Sergei Polonsky

Sergei Polonsky
Born Sergei Yurievich Polonsky
(1972-12-01) 1 December 1972
St Petersburg, Russian SFSR
Residence Koh Dek Koul Island, Cambodia
Alma mater St. Petersburg State University of Architecture and Civil Engineering
Occupation Real estate entrepreneur, owner of Potok, formerly Mirax Group
Net worth Decrease US$1.2 billion (2008)
Spouse(s) Olga Deripasko

Sergei Yurievich Polonsky (Russian: Сергей Юрьевич Полонский, born 1 December 1972) is a Russian businessman. Polonsky is the owner and head of one of the largest real estate companies, Mirax Group (2004–2011).[1] He was one of the richest men in Russia before the late-2000s financial crisis. Now he is shareholder and investor of a number of commercial structures incorporated by the holding Potok (as of 1 December 2011), earlier Nazvanie.net (March – November 2011). In October 2011, Sergei Polonsky was noted by the Forbes magazine as one of the nine most unusual Russian businessmen.[2] He is currently awaiting trial in Moscow on charges of fraud.[3]

Early life

Polonsky was born 1 December 1972 in Leningrad, Soviet Union (now Saint Petersburg, Russia). Polonsky finished secondary school No. 99 of the Vyborg District of Leningrad. In 1989, he joined the Airborne Troops. He did his military service in the 21st Separate Air Assault Brigade (1990–1992), which was stationed in the time of the armed conflict between South Ossetia and Georgia in the combat zone at Tskhinval.

In 2000, Polonsky graduated from the St. Petersburg State University of Architecture and Civil Engineering. He qualified as an economist and manager with a specialization in economics and management of building enterprises. In 2002, he defended his PhD thesis "Formation of Functional Procurement Strategies in Construction".

Career

Stroymontazh

Main article: Stroymontazh

In 1994, when Polonsly was 22, he founded Stroymontazh LLC with longtime friend Artur Kirilenko. Stroymontazh was a construction and real estate firm set up with the initial intention of selling apartments that they had plastered and finished. When the building owners rand in to financial difficulty however, they began to pay the pair in apartments. It was through these means that it was not long before Polonsky and Kirlenko took control of their first unfinished building starting them on the path to being property developers.[4] In 1996 Polonsky and Kirlenko took their first contract job, completing an apartment project in St. Petersburg for a company called Lenenergo.[5]

It was during the 1998 financial crisis in Russia however that Polonsky and Kirlenko began to achieve huge financial success. According to the New York Times, by paying construction costs in roubles and selling property in dollars they were able to profit in the lag time between construction and sale as the value of the rouble fell. The company rapidly amassed wealth and made a name for itself as one of St Petersburg's largest developers eventually building Petrovsky Fort, a 540,000-square-foot complex that became the standard for business centers in the former capital.[6]

Polonsky opened an office in Moscow in 2000, after graduating from St. Petersburg State University of Architecture and Civil Engineering. Two years later Mayor Luzkhov appointed him as an adviser. He was not yet 30.[7]

Mirax Group

In 2004, the Moscow branch of Stroymontazh was renamed "Mirax Group" and in 2006, split from Stroymontazh, the St Petersburg branch, with Polonsky at the head of Mirax and Kirlenko at the head of Stroymontazh. Both men maintained 10% ownership of the other's company until 2009 when they each sold their respective stakes.[8]

Mirax carried out projects in Russia, Ukraine, Turkey, Cambodia and The United States. At its peak in the late 2000s, Mirax Group's assets amounted to more than 12 million square meters of real estate, with 2008 revenues estimated at $1.65bn and net profits of $616.4m.[9][10] Some notable projects are outlined below.

Moscow's Federation Tower

Federation Tower

Billed as Moscow's first skyscraper the Federation Tower when completed will be the tallest building in Europe. The building consists of two towers, the taller one with 93 floors and a height of 1,161 feet, and the other with 63 floors. A 1,470-foot spire will rise between the two, with glass elevators running up its core, offering a panoramic view and entry into the buildings. The towers will have 4.5 million square feet of high-end office space, luxury apartments, shops, restaurants and a 44-story Grand Hyatt hotel.[11]

In 2009, The Federation Tower won the FIABCI World Prix d’Excellence Award (Office Category Winner).[12]

Construction of the project stalled in 2008 as a result of the financial crisis however it was resumed in August 2011 and is set to be completed in 2015.[13]

Korona Residential Property

Korona was a landmark project, the first one in Moscow which reflected the state-of-the-art achievements in architecture, planning, construction technologies and landscaping. The ceremony of laying the first stone in the foundation of the Korona Project was quite an event in the construction trade of Moscow, which demonstrated a new, unusual, vigorous and assertive style of the young businessmen from St. Petersburg.

Golden Keys

Golden Keys 2

Golden Keys 2 Residential Property was the 2nd project implemented by Polonsky's team. Polonsky suggested a comfortable "town within the city" living concept where high-rise residential buildings are mixed with a cottage village named "Y".

After that, the company launched new business centers Pollars and Europe Building. In 2002–2007, the company started the construction of such residential compounds as Taganka House, Kutuzovskaya Riviera, Mirax Park and the Federation Tower[14] – a mixed-use complex in the Moscow International Business Center – Moscow City.

2008 economic crisis and restructuring into Potok

In 2008, Polonsky was the first developer who openly admitted that the Russian real estate market was hit by the global financial crisis. According to Anton Chernigovsky, who wrote the article "Polonsky Makes a Demarche"[15] published in the Business Magazine, "his competitors kept arguing zestfully that real estate was the last thing to be threatened by the crisis. But in as early as two months, they had to withdraw their words and start to urgently suspend their projects and patch up financial gaps".

The downturn hit Mirax Group hard, in August 2008, Polonsky published an open letter in his blog, where he said that during the previous year, Mirax Group could not receive any credit to continue construction had not sold any real estate over the past few months. Commissioning deadlines therefore needed to be reviewed and extended.

On 10 October 2008, Sergei Polonsky announced that he would eat his tie if the elite apartments' prices did not rise by over 25% in 1.5 years. The forecast came true with a half a year delay, and on 31 May 2011 Polonsky ate a piece of a true tie at Minaev LIVE, a TV-show hosted by Sergey Minaev.[16]

In July 2009, Alpha Bank acquired all of Mirax Group's debt obligations to Credit Suisse and called in the company's debts in an effort to bring the company to bankruptcy and take control of it. Polonsky described the steps taken by Alpha Bank as ‘premeditated systematic actions aimed at divesting and acquiring’ the corporation’s assets adding that Mirax Group had been 'completely unready for the sudden turn of events.'[17]

In February 2011, Sberbank of Russia (Savings Bank of the Russian Federation) decided to grant Mirax Group a $373 million credit for 6 years. On 3 March 2011, at a media conference, Sergey Polonskiy declared that the Mirax Group Board decided to liquidate the Mirax brand.[18] He also promised to fulfill all the obligations of the Group to complete the projects and repay the debts. In May 2011, the works at the unfinished projects were resumed.

In March 2011 On 1 December 2011, Sergei Polonsky renamed his company "Potok", and this company inherited all the structures and liabilities of the former Mirax Group. Mirax Group had suffered as a result of the global economic crisis and had been struggling to refinance its debt

On 6 July 2012, by virtue of the shareholders' agreement, Sergei Polonsky bought out the shares of the minority shareholders of the "Potok" (Flow) company and became the owner of Potok's 100% block of shares.

Kutuzovskaya Mile takeover and embezzlement charges

September 2011

One notable project to stall as a result of the economic crisis was the Kutuzovskaya Mile residential complex. Polonsky became involved in the project through Mirax in 2005 at the request of the Moscow Mayor Resin Rosltak. The project had been started in 2002 by FTsSR (Federal Centre for Social Development) a company with many political connections but little experience in developing real estate. Mirax took control of the project however agreed to give FTsSR 5% of the finished apartments. Mirax proceeded to invest 2.5bn rubles in developing the project before work was forced to stop in 2009.[19]

FTsSR terminated the contract in January 2010. Polonsky claims this was done unlawfully and down to disputes between FTsSR and Mirax Group however according to FTsSR, funding from Mirax Group had stopped. In September 2011 FTsSR forcibly took control of the site using a private security firm. Polonsky has described FTsSR's actions as a raid in the media. "At this very moment the Project site, located at the construction site of the residential quarter Kutuzovskaya Mile, is being forcibly taken over", the company said in an official statement. To protest against the actions of the Moscow authorities, Polonsky declared a hunger strike and continued to provide his round-the-clock presence at the construction site. The Moscow Chief Directorate of the Ministry for the Internal Affairs of the Russian Federation stated at the time however that "the police stayed uninvolved in the conflict." and that the law enforcement officers present at the scene were there to "maintain public order".[20]

Subsequently, in September 2012, the Russian Ministry of Internal Affairs (MVD) began investigating Polonsky in relation to the Kutuzovskaya Mile project. Prosecutors claim that between 2007 and 2008 Polonsky, through Mirax Group subsidiaries Avanta and Concordia Asset Management, took 5.78bn rubles in down payments from 80 individuals hoping to buy apartments. They claim that contractual obligations were not fulfilled and the funds were illegally diverted by Polonsky to other Mirax Group entities. In June 2013, the MDV charged Polonsky in absentia with embezzlement.[21] Polonsky strongly denies any accusations of wrongdoing and has expressed his willingness to be investigated as he believes that "no legal offence has been committed."[22]

According to the Russian publication Novaya Gazeta, the Kutuzovskaya Mile issue has become a "bottomless pit of internet folklore".[23] Polonsky maintains that he transferred 2.5bn rubles to FTsSR prior to the termination of their contract, which would have been more than sufficient to meet the contractual obligations entered into by his companies. He added that the remaining funds had not been diverted out of the project and had stayed within Mirax Group.[24] In an open letter dated 2 October 2013 Polonsky admitted to "incompetent management" and expressed his willingness to pay $12m in compensation to his creditors. He also sought to assure all investors that their apartments would be completed.[25]

The embezzlement charges, Polonsky believes, are part of an attempt by FTsSR and the Moscow government to take the Kutuzovskaya project away from him and hand control to Arkady Rotenberg a rival property developer with close ties to the Russian president Vladimir Putin[26]

Arrest in Cambodia

In late 2012, Sergei Polonsky and two other Russians – Konstantin Baglay and Alexander Karachinsky – were arrested by the Cambodian police. They were suspected of unlawfully depriving several Cambodian seamen of their liberty.[27]

Polonsky protested at the arrest and the conditions of his incarceration, writing on his blog “After being detained, none of the detainees, including myself, was allowed to make a telephone call, we were denied our right to a counsel for legal assistance and to an interpreter, although the law of Cambodia provides for these rights. At present, they are holding me in a cell without an air conditioner at a temperature exceeding +35 degrees Celsius in shadow and with horrible sanitary conditions. According to the Cambodian counsels and interpreters, they regularly receive threats and warnings not to work with me from unknown people.” He also made several petitions to the Russian Ministry of Foreign Affairs; however, they failed to take any steps to help.

On the 7 January 2013, Polonsky wrote a letter to the king of Cambodia to apologize to the Cambodian people for the trouble caused while pleading innocent in the crimes he was charged with. He added that after his release from jail, he intended to file a petition to be granted Cambodian citizenship and planned to develop a business in the country.[28]

K. Baglay and A. Karachinsky were released from custody uncharged on 11 March 2013 and Polonsky was released on bail on 3 April 2013.[29]

On the 15 May 2015, Polonsky was arrested again in Sihanoukville, where authorities said he had been living for two years with an expired visa. Cambodian Authorities has deported this fugitive Russian tycoon living illegally after he was accused of embezzling $175m in his homeland. He was put on a flight to Moscow via Vietnam on Sunday morning.[30]

Interpol and extradition to Russia

On 14 October 2013 at the request of the Russian authorities, Polonsky was issued with a "red notice" by Interpol and on the 7th November 2013 the Russian Prosecutor's Office sent Cambodia an official request for Polonsky's extradition.[31] Polonsky was subsequently detained however on 14 January 2014, the Phnom Penh Appeal Court ruled that the grounds given by Russia for Polonsky's extradition were insufficient.[32]

New charges were brought against Polonsky by Russian in February 2014 and sent to Cambodia, however on the 16 April 2014 the Supreme Court of Cambodia ruled that Cambodia does not have an extradition treaty with Russia so Polonsky could not be extradited on any grounds.[33]

Polonsky was eventually deported from Cambodia and sent back to Moscow on 17 May 2015.[34]

A Moscow court has set his trial date at 11 October 2015.[3]

UK High Court case against Alexander Dobrovinsky

On the 7 May 2014, Polonsky filed a lawsuit at the UK High Court against his former lawyer, Alexander Dobrovinsky. Polonsky claims that Dobrovinsky along with his colleague Natalia Levinzon and the London-based law firm Dobrovinsky and Partners LLP helped steal £300m from him by pretending that he was negotiating a sale of his company, Potok, to Roman Abramovich whilst Polonsky was detained in Cambodia. Dobrovinsky, a known advocate of numerous Russian oligarchs, was in fact, it transpired, selling the business to Roman Trotsenko, an existing shareholder in Potok, whom Polonsky had previously refused to do business with. Polonsky claims he has received only a few million dollars of the hundreds of millions he says he is owed, and alleges that the lawyers were acting for Mr Trotsenko all along.[35][36]

Dispute with Alexander Lebedev

Polonsky has been involved in a long running dispute with oligarch and newspaper magnate Alexander Lebedev. The dispute first entered the public domain in 2006 when Lebedev, then a member of the Russian parliament, openly criticised the construction of the Federation Tower project that was being undertaken by Polonsky stating that "cracks" had been found in the building's foundation.[37] The next day, Polonsky responded by invited journalists to the Federation Tower promising to pay anyone one million rubles if they found crack. The journalists were allowed to access all underground floors but the long search brought no result.[38]

On 16 September 2011, Polonsky and Lebedev were guests on the panel discussion programme NTVshiki to discuss the Russian economic crisis. During the broadcast, Lebedev again made mention of the cracks and Polonsky responded angrily that the rumours had been quashed three years earlier. Tensions between the two increaced throughout the show until Lebedev stood up from his chair and punched Polonsky three times in the face, knocking him out of his chair. Polonsky took no retaliatory action against Lebedev, who appeared poised, ready to continue the fight.[39][40]

On 3 October 2011, a criminal case was initiated against Alexander Lebedev under Article 213, Part 1, Clause B of the Criminal Code of the Russian Federation (Hooliganism). The decision was made by the Investigative Committee of Russia based on pre-investigation check results. On 3 July 2013, Lebedev was found guilty and was sentenced to 150 hours of community service.[41]

"Neulovimiye" controversy

In March 2015, Polonsky, announced plans for a $1 billion lawsuit against U.S. filmmaker 20th Century Fox because of similarities between himself and the villain in one of the studio's films. "Neulovimiye" ("Elusive"), a Russian-language movie released in 2015 by 20th Century Fox, has a primary character named Sergei Polyansky who kills a young woman with his car and displays many negative character traits. In addition to having a similar name, film critics have also acknowledged similarities in physical appearance between the real-life Polonsky and the fictional Polyansky. The lawsuit has yet to be filed.[42][43]

Awards and prizes

Educational Initiatives and Voluntary Work

In certain periods, Polonsky was a member of various voluntary associations: in 2001–2005 – member of the Council of Entrepreneurs under the Mayor and Government of Moscow, in 2001–2010 – member of the “Business Russia” organization of entrepreneurs. In 2003, Polonsky was elected Vice President of the Russian Academy of Business and Enterprising, in 2004, he became Vice President of the public association of professional managers, the International Club of the Best Managers of the New Era. In 2005, Polonsky was one of those who established the Russian Builders’ Association, and until now remains its First Vice President.

Space Travel

In 2004 Polonsky prepared for a spaceflight to the International Space Station,[44] completing a full cosmonaut training course. The flight did not take place however because of his height there was not enough room for his legs under the console, which could have led to injury as the spacecraft landed.

References

  1. ↑ Mirax Group. Investing.businessweek.com (1 December 2011).
  2. ↑ 9 most unusual Russian businessmen. Forbes.ru.
  3. 1 2 Alexei Afonsky, Russian businessman Polonsky to remain in detention until October, RAPSI, 12 August 2015.
  4. ↑ Manhattan on the Moskva New York Times, 10.09.2006
  5. ↑ The Man Behind The Federation Tower The Moscow Times
  6. ↑ Manhattan on the Moskva New York Times, 10.09.2006
  7. ↑ Manhattan on the Moskva New York Times, 10.09.2006
  8. ↑ Час расплаты Lenta, 4.4.2011
  9. ↑ Super Brands
  10. ↑ Mirax Group опровергает информацию о массовом увольнении сотрудников RIA, 9.9.2009
  11. ↑ Manhattan on the Moskva New York Times, 10.09.2006
  12. ↑ FIABCI World Prix d’Excellence Award
  13. ↑ Federation Tower
  14. ↑ The Man Behind The Federation Tower. Themoscowtimes.com.
  15. ↑ "Polonsky Makes a Demarche, Business Magazine, 3 May, 2011". Archived from the original on 21 July 2012.
  16. ↑ Polonsky keeps promises. Youtube.com (6 June 2011).
  17. ↑ Court arrests Mirax’s properties on Alfa Bank suit to prevent assets divestment The Russian Corporate World, 9.2009
  18. ↑ Mirax or mirage?. Themoscownews.com.
  19. ↑ Остров Полонского Novaya Gazeta, 4.8.14
  20. ↑ "Kutuzovskaya mile " in Moscow will be completed. Lands-sale.com (19 September 2011).
  21. ↑ Polonsky Charged in Absentia With $180M Embezzlement The Moscow Time, 17.06.2013
  22. ↑ Realty developer Polonsky accused of fraud, says is innocent Interfax, 13.11.2013
  23. ↑ What is the Federation Tower built on? Novaya Gazeta, 17.10.2011
  24. ↑ Остров Полонского Novaya Gazeta, 04.4.2014
  25. ↑ Полонский рассматривает возможность скорого приезда в Москву RIA.ru, 04.10.2013
  26. ↑ Остров Полонского Novaya Gazeta, 4.8.14
  27. ↑ "Russian real estate tycoon arrested in Cambodia for taking boatmen hostage", Rt.com (January 05, 2013). Retrieved 17.05.2015.
  28. ↑ Polonsky wants to seek Cambodian citizenship. English.ruvr.ru.
  29. ↑ Russian Ex-Billionaire Polonsky Freed From Cambodian Jail Sputnik News, 03.04 2013
  30. ↑ The Guardian, 17.05 2015
  31. ↑ Fugitive Polonsky's Personal Details on Interpol Website The Moscow Times, 06.11.2013
  32. ↑ Cambodia refuses to extradite Polonsky in Russia The Moscow Times, 18.01.2014
  33. ↑ Cambodia Rejects Russia's Polonsky Extradition Request The Moscow Times, 25.04.2014
  34. ↑ Associated Press, Cambodia deports fugitive Russian tycoon accused of embezzling $175m, The Guardian, 17 May 2015.
  35. ↑ Abramovich pulled into £300m court case The Independent, 30 May 2014
  36. ↑ Press Release
  37. ↑ The foundation of the tower "Federation" in Moscow-City has cracked irn.ru, 14.10.06
  38. ↑ Who can find a crack in the "Federation", get a million izvestia.ru, 15.12.2006
  39. ↑ Russian oligarch Alexander Lebedev punches rival Sergei Polonsky in TV debate Al Jazeera
  40. ↑ Vladimir Putin calls Alexander Lebedev attack on Sergei Polonsky 'hooliganism' The Daily Telegraph, 21.09.2011
  41. ↑ Lebedev found guilty of assault. BelfastTelegraph.co.uk (2 July 2013).
  42. ↑ Damien Sharkov, Russian Tycoon to Sue 20th Century Fox for $1bn, Newsweek, 27 March 2015.
  43. ↑ Peter Spinella, Russian Tycoon Polonsky Wants $1 Billion From 20th Century Fox for Resemblance to Villain, The Moscow Times, 26 March 2015.
  44. ↑ Russian millionaire rejected for space ride MSNBC (20 August 2004).

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