Moscow — One of the oldest Canadian-owned businesses in Russia, Moscow's Aerostar Hotel, has been shut down and its Canadian manager ejected by private guards working for a junior Russian partner.
“We were illegally evicted,” said Andrew Ivany, the Aerostar's Canadian general manager who has run the business on behalf of IMP Group of Halifax for the past 14 years.
“They came in last Friday, about midday, with about 30 people, and gave us two minutes to get out.”
About 150 guests were forced to leave over the weekend and find alternative accommodation.
Advertisements
The 343-room hotel was seized by Aviacity, a Russian company that owns 25 per cent of the Aerostar joint venture and also recently acquired property rights to the building.
Aviacity says it will re-open the Aerostar in October under its own management. But Mr. Ivany says the Canadian company's lease, negotiated in 1989, is good until 2017.
A Canadian Embassy official, who asked not to be named, said the Canadian government has sent an official note expressing “deep concern” over the incident to Russia's Foreign Ministry.
“We are in close contact with senior Russian authorities, and they share our concern” over the use of force to settle a business dispute that has been before Russian courts for the past year, the official says.
“We are pressing them regularly and intensively. We want to see the Aerostar returned to its rightful management without delay,” he said.
Mr. Ivany and his staff have set up emergency offices in a rival Moscow hotel, and he says they are surveying legal options.
The Canadians have filed a criminal complaint with Moscow police, said a lawyer close to the situation, who asked not to be named.
The Aerostar, one of the first international hotels to open in Russia following the collapse of the Soviet Union, has been plagued by frequent conflicts between its Canadian and Russian partners.
The joint venture, Aeroimp, was originally 50 per cent owned by IMP, with the other half divided between the Russian airline Aeroflot and the Main Services Department of Russia's Aviation Ministry.
Last year, Aviacity acquired Main Services' stake and went to court to void the lease. The issue is still working its way through Russia's complex legal system.
It is not known who owns Aviacity. The company is currently under investigation by Russian authorities who suspect it acquired the state's share in the Aerostar through an “improper bankruptcy” of Main Services.
Aviacity moved to seize the Aerostar “because the building was worth much more to them vacant than under the terms of the existing lease,” the lawyer said.
Use of force in resolving business disputes was common in Russia during the 1990s but has been rare since President Vladimir Putin came to power four years ago, pledging to install “a dictatorship of law.”
Moscow's hotel sector was particularly turbulent in the past decade.
An American co-owner of the Radisson Slavyanskaya hotel, Paul Tatum, was killed in what is believed to be a contract murder — still unsolved — during a contract dispute with his Russian partners in 1996.
The IMP Group built the four-star Aerostar around the shell of an unfinished Soviet-era hotel, with a $60-million loan from the Royal Bank of Canada, and opened it for business travellers in 1991.
Under the original joint venture terms, the Canadians were to manage the hotel and control the sub-leasing of its 6,200 square metres of plush, central Moscow office space.
During the 1990s there were repeated conflicts with partner Aeroflot, which complained that the Canadian company had been given too sweet a deal.
IMP won several rulings at the International Arbitration Court in Stockholm, upholding the validity of the original contract, but Russian authorities have done little to enforce those judgments.
In 1997, then-prime minister Jean Chrétien interceded with Russian leader Boris Yeltsin during a Kremlin meeting to help resolve a dispute, in which a Russian director of Aeroimp had ordered Canadian managers out of the hotel.
Mr. Yeltsin, whose son-in-law was Aeroflot's director at the time, replied that Canadians were prone to whine too much about their business troubles in Russia.
The next year, Canadian authorities impounded an Aeroflot jetliner at Montreal's Dorval airport and only released it after the Russian airline agreed to pay $5.86-million it owed IMP for management services at the Aerostar Hotel.
An undisclosed agreement was subsequently reached between the main partners, and peace had reigned between them — until now.
“I feel very sorry for the Aerostar's staff,” Mr. Ivany said. “Some of them have been with us from the beginning, and it's a tragedy that they have been put out of work like this.”