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. Last Updated: 07/27/2016

Plaza Group Buys Into Pervoye OVK Bank

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The Plaza Group, which is controlled by controversial businessman Umar Dzhabrailov, has obtained a large stake in the Pervoye OVK bank and the bank has invited Dzhabrailov to become its board director, both the bank and Plaza Group said.

The size of the stake has not been disclosed, but "it is enough for Umar Dzhabrailov to become head of the board of directors," said Yelena Pozdnyakova, spokeswoman for Pervoye OVK, or the First Mutual Lending Society.

OVK was created out of the ashes of SBS-Agro and formally registered in early 1999. It took over 45 SBS-Agro branches throughout Moscow well before SBS-Agro was taken over by ARKO, the state agency set up after the 1998 financial crash to restructure failed banks. SBS-Agro, which owed its creditors $1 billion when it went under, holds 8.19 percent of OVK.

Alexander Smolensky, former SBS-Agro president, reportedly controls Pervoye OVK's business though formally he holds no position in the bank.

The OVK group reportedly includes branches in the Urals, Volga River valley, Far East, northwest and Siberia.

Last summer a group of SBS-Agro depositors, whose life savings are still frozen in the bank's accounts, filed a suit questioning the creation of OVK bank. They accused the bank's management of transferring hundreds of millions of dollars in SBS-Agro assets to the new bank, but a court rejected their suit.

Dzhabrailov said among the reasons he decided to buy into OVK are its wide network of branches, high technology and orientation toward work with private clients.

"The operations and services offered by the bank are much in demand. In the future, we will pay attention to expanding operations with big trade companies and travel operators," Dzhabrailov said Thursday in remarks reported by Interfax-AFI.

"In the end, I am just interested in cooperating with the head of the bank, Alexander Smolensky," he added.

Pozdnyakova returned the compliment Friday, saying that even if Dzhabrailov would not accept the proposal to become board director, the bank believes it is "going to get an interesting shareholder."

An OVK shareholders meeting that will formally approve Dzhabrailov as board director will take place in the beginning of April, she said.

Dzhabrailov, 42, said he is going to start studying the state of affairs in the bank. "This is a new field of activity for me, but I think I will succeed," he was quoted as saying.

Smolensky's representative Eduard Krasnyansky was quoted by Kommersant on Friday as saying that together with Dzhabrailov, a few other Plaza representatives will be taken onto the board.

Plaza brings "very big business" to the bank, Krasnyansky said.

Dzhabrailov and his Plaza Group own or manage more than a dozen companies in Moscow dealing with real estate, hotels, advertising and security.

Moscow tax police are investigating Dzhabrailov for large-scale tax evasion, a spokesman for the tax police said Friday. The police say the Radisson Slavjanskaya Hotel may have failed to pay more than $35,000 in taxes at the time when Dzhabrailov served as its general director in 1994-97, Kommersant reported last month.

Plaza Group now manages the Moscow Business Plaza business center in the Radisson Slavjanskaya and also the Smolensky Passazh business and trade center, Plaza Chaika 1 and 2 business centers, Tikhaya Gavan advertising agency and Virus night club.

Dzhabrailov ran in last year's presidential elections, coming in last with 0.8 percent of the vote.