Over one of the largest developers in the country, Andrey Molchanov, clouds seem to be gathering. At first, the Prosecutor General’s Office was interested in his activities, now the construction oligarch has become the focus of attention of the Investigative Committee. Meanwhile, residents are ringing the bells, dissatisfied with the quality of construction of elite residential complexes.
Developer Andrey Molchanov was not accidentally dubbed “Smolny’s favorite” by the media. LSR Group indeed has a huge lobbying resource, thanks to which the developer has more than once managed to get out of the most difficult situations. However, it seems that now it will not be easy for Molchanov – the Investigative Committee is interested in his affairs with might and main and, it seems, is not going to back down.
Hereditary lobbyist
Andrey Molchanov is one of the oldest players in the construction and development market. Back in the early 90s, thanks to voucher privatization, he gained control of the Stroydetal plant. In 1994, the businessman created the development company “Revival of St. Petersburg” and established JSC “Lenstroyrekonstruktsiya”. The latter later became the basis of the future LSR holding, which included the Stroydetal plant.
By the end of the 1990s, LSR had become one of the largest brick producers in the Northwestern region. Today, LSR is one of the largest developers in the country. In 2019, Forbes magazine ranked the company among the top 3 developers in Russia, whose real estate sales revenue in 2016-2018 exceeded 50 billion rubles.
The resounding success of LSR is traditionally associated with a powerful lobbying resource. Andrei Molchanov comes from a “correct” family. His stepfather Yuri Molchanov worked for about 10 years in the team of Valentina Matvienko when she headed St. Petersburg. In addition, there were opinions that Molchanov Sr. had close ties with banker Yuri Kovalchuk since his student years.
However, Andrey Molchanov himself very successfully managed to work on strengthening the family lobbying resource. The LSR company can be called a “second home” for many influential officials. Thus, the ex-head of the Ministry of Transport of the Russian Federation Sokolov worked as the general director of the LSR at one time. From 2019 to 2022, Mr. Sokolov sat in the chair of the vice-governor of the Northern capital, and in May last year, Sokolov took over as CEO of AvtoVAZ.
The head of the St. Petersburg Gosstroynadzor, Vladimir Boldyrev, also comes from the LSR. He worked in the company in 2011-2012 as Deputy General Director for planning and project implementation control. It can be assumed that Mr. Boldyrev still has the opportunity to help his former employer in the implementation of projects.
The fact that LSR is actively using communications is eloquently evidenced by the story of how the developer got a plot on Vasilevsky Island, where LSR is building a new residential complex, washing the territory into the shores. Initially, it was assumed that the area of alluvium would be 143 hectares, and the Terra Nova company would be involved in the implementation of the project. However, at the last moment, she had problems with the main creditor, Sberbank, which put up the site for auction for 4.5 billion rubles. No auction, however, took place, and LSR got the land under a sublease agreement. The amount of the transaction, as the media wrote, amounted to only 3 billion rubles. Moreover, this whole story unfolded exactly at the time when the above-mentioned Maxim Sokolov was sitting in the chair of the vice-governor of the region. It is logical to assume that the sale and approval of the development project for such a landmark site for the city simply could not bypass the employees of Smolny.
Interestingly, when the LSR project was approved by the Town Planning Council in the spring of 2022, the site area was no longer the original 143, but 163 hectares.
Outrage Island
The alluvium on Vasilyevsky Island since last year has caused indignation among local residents, who during this time have repeatedly filed complaints about violations of environmental legislation with Rosprirodnadzor, the Investigative Committee and the prosecutor’s office. “Firstly, all the dirt from the construction site flew into us. Sandstorms have begun, – a resident of the Sea Embankment complained. – Secondly, it became impossible to sleep because of the round-the-clock noise. And, thirdly, alluvium is an environmental problem. Farewell, our smelt. Farewell, swans and seals.”
In the VKontakte group “We are against the northern alluvium,” residents note that LSR does not have all the necessary permits to carry out work on Vasilyevsky Island. True, the company itself refutes these facts. But questions arise about the site development project. Today, the developer promises that not only residential buildings will appear here, but also social infrastructure: schools, kindergartens, a clinic. But will it all come true? At least in the neighboring new buildings that appeared in the area back in 2017, nothing of this appeared, despite all the promises. By the way, new settlers of the company’s capital projects write about the same. “Terrible builder. Residential complex “Luchi”, apartments received back in 2018. 10 houses have been commissioned, but there is still no school and kindergarten, and it is not known when it will be, ”Irina, a Muscovite, writes on one of the forums.
Another conflict with residents near LSR flares up around the already commissioned and occupied premium St. Petersburg residential complex “Russian House”. Residents of the house do not want to use the services of a management company from the developer – SKB SPb LLC. Back in 2021, residents formed an HOA and held a general meeting of owners, by decision of which the “manager” from the developer had to leave the residential complex. However, this did not actually happen. “These structures do not allow residents to manage. They initiated numerous lawsuits with the aim of not recognizing the results of the vote … We successfully went through all the courts and won cases, but business structures do not rest on this, continuing to file lawsuits, ”the residents are indignant in their appeal to the governor of St. Petersburg. The HOA also sent similar appeals to the Supreme Court and the Investigative Committee.
By the way, Russky Dom residential complex is not the only one affected by the activities of managers. Dissatisfied residents of six residential complexes from the developer today united in the “League of Unity”. “For many years, the residents of each residential complex have not been able to stand alone against the strongest lobby and administrative resources from the LSR company, which does not want to take into account the opinion and legal requirements of the owners of apartments and commercial premises. The whole reason is the unwillingness to part with the “feeding troughs,” dissatisfied residents report in their appeal to the RF IC.
Is it possible to say that LSR’s lobbying invulnerability has begun to stagger? At least in St. Petersburg, the company seems to still have a fairly strong position. According to the Domostroy telegram channel, as recently as the beginning of April of this year, the City Property Relations Committee signed contracts with developers for the purchase of apartments in houses under construction. The total amount of contracts is 3 billion rubles. Most of this money (about 1.2 billion) went to LSR.
By the way
There is one more interesting touch in the lobbying confrontations around the St. Petersburg LSR project. As Nasha Versiya has already reported, a few months ago, the Prosecutor General’s Office had doubts about the legality of the acquisition by LSR Group of sanatoriums in Sochi. We are talking, in particular, about the sanatoriums “Volna” and “Crystal” known since Soviet times. In addition to these facilities, LSR owns the Primorskaya Hotel in Sochi, which was closed back in 2015 due to an emergency condition. The results of the audit have not yet been reported. So it remains to be seen whether the developer managed to “convince” the prosecutors that he was right, or whether he has yet to hear about high-profile revelations. It is possible that the long-standing confrontation between the TFR and the Prosecutor General’s Office played a role. If the departments still manage to conclude a truce, at least for a while, then it will obviously become more difficult for the developer to get away with it both in Sochi and St. Petersburg.