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Andrey Borodin’s Letter to the General Prosecutor

To Y. Y. Chaika,
General Prosecutor of the
Russian Federation

CC:
M. V. Kuzovlev,
OAO Bank of Moscow

A. A. Alyukayev,
administrative receiver,
ZAO Premier Estate

REPORT

The Russian Interior Ministry Investigations Department is investigating Criminal Case #89816 against me, Andrei F. Borodin, with charges brought under Part 4 of Article 159 of the Criminal Code of the Russian Federation. In my earlier complaints and reports made to the General Prosecutor’s Office of the Russian Federation, I have repeatedly pointed to the unlawful and groundless nature of my criminal prosecution, as well as to numerous violations committed by the investigators.

I have repeatedly turned to the General Prosecutor’s Office of the Russian Federation and the Investigations Committee of the Russian Federation with reports concerning individuals from the top management of the VTB Bank and the Bank of Moscow, because their actions bore signs of crimes related to bribe giving, receipt of financial assistance, non-receipt of funds from the sale of Moscow Government shares by the state budget and commission of other unlawful acts. Those reports are currently being considered by law-enforcement agencies of the Russian Federation.

In addition to reports made earlier, I must request that prosecution react to the following circumstances, which are under prosecutorial jurisdiction pursuant to the Federal Law “On prosecutor offices of the Russian Federation.”

As part of Criminal Case #89816, a representative of the Bank of Moscow made an absurd and groundless civil claim the amount of which was later also groundlessly increased by the Bank of Moscow and now surpasses 50 billion roubles. The Bank of Moscow seeks to collect the amount as joint responsibility of the defendants, including me (A. F. Borodin).

That claim includes the 12.76 billion roubles given by the Bank of Moscow as loan to ZAO Premier Estate secured by property belonging to Premier Estate.

The groundless and absurd nature of said claims of the Bank of Moscow is directly connected with the absurd and groundless nature of the charges against me that the investigators have formulated and is per se a subject to be contested and challenged under criminal-procedure legislation.

The deal where the Bank of Moscow issued a loan to ZAO Premier Estate is in full compliance with civil law, including in the portion concerning collateral, because it was duly secured by the pledge of property owned by the debtor: a land plot, cadastre number 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51). The value of the land plot was far in excess of the loaned amount. Thus the interests of the creditor bank were fully protected in case the debtor failed to repay the loan.

Nonetheless, representatives of the Bank of Moscow have not limited themselves to bringing a civil claim under Criminal Case #89816. From the publicly accessible card file of commercial cases, I know that the Bank of Moscow has turned to the Moscow Commercial Court seeking the bankruptcy of ZAO Premier Estate. On 10 December 2012 the Moscow Commercial Court placed ZAO Premier Estate under supervision. The claim of the Bank of Moscow in the amount of 13,747,861,738.16 roubles has been included in the creditors’ claims register.

The above amount is made up of 13,548,849,635.72 roubles of the principal debt and 199,012,102.45 roubles of penalty.

Aleksandr A. Alyukayev, member of NP SRO AU Razvitiye, Individual Taxpayer’s Number 771501041807, registration number in the consolidated register of administrators 141, address for correspondence: 105005, Moscow, Box 145, has been appointed provisional administrator of ZAO Premier Estate.

On 16 May 2013, the Moscow Commercial Court pronounced ZAO Premier Estate bankrupt, and bankruptcy proceedings opened. The same individual, Aleksandr A. Alyukayev, was made administrative receiver.

On 27 November 2013, the Moscow Commercial Court granted a request of the administrative receiver that bankruptcy proceedings with respect to ZAO Premier Estate be extended by six months.
The Moscow Commercial Court has set a hearing of the administrative receiver’s report on the results of the bankruptcy proceedings for 23 April 2014.

The cited circumstances, reflected in judicial acts of the Moscow Commercial Court, point to the fact that bankruptcy proceedings are being conducted by administrative receiver Alyukayev with respect to ZAO Premier Estate, as a result of which the company’s property and other assets may be alienated.

The Federal Law “On bankruptcy” establishes the powers of the administrative receiver, grounds and procedure for the sale of the property of the debtor organisation and peculiarities of the legal status of the creditor whose claims are secured by the debtor’s pledged property. What matters for the results of bankruptcy proceedings with respect to a debtor organisation is the price of the debtor’s property being sold as well as abidance by legal requirements in its determination.

Information about actions of the administrative receiver and participants in the bankruptcy proceedings with respect to the property of ZAO Premier Estate, including the land plot with cadastre number 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51), which was used as security on the loan issued by the Bank of Moscow, is lacking in open access.

Its market value, which the investigators have been trying to determine in the course of the investigation of Criminal Case #89816, has not been determined so far. The investigators have more than once requested relevant expert assessments; however, expert conclusions concerning the land plot’s value have been contradictory and would cause doubts, for which reason the investigation team is now conducting on its own initiative a repeated expert assessment.

These circumstances point to the possibility of the wrong determination of the value of a land plot not only as part of an investigation of a criminal case but also as part of bankruptcy procedure. As a result, a situation may be created artificially where pledged security will be claimed but the Bank of Moscow’s claim will not be satisfied, due to a groundless underestimation of the land plot’s value.
Not excluded is also an intentional misrepresentation of the land plot’s value, for the purpose of influencing the results of bankruptcy proceedings concerning ZAO Premier Estate. Such a misrepresentation will lead to a violation of the rights of creditors and budget interests of the Russian Federation and acquisition of said land plot by interested persons at a wittingly low price.

As for the value of the property – the pledged land plot – it is necessary to note yet another important circumstance.

According to Annex #3 to Decree #751 of the Government of Moscow of 26 November 2013, specific indicator of cadastre value of the land plot whose cadastre number is 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51), is currently equal to 48,495.50 roubles per square meter, due to which the cadastre value of the land plot amounts to 26,777,208,065 roubles.

Alienation of this property at a price below the cadastre value will inevitably mean commission of unlawful actions in bankruptcy proceedings in the interest of persons interested in property gain under the pretext of bankruptcy proceedings for ZAO Premier Estate, will largely harm the state budget and forms corpus delicti under Article 195 of the Criminal Code of the Russian Federation (unlawful actions in bankruptcy proceedings).

According to the Federal Law “On prosecutor offices of the Russian Federation,” the offence prevention function is one of the functions of prosecutorial bodies and may be executed by applying measures of prosecutorial reaction, such as warning (Article 25.1 of the Federal law “On prosecutor offices of the Russian Federation”).

Prosecutorial bodies now have a chance to prevent commission of offences in the course of bankruptcy proceedings for ZAO Premier Estate with the participation of the Bank of Moscow and other interested persons.

Based on the above, I am requesting that you:
1. Conduct a verification of the circumstances of the bankruptcy of ZAO Premier Estate on report by the Bank of Moscow and activity of the administrative receiver – for the purpose of preventing alienation of the debtor’s property (a land plot) at a wittingly low price, below the cadastre value, determined by an authorised state body.
2. As a result of the verification, take measures of prosecutorial reaction for the purpose of preventing offences and crimes.
3. Inform my representatives about the results of the verification: Attorney M. S. Dolomanov, Dolomanov and Partners, Office 9 4/17 Pokrovskiy Boulevard, Building 1, Moscow 101000; Attorney D. V. Kharitonov, Gridnev and Partners, 2/32/65 Sadovaya-Kudrinskaya St. Moscow; and Attorney V. R. Oganesyan, Law Firm #5, 6/9 Sredniy Karetnyy Pereulok, Building 1, Moscow 127051.

Sincerely,

A. F. Borodin
17 January 2014

Commentary by Andrey Borodin: VTB people and all sorts of officials in Russia have on many occasions stated that the security on the loan to Premier Estate (which set off a series of criminal cases in the process of a raider takeover of the Bank of Moscow) fails to cover the loan (about 13 billion rubles) and is almost worthless. Now, the current cadastre evaluation of the pledged land says that it is worth some 27 billion roubles, i. e. more than twice covers the company’s debt.