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. Last Updated: 07/27/2016

$89M Fraud Charge for Builder

VedomostiGUBOP says Keystone defrauded Sberbank out of $89 million during the building this office complex on Sofiiskaya Naberezhnaya.
Federal organized crime police Friday charged the company that built one of the capital's swankiest new office buildings with fraud and money laundering to the tune of $89 million.

Keystone Financial and Construction Co., the Moscow constructor, developer and owner of the riverfront Tsar's Garden office complex, used false invoices to swindle state savings bank Sberbank out of $89 million between 1998 and 2001, the Interior Ministry's organized crime department, GUBOP, said in a press release quoted by news agencies.

The money was part of a $150 million line of credit provided by the bank between January 1998 and February 2001 for the construction of the 83,500-square-meter complex.

At the behest of Sberbank, GUBOP opened a preliminary investigation into Keystone's finances late last year that was later joined by authorities in Germany and Switzerland. The investigation traced funds earmarked for the construction of Tsar's Garden to an offshore company registered in Liechtenstein, Prime-Tass reported.

GUBOP said the money was first transferred from Sberbank to Keystone accounts in several Russian commercial banks and then on to third companies before being sent to Liechtenstein for further laundering.

All of Keystone's property and accounts have been seized, and the offices and homes of several senior Keystone managers have been searched, yielding more incriminating evidence, news agencies reported. It was unclear Sunday whether top Keystone personnel, including president Yelena Klimenkova, had been charged. Neither Keystone nor Sberbank would comment.

Tsar's Garden, which officially opened last month, is located in the heart of Moscow, just across the Moscow River from the Kremlin at 36/10 Sofiiskaya Naberezhnaya.

In several interviews with The Moscow Times over the last two years, Keystone's chief of project development, Vladimir Neretin, cited Sberbank as the main source of finance for the project, but declined to reveal a figure or the names of smaller investors.

Work on the complex began in April 1998, but was put on hold after the financial crisis hit that August. Excluding the expenses associated with the delay, most real estate experts say the end result is less grand than the one originally touted by Keystone and should have cost under $100 million, as opposed to the $180 million originally estimated.

Keystone is not a newcomer to the Moscow real estate scene. The company owns an office and banking complex at 42 Bolshaya Yakimanka Ulitsa and a community of cottages in the northern suburb of Khimki. It is also planning to build a 22,000-square-meter sports center near Moscow State University.