Putin's Palace

"Putin's Palace"
Exterior of the palace under construction
Location in Krasnodar Krai
General information
Architectural style	Italianate
Location	Gelendzhik, Krasnodar Krai, Russia
Coordinates	44°25′09″N 38°12′19″E / 44.419202°N 38.205306°E / 44.419202; 38.205306Coordinates: 44°25′09″N 38°12′19″E / 44.419202°N 38.205306°E / 44.419202; 38.205306
Construction started	2005
Cost	$1 billion (estimate)
Owner	Alexander Ponomarenko
Design and construction
Architect	Lanfranco Cirillo
Main contractor	Spetsstroy 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]

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 an 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]

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.^[16] Activists made another sortie into the property in June 2011, when they claimed to have found an illegally constructed marina.^[17]

Gallery

Wikimedia Commons has media related to Putin's Palace.

References