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. Last Updated: 07/27/2016

Mitvol Stops Construction Work at Moskva-City

Itar-TassMitvol, right, assessing the damage caused by a sewage flow into the Moscow River from a Moskva-City site June 29.
As if taking on Shell, Alla Pugachyova and Moscow region Governor Boris Gromov was not enough, government inspector Oleg Mitvol has now trained his sights on the multibillion-dollar Moskva-City development.

Mitvol's agency, the Natural Resources Ministry's environmental watchdog, last week ordered work to be halted for five days on two sites at the Moskva-City development and is going to court to get the ban extended to 90 days.

The two companies at the center of the investigation could also face lawsuits and fines reported by national newspapers to be as much as 100 million rubles ($3.9 million).

The reason: pollution of the neighboring Moscow River. According to the environmental watchdog's investigation, runoff from the two sites has clogged up the river, reducing its depth from 1.5 meters to 20 centimeters.

The two locations in question are Sites 14 and 15. On Site 14, Turkish construction firm Rassen is building the Mercury City Tower, a mixed residential and office complex. On Site 15, Russian company MSM-1 is building an office development for the Moscow city government.

Mitvol confirmed on Friday that work had been suspended on two sites and that lawsuits were being prepared against the two companies involved. The total amount of the damages was yet to be ascertained, he said.

A spokesman for MSM-1, however, denied on Friday that the company had received any official notification to stop work. He refused to comment further.

The Moskva-City project is the capital's most ambitious development. The Krasnopresnenskaya Naberezhnaya site is being turned into a major business center and will eventually house a clutch of the tallest skyscrapers in Europe.

Yulia Nikulicheva, National Director of the Strategic Consulting Department at Jones Lang LaSalle, said that with such a high concentration of building work going on at the Moskva-City site, environmental hazards did not come as a surprise.

Although the current work stoppage may be small-scale, with Yelena Baturina, Shalva Chigirinsky and Oleg Deripaska all involved in the Moskva-City development, Nikulicheva said Mitvol would have his work cut out for him if he sought to broaden his campaign.

"If these people were to form some sort of union, then it would be very influential," Nikulicheva said.

As yet, however, Mitvol said he did not intend to widen the scope of his investigation to take in the rest of the Moskva-City development.

This is by no means the first time that Oleg Mitvol has hit the headlines. Last year he spearheaded a government-inspired charge against Shell's Sakhalin-2 oil and gas project, which ended in the British-Dutch energy major ceding a controlling stake in the project to Gazprom in December.

Before that, Mitvol had made his name by waging a public campaign against the suburban dachas of the rich and famous, with not even pop diva Alla Pugachyova, UES chief Anatoly Chubais or former Prime Minister Mikhail Kasyanov, immune from his checks.

A court case is currently rumbling on between Mitvol and Moscow Region Governor Boris Gromov, who accused the official of slander after he said Moscow region authorities were illegally selling land for below the market price.

Despite Mitvol's colorful and often highly politicized track record, analysts agreed that environmental standards at construction sites across the country were often either insufficient or simply nonexistent.

Russian standards are considerably below those of Western Europe, Nikulicheva said.

Last year Cushman & Wakefield's annual European Cities Monitor ranked Moscow joint last in a survey of 33 European cities that ranked their "freedom from pollution."

"The fact that [Mitvol's agency] is reviewing construction practices in central Moscow could be another positive development in the cleaning up of the city and the eventual improvement of its ecological image," said Tom Wiseman-Clarke, director for advisory services at Cushman & Wakefield Stiles & Riabokobylko.

Wiseman-Clarke said that if any delay to the Moskva-City project lead to late delivery dates, it would have the additional effect of contributing to the general deficit of office space in the market and put upward pressure on rental rates.

But Nikulicheva said that with support for the Moskva-City development coming from very high up, the delays to the project were unlikely to last long.

The project has already been several years in the pipeline and, viewed as a symbol of Moscow's economic regeneration, has the personal support of Mayor Yury Luzhkov, she said.