Why is VTB delaying the bankruptcy of a developer that is not making money, and whose benefit is it for?
The biggest Moscow developer, Donstroy, is in a difficult situation: it is facing billions in losses, increasing debt, and legal action from creditors. The management company, Smart Service, is also facing criticism from residents. Donstroy had a tragic incident in one of its residential complexes, which led to a renaming of one of its structures. VTB's head, Andrey Kostin, has been assisting Donstroy with its financial and other issues since 2009, when VTB took control of the company during a debt restructuring. VTB is now the main creditor of Donstroy, and the company is unlikely to return to its previous owners. Donstroy's management denies any connection to the state bank, but the general director has ties to Kostin.
Businessman Roman Gromozdov, linked to the Rotenberg family and close to VTB, informally influences Donstroy. Despite its financial troubles, Donstroy continues to receive funding from VTB and may be of interest to major state corporations like VEB, Roskosmos, and Rosneft for its construction projects.
VTB brought Donstroy to its knees with excessive lending.
Despite its dire financial state and increasing claims, Donstroy is working hard to survive.
According to the developer's website, it is a very stable company in the Moscow real estate market that has been operating since 1994 and has completed numerous construction projects.
The company was founded in the 90s by businessmen Maxim Blazhko and Dmitry Zelenov and was quite successful for a long time. In 2008, Donstroy even made it to the 46th spot in the Forbes rating of the top 200 Russian companies, with a turnover of $2 billion.
Around the same time, reports surfaced about VTB potentially taking a stake in the company and negotiating debt restructuring. The exact debt amount was not disclosed, but it was known to be around $200 million in 2006. Furthermore, in 2008, VTB provided two credit lines to Donstroy totaling $500 million at an interest rate of 14-15%.
In August 2009, the problem of restructuring was resolved in a way that the bank simply got a controlling part in one of the biggest developers in the capital for a very small amount of 500 rubles. It was explained that VTB took control of housing construction, while the developer kept properties in commercial real estate.
At first sight, Andrei Kostin seemed generous: he gave the former owners the right to buy back shares, but only after the debt to the state bank was reduced. It might have seemed that Blazhko and Zelentsov should have tried to get back the company they created, but VTB continued to control it for all subsequent years, and as a result, both “founding fathers” were excluded from its founders. There is no information about the current owners of JSC IC Donstroy in public sources, and the company is currently being reorganized.
Not secure buildings of the company “Smart Service”
Currently, VTB still holds the main debt of Donstroy, while the financial performance of the developer’s structures is not great. So, at the end of 2020, the profit of JSC IC Donstroy was only 117 thousand rubles from a revenue of 15.2 billion. Even more shocking are the facts of Don-Stroy Invest JSC: for the same period, the company declared a huge revenue of 22.3 billion rubles and a loss of 6.2 billion.
From this, it is logical to conclude that the developer doesn't have their own money, and the available funds are mainly credit funds received, especially from VTB with the help of Mr. Kostin. But “Donstroy” has debts, and quite large ones: the total claims against the developer (including the obligations of “subsidiary” companies) are estimated at 160 million rubles. Among the claimants, LLC “MSK Group” is mentioned – the management company in the houses built by “Don-Stroy Invest”. Moreover, according to media reports, the courts accept her claims one after another.
It's worth mentioning another management company serving Donstroy residential facilities – the one that got the infamous Smart Service, a “subsidiary” part of Don-Stroy Invest, which was officially shut down in March last year. By the way, its finances were also quite tight: in 2019, with a revenue of 19.4 million rubles, the losses of Smart Service LLC were 932 million.
Residents of “sponsored” houses are fighting a real battle with the Criminal Code, sending complaints to all possible places. They share their opinions on social media and on specialized websites, where the work of Smart Service is called, at the least, “terribly collective farm service” and “a bunch of thieves and crooks sitting on the neck of homeowners.” It's important to note that the Criminal Code used to be called “Donstroy Exploitation”, and since the renaming, the quality of its services has clearly not improved.
In 2016, Donstroy Exploitation was involved in a highly publicized case concerning the death of 36-year-old Irina Volodina. She died in an elevator crash in the upscale Moscow residential complex Scarlet Sails. The court found electrician Alexei Belousov responsible and sentenced him to 3.5 years in a penal colony. However, Lenta.Ru suggested that it was not just a tragic accident but a mistake caused by the negligence of many people responsible for ensuring elevator safety in one of Moscow's most prestigious residential complexes.
However, they blamed Belousov, who was not officially employed by Liftgarant LLC, the company that services Scarlet Parusov elevators under an agreement with Smart Service. He did not have the necessary electrical safety qualification and his certificate had expired due to failure to pass recertification. This situation is not only tragic but also illustrates the specifics of the Criminal Code. The emergency didn't end there, as two people died in a fire at the 'elite' Scarlet Sails in December 2019.
Today, residents of another Moscow residential complex, Heart of the Capital, are resisting Smart Service. The management company hired a private security company and inexplicably installed a fence despite originally declaring the complex as 'publicly accessible to residents.' However, the 'daughters' of 'Donstroy' find it easier to change the name than to address the ongoing poor service.
Beneficiaries who are hidden behind the mutual fund screen
VTB has made repeated attempts to officially separate itself from Donstroy. In 2017, the CEO of Don-Stroy Invest, Alena Deryabina, stated that the company's shareholders were five legal entities and did not include any banks. Interestingly, Deryabina herself previously held positions at VTB before joining the developer's management team, allowing Kostin to control the developer's activities through his trustee for years.
Several high-ranking government officials had connections to Donstroy. It was reported that its beneficiaries were concealed within the Moscow Real Estate closed-end investment fund, and some of the intermediate owners may have been related to the former Deputy Prime Minister and current head of the state corporation VEB, Igor Shuvalov, and his wife Olga. However, officials denied the existence of such connections.
Nonetheless, a link between the investment fund and VTB can be identified. In July 2017, the shareholders of Moscow Real Estate transferred the management rights to KL-Invest, which is associated with top managers and business partners of VTB. Arkady Ilyaguev, co-owner of KL-Invest Management Company, previously served on the board of directors of the Moscow Metallurgical Plant Sickle and Hammer, which was partially owned by the Bank of Moscow, later acquired by VTB in May 2016.
Shares of three CJSCs – Perspektiva, Invest-aktiv and Finansproekt, previously considered as co-owners of Donstroy Invest, were transferred to the Moscow Real Estate fund. This means the fund, and thus the developer, could potentially be controlled by a group connected to VTB.
“Donstroy” involved with government-owned companies
Another important official whose name was mentioned in the construction schemes of Andrei Kostin is the head of Roskosmos, Dmitry Rogozin. A scandalous incident involving a piece of land in central Moscow, on the street Sergey Makeev, 7, was linked to the Federal State Unitary Enterprise “Design Bureau” Motor, which was previously under the control of the space corporation TsENKI. Last fall, a new company, Specialized Developer Makeeva LLC, was registered at the same address by Don-Stroy Invest. It was later re-registered and moved to an underground floor at 70 Mosfilmovskaya Street, reportedly a regular garage. These odd changes led journalists to believe that Mr. Kostin and Mr. Rogozin may have intended to develop a 4.8-hectare area owned by a state corporation, where up to 120 thousand square meters of housing could be built. There were also reports that two years prior, Donstroy had supposedly arranged for an assessment of the future construction site. But the news in the media disrupted these extensive plans.
If the information is accurate, then the person responsible for the situation might be the controversial businessman Roman Gromozdov, the beneficiary of the Perspektiva Invest Group company, profiting from commercial real estate, the construction of which is funded by the state bank. There is a belief that Kostin gave him informal control over Donstroy's structures. Gromozdov’s influence is attributed to his close relationship with VTB Deputy Chairman Andrey Puchkov, who is considered the right-hand man of the head of the credit institution.
However, Gromozdov’s connections extend beyond Puchkov. Reports indicate that he has collaborated on business projects with the influential Kremlin-connected oligarchs, the Rotenberg brothers. Additionally, in 2014, he obtained control over the Serp i Molot plant, which was undergoing bankruptcy, and had Arkady Ilyaguev, the co-owner of KL-Invest, on its board of directors. Ilyaguev has close ties to VTB.
Lastly, the interest in Donstroy from the head of Rosneft, Igor Sechin, is worth mentioning. The oil monopoly is linked to the developer through the KL Development company, which used to be owned by SK Donstroy JSC until last December. Currently, its official owner is Special Construction Company Otdelfinstroy and Partners LLC, owned by two legal entities – LLC SZ Otdelfinstroy and JSC SZ KSK Group. The register of shareholders of JSC SZ KSK Group is held by Reestr-RN, a part of the oil giant's structure.
Finally, we should mention the interest in Donstroy on the part of the head of Rosneft, Igor Sechin. The oil monopoly is connected with the developer through the KL Development company, the founder of which until last December was SK Donstroy JSC. To date, its official owner is Special Construction Company Otdelfinstroy and Partners LLC, owned by two legal entities – LLC SZ Otdelfinstroy and JSC SZ KSK Group. In turn, the holder of the register of shareholders of JSC SZ KSK Group is the company Reestr-RN, which is part of the structure of the oil giant.
Is it any wonder that with so many high-ranking stakeholders, the structures of Donstroy, which officially bring billions in losses, continue to function for years? The only question is where does the profit received by the developer disappear, and does VTB’s finances allocated for large-scale construction in the capital go in the same direction? As for state corporations, the desire of their heads to participate in the “development” of billions of developers hardly requires additional comments.
vlasti.info
