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. Last Updated: 07/27/2016

Raiders Target Foreign Investor's Warehouses

MTThe plaque reading "Office of State Duma Deputy Viktor Cherepkov" that the guards hung up during the April 22 raid.
By all appearances it was an ordinary, lazy Sunday at a complex of warehouses in northern Moscow. Then a dozen burly guards burst through the metal front gates at 11 a.m.

The guards made a beeline for the main building and raided the safe, carting off original copies of ownership and rental agreements as well as computers and other goods. A short time later, several well-dressed men who claimed to have the backing of a State Duma deputy told tenants renting offices in the warehouses that they were the new owners.

Hearing the news, the original owner, London-based Indian businessman Rajesh Galani, hopped onto a plane for Moscow -- and ultimately managed to reclaim the property.

Galani's story serves as a cautionary tale about doing business in Russia. Foreign businessmen rarely find themselves the target of illegal property seizures, but at least 500 attempts on Russian businesses are made in Moscow every year, said Duma Deputy Gennady Gudkov, a member of a parliamentary working group on the issue. About 10,000 of these raids occur nationwide every year, he said.

"It's difficult to give a figure because there are no statistics and people tend to deal with the problem in their own way," Gudkov said.

Galani believes a real estate developer eager to make tens of millions of dollars on his property is behind his troubles at 4 Selskokhozyaistvennaya Ulitsa, just north of the All-Russia Exhibition Center.

"I have been here since 1993, and until now I had not had any bad experiences," he said. "I've lost my trust in the system."

Galani's problems started on April 22 when guards wearing uniforms of the private security firm FIST stormed the complex. The complex is a hodgepodge of warehouses filled with offices being leased by mostly Indian-run wholesale fabric firms.

"We were told that there were some sort of checks being carried out, but when we got here they refused to let us in," said a lawyer for Galani. He asked not to be identified, citing an ongoing police investigation.

"They certainly looked very professional and seemed to know what they were doing," said Alexei Belyakov, an employee of tenant Vlada-Sport, which, according to a police report, had about $10,000 of goods stolen during the raid.

Within an hour, Galani's representatives had filed an official complaint at the local Rostokino police station. When the police officers arrived, they were blocked from entering the buildings and shown a document authorizing the guards to patrol the complex, the lawyer said. The document turned out to be false.

The officers took no further action and left.

"They saw that there was no public disturbance, murders or violence and that they could do nothing else," a police spokeswoman for Moscow's Northeastern District said.

Among the raiders were several businessmen surrounded by bodyguards with uniforms of the OMON riot police and the Interior Ministry, witnesses said. The group, led by two Indian citizens, declared themselves the new owners, the lawyer said. They told tenants that new rental agreements would have to be signed and promised that any existing problems with water or electricity would be fixed, several tenants said.

"They even said that we wouldn't have any organizations coming to check us," said a tenant, originally from Delhi, who asked not to be identified for fear of recrimination.

The guards hung up a plaque that declared the property was the "Office of State Duma Deputy Viktor Cherepkov." Eyewitnesses said one of the well-dressed Russians, a young man, claimed to be Cherepkov's son.

Cherepkov, an independent Duma deputy and former mayor of Vladivostok, denied any involvement in the raid. "This is the first that I have heard about this particular incident," he said.

But, he said, he had filed two lawsuits against people who had improperly used his name in the past. "This sort of thing has happened on several previous occasions and I am fed up with it," he said. "Because I'm a Duma deputy of some standing, they think that they can use my name."

Cherepkov said his son, Vladimir, could not have been at the complex. "I only have one son, and he lives in Vladivostok and works for the Emergency Situations Ministry," he said.

Determined to reclaim the complex, Galani went over the Rostokino police, filing a complaint with the Northeastern District police headquarters.

On the evening of April 23 -- less than 36 hours after the raid -- elite SOBR commandos from the Northeastern District police force scaled the fence around the complex and detained the FIST guards. By this time, however, the original property ownership papers had vanished along with the men who had claimed to be the new owners.

The guards were taken to the Rostokino police station and released after a few hours. The police spokeswoman said the guards had produced an agreement confirming their right to guard the property. The agreement later turned out to be a forgery.

"We are now searching for the people who drew up this fake agreement," the spokeswoman said.

A FIST spokesman refused to comment on whether guards working for the agency had been involved in the raid.

Galani has little doubt as to the real motive for the attack. He recently received preliminary municipal approval to build a mixed residential and retail complex on the site.

"I originally bought it for $2 million, and after getting these documents, the value goes up to $20 million," Galani said.

His lawyers put the value of the proposed new complex at about $40 million.

Galani refused to identify the developer that he believed might be behind the raid, citing the ongoing police investigation. "As I understand, there is a very big builder involved who has paid a lot of money to these people," he said.

One real estate consultant said it was rare for foreigners to be targeted by raiders, and that foreigners usually hedged their bets by teaming up with Russian partners.

"For the majority of investors looking to buy property for development, they would be looking to do it with a local partner," said Tim Millard, head of advisory and research at Cushman & Wakefield Stiles & Riabokobylko.

"The most important thing then is to choose your partner wisely," Millard said.

Galani said he was the sole owner of the property.

Galani said he has brought his plight to the attention of the Prosecutor General's Office, the Federal Security Service and other agencies. "Now I am confident that it will all turn out fine," he said.

Duma Deputy Alexander Krutov of the Rodina faction sent a letter on May 2 to Interior Minister Rashid Nurgaliyev, highlighting the case and asking the minister to take the ensuing criminal proceedings under his personal control.

For now, Galani can do little but wait to see how the police investigation unfolds. He does not want to invest any money into revamping the complex, because someone could lay claim to it as long as the original ownership papers are missing.

Galani let out a deep sigh as he walked around the complex on a recent afternoon.

"I don't think this should have happened to me, but still it's happening and it really shocks me," he said.