2005 House Privatization Controversy
In July 2005, he was involved in a privatization scandal. Two luxury houses formerly owned by the government were sold in 2003 for a price significantly below market value to two companies, one of which is owned by Friedman and another by the former Russian prime-minister, Mikhail Kasyanov and Kasyanov's wife Irina. Friedman has said that he wasn't surprised at the low price of the house he bought because another company held a 49-year lease for that house at the time (however, that lease was bought out very cheaply a week after the auction for the houses), and that he's not aware of the details of the sale as it was handled by his corporation's legal department. According to later allegations made by the State Duma member and journalist Aleksandr Khinshtein, Kasyanov bought the company that owns one of the houses using a loan given to him by Friedman, and one of Friedman's companies won the government-conducted tender to manage the Sheremetyevo International Airport a week after the houses auction, allegedly with some Kasyanov's involvement. Friedman has dismissed those allegations and maintains that none of his companies ever gave any loans to Kasyanov.
On 17 January 2006 the Moscow Court of Arbitration has ruled that the house bought by Friedman should be returned to the state as not all the appropriate procedures have been followed during the privatization. However, the court also refused to call the privatization contract legally null and void (in that case Friedman's company wouldn't even get the money they paid for the house back), so it's unlikely that the prosecutors would have enough evidence of Friedman's involvement to indict him personally in the criminal court.
On 2 February 2006 the same court reached a similar ruling about the house bought by Kasyanov, he would also have to return it.
On 1 March 2006 two government officials who were responsible for the auction, former deputy minister of property relations of Russia, Nikolai Gusev, and the director of Federal State Unitary Enterprise "VPK-Invest" (who officially was managing the houses before the auction), Ramil Gaisin, were indicted for "appropriation of managed property committed by an organized group on particularly large scale". They weren't arrested, they are currently released on their own recognizance. According to the prosecution, they currently don't have enough evidence to indict Kasyanov.
Read more about this topic: Mikhail Fridman
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