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Police Say Searches at Mirax No Joke

A masked policeman stands guard at the entrance of the Mirax Group office in central Moscow, April 1, 2010. A group of armed policemen searched the office of the company on Thursday. Mikhail Voskresensky

Interior Ministry investigators, escorted by 40 armed and masked riot police, raided Mirax Group's offices in the Federation Tower on Thursday as part of a probe into the alleged theft of 4.1 million rubles ($140,000) in electricity.

Video posted on Mirax president Sergei Polonsky's blog showed masked OMON riot police posted in the company's hallways, while bewildered employees stood along balconies overlooking the office's luxurious atrium.

"The search warrant said it was in connection with [an investigation into the possible] theft of electricity from our Zolotiye Klyuchi residential complex," Polonsky told reporters in a video posted on "I can't understand why it's necessary to bring gunmen to our office. We have an absolutely open position and we always offer all the necessary documents."

The real estate mogul brushed off the investigation, saying "stealing 4.1 million rubles of electricity isn't our business." But Polonsky, who looked unusually nervous in the video interview, said it was possible that police might seek to have him placed in pretrial detention.

"The search warrant says electricity was stolen from a residential building developed by Mirax for a fitness facility on the premises [of Zolotiye Klyuchi], so in a way it appears that we stole the electricity from ourselves," Mikhail Dvorkovich, an adviser to Polonsky, told The Moscow Times.

Police were searching for information on former Mirax executive Maxim Privezentsev, Dvorkovich said. A copy of the warrant, posted by Polonsky on his blog, also indicated that investigators were interested in Privezentsev for allegedly stealing electricity.

The size of the alleged theft is too minor for police to paralyze a company's operations, Dvorkovich said, adding that investigators had already visited Mirax's office twice in relation to the case — without the armed escort.

"Four million rubles is just 'kopeks,' and 700 people were held in the atrium for several hours for that reason alone," he said. "This is how the police congratulated us on April Fools' Day."

Andrei Pilipchuk, a spokesman for the Interior Ministry's economic crimes department, said the raid was "of course" not a prank.

"The case was initiated in connection with a possible violation of Article 165, Part 3, of the Criminal Code," he said. "And frankly, I don't understand why this case is causing so much publicity now. This is the third and final visit by the police before the case goes to court."

The charges, for causing property damage through deception or abuse of trust, carry a maximum punishment of five years in prison.

Pilipchuk declined to elaborate on the case or suspects, addressing further questions to Moscow city police, who were not immediately available for comment.

A source close to Mirax told Vedomosti in December that Privezentsev was the only one of Polonsky's former partners who did not get shares under an options program that he created three years earlier. He left the company in September.

RBK Daily reported last month that Mirax had accused Privezentsev of an apparently unrelated theft during reconstruction work at Kursky Station.

The Moscow Times was unable to reach Privezentsev for comment.

Apart from the Mirax Plaza and Federation Tower developments in Moskva-City, the developer also built residential projects such as Kutuzovskaya Riviera, Rublyovskaya Riviera, Zolotiye Klyuchi-1 and Zolotiye Klyuchi-2.

But restructuring debt, rather than building residential complexes and office towers, has been Mirax's main concern in recent months.

Polonsky announced last month on both the Mirax web site and his personal blog that he was selling all of the company's property to raise cash.

Known for outlandish statements and publicity stunts, Polonsky personally offered to conduct guided tours of the Federation Tower — complete with snacks and champagne — for possible buyers, charging $100 per visitor.

The promotion last month was advertised in billboards around downtown Moscow that read: "Need money badly. Selling apartments in Moskva-City. Polonsky."

Mirax now has about $550 million in debt, most of it due this year. Of the total, $193 million is owed to banks, including $40 million that is overdue, Vedomosti reported last month, citing sources close to the company.

Most recently, Mirax took a half-year loan of $53 million from Project Finance Bank at 29 percent annual interest, the newspaper reported. The developer said March 11 that the loan was at 15 percent interest and that all but $700,000 went toward paying down its debt to Alfa Bank.

Mirax had owed Alfa more than $330 million after the lender purchased debt from Credit Suisse at a major discount. Alfa immediately went to court to try to seize the developer's assets, but the sides said in September that they had agreed to a major restructuring deal.

A week later, Polonsky hired Mikhail Prokhorov's MFK Bank, which specializes in distressed assets, as a financial consultant.

He has also invited Roman Trotsenko, the main owner of the AEON Corporation, to advise him on debt refinancing, Vedomosti reported last month, citing sources close to the builder's shareholders.

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