The property commission of the Austrian state of Tyrol ruled that the sale was not in the public interest, the body's chairman, Christian Visinteiner, announced Wednesday.
The decision deals a blow to Baturina, who has been running a charm campaign in Kitzb??hel, a posh ski resort. Her property development firm, Inteko, sponsors a lavish jazz festival there that starred Stevie Wonder last summer. Baturina has also invested millions of dollars in sports sponsorships and on a massive golf course, local media reported.
Kitzb??hel property authorities approved the chalet sale, but this spring the state property commissioner decided to block it. Last week, the property commission in the regional capital, Innsbruck, vetoed the acquisition of the chalet by Tirus, an obscure tourism firm that, according to Visinteiner, is co-owned by Baturina.
The sale contradicts local zoning law and the property's residential status, Visinteiner said by telephone from Innsbruck.
He said that the firm had said in its application that the mansion was needed purely for commercial use. "This is a completely residential area," he said.
Tyrol's stringent laws stipulate that sales to non-EU residents must be in the public interest and foreigners may only acquire private property if they prove that they plan to live there permanently.
Visinteiner said the three-member commission made up its mind quickly when the case was heard last week. "We discussed the possibilities of the sale being in the public interest, but that did not take very long," he said.
He said the decision, which was faxed to the parties concerned Wednesday morning, renders the sale invalid and that the buyer and seller had a right to appeal to Austria's High Court.
Baturina's lawyer Emilio Stock said he would advise his client to buy the home personally. The commission's decision was not that bad because it only meant that authorities disliked the sale to a company, he said by telephone from Kitzb??hel.
Stock added that the commission had acknowledged that Baturina was acting in the public interest. "It said Yelena Baturina has shown significant social, economic and cultural activities in the region, but then said this does not hold true with regard to the firm," he said.
Baturina, who Forbes magazine ranks as Russia's richest woman with a fortune of $4.2 billion, bought the chalet in Aurach, a village next to Kitzb??hel, for an undisclosed sum last year.
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