New national sport in Crimea
Seizing all what is possible
YALTA, Crimea — In the scramble for Crimea’s spoils, armed forces have raided myriad enterprises across the peninsula, expelling the owners and claiming the property for the Crimean government.
At the Zaliv Shipyard in Kerch, the militia invaded by land and by sea, with dozens storming the dry dock from two boats, said Nicolay Kuzmenko, the chairman of the shipyard’s board.
“It looked like a military operation,” he said, with the government-backed “self-defense forces” wearing black balaclavas that hid their faces.
That force, which helped the Russian military seize Crimea, answers to Prime Minister Sergei Aksyonov, who calls it “the people’s militia.”
The management desperately telephoned local government officials, the police and the F.S.B., Russia’s internal security service, Mr. Kuzmenko said. No one responded.
“This raid was fully supported by the local authorities,” he said, echoing the experience of other owners.
Arbitrary enforcement of property rights has long been considered a bane of doing business in Russia. Occasional high-profile cases like the dismantlement of the Yukos oil company, and more recently, the Bashneft oil company, generate headlines. But in Crimea, the confiscations are being carried out in a widespread, systematic fashion that has no recent precedent.
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A movie set on the lot of the Yalta Film Studio, which the Crimean government has taken over. Credit James Hill for The New York Times
Since Russia annexed the Black Sea peninsula 10 months ago, more than $1 billion in real estate and other assets have been stripped from their former owners, according to estimates from the owners and lawyers. The assets include banks, hotels, shipyards, farms, gas stations, the major bakery, a vital dairy and even the storied lots of Yalta Film Studio, which 50 years ago made this now shabby seaside resort the Hollywood of the Soviet Union.
Property seizures on such a sweeping scale have not occurred since the Russian Revolution, owners said. Many have argued in court that the confiscations violate a clause in the Russian Constitution mandating compensation when the government takes property. But given the triumphant mood in Moscow about the annexation, the owners expressed little hope for redress.
“If you act like the Communists in 1917, and take everything away, you should just say it,” said Mr. Kuzmenko, speaking by telephone from Kiev. “If there is no compensation, it looks like robbery.”
Lawyers say the statutes governing property seizures are hazy and applied haphazardly, according to what suits the authorities.
“If they truly believe that Crimea is Russian territory, they should apply Russian law there and not some lower Crimean law that contradicts Russian law,” said Roman V. Marchenko, a lawyer based in Kiev whose firm, Ilyashev & Partners, is pursuing several cases.
But even if Russian law were applied, he said, that might not help. “We strongly believe that for political reasons we will not get justice in Russian courts.”
Lawyers say the government is selectively seizing property to cover its bills. “The Crimean authorities received a carte blanche to fund the budget of Crimea and they are looking for owners and stakeholders who are not in their party and not State Council deputies,” said Zhan Zapruta, the lawyer for Krymavtotrans, the peninsula’s main vendor of bus tickets, seized by the militia in September.
Crimea’s State Council, its parliament, opened the door for wholesale confiscations in August when it granted the government the right to take property to maintain “vital activity,” a concept so vague that lawyers suing the government say it is invoked to cover virtually anything. The law also states that the government will pay compensation.
Crimea’s government refuses to characterize its actions as confiscations, with top officials, including the prime minister, declaring them nationalizations.
“Nothing was confiscated,” said Vladimir A. Konstantinov, chairman of the State Council, when asked about the issue. “There is a procedure of forced redemption.”
By that, Mr. Konstantinov and other leaders mean that they are reclaiming property that they say was stolen from the government through illegal sweetheart deals made by Ukrainian officials and their oligarch cronies. The Crimean authorities have also seized assets from oligarchs they accused of financing the war against pro-Russian separatists in southeastern Ukraine. Business people living in Crimea and even Russians have lost property as well.
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Valerie P. Pavlotos, 74, used to work at the Yalta Film Studio. Credit James Hill for The New York Times
The main target to date is Igor Kolomoisky, a principal owner of PrivatBank, Ukraine’s largest bank, and currently the antiseparatist governor of Dnipropetrovsk. In late December, Crimea’s Ministry of Property and Land announced an auction of the 83 properties in which Mr. Kolomoisky owned shares. An earlier government list of his properties included hotels, office and apartment buildings, resorts and a chain of 16 gas stations.
The December announcement said money from the property sales would go to the Crimean budget and to depositors who lost their bank accounts when PrivatBank stopped operating in Crimea after the annexation. But a senior executive at the bank, Timur Novikov, said it was impossible to ascertain how the list of properties had been compiled, saying, “I think it is a total mess.”
In Kiev, the Ministry of Justice said that nearly 4,000 Ukrainian businesses or organizations had lost property. Mr. Konstantinov refused to discuss the precise number, and the Crimean Ministry of Property and Land declined to comment. But Mr. Konstantinov did say property owners would be reimbursed.
Russia’s Ministry of Crimean Affairs declined to comment. Several lawyers said their cases were referred to Russia’s Supreme Court, which is expected to issue the definitive ruling on whether the Crimean law is constitutional.
Various companies are turning to courts outside Russia. Many find their cases hobbled by the fact that the militia seized computers and legal documents along with the property, leaving the owners to fight back without records.
One of the most high-profile properties, Yalta Film Studio, sits high above the town, with sweeping views of the Black Sea.
In October, 12 armed men stormed the administration building and forced everyone there to lie face down, said Sergei M. Arshinov, the Moscow businessman who owns the property. He was perplexed because he had been negotiating with the government to sell the property back. He and his brother invested heavily in the 32-acre property and ran it for more than a decade as a back lot for movies and television shows.
The Crimean government cites the studio as an example of what it calls “criminal” land sales, saying publicly that it will pay only about $100,000 in compensation, reflecting what it says was the sale price under Ukrainian stewardship. Mr. Arshinov said he and his brother originally paid about $3 million for the property and then over $11,000 monthly in property taxes for the main parcel, which was valued at $13 million on the Ukrainian tax rolls. Mr. Arshinov said he and his brother had invested because a friend running Russia’s state movie committee asked them about 15 years ago to rescue the bankrupt studio.
Some longtime studio workers were ecstatic about the property seizure.
Valerie P. Pavlotos, 74, a former movie set builder, limped around an old seafront film lot, reliving the golden age of Soviet filmmaking.
“This entire area was always full of people in different costumes. You could see all the famous Soviet actors,” he said, adding repeatedly, “It was a cathedral of art.”
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Kirill Attestatov, 28, is among those hoping to recover savings deposited in Ukrainian banks. Credit James Hill for The New York Times
Two deserted sound stages and several small office buildings, with crumbling plaster, now sit abandoned behind an unmarked gate, just yards from a hectic boardwalk. Mr. Arshinov’s company sold off this smaller property in 2004.
Development plans were interrupted by gangland killings, Mr. Pavlotos said, adding scornfully, “For 23 years, Ukraine did nothing for this studio.”
In the fight over the spoils, ordinary Crimeans sometimes get caught in the middle.
The 41 Ukrainian banks operating in Crimea, for example, were forced to close. Some 30 Russian banks moved in, most of them small, provincial institutions.
All property belonging to PrivatBank was seized including branches, cash reserves and automated teller machines, said Mr. Novikov, the executive responsible for pursuing legal remedies. He estimated the bank’s overall losses at $1.1 billion.
Initially, President Vladimir V. Putin of Russia seemed to encourage Crimeans to stop repaying their loans. During a national presidential call-in show last spring, someone asked about a two-year car loan, saying, “PrivatBank no longer operates in Crimea. What am I supposed to do?”
Mr. Putin responded, “Please use the car and don’t worry.” Later, the Russian government urged loan repayments, but Mr. Novikov said that “as a result of public statements by Russian and Crimean officials, PrivatBank’s borrowers stopped paying their loans.”
The Crimean government maintains that all the assets seized equal the deposits retained by the bank when it ceased operations. The bank disputes the math.
“The amount of loans granted in the Crimea far exceeds the amount of funds accumulated through deposits,” Mr. Novikov said via email.
Crimean residents who lost deposits trek to the offices of Russia’s Deposit Insurance Agency. Many despair of retrieving any money.
In Simferopol, the capital, Kirill Attestatov, 28, a computer specialist, said his application always seemed to be missing something. “I don’t know when I will see the money,” he said. “Maybe next century.”
Yevgeniya Bavykina, Crimea’s deputy prime minister, wrote in response to an email query, that the fund had received 328,000 claims from depositors. Of the 34.6 billion rubles ($560 million) in claims, 29.8 billion ($482 million) had been verified, she wrote.
Crimea’s leaders repeatedly counsel patience while claiming that the transition is going well over all. But those finding themselves squeezed by the government are souring on Russian rule.
“If the state does not respect the right to private property, if that is dead, then I do not want to live in such a state,” said Mr. Zapruta, the lawyer for Krymavtotrans.
