Garden Ring Store Faces Goods Seizure

At least one of Moscow's popular "Garden Ring" supermarkets could have its inventory seized by MOST-Bank as soon as Monday, culminating a months-long battle that has seen the Irish partners in the venture flee the country and the Russian partners left holding the field.


The seizure, which would be for collateral against a $5 million loan from MOST-Bank taken out by the Irish partners to purchase merchandise, apparently would be the result of yet another prominent Moscow joint venture that has turned sour.


Battle lines were drawn last July, when the Irish partners tried and failed to buy out Dmitry Kishiev, the Russian partner in the Irlasto joint venture that runs the five-store supermarket and retail chain, which includes three Garden Ring branches.


Apparently fearing for their safety, the Irish partners then fled the country, urging their more than two-dozen expatriate employees to do likewise.


But in what has developed Park Place (113 Leninsky Prospekt) as soon as Monday to "take our food."


Fitzsimmons added that the bank account for Garden Ring supermarkets is also held by MOST-Bank.


Kieran Walshe, chief executive officer of Irlasto, declined to make any comment on either the seizure of goods by MOST-Bank or the dispute as a whole, when contacted in Ireland on Friday.


Kishiev, for his part, outlined his version of events in a two-page letter faxed to The Moscow Times by Fitzsimmons. MOST-Bank representatives could not be reached for comment Friday.


A company spokesman for Irlasto, who did not wish to be named, said in a statement that: "The facts contained in [Kishiev's] fax do not represent an accurate account of the matters in dispute between Dmitry Kishiev and his foreign partners." The statement added that the dispute was being pursued by Irlasto's lawyers and the Moscow authorities in Moscow.


Kishiev contends that the financial disagreements began in 1995, when the directors of Irlasto were "advised of impending substantial rent increases" and he suggested buying the property.


It was at this point that the Irish partners attempted to buy Kishiev out.


Kishiev, who is now in de facto control of all five stores, alleges that the $5 million of goods bought with the MOST-Bank loan never arrived. But according to his interpreter Natalya Lizuonova, MOST-Bank is "fully entitled" to seize existing stock from the old partnership.


In January 1996, Kishiev said, his accountants "expressed serious concern at the level of interest being repaid to MOST-Bank for the loan," and he sought early repayment of the principal. The interest being paid at one point reached 80 percent.


According to sources close to the dispute, by last spring negotiations were under way between Irlasto's Irish directors -- Walshe and deputy chief executive Michael Coughlan -- for a possible buyout of the Russian side.


However on July 12, after Walshe and Coughlan failed to raise enough cash for the buyout, Walshe told roughly two dozen Irish expatriate employees to "collect their belongings and leave the country," because of threats he had received, the sources said.


"The last meeting was in Moscow, and [the Irish partners] left Moscow very abruptly," said Lizuonova. "They said that they didn't feel safe here -- but we had been working with our Irish partners for four or five years."


Kishiev was not available for comment Friday, Lizuonova said.


As for the Garden Ring employees, "We were told ... that we would used as pawns," Fitzsimmons said.


The Irish partners "booked us a flight -- 26-27 Irish expatriates from all the stores -- and what they told us was we'd have a meeting in Ireland. Walshe told us that the problems would be resolved and we'd be back in Moscow in a week," Fitzsimmons said.


But in the end, Fitzsimmons said he was never contacted and returned to Moscow in August on his own initiative.


As for the allegations of threats by the Russian partner, "It's very difficult to say -- when I asked [Walshe] whether he was threatened he told me no," he added.


Lizuonova said Kishiev was questioned by police in connection with the alleged threats in July and was released without charge.


The long-running feud coincides with what some customers say has been a decline in quality and selection at the widely known supermarkets.


"In the past six months there isn't always what I want ... and my friends also complain about that," said Svetlana Sologub, who said she has been shopping at the store near Mayakovskaya for four years. "For example, today I came to buy some Whiskas for my two cats, but I couldn't find any."


Store employees were tight-lipped about the management turmoil.


"We're all scared about losing our job," one clerk said.


The Garden Ring episode recalls the breakup of another high-profile joint venture, the Arbat Irish House. The Irish partners last summer quietly yielded their stake in the project -- one of the first major Russian-foreign partnerships in Moscow, established in 1991 -- to the Russian side, which included MOST-Bank.





-- Astrid Wendlandt contributed to this report.