Trutnev Plans to Fire City Forestry Chief

The Natural Resources Ministry said Friday that it would fire the head of the Moscow branch of the Federal Forestry Agency over contentious auctions for land leases near the elite Rublyovskoye Shosse.

In a letter to Prime Minister Viktor Zubkov, the ministry also said it would reprimand Valery Roshchupkin, head of the Federal Forestry Agency, after completing an investigation requested by Zubkov into the auctions, in which parcels of forested land went to well-connected bidders for below-market prices.

Winners of the leases, which could be overturned if a Prosecutor General's Office investigation finds they were illegal, included Eko Vest, a firm tied to billionaire Roman Abramovich, and Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, or RSPP.

"It's a kind of blast from the past," said Vladimir Pantyushin, head of economic and strategic research at Jones Lang LaSalle. "It's like something you would have read about in the 1990s."

The Moscow Forestry Agency, headed by Sergei Sopin, posted a statement on its web site on Monday saying it had kept the federal agency well informed of its plans for the "preparation and organization of the auctions."

Neither Sopin nor Roshchupkin could be reached for comment Friday.

The auctions, initiated by the Federal Forestry Agency and organized by its Moscow branch, were to be held Dec. 18 to 20. On the first day, 22 plots west of Moscow totaling 490 hectares were leased at bargain prices for 49 years.

The starting price of 1,000 rubles ($42) per sotka, or 100 square meters, was well below the actual value of such a lease, which analysts estimated at $5,000 to $10,000. Participants were registered from 10 a.m. to 2 p.m. and invited into the building according to a list, Vitaly Kuravlyov, who was hoping to bid on one of the lots, told Vedomosti. "I was there from 6 a.m., but I wasn't able to register."

Natural Resources Minister Yury Trutnev ordered the auctions halted, but a Moscow court allowed the auctions to proceed in March, and the remaining 501 hectares were leased March 14.

Even after the initial complaints, the Moscow Forestry Agency, which also covers the Moscow region, seemed to do little to accommodate bidders.

Natalya Trubnikova, deputy head of the Moscow agency, said March 21 that everything was done to include bidders -- who were registered by telephone -- though she added that the agency's phones often do not work, Vedomosti reported.

Sergei Vashchenko, who tried to register as a private citizen, told Vedomosti that he was ready to bid as much as $7,000 per sotka on a parcel that was ultimately leased for $25 to $30 per sotka.

The Moscow agency said 44 firms and 17 individuals won parcels, including Olga Smorodskaya, president of the New Generation Fund, actress Yulia Rutberg and the Dynamo football club.

RSPP president Shokhin took 2 hectares near his house for 153,562 rubles, according to auction records, or 768 rubles ($33) per sotka.

"I was concerned about the state of the forest and have been trying for the past eight years to lease this area to preserve it as forest," Shokhin told Vedomosti. "I'm not going to use the property for commercial purposes," he said.

The Natural Resources Ministry said no residential housing could be built on leased woodlands and that the Moscow agency violated laws stating that the time and place of auctions must be clearly specified.

The Moscow agency's statement Monday said that in accordance with Part 4, Statute 79 of the Forestry Code, an announcement was made in advance of the auctions and included the place, the start and end dates for applications and the date of the auction.

The law does not stipulate the length of time during which applications must be accepted, and therefore the agency was not in violation of the law, the statement said.

Analysts said the auctions were not particularly out of the ordinary.

"This country is being ruled by bureaucrats," said Alexei Yazykov, a real estate analyst at Renaissance Capital. "They are dividing the assets among themselves."

"Roman Abramovich is being a good boy, so he's allowed to take a piece. It sounds like something from 200 years ago. Its like a feudal system where the boss divides the spoils," Yazykov said. "They are not so much profiteering as improving the location for themselves."