My land. Ufa Vice Mayor Aleksander Filippov siphons millions and billions off the budget?
Ufa Vice Mayor for Construction Aleksander Filippov has been holding his post for almost five years. During this period, he became involved into a number of scandals related to the Ufa construction market and now is likely facing criminal prosecution.
In the coming months, the capital of the Republic of Bashkortostan is about to become the primary newsmaker of the country in relation to corruption. The governmental servant in the midst of the events is not very high-ranked – Aleksander Filippov is a Vice Mayor of Ufa for Construction and Land Turnover. Despite the humble position in the vertical power structure, Filippov is well-known for his frenzied activity. In less than five years, he has caused a number of high-profile scandals and attracted close attention of the General Administration for Economic Security and Combating the Corruption of the Ministry of Internal Affairs (MIA) of the Russian Federation amid calls for his dismissal from Ufa residents.
Filippov had settled into the new job very quickly and as early as in 2012, shortly after his appointment, the Ufa Municipal Administration has made its first questionable real estate deal. This refers to the privatization of the land where Lights of Ufa Entertainment Complex is located. Shortly before the privatization, the land lot with the area of 10.2 thousand square meters was merged with an adjacent lot with the area of 4.7 thousand square meters. This lucrative piece of real property with the total area of almost 15 thousand square meters located in a prestigious neighbourhood of the city was sold by the municipal administration for mere 2.7 million rubles ($45.7 thousand). The officials have ‘forgotten’ to assess the cadastral value of the land – which amounted to 110 million rubles ($1.86 million). The land has been purchased by the commercial tenants of the entertainment complex: Class Manager-Ufa, Office-Service, Restaurant-Service, and Show-Service companies. Galina Filippova, the mother of the Ufa Vice Mayor, was among the owners of Show-Service. Earlier, her share in the business had belonged to Aleksander Filippov. The official has named this deal a ‘preferential buy-out’.
Shortly after the sale, the adjacent lot with the area of 4.7 thousand square meters has been severed again and sold to some private entrepreneur who could be a dummy person – because the land was immediately resold to Osnova-Ufa company at a price six times higher – 57 million rubles ($964.7 thousand). The names of beneficiaries of Osnova-Ufa are hidden behind Cyprus-based Green Valley Limited offshore company. The commercial tenants of Lights of Ufa have retained the main lot in their possession. A criminal case had been initiated in 2013 due to the fact of this privatization; swindling on an especially large scale was incriminated to a group of unidentified officials. A year later, the Investigative Committee of the Russian Federation (ICR) has closed this case and resumed it only in 2016. The investigation taken under personal control by Alexander Bastrykin, the Chairman of the ICR, is currently stalled.
Video: Press conference of Aleksander FilippovGranted lands
In the meantime, Aleksander Filippov, who allegedly has friendly relations with the family of the Head of the Republic of Bashkortostan, continued his operations. The republican legislation allowed to transfer lands owned by the region to developers without tenders – provided that the developers undertake a commitment to complete troubled construction projects. These regulations contradict the Land Code of the Russian Federation that restricts land sales without tenders, and the enterprising Vice Mayor had been using the opportunities provided by the regional legislation on an enormous scale.
Filippov was one of the authors of the Regulation of the Administration of Ufa Municipal Entity of the Republic of Bashkortostan № 2620 of June 18, 2014 that had ‘legalized’, based on the republican legislation, the transfer of lands to private owners without tenders on the above-mentioned grounds of ‘completion of troubled construction projects’. Later the investigators have found out that a number of land lots had been transferred on the basis of this Regulation to Trest Bashgrazhdanstroy, Center for Development of Perspective Projects, Residential Construction Fund – Real Estate, and Customer Administration companies. All these firms were founded by municipal unitary enterprises.
The so-called ‘troubled construction projects’ were handled by the municipal administration through its enterprises – a lawsuit filed by the Center for Development of Perspective Projects in an attempt to get even more municipal lands confirms this. The plaintiff had estimated nine lots transferred by the municipal administration to the development company slightly above 155.5 million rubles ($2.6 million) – while the cadastral value of only one of the lots mentioned in the lawsuit – 02:55:020614:542 – was more than 282 million rubles ($4.8 million). Some media supposed that the so-called ‘troubled construction projects’ had been, in fact, completed by the municipal unitary enterprises – while their subsidiary companies were used to withdraw the assets from the state ownership. An audit launched by the MIA General Administration for Economic Security and Combating the Corruption in 2015 has stalled – similarly with the criminal case taken by Alexander Bastrykin under personal control.
Cadastral value of a lot mentioned in the lawsuit is more than 282 million rubles ($4.8 million)
The great resettlement
The most brazen ‘project’ of Filippov was the resettlement of people from 115 dilapidated buildings in Ufa. An unbelievable sum exceeding 1 billion rubles ($16.9 million) has been spent on this. The only positive outcome of this story is that the residents of dilapidated houses have, in fact, moved to new apartments. Other aspects of the epic saga fall under various Articles of the Criminal Code of the Russian Federation, including Article 159 (swindling), already familiar to the Vice Mayor, and the Federal Anti-Corruption Act. The story became known to the public after the publication of a letter from Konstantin Tsitsin, the Director of the Fund for the Housing and Utilities Infrastructure Reforming, to Rustem Khamitov, the Head of the Republic of Bashkortostan. The letter describes in a barren and formal language – but with thinly veiled bewilderment – an astonishingly simple scheme used to embezzle one billion rubles.
The 115 dilapidated buildings had to be resettled with maximum economy of budget funds. To achieve this, it was decided to create in Ufa a new mechanism for public and private partnership, in this particular case – partnership with developers. The mechanism was simple: construction companies undertake a commitment to resettle the people, while the city allocates to them lands for the development at dumping prices. The Ufa Municipal Administration has signed respective land development contracts. Although such contracts were supposed to be signed with winners of open tenders, not a single tender can be traced.
According to the letter from Tsitsin, some contracts pertained to buildings earlier included into federal and regional resettlement programs dated 2008–2012. The Director of the Fund for the Housing and Utilities Infrastructure Reforming has identified 57 such buildings. Other houses were included into the resettlement program after the signing of the contracts. It is necessary to note that resettlement programs are a standard mechanism used to resettle people from dilapidated buildings: the city purchases new housing at the expense of the federal and regional budgets.
The new apartments have been acquired and conveyed to the people. But these apartments were purchased not by the developers who had wangled the lands – but by the municipal administration at the budget expense. The total amount of budget costs listed by Tsitsin in his letter is one billion rubles – this is how much the construction companies managed to save. Taking the real cost of lands allocated to the developers, this amount might double or even triple.
Investigators of the ICR and MIA General Administration for Economic Security and Combating the Corruption are currently trying again to figure out why do the Ufa Municipal Administration and personally Aleksander Filippov care so much about the wellbeing of developers. In the end of February, the operatives have performed searches and seizures of documents in the municipal administration. Then the investigation has stalled again.
First Deputy Prosecutor Oleg Gorbunov has declared the order to institute criminal proceedings ungrounded and returned the case file to the investigators to rectify defects. But the ICR has announced its intention to appeal this decision.
Yesterday, it became known that Filippov has been summoned to the investigator for questioning. The questions will pertain not to the resettlement of Ufa residents, but to the non-payment of income tax in the amount of 3.7 million rubles ($62.6 thousand) after the sale of Avtoreal company. However, ‘land affairs’ were involved into that story as well. Aleksander Filippov used to own the company prior to his employment with the municipal administration. But when new owner of Avtoreal Evgeny Ivushkin, decided to sell the company to Andrei Smyshlyaev, owner of Taganka group, some issues have popped-up. Avtoreal used to lease a land lot; the company failed to produce a development project for it prior to the expire of the lease term and lost the rights on this land. The Land Use Department – supervised by Aleksander Filippov at that time – refused to extend the lease contract.
Apparently, a comprehensive inquiry into all the actions of Filippov would be possible only with a new Head of Bashkortostan.