The House the Kremlin Built. How the Presidential Administration Spends Billions on Apartments for Officials

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As families with many children wait years for mortgage subsidies, the Kremlin administration doles out multimillion subsidies to its employees and spends billions of rubles from the budget to purchase apartments for officials. Moreover, real properties are purchased on a non-competitive basis, and the price cuts are minimal. The beneficiaries of such schemes are people close to the head of the construction complex of Moscow Marat Khusnullin. Contracts are also won by firms associated personally with the man in charge of construction projects, the richest official in the Presidential Affairs Management Directorate Oleg Perlin. A lot of budgetary funds are also allocated for construction. Moreover, the apartments are not given to those who are really in need, but to the top officials, who, after privatization, offer them for sale or re-register them in the name of their relatives. For example, under such a scheme the family of deputy head of the Presidential Administration Sergei Kirienko became the owner of an elite property.

By law, an apartment purchase subsidy is a support measure for the least protected social groups, such as large families, but in reality, very few people are able to get it. On the eve of Vladimir Putin's «direct line», young mothers from Yugra recorded a video appeal. They said that the authorities deceived them by forcing them to take on onerous mortgage debts under a special subprogram: «They promised to pay the subsidy within three years. In fact, the situation is such that even those families who were on the waiting list in 2010 still cannot receive state support.»

What large families are struggling to achieve in Russian provinces, government officials can easily obtain in the capital. Over the past four years, the Presidential Affairs Management Directorate has spent nearly 5 billion rubles to buy up well-appointed apartments in Moscow. In June 2018 alone, the Directorate department entered into government contracts to purchase apartments worth 768 million rubles.

«Realtor» Fradkov

The signature of the youngest son of the former Russian Prime Minister Mikhail Fradkov appears under the fresh contracts for the purchase of nearly 100 apartments to be owned by the Russian Federation. 36-year-old Pavel Fradkov has spent the past three years as deputy head of the Presidential Affairs Management Directorate and worked as deputy head of Rosimushchestvo (Federal Agency for State Property Management) before that.

The Presidential Affairs Management Directorate (PAMD) is engaged in the acquisition of housing for «needy» federal civil servants (there are over a thousand of them on the waiting list). Mass purchase of apartments implies a price cut compared to the average market value. The April 11 Order of the Ministry of Construction of Moscow sets the average market price of one square meter at 91,600 rubles in Moscow, but the PAMD's purchasing prices are much higher. For example, the PAMD buys apartments in Zarevoi proezd for 161,000 rubles per square meter.

In Fradkov Jr.'s auctions, the only bidder and winner is the Moscow Civil Engineering Directorate (CED). It was created in 2011 at the initiative of vice-mayor Marat Khusnullin, and it is headed by an old acquaintance of Khusnullin Damir Gazizov, a Tatarstan native. When Khusnullin was Minister of Construction of the Republic of Tatarstan, Gazizov was the Head of the Municipal Directorate of Capital Construction and Reconstruction, and they were preparing Kazan for the Universiade together. Gazizov left public service in 2006, soon after he became a defendant in a criminal case: according to investigators, he awarded the contract for the reconstruction of the Central Kazan Stadium to his crony's company, which, in turn, stole 500,000 rubles that had been allocated to installing an elevator.

Natives of Tatarstan are also tasked with designing houses for officials. The general designer of the house for government officials was Tatinvestgrazhdanproekt, a company from Kazan. Despite the fact that it offered a higher price (19 million rubles) compared to the other bidders, it won the contract as the other four bidders were not allowed to participate. It was not possible to become familiarized with the results of work of the Tatarstan designers - the decision on the approval of the design documentation for the specified house has not been posted on the Moscow City-Planning Policy Complex web portal, though a similar decision on the house next door, which is being simultaneously constructed, is available. Nor is the design available in the auction documentation on the construction of the house. And there is no information on the total living area of the proposed house in the description of the property to be purchased. All this grossly violates the law on public procurements.

Private equity construction

The Presidential Affairs Management Directorate began working with Khusnullin's cronies only a year and a half ago. Before that, the Presidential Affairs Management Directorate preferred buying apartments on a no-alternative basis from other developers, which were linked directly to the richest man in the Directorate, Oleg Perlin, who holds the position of Main Directorate of Capital Construction of the Presidential Affairs Management Directorate.

For example, earlier auctions were constantly won by Mosfundamentstroy 6, of which Perlin used to be a shareholder. The general director of this company is Viktor Nesterenko, whose family has links to Oleg Perlin. According to the Unified State Register of Legal Entities, Perlin was Victor Nesterenko's partner in the now defunct Kombinat Pitaniya Dmfk. And Ivan V. Nesterenko is currently a co-founder of SEU FS 6 LLC, along with another former business partner of Perlin, Fedor Alberti. The senior and junior Nesterenkos also own Dokon LLC, which acts as a major government contractor (with contracts worth nearly 3 billion), including for the Kremlin.

Oleg Perlin, a former businessman and now the country's chief «key keeper,» is a record-breaker in terms of income, even officially. His income in 2016 was five times higher than the earnings of the head of the Presidential Affairs Management Directorate Alexander Kolpakov. At the end of last year he declared 71.4 million rubles in earnings, and the year before - 104 million. Strangely enough, in 2015 he earned many times less - 17 million. Why such a difference? According to the declaration, he did not sell anything big in 2016 - only a Mercedes car disappeared from his property list. It is impossible to trace his income sources based on the public portion of his tax declaration.

Apartment for Kiriyenko

The Presidential Affairs Management Directorate also builds housing by itself, on its own plots of land. «Needy» officials receive apartments from the state, and then, after privatization, put them up for sale.

The construction of the elite housing estate Royal House on the Yauza river was ordered by the PAMD. The company Corund XXI was the developer. According to extracts from Rosreestr, first deputy general director of Rosenergoatom Alexey Zhukov and the father of Rostekh's top manager Dmitry Gotliba became owners of apartments in that premium apartment complex (Nastavnichesky lane, 3). Some of the apartments are for sale on the public market: according to the advertisements on the real estate agencies' websites, the cheapest apartment there is available for 19.2 million rubles, and the most expensive one – for 101 million rubles.

The house owned by the Presidential Affairs Management Directorate is also located within the guarded and fenced off area in Nesvizhsky lane. Back in the day, certain top-ranking government officials, including Valentina Matvienko, got apartments there because of their «need» and then privatized them. Recently, an apartment priced at 210 million rubles was offered for sale in that house. Nadezhda Kirienko, daughter of the first Deputy Head of the Presidential Administration Sergei Kirienko still owns a similar apartment (of over 250 square meters). The apartments next door to her are owned by Rosneft's first president Alexander Putilov and ex-head of the Presidential Administration Nikolai Bordyuzha (in office between Yumashev and Voloshin), who spent the last 14 years as Secretary General of the Collective Security Treaty Organization.

An apartment in another well-known government-owned house on Olof Palme Street has been put up for sale as well. An apartment of that size (121 square meters) is owned by the current State Duma United Russia deputy Michael Terentyev. In a phone conversation with The Insider, the deputy chairman of the Duma Labor Committee was unable to confirm or deny the planned sale of the property: «And how do you even know I live there? It is classified. I refuse to comment in any way.»

A major construction project is being implemented by the PAMD in St. Petersburg, a complex of Supreme Court buildings should be ready by 2019. There is also a 600-apartment residential complex with parking lots for judges and staff. The overall project costs have already run to 37 billion rubles, according to calculations based on public procurement.

Veterans behind officials on waiting lists

Another way for an official to become the proud owner of the keys to a new apartment is to get a subsidy. By law, it may be granted only to those civil servants who either live in an apartment of less than 15 square meters per person, or do not own real estate at all. However, the rule does not apply to top officials. By law, the restriction can be bypassed only by the decision of the head of a government agency. And they have been actively exercising that right.

For example, deputy head of the Presidential Affairs Management Directorate Olga Sergun, got a 31-million-ruble subsidy for purchasing an apartment last year. Oleg Podolko, head of the PAMD’s regional directorate in Crimea, got more than 11 million, although he owns an apartment, and his wife has two (in Russia and Moldova). In 2016, Alexander Romeikov, an assistant to the head of the PAMD, who is single, received a subsidy of more than 15 million, although he already has an apartment of his own. Another deputy head of the Directorate, Dmitry Verbovoy, purchased his third apartment with money allocated from the budget.

Many employees of the central government also received subsidies over the last year. As The Insider found out, those included the Health Minister's assistant Irina Zvereva and a department director at the Health Ministry Yekaterina Kakorina, Kirill Rybak, an advisor to Vladimir Medinsky, Deputy Director of the Budget Policy Department at the Finance Ministry Olga Voronovskaya, and Pavel Malkov, Director of the State Governance Department at the Ministry of Economy.