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. Last Updated: 07/27/2016

Russia Plans Overhaul Of Overseas Properties

As part of a plan to shed unnecessary and expensive assets, Russia is reorganizing and trimming down its property holdings throughout the world.

Four Western auditing firms will evaluate residential, commercial and multi-use facilities spread across 48 countries to determine how to use the property efficiently, or whether the government should sell them. Now, none of the holdings selected for audits are being used for their intended purposes, State Property Ministry officials said Thursday.

"New Russia cannot afford financially to have so much property and to sustain it," said Alexander Radchenko, head of the ministry's department of overseas property and foreign investments.

"This is directly related to the deterioration of the financial situation, the reduction of budget spending ... and with changes in Russian missions abroad," Radchenko said.

Four auditors -- Coopers & Lybrand, Ernst & Young, PADCO Inc. and U.S.-based WestCap Group -- have until Dec. 31 to finish their evaluations and offer recommendations for efficiently using the property.

Although officials would not say how much the program cost, funding will come from a $28.5 million loan from the European Bank of Reconstruction and Development.

The 142 properties set for evaluation are just a fraction of Russia's 2,600 foreign real estate holdings.

Although officials estimate that at least one-fourth of the total properties are not being used as intended, Radchenko said the government will assess only those to which its ownership is unchallenged. Many other properties are claimed as partial inheritance by other post-Soviet countries, such as Ukraine and Georgia.

Once the properties are assessed, a special governmental commission including members from the State Property Ministry, the Anti-Monopoly Committee and the Foreign Ministry will manage and redistribute the holdings.

Radchenko was adamant the public understand that the program was not a foreign plot pushed by the EBRD to value Russian assets for seizure in case Russia defaults on international loans. To assure people this is not true, the State Property Ministry will not release the audit's results until everything is compiled and analyzed, he said.

"We want to assure people that Russia itself is the party ordering this audit, and not the EBRD," Radchenko said. He also said people should not think all the property being assessed will be sold, as the government may develop some holdings as long-term earners for the budget.

"Our goal is to substantially increase the efficacy in the use of overseas property," Radchenko said.