“Who are the people protecting Znamensky?” Who to make entrepreneur give land back to Irkutsk Region
There is a scandal going on surrounding the Znamensky auto market in the Irkutsk Region. Social activists and MPs are accusing Znamensky owner Sergey Skvortsov of illegal seizure of the market territory and tax evasion. The entrepreneur who had gone bankrupt half a year ago thinks it is his unscrupulous competitors who are behind all the accusations, or rather one particular competitor whose lands border the market. The business conflict seems to be going to result in criminal investigation.
A war for the land has only begun. It was reported earlier this month the Irkutsk Region Ministry of Property Relations lawyers are preparing to file a lawsuit against the Znamensky administration, accusing it of illegal seizure of 1.7 hectares of non-demarked land. It is worth mentioning that information on Skvortsov using the land in dispute has been circulating in the city since 2010. But it has only been 6 months since information on him doing it illegally emerged; that is when 2 neighboring entrepreneurs Sergey Skvortsov and Grigory Reznikov seem to have disagreed on something. Skvortsov accused his competitor of employing unscrupulous practices. He claimed his lessees began talking about how his market was going to go out of business soon and how it was better to sign contracts with the owner of the neighboring territory. Reznikov, being an MP, pushed a group of social activists towards filing a complaint to various public agencies; the group claimed the Znamensky administration violates the Environmental Code and that it illegally seized a part of its present territory.
Znamensky was founded in Irkutsk at a wasteland alongside the Ushakovka River embankment in 1995. It has grown into a large shopping center hosting more than 200 auto companies from the city and region. It is one of the biggest auto markets in the region.
Znamensky owner Sergey Skvortsov illegally seized about 2 hectares of the Ushakovka River water conservation zone to expand his business in 2010, according to social activists. About 40 car services, warehouses, and a parking lot are located there now, right on the riverside. The land they all are located on belongs to the Irkutsk Region. However, it is Skvortsov’s companies who charge rent for the land, not the region. They are estimated to make about 5 million rubles a months off of it. What is more, Skvortsov does not pay taxes from this; the land has no official owner, so for the law there are no buildings there.
It was a planned inspection of compliance with the Russian Land Code that discovered that Skvortsov charges rent for the land he does not own. The Chief Specialist of the Division for Land Supervision of the Land Department of the Municipal Property Management Committee of the Irkutsk Administration carried out the inspection on November 23, 2015, as ordered by the Chair of the Municipal Property Management Committee of the city Administration. The Committee had already offered Skvortsov to vacate the illegally seized land. He did not do anything, however. Znamensky occupies 16 600 m2 and borders a land lot with cadastral number 38:36:000018:16726 on the north, according to the inspection. The land lot is registered at Irkutsk Region, City of Irkutsk, Barrikad Street 26. The land is used to host non-residential buildings made out of metal sheets used to provide car repair, storage, container storage, and car parking services. This violates articles 25 and 26 of the Code. The company failed to show ownership documents for the 16 600 m2 land lot bordering the land lot with cadastral number 38:36:000018:16726 (registered address: Irkutsk Region, City of Irkutsk, Barrikad Street 26) on the north. Administrative violation report № 41/33 was drawn on January 21, 2016 as a result of the inspection of Znamensky which was fined for 100 000 rubles.
Skvortsov tried appealing the fine in the Irkutsk Region Commercial Court. His representatives claimed the Russian Federal Service for State Registration, Cadastre and Cartography Irkutsk Department made a mistake and land lot 38:36:000018:16726 was not illegally seized. Znamensky is actually located at another, neighboring land lot, according to Skvortsov. However, a closer look at the documents reveals it was not land lot 38:36:000018:16726, but the one that borders it on the north that was mentioned in the inspection report. Skvortsov could now show any ownership documents for this land lot during the inspection. Moreover, he did not deny occupying and using the neighboring land lot in the Court. Skvortsov tried multiple times to take possession of it to establish Znamensky there, according to the case file. However, he was not allowed to due to the Irkutsk development master plan not being approved. Yet, he still used the land lot. The Court ruled against Skvortsov and decided the fine was appropriate.
However, it did not affect the seized land. Lessees kept paying Skvortsov as if he were the owner. They keep paying, too, at least for now. Neither the police, nor prosecutors, nor the Irkutsk Region government, the real land lot owner, reacted to news of the last year illegal seizure. Only after MP Grigory Reznikov took the matters into his own hands it got off the ground. Even then, only public activists got involved. They used money gathered through social network services to pay SibGeoEcologia, a certified company, for geodesic surveying of the land lot in dispute. Illegal seizure of the land lot did occur, according to Aleksey Chubko’s geodesic surveying report, the cadastre engineer who performed it. The land where the market is located is not demarked, according to the surveying. There are permanent buildings on a 0.6 hectare land lot. However, this part of the market (which is 1.7 hectares wide with all its approach roads and parking lots) is empty, according to documents. The Russian Environmental Code was violated, too, according to Profiziskaniya’s inspection. “Samples showed 1.07 fold excess of normal iron level set in health-based exposure limits. They also showed 4 fold excess of zinc, 3 fold excess of copper, 3 fold excess of oil products, and 3.2 fold excess of iron levels set in the maximum permissible concentrations for fish farms. The soil contained 504 times more oil products than permitted”, according to the inspection. The River’s water conservation zone is 200 meters wide, while its coastal protection zone is 50 meters wide, according to the Russian Water Code. However, there are only 9 meters between the illegal buildings and Ushakovka’s bank. What is more, all the waste water pours straight into the River since there is no storm drain in place.
Activists gathered more than 300 signatures and filed a complaint to Irkutsk Mayor Dmitry Berdnikov, asking him to resolve the situation. They also sent letters to various supervisory agencies and MPs. At the same time, the owner of the illegally seized land concluded it was all due to his competitors trying to frame him, or rather one particular competitor - his Barrikad Street neighbor, Gregori Motors auto dealership chain owner, and MP of the local Duma Grigory Reznikov. So Skvortsov decided to retaliate; a group of initiative Znamensky employees accused the MP of exceeding official powers, having vested interests, and illegal land seizure. The entrepreneur, being an Irkutsk Region Civic Chamber member, supported the group. He asked the local Duma to inspect “activities of Grigory Reznikov, an Irkutsk Duma MP from Electoral District № 6, concerning illegal use of his official powers to the detriment of both public and state interests”. The market employees and owner asked to investigate whether the MP is corrupt. They asked, among other things, to investigate how he got land lot 38:36:000012/792, where he allegedly illegally constructed a building. The Irkutsk Duma Commission on Corruption was convened to investigate him; it has not been convened for a year and a half prior to that. However, it did not find any evidence of the MP being corrupt. It discovered the building was constructed as far back as in 2012, while the land lot was legally bought by the MP’s wife in January of 2016. The Commission also failed to find any witnesses of Reznikov personally trying to steal Skvortsov’s lessees and persuade them to rent from him. “There is an internal conflict between owners, lessees, and sub-lessees of the outdoor concession stands located at Surnova and Barrikad Streets in Irkutsk. There is no evidence Reznikov is corrupt, too”, the Commission concluded.
Reznikov's land plot
The MP saw Skvortsov’s side’s actions as retaliation for him having triggered investigation of the illegal seizure of the market and took him to court. Moreover, the Ministry will have to use materials submitted by the Committee and file a lawsuit concerning demolishing of the constructed buildings and returning the land back to the region. Still, it is up to public officials how long it will take them to deal with it. At the moment it seems as if no one wanted to take on the issue save for public activists and a couple of MPs; reaction of all public agencies who received complaints about the illegal business being run on the illegally seized land seems odd, to say the least. Prosecutors, Federal Supervisory Natural Resources Management Service, Federal Service for State Registration, Cadastre and Cartography, and other agencies insist taking illegally seized land away is out of their jurisdiction. For example, the Federal Service for State Registration, Cadastre and Cartography had fined Skvortsov for 100 000 for the seizure last year. Yet, its Deputy Head Larisa Varfolomeeva officially stated the Russian Law does not punish twice for the same offence. Prosecutors decided not to do anything until court rules on the lawsuit that has yet to be filed by the Ministry. But the most interesting reaction to social activists’ complaint came from the Russian Federal Tax Service Irkutsk Region Department; activists complained about failure to pay taxes for use of the land. “Information about the land lot outlined on the map attached to the claim, its cadastral number, cadastral price, and owner were submitted. The Tax Service is not allowed to calculate land tax payments for land use in case of its actual use if the Tax Service does not have necessary information about a land lot and its owner”, Federal Tax Service Irkutsk Region Department Deputy Head Tatiana Shafran said.
Skvortsov is using time public officials are spending on pointing fingers at each other to use the seized land, making millions of rubles he does not declare to anyone. One can understandably suspect there is a conspiracy. Civilized countries call such conspiracies “corruption”. In Russian it is called “mutually beneficial relationships”. For example, Skvortsov’s best friend is believed to be famous Irkutsk Duma MP Sergey Udin. He used to work at the Russian MIA General Administration for Economic Security and Combatting the Corruption. Udin has great influence in Irkutsk. He is on friendly terms with many influential people, too. It is his security agency Arsenal that protects Znamensky, as well as interests of its owner. Skvortsov is also known to have close ties with people at the Federal Supervisory Natural Resources Management Service and Federal Service for Supervision of Consumer Rights Protection and Human Welfare. He would have been criminally prosecuted and would have paid multimillion fines for Znamensky’s violation of the Environmental Code had he not have these ties; the car services located on the Ushakovka bank do not have any car service utility systems. This means all the toxic liquids get spilled on the ground and then flow straight into the River. Oil products maximum permissible concentration is exceeded 500 times, according to a report on environmental condition of Ushakovka. All this waste gets into the Angara River with Ushakovka waters.
There is still another important issue in this ongoing kerfuffle; it was voiced by a Znamensky lessee (the individual preferred to remain anonymous for obvious reasons): “Is anyone thinking of what will happen to lessees and entrepreneurs?? I rent a warehouse located on this “red line”. I have been paying for my facility since 2012. All other entrepreneurs and I paid for construction of these facilities from our pocket!! There are more than 60 of us!! I spent 4 million rubles on my warehouse and shop!!! Skvortsov told me he owned all this land when I signed my contract. Who will give us back our millions if the Administration demolishes everything?? Who will give us back our businesses?? Do you mean Skvortsov charged us money for years for something he does not own?? This look like a reason for criminal investigation to me, not just some swindling charges, my friends!!! What kind of protection does Skvortsov have? Do you mean knowing the right people can still solve any problem? What is the General Administration for Economic Security and Combatting the Corruption even doing? What about the Russian Investigative Committee?”
Only one thing is clear – all the buildings will be demolished if court rules the land was illegally seized (which it will if the case makes it to court). The facilities owners most likely will not be compensated then; the Znamensky owner went bankrupt as far back as in 2016. He owes various banks and business partners tens of millions of rubles.
The prosecutors want the former Russian Federation Council member to go to prison for 14 years instead of 9 and pay a 500-million-ruble ($8.8 million) fine instead of 70 million rubles ($1.2 million).