What building is in this photograph?
Virtually every Russian citizen would answer without hesitation: GUM, the Main Universal Store.
It is part of Russia’s cultural code: you come to Red Square, and there is GUM on the left, Lenin’s Mausoleum on the right, and St. Basil’s Cathedral straight ahead.
When we watch the May 9 Victory Day parade, it unfolds more against the backdrop of GUM than of the Kremlin.
“If you get lost, meet in the center by the fountain,” and all that.
The GUM shopping center is officially a cultural heritage site: “Upper Trading Rows, 1889–1893, architect A. N. Pomerantsev.” And it is a VERY large store in the best location in Moscow—and arguably in all of Russia—covering 70,700 square meters.
GUM used to be owned by the city of Moscow, and is now federally owned—that is, it belongs to the state, which means it belongs to all of us.
So when Dmitry Medvedev, leader of the United Russia party, signed the document transferring GUM to businessman Kusnirovich on a lease basis without any bidding, auctions, or other competitive procedures (through PJSC “Trading House GUM”; as of December 2014, he owned 75.6% of the company), the Anti-Corruption Foundation decided to find out: at what price?
Do we have the right to know? We do. The store is state-owned, a cultural heritage site, and a national asset. Information about the price at which the people of Russia lease out GUM should be available to the people of Russia.
By Russian government order No. 242-r of February 22, 2014, it was authorized to lease to OJSC “Trading House GUM,” without any bidding, premises with a total area of 74,967.99 square meters for 49 years.
The lease agreement itself, however, was only signed at the end of the year:
According to Forbes, Kusnirovich makes a very good living by subleasing GUM and even appears on its list of the “kings of Russian real estate”:
It is not hard to become a real estate king when state property is simply handed over to you without a tender. The “king’s” company is doing quite well even in times of crisis.
According to PJSC “Trading House GUM”’s annual report, the company’s turnover in 2014 amounted to 5.3 billion rubles, or 1.4 billion rubles more than the previous year. At the same time, the company’s net profit increased to 791.09 million rubles.
But while information about Kusnirovich’s income is not secret, finding out how much the Russian budget receives from leasing out the GUM building turns out, in practice, to be impossible.
We at the Anti-Corruption Foundation repeatedly submitted requests. The grounds for obtaining this information are more than sufficient: the building is state-owned, the income should go into the Russian budget, so let them openly disclose the lease rate.
In response to our requests, we received an insolent brush-off: they would tell us nothing because information about the lease rate MAY constitute a commercial secret. That is how they put it. Not even that it “is a secret,” but that it “may be.”
It is phrased that way because officials understand perfectly well that such information cannot be a commercial secret.
Because, to quote:
This is Article 3 of Federal Law No. 98-FZ of July 29, 2004, “On Commercial Secrets.”
There is only one way to declare the amount of a state lease payment secret: to write into the contract that “corruption through artificially lowering the lease rate is businessman Kusnirovich’s know-how and intellectual property.”
Amusingly, after we started bombarding everyone with requests on this issue, media reports began to appear claiming that the rent had supposedly been raised to market level.
But the information still has not been officially disclosed, and we do not believe the rent is at market level. So we went to court demanding that the Federal Agency for State Property Management (Rosimushchestvo) be ordered to: a) give us a substantive response, b) disclose GUM’s lease rate, and c) provide a copy of the appraiser’s report on the basis of which the rent was set.
The claim was filed with the court on July 14, 2015. Under Article 257 of the Civil Procedure Code, as it stood at the time, it should have been considered within ten days, but the hearing was not scheduled until October 2.
Our claim was denied, and Rosimushchestvo once again based its position on the notorious argument that “disclosing the information may violate the commercial secrecy of the parties to the contract.”
Amusingly, the court also refused to involve the parties to the lease agreement (the federal state unitary enterprise and Trading House GUM) as interested parties, justifying that refusal by saying that their rights and interests could not be affected by the court’s decision. So one statement contradicts the other, but that did not seem to bother the court.
So, to sum up: the official position of the Russian Federation is that the people of the Russian Federation have no right to know the price at which they are leasing GUM—the country’s premier and most prestigious retail space—to businessman Kusnirovich.
The decision is outrageous, absurd, and, without exaggeration, undermines the very foundations of the state. It turns out that income from property belonging to citizens can be hidden from those same citizens.
The court’s actions provide yet another indirect but compelling piece of evidence that leasing GUM out without a tender and at a reduced price is a direct manifestation of corruption.
We will keep pushing for full disclosure of all the information and, more broadly, for a ban on “classifying” information of this kind.
If you know anything interesting about “the shady dealings of officials and Kusnirovich around GUM and beyond,” you can help us a great deal by sending information/documents to Black Box (completely anonymously).