of federal budget funds.” On March 14, 2008, a purchase agreement was concluded between the Government of the Republic of Hungary and the offshore company Diamond Air S.a.r.l., controlled by V.F. Vekselberg, under which Diamond Air S.a.r.l. acquired ownership of the trade mission building at the above address, with a total area of 17,612.8 square meters, for an amount equivalent to US$21.3 million. Subsequently, after the sale and transfer of ownership rights, and on the basis of Resolution No. 503 of the Hungarian National Asset Management Council dated July 30, 2008, the Hungarian Ministry of Foreign Affairs announced a closed tender for the sale of the said trade mission building. As a result of the review of bids, the said fictitious tender—conducted essentially to create the appearance of legality for the previously concluded purchase agreement of March 14, 2008—was won by Diamond Air S.a.r.l., as the bidder offering the highest price: US$21,320,626. Then, in October-November 2008, pursuant to Part 5 of Article 1 of Federal Law No. 193-FZ of November 8, 2008, “On Amendments to the Federal Law ‘On the Federal Budget for 2008 and for the Planning Period of 2009 and 2010,’” 3,000,000,000 rubles were allocated from the federal budget for the acquisition of the building to house the Ministry of Regional Development of the Russian Federation at the address Moscow, 3 Krasnaya Presnya St., which was equivalent to US$111,000,000. On December 10, 2008 and June 10, 2009, state contracts No. 159 and No. 32 were concluded between the Ministry of Regional Development of the Russian Federation and Diamond Air S.a.r.l. for the acquisition of the building at the above address. During the conclusion of the said state contracts, Diamond Air S.a.r.l. was represented under an agency agreement by Renova Innovative Technologies LLC, a company controlled by V.F. Vekselberg. Thus, V.F. Vekselberg, through Diamond Air S.a.r.l., which he controlled, acquired the former trade mission building from the Government of the Republic of Hungary for US$21,000,000 and immediately resold it to the Government of the Russian Federation for US$111,000,000. That is, as a result of involving the offshore company Diamond Air S.a.r.l. as an intermediary in what was effectively the acquisition by the Government of the Russian Federation of real estate from the Government of the Republic of Hungary—an arrangement approved at the highest level—V.F. Vekselberg came into possession of at least US$90,000,000 in federal budget funds of the Russian Federation. According to assessments by the Hungarian authorities and independent experts, the market value of the building at Moscow, 3 Krasnaya Presnya St., Bldg. 1 is approximately US$50,000,000, which indicates that: when the building was purchased by V.F. Vekselberg, its price was substantially understated, which is the subject of a criminal investigation being conducted by the Prosecutor’s Office of the Republic of Hungary, and when the building was sold, its price was substantially overstated, causing damage to the budget system of the Russian Federation in an amount of at least US$60,000,000. Based on the above, I request that subordinate staff be instructed to conduct a review of these circumstances in accordance with Articles 144 and 145 of the Criminal Procedure Code of the Russian Federation, and, based on the results, to open a criminal case and bring the guilty parties to criminal responsibility.*
2 (and most importantly). Who bears direct political responsibility for the antics of citizen V.F. Vekselberg?
That’s right.
President of the Russian Federation Dmitry Anatolyevich Medvedev.
He appointed him to head the Skolkovo Foundation, which has been given enormous amounts of budget funding. Together they talk about innovation, new approaches, a new life, specialists coming to Russia, and so on. Well then, let him answer for his personnel decisions. Medvedev must decide whether a person who ought to be under criminal investigation for corrupt collusion and embezzlement of budget funds can be allowed to run Skolkovo.
And whether we can trust what is happening at Skolkovo if it is run by people who are fond of schemes like this.
Medvedev recently said: “Skolkovo needs more publicity; it should be known all over the world.”
They will know it. As a symbol of corruption.
We will not be lazy; we will write to all participants and partners of the Skolkovo Foundation about this—Russian and foreign, everyone. If they want to talk about innovation with a fraudster sitting at the top table, let them.
I am just not sure that, for example, MIT will be pleased to receive such information.
No one is arguing that Vekselberg cannot be declared a criminal before a court ruling. But he absolutely should resign until the investigation is over.
If he is interested in preserving his reputation, then he should come forward himself and explain how this happened.
If he stays silent, that in itself will say a great deal.
Back to Medvedev. This case is an excellent opportunity to test his own initiatives.
He is supposedly a great fighter against corruption. Clearly, corruption at this level, involving ministers and his own protégé, falls within his zone of responsibility.
Medvedev recently demanded that the Prosecutor General respond to high-profile cases. Let us see whether Medvedev himself is prepared to respond.
Go here: letters.kremlin.ru/ Using our usual method, send a letter with the following text:
From numerous media reports, I have learned that the actions of the well-known businessman V.F. Vekselberg and members of the Government of the Russian Federation may contain elements of a number of crimes. Specifically, documents available in the public domain show that on 14.03.2008 a purchase agreement was concluded between the Government of Hungary and the offshore company Diamond Air S.a.r.l., controlled by V.F. Vekselberg, under which Diamond Air S.a.r.l. acquired ownership of the trade mission building of the Republic of Hungary (Moscow, 3 Krasnaya Presnya St., Bldg. 1) for an amount equivalent to US$21.3 million. On 10.12.2008 and 10.06.2009, state contracts No. 159 and No. 32 were concluded between the Russian Ministry of Regional Development and Diamond Air S.a.r.l. for the acquisition of this building for an amount equivalent to US$111 million. Thus, V.F. Vekselberg, possibly acting in criminal collusion with members of the Government of the Russian Federation, through Diamond Air S.a.r.l., which he controlled, acquired the trade mission building from the Government of Hungary for US$21 million and immediately resold it to the Government of the Russian Federation for US$111 million. That is, as a result of involving the offshore company Diamond Air S.a.r.l. as an intermediary in what was effectively the acquisition by the Government of the Russian Federation of real estate from the Government of Hungary—an arrangement approved at the highest level—V.F. Vekselberg came into possession of at least US$90 million in federal budget funds of the Russian Federation. According to independent assessments, the market value of the building is about US$50 million, which indicates that when V.F. Vekselberg bought the building, its price was substantially understated, while when it was sold, the price was substantially overstated, causing damage to the budget system of the Russian Federation in an amount of at least US$60 million. Based on the above, I request that the Prosecutor General’s Office and the Investigative Committee of Russia be instructed to review these circumstances and bring the guilty parties to justice.
Let us wait for the response.
And later, when we hear Medvedev say “fight against corruption,” “innovation,” or “Skolkovo,” we will remember that response.
And we will judge by actions, not by talk.
What makes this case remarkable is that all the evidence is right there in plain sight, and even the government itself has acknowledged legal violations.
An excellent indicator for comparing rhetoric with real intentions.
Is this blackmail and provocation?
No, these are lawful and well-founded demands by Russian citizens.
I urge everyone to get involved, help spread the information, and follow developments.
Many thanks in advance to everyone who helps.