Shalva Chigirinsky's problems are growing like a snowball: he lost the investment contract for the reconstruction of Rossiya, and received only tax claims.

Text: Denis Tykulov

The loss of the investment contract for the reconstruction of the Rossiya Hotel became the reason for tax authorities to present claims against Shalva Chigirinsky's ST Development. Since the court annulled the contract, the inspectors refused to deduct the VAT that the development company paid when transferring funds to contractors involved in dismantling the hotel. According to the Kommersant newspaper, in just two quarters of last year the amount of claims amounted to about 34 million rubles. So far, the court has sided with the developer, but if ST Development still fails to regain development rights (for example, by winning a new competition), then it will have to pay multimillion-dollar tax deductions.

In November 2004, Shalva Chigirinsky's company won the tender for the reconstruction of the Rossiya Hotel. Four firms fought for the right to demolish Rossiya and build up the vacated territory. "ST Development" of Shalva Chigirinsky received 18 votes, the company "Monab" - seven, "Consign" and Bau Holding Strabag Aktiengesellschaft - none.

As a result, Shalva Chigirinsky’s company was declared the winner. According to the terms of the competition, it was supposed to receive ownership of 51% of the total area of the new multifunctional complex of 410 thousand square meters. m, which is planned to be built on the site of the Rossiya Hotel. However, according to representatives of the Monab company, which is a subsidiary of Eurofinance Mosnarbank, the project presented by ST Development did not meet the conditions of the competition. On this basis, in February 2005, Monab filed a lawsuit with the Moscow Arbitration Court demanding to challenge the decision of the competition commission. Having lost the case in several instances, Monab reached the Supreme Court, whose presidium confirmed the legitimacy of its claims and overturned the decision of the competition commission. Attempts by Chigirinsky’s structure to challenge the resolution only worsened the situation: on January 23, 2007, the competition itself was declared invalid, although the businessman is in no hurry to leave Rossiya.

By that time, the hotel had already been dismantled by the contracting companies OJSC Moskapstroy and FPK Satori. And on December 12, 2007, representatives of the Moscow Tax Inspectorate N3 denied ST Development tax deductions for the second quarter of 2007 in the amount of 25.7 million rubles: since the investment contract was declared invalid, ST Development is deprived of these benefits. After some time, tax officials presented claims to the company for the third quarter of 2007 in the amount of 8 million rubles. Similar claims may be made for other reporting periods.

ST Development has already appealed the first tax case in the Moscow Arbitration Court, and the judges sided with the developer. “The position of the tax authorities in this situation is absolutely illegal: when carrying out construction and installation work, the company has the right to a deduction,” says Galina Akchurina, head of the tax dispute practice at FBK-Pravo. “Whether the competition is recognized as legal or not does not matter at all.” However, if the developer finally loses the property and the complex on the site of Rossiya is built by another company, then ST Development will have to pay multi-million dollar benefits to the budget. The judges' decision states that the company will be entitled to a deduction if the facility is completed and used to generate income and carry out commercial transactions subject to VAT.

And Shalva Chigirinsky has enough chances to lose “Russia”. In particular, some time ago, the Chairman of the Supreme Arbitration Court, Anton Ivanov, noted that if the complex is nevertheless erected, it will be recognized as an unauthorized construction. And then Chigirinsky will have no time for tax deductions.

According to experts, $60-70 million was spent on dismantling Rossiya, and the owner of ST Development has many chances to lose this money. “Of course, if the investment contract takes into account such a development of events, then ST Development may demand the spent funds from the city,” says Elena Lebedeva, managing partner of the Megapolis Legal law firm. “If not, then everything depends on the skill of the lawyers.” As practice shows, few manage to win against the capital's government.

Construction of bad luck