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Russian President Vladimir Putin (back) addresses the Federal Assembly, including State Duma deputies, members of the Federation Council, regional governors and civil society representatives, at the Kremlin in Moscow March 18. (RIA Novosti/REUTERS)
Russian President Vladimir Putin (back) addresses the Federal Assembly, including State Duma deputies, members of the Federation Council, regional governors and civil society representatives, at the Kremlin in Moscow March 18. (RIA Novosti/REUTERS)

Russian state project helped fund ‘Putin’s palace’ Add to ...

A grand estate on the Black Sea, allegedly built for Russian President Vladimir Putin, was partly funded by taxpayer money from a $1-billion (U.S.) hospital project, a Reuters investigation indicates.

While the existence of the property is well known, this trail of funding has not been revealed before.

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Two allies of the Russian leader profited from state contracts worth nearly $200 million, according to customs documents and banking transactions examined by Reuters. Nikolai Shamalov and Dmitry Gorelov owned a company that supplied medical equipment to a federal hospital project - initiated by Putin - at prices some medical specialists say were inflated.

Mr. Shamalov and Mr. Gorelov then sent some of the gains to Swiss bank accounts, the records show. From those accounts money was transferred to a Liechtenstein account linked to the construction of a luxurious estate on the Black Sea popularly known as “Putin’s Palace,” the same records indicate.

Sergei Kolesnikov, a former business colleague of Mr. Shamalov and Mr. Gorelov, said in 2010 the estate was built on behalf of Mr. Putin. The Kremlin has denied that Mr. Putin, who has held power in Russia as president or prime minister since 2000, has any connection to the property.

The money trail emerged from a Reuters investigation into how the Russian state spends public funds. In a $1 billion health project announced by Mr. Putin in 2005, Mr. Shamalov and Mr. Gorelov acted as intermediaries, documents reviewed by Reuters show. The documents indicate two men owned a UK-based company, called Greathill, and used it to buy high-tech medical equipment, mostly from the German manufacturer Siemens AG. They then sold the equipment on to Russia at a profit.

Mr. Shamalov, a former sales executive of Siemens in Russia, did not respond to requests for comment. A spokesman for Siemens said the company was not aware of Mr. Shamalov’s connection to Greathill. Mr. Gorelov said the import operation had been transparent and that Greathill sold equipment to Russia at prices approved by Russian state experts.

Bank statements indicate that the UK company Greathill paid $56 million to accounts in Switzerland after 2006, when Russia began to implement Mr. Putin’s $1-billion project to improve healthcare. Those Swiss accounts were controlled by a company called Lanaval, according to the bank records.

Documents reviewed by Reuters show that Lanaval then sent $48 million to an account in Liechtenstein controlled by Medea Investment, a company registered in Washington DC. Medea Investment is controlled by an Italian architect called Lanfranco Cirillo who designed the Black Sea estate, according to Mr. Kolesnikov. In a statement through his lawyer, Cirillo said he had been assigned work on the Black Sea property because of his experience and professional skills.

He did not respond to questions about the funding of the Black Sea estate and payments made to Medea.

A spokesman for Mr. Putin did not respond to questions about Kolesnikov’s claims and Reuters findings. The Kremlin has previously dismissed Mr. Kolesnikov as an aggrieved man, saying he left Russia because of business disputes. Mr. Kolesnikov denies that suggestion.

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