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Billions Made From Utilities Escape Investigators

The Prosecutor's Office of the Krasnoyarsk territory has published details of the probe into the missing utility bill payments that are the part of a grand money-withdrawal scheme implemented in many Russian cities.

The Krasnoyarsk-based Housing Systems Managing Company (HSMC) is a city monopolist which serviced about 80% of Krasnoyarsk housing stock “at the height of its power.” Its market share is currently down to 40%. However, the organization remains the biggest regional player. It has changed hands several times over the past few years, and was involved in major scandals. Wek.ru covered some of them. The lastest scandal broke out over the loss of about 1 billion rubles ($13.6 mln) from the company accounts, as recently reported by State Duma deputies. The situation looks quite confusing.

The HSMC quickly claimed that it discovered that money was missing and reported to the police. However, the company’s official statements mention 500 million rubles ($6.81 mln). They are associated with the case of Natalya Zhavnova, the former head of the management company. When the law enforcement authorities commented on the case of Zhavnova, they spoke about the amount of 100 million rubles ($1.36 mln). She managed the firm when it was owned by the Siberian Generating Company. Apparently, the HSMC management is simply trying to pass off one case as the other to the public, which is certainly suspicions.

The other day Krasnoyarsk Territory prosecutor Roman Tyutyunik held a big press conference where he talked about the most resounding cases in the recent months. The HSMC was also brought up. Tyutyunik clarified that the case over withdrawal of large funds had been initiated. It is being investigated and related only to the current owners of the company. The investigation is complicated, as the circumstances of the case went beyond the borders of the Krasnoyarsk Territory a long time ago. It is owned by Muscovites who have similar assets in the segment of public utilities in other cities. The Prosecutor's Office scrutinized the activities of the holding all over the country revealing a lot of interesting details.

“The HSMC criminal case is in protracted crisis. I have to submit requests to six regions where the company has its branches. Things are not going smoothly there either. Currently, the ultimate goal is to bring together all the investigation materials. Then the case will be transferred to the Krasnoyarsk investigation committee or the Russian Interior Ministry,” Tyutyunyk said.

The current owner of the HSMC is a certain Moscow-based Maintenance and Improvement organization, which bought the Krasnoyarsk asset at the beginning of 2019. There is very little official information about it. Sketchy data from open sources suggests that this company is affiliated with Domkom-Invest belonging to businessman Alexander Kostyukov. It owns management companies in ten Russian regions. State Duma deputy Alexander Khinstein sent a request to law enforcement agencies in connection with the activities of this firm in Samara in 2019. He said at the time that the management company spent only a third of the funds collected from people for their intended purpose. The rest was transferred to the accounts of the Moscow owner. Similar accusations were made in Nizhny Novgorod two years earlier.

“A few years ago, when more than two billion rubles ($27.22 mln) disappeared from the HSMC, there was also much talk about the money missing. Documents were seized, and employees were interrogated, but it led to nothing. The situation is similar now, and it is a consequence of the Russian legislation in this sector. All the money that comes into the bank account of a managing company is revenue. There is no obligation for a management company to keep in its account the received money that has not yet been spent on the needs of the house. Everything placed in the account is spent. No management company keeps money in the current account. Some firms settle the debts of non-payers, others loan the money for house repairs, and still others transfer it for other purposes. It is very difficult to prove that using money for other purposes is a fraud. This loophole is usually taken advantage of,” Roman Kazakov, head of the People's Control in Housing and Utilities social movement, said in an interview with wek.ru.