Publication: Monitor Volume: 6 Issue: 188

Kremlin “property manager” Vladimir Kozhin says that the presidential administration is ready to discuss privatizing the lion’s share of its multibillion-dollar property empire. Speaking to the U.S.-Russia Investment Symposium (which was organized by Harvard’s John F. Kennedy School of Government and the Britain’s Financial Times newspaper and ended over the weekend), Kozhin, a long-time associate of President Vladimir Putin, said that he planned to attract private foreign investments into the private structures under his department’s management, and that, to this end, he would organize a “Kremlin Investment Forum,” to be held early next year. According to a newspaper account, Kozhin, whom Putin picked earlier this year to replace Pavel Borodin as Kremlin property manager, is planning a large investment project, provisionally being called the “Kremlin Complex,” which will involve building a federal center for precious stones and precious metals, an auction house for selling jewelry and antiques and a hotel-museum aimed at high-end customers, all to be located on the Kremlin’s Red Square. The newspaper, noting that Gokhran, a state depository operating under the Finance Ministry, currently has the sole right to dispose of the country’s precious stones and metals, speculated that Kozhin’s department might be seeking to take over the depository’s functions. The paper reported that Putin last month personally ordered the Kremlin administration and Finance Ministry, in conjunction with the tax police, Interior Ministry and Federal Security Service, to begin an audit of Gokhran, its first audit in five years. The paper suggested that the audit might have been aimed inventorying the depository prior to its de facto “privatization” by the Kremlin property department. It also reported that the planned Kremlin hotel will either replace the Moskva, a Soviet-era hotel located just south of the Kremlin on Manezh Square, or be housed in the Kremlin’s building No. 5 (Segodnya, October 10).

The latest reports on Kozhin’s putative commercial projects are not the first since his appointment earlier this year. In June, the AK&M news agency reported that the Kremlin property department was planning to open a chain of “Kremlevskie” stores, which would sell products manufactured by some of the enterprises it owns and to create a company called “Kreml”–Kremlin–which would, among other things, undertake renovations to make the State Kremlin Palace the country’s leading concert hall. Prime Minister Mikhail Kasyanov recently signed a decree ordering that all profits from commercial activities carried out by government ministries or agencies must be placed with the federal treasury system. It is unclear whether commercial activities carried out by the Kremlin property department would fall under that umbrella (see the Monitor, October 5). The Kremlin’s property department is a multibillion-dollar empire including apartments, dachas, hospitals, clinics, hotels, rest homes, restaurants and factories spread across Russia, along with billions of dollars in Russian property in eighty-six countries. Borodin, the department’s previous manager, has been implicated in the Mabetex scandal, involving allegations that he, among others, received kickbacks from two Swiss firms to whom he awarded refurbishment contracts worth hundreds of millions of dollars. After replacing Borodin with Kozhin earlier this year, Putin recommended Borodin for the post he currently holds–state secretary of the Russia-Belarus Union. In June, Kozhin announced that an audit of the Kremlin property department had found that no significant abuses had occurred during Borodin’s tenure (see the Monitor, June 9).