- The Washington Times - Saturday, January 28, 2006

Visitors to Moscow these days have been alarmed by the city’s changing face. Two landmark hotels — the Moskva and the Rossiya — recently were torn down, among other historical buildings. The man responsible is Yuri Luzhkov, the 69-year-old mayor who has ruled Moscow since 1992 and happens to be married to the richest woman in Russia.

And she just happens to own a construction firm which controls most of the re-building in Moscow.

Elena Baturina is Mr. Luzhkov’s second wife, and is 26 years his junior. Her personal fortune is more than $2 billion. She owns the construction company Inteco which holds a monopoly on all construction in Moscow.

Mr. Luzhkov, a bald, roly-poly man in a black leather cap who began as a Soviet bureaucrat, was awarded the right to conduct privatization independently from the government, a step known as the “Moscow experiment.”

His wife, an avid art collector with a weakness for million-dollar Imperial vases, started Inteco in 1991, making furniture and china. Her fortunes rose with her husband’s powerful backing and she now controls at least 20 percent of all new construction in Moscow, having bought cement factories in 2002 . The mayor’s freewheeling way with the bulldozers ensured his wife would always have an income.

As for the new skyline, Moscow is now dotted with “Luzhkov Baroque” structures.

In Moscow, nothing gets done without Mr. Luzhkov’s approval. Indeed, a Russian anti-corruption policy institute just released a study saying the average company spent $244,000 in bribes to Russian officials in 2003 alone.

Meanwhile the Mayor presides over a city awash in prostitution, gambling and abductions. The judicial system is broken. There is no hot running water in summer and the city suffers regular blackouts. A recent poll in the country found 32 percent consider Luzhkov “corrupt.” How corrupt?

When the Transvaal Water and Recreation Park collapsed in 2003, killing dozens of adults and children, the mayor announced it was due to a “flawed building design.” He neglected to say the property was party owned by his wife.

Miss Baturina was said to be furious when Forbes singled her out last year on their annual list of Russia’s richest citizens. She prefers to keep her wealth a secret. Paranoid about the family’s security, she built a private school for her two daughters in Moscow, rimmed with high walls and security cameras.

Some Luzhkov tactics border on the bizarre: He announced he would fine weather forecasters for wrong predictions.

Invited by a tony Western European tennis club for a tournament (the mayor loves the game) he asked if he could land his helicopter on the courts. Recently, he ordered Moscow restaurants to install security and bulletproof windows, thus ensuring he can enjoy his borscht without the spray of bullets.

But it’s Mr. Luzhkov’s detractors who need bodyguards.

In 1996, 41-year-old American businessman Paul Tatum was murdered in Moscow while walking to the subway. Days earlier, he took out newspaper ads accusing Mr. Luzhkov of corruption.

Tatum had a share in a luxury hotel the mayor coveted and didn’t relent to Mr. Luzhkov’s demands. Following the bloody slaying, Mr. Luzhkov took over the hotel and its annual profits of $40 million. Tatum’s family is suing the mayor for murder.

The privatization in Moscow made billionaires of some, many of whom emigrated to London, where they enjoy life far from Mr. Luzhkov’s grasp. No one in his right mind would go against him.

Except one man: American businessman Tom Sapir. A Georgian Jew who immigrated to the United States years ago and worked as a taxi driver in New York, this unassuming rags-to-riches owner of Manhattan real estate sued Mr. Luzhkov after the mayor of Moscow essentially took over one of Mr. Sapir’s companies in Russia, the Moscow Oil Refinery.

Plans for a polyurethane plant were scuttled after Mrs. Luzhkov decided it might cut into her profits. The Arbitration Court of Stockholm ruled last November that the Moscow Oil Refinery must pay more than $28 million in losses and fines to Mr. Sapir’s company, Joy Lud International Distributors (JLID) for failing to live up to a 1995 contract.

Mr. Luzhkov refuses to pay, hoping Mr. Sapir will just slink away.

But Mr. Sapir — who just last week purchased the Doris Duke-Semans mansion in Manhattan for $40 million, the largest single price for any townhouse in New York — says it’s not the money; it’s the principal.

The case is ongoing and many observers are watching closely to see if Mr. Sapir will win. He has written a letter to President Vladimir Putin, outlining Mr. Luzhkov’s intimidating tactics and asking for justice.

Mr. Putin and Mr. Luzhkov are not especially close. In fact, Mr. Luzhkov has become something of a liability, given his scandal-ridden tenure. The mayor was re-elected in December by a landslide. He is suspected of funding his campaign from the $10 billion municipal budget.

Under a new law, Mr. Putin will nominate the mayor’s successor in 2007, to be approved by the 35-member city council.

There are reports Mr. Luzhkov and his wife have already begun moving their assets out of Russia.

In the wake lie the rubble of concrete and the innocent lives of those hoping to do legitimate business in Moscow under the wrecking ball.

Tsotne Bakuria, a former member of the Russian Parliament from Georgia, was a 2004 visiting scholar at George Washington University’s Elliott School of International Affairs.

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