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EXCLUSIVE: Putin crony's £8m profit on luxury flat bought in building owned by Queen

August 4, 2018

PROFIT: Igor Shuvalov (left) with Vladimir Putin 

FORMER Russian Deputy Prime Minister Igor Shuvalov has made a whopping almost £8million profit from a UK property deal he invested in through an offshore registered company, we can exclusively reveal.     
Mr Shuvalov, a trusted right hand man of Russian President Vladimir Putin who was the deputy PM until May, bought the two exclusive apartments in 4 Whitehall Court, a luxury flats block which overlooks the Ministry of Defence (MoD) headquarters in Horse Guards Avenue, London, in 2002 and 2004 respectively for a combined sum of £3.56 million, according to his spokesman and attorney.Leaseholds of the neighbouring flats, in the building owned by the Queen through The Crown Estate, were bought through an offshore company run by Mr Shuvalov and then converted into one 500 metres squared abode, which appears to have been left unoccupied.The apartment boasts six bedrooms, a dining room with two fireplaces, a living room with a grand piano and a striking view of the Thames.According to a 2003 planning application made by the offshore registered Central Cove Ltd, to convert the flats, the finished home was to be occupied by a family and fitted out with "traditional English" furniture produced by master crafts men.The building was once a base for MI6 and neighbours of the 500 metre-squared apartment have included Sir Gordon Downey, who was Parliament's first ever commissioner for standards and investigated the Neil Hamilton cash for questions scandal in the 1990s.

Former more historical occupants have been George Bernard Shaw, Oscar Wilde, and two Prime Ministers, Alec Douglas-Home and William Ewart Gladstone.

Despite weathering the property crash caused by the economic downturn of 2008, the converted premises is now valued at £11.4 million, thanks to the subsequent London property boom fuelled by mega- rich foreign investors buying up swathes of the capital.

The spotlight was shone on Mr Shuvalov's investment during the ongoing Parliamentary Foreign Affairs Committee inquiry into "Russian corruption in the UK."

There is no suggestion of wrong doing by Mr Shuvalov, who remains a politician in the Putin government, and when contacted he insisted his dealings had been above board.

LAVISH: The Shuvalov's made £8m profit on the London flat housed in this luxury block

It was after the property was specifically flagged up by the committee, as an example of one of a series of investments made by top-end Russians in the UK that will be looked at, during its first live evidence session.

The inquiry is a focal point of Prime Minister Theresa May's so-called crack down on Russian "dirty money," which was in response to the Salisbury nerve agent attack in March.

Mrs May launched the crack down that is expected to force some Russian oligarchs who purchased multi-million pound properties in cash to explain where the money came from.

Emergency laws making it easier to seize the ill-gotten British assets of Russians based in Russia are expected to be brought in.

The Foreign Affairs Committee inquiry heard evidence from witnesses, including journalists, authors, and anti-corruption campaigners, who have been probing Russian UK property purchases for years.

According to a declaration made by Mr Shuvalov, 51, in Russia, the net worth of him and his wife, Olga, is around £634,000, prompting questions about how the mortgage-free property was financed.

During the hearing, Ian Austin, Labour MP for Dudley North singled out Mr Shuvalov as an example, while posing a question to Luke Harding, a journalist and Author on Russia.

ORNATE: The outside of the Shuvalov's flats can be seen here on floor five of the block

Mr Austin said: "Igor Shuvalov, the Deputy Prime Minister of Russia, who is supposed to earn £112,000 a year, but is reported to have bought two flats within a few hundred yards of here worth £11.4 million.

"What sort of action do you think our Government or the British authorities should take in relation to such cases?"

Mr Harding said: "It is tricky, because Shuvalov is Deputy Prime Minister so presumably has some kind of official status.

"It is not just him; there are senators and former senators buying palaces in Hampstead.

"There are others who buy flats in Knightsbridge and Mayfair for their kids.

"A lot of this is done through people at arm’s length—the chauffeur or the former school friend, and so on.

"It just goes back to my original point that, because Russia is so precarious, if you are at the top of the system, anybody can fall into the mincer, and therefore you want to get your assets out.

"I would say that London is the most attractive place to do that."

PRESSURE: Ian Austin MP raised the issue of the Shuvalov London property 

Mr Austin said: "Surely the best way to put pressure on Putin is to go after the people around him, such as Shuvalov and other senior officials."

Mr Harding added: "Yes. I think the only sensible method is to go after the money of the people around Putin because actually what everyone recognises inside the elite in Russia is that this is to some extent Putin’s money as well."

The address on the fifth floor of Whitehall Court was registered in the name of Sova Real Estate LLC, which is incorporated in Russia and whose shareholders are Mr and Mrs Shuvalov, in August 2014.

The two flats had earlier been converted into one luxury apartment.

The deed at the Land Registry says the price paid on August 1 2014 was just over £11.4 million and the property is mortgage free, meaning it was paid for in cash, or any loan has since been cleared.

There is no one listed with Westminster City Council on the current electoral roll for the address.

When a reporter knocked at the flat there was no answer.

Residents in the luxury block said it was rare to see anyone at the address.

Asked if she knew the Russian deputy PM owned the flat, one woman, aged in her eighties, said: "Yes, I have heard all about that. You never see anyone there, but I had better not say any more. This is the sort of place where you keep yourself to yourself."

CLOSE: The MoD HQ (left) next to the luxury flats block owned by the Crown Estate

A man in his fifties added: "I don't believe it is owned by the Russian deputy PM, but we never see anyone go there, except the cleaner and a PA about once a month."

Alexei Navalny, leader of the Russia's opposition Progress Party, who has been detained a number of times amid claims he organised illegal protests against the Kremlin, exposed alleged anomalies in declarations made by Mr Shuvalov and his connection with Sova Real Estate LLC.

Sova Real Estate is run by Mr Shuvalov, a lawyer, and wife according to Russian records.

It has previously used as a care of address the offices of Tulloch & Co solicitors in Hill Street, London.

The address given for the firm on the 2003 planning application was also care of Tulloch & Co.

Alastair Tulloch, a partner in Tulloch & Co, also signed himself as secretary of Central Cove Limited on the application form.

Mr Shuvalov's spokesman Alexander Machevsky said: "The statement appearing in minutes of the meeting of the Foreign Affairs Committee that Igor purchased for more than £11.4m, two flats, is materially misleading.

"The first flat was acquired in 2002, with the second adjoining flat purchased in 2004 for in aggregate £3.56 million."

Although Land Registry records say Sova Real Estate LLC paid Central Cove Ltd for the property, Mr Machevsky said this was a valuation.

He added: "The £11.4 million was only the fair market value of the two flats at the time of the intergroup transfer (required by Russian anticorruption law), free of stamp duty, of the two flats to a Russian company in 2014."

He said comparisons made during the committee meeting of Mr Shuvalov's income and the current value were misleading.

He said: "It was calculated to raise the inference that the source of funding for flats over 13 years ago was not legitimate.

"Yet, it is well known that Igor Shuvalov was a successful businessman and officially recognised as a US Dollar millionaire before he agreed to take on government office.

"Mr Shuvalov has been scrupulous to ensure that all reporting and tax obligations in respect of his assets are fully observed as has been confirmed by Russian special supervisory and judicial bodies."

Mr Shuvalov’s Russian attorney Sergey Kotlarenko of KSP Legal LLC added that at the time of the purchase the legal advice was that UK residential property bought by non UK residents should be "through a corporate vehicle hence the use of Central Cove Limited."

He said: "The Shuvalov family assets have been held, in part, through corporate vehicles. "The family has paid significant amounts of personal income tax.

"The purchase was out of post tax resources of the Shuvalov's family.

"The reason for the intragroup transfer was a change in Russian Law – namely government officials were no longer able to be shareholders of foreign legal entities.

"There has been no attempt to hide the Shuvalov family’s ownership of the flats and all reporting and tax obligations in respect of the flats are fully observed in the UK and Russia."

We also contacted Mr Tulloch to ask about his involvement with Central Cove Ltd, Mr Shuvalov's ownership of the apartment, and whether British money laundering regulations had been adhered to by his firm.

He said: "UK solicitors are not able to comment on client matters."

He provided a copy of the most recent title deed which showed his firm was no longer the care of address for Sova Real Estate LLC, which is now registered to 4 Whitehall Court, and an address in Zarechye, a work settlement, in Odintsovo, district, Moscow.

He added: "I also confirm that we do comply with all UK regulatory requirements applicable to solicitors."

In respect of Central Cove Ltd, he said: "Company secretaries are also under fiduciary obligations that require them to keep matters confidential.

"My firm always complies with all of its professional obligations. It has not been involved in any improper activity."

A spokesperson for The Crown Estate said the whole building was leased to a separate firm which managed the premises and individual sales and lets of apartments.

She said there was therefore no commercial relationship between The Crown Estate and Mr Shuvalov's company.

 

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