St. Pete Ice Palace Sued by Sberbank

ST. PETERSBURG — State-owned Sberbank is suing the company that runs St. Petersburg's Ice Palace to recover part of a $20 million loan it gave to help build the stadium.

The case, filed last month in the St. Petersburg and Leningrad region arbitration court, appears to be a straightforward case of alleged loan default.

But the suit has opened a financial Pandora's box of creditors, debtors and a Finnish construction company whose management seems to have evaporated. The bank is calling in the loan, and it is not even clear how much was budgeted to build the stadium.

As such, Sberbank — one of four banks that agreed to help finance the project — may have a long wait in recouping its loan.

The Ice Palace project began in December 1998 in preparation for the 2000 World Ice Hockey Championship, which was held in St. Petersburg in April and May. To build the state-of-the-art stadium, the city formed the Ice Sport Palace joint-stock company, the target of the Sberbank suit.

At present, the city owns 100 percent of the shares in the Ice Palace.

The original plan, according to city officials, was to secure loans from the banks with the city budget as guarantor.

The banks involved were Balt-Uneximbank, Baltiisky Bank and Bank Menatep-St. Petersburg.

Sberbank's loan of $20 million was essentially a mortgage, with the stadium itself put up as collateral.

It was thought at the time that the contracts were signed, that the banks would recoup their investments by using the Ice Palace as a venue for concerts and sporting events once the hockey tournament was over.

But this has not proven to be the case, and ferreting out who owes what to whom has brought on buck-passing — without the bucks.

Alexander Afanasyev, spokesman for St. Petersburg Governor Vladimir Yakovlev, said Thursday that he knew nothing about the suit and that questions should be directed to City Hall's finance committee.

Sergei Krotov, head of the finance committee, said Sberbank is claiming the city owes it 14.5 million rubles (about $520,000). He said a date for a hearing has yet to be set, but that the litigants should negotiate.

"[All] three sides [including the city] must negotiate in order to find some other solution."

Krotov's deputy, Vladimir Gaidei, contacted in a separate telephone interview, said the city had no responsibility to pay off Sberbank from the city budget at all.

"That was a straight credit from Sberbank to the Ice Palace and the city budget has nothing to do with that agreement," Gaidei said.

Officials contacted Thursday at Sberbank refused to comment on the suit, and Ice Palace general director Sergei Isotov was unavailable for comment.

Indeed, no one is sure how much the project cost.

The stadium was built by the Finnish construction firm Skanska, for a then-quoted price of $84 million. But a phone call to the company's St. Petersburg office on Thursday was unable to reconfirm this figure. A secretary named Natalya, who would not give her last name, said those associated with the project have left the firm.

"They've all gone," Natalya said.

The original quote is at any rate in variance with what many city legislators have heard.

Yabloko legislative assembly Deputy Boris Vishnyovksy said $60 million was the price he heard at the time the contract was signed in December 1998.

When the stadium was initially proposed, Yakovlev pledged that no city funds would be spent on the project — even though the city budget was securing most of the loans. Come February, Yakovlev disbursed $5.5 million from the budget to Baltiisky Bank toward a $9.5 million loan.

The bank has given the city until the end of the year to come up with the remaining $4 million.

The $2.5 million owed to Menatep-St. Petersburg and the $7.9 million due in April to Balt-Uneximbank are matters about which both banks are keeping silent.