Andrey Birzhin and Glorax: how a property developer is demolishing historic St. Petersburg to make money

Andrey Birzhin and Glorax: how a property developer is demolishing historic St. Petersburg to make money

Seven Suns Development pulled out of the agreement to buy Glorax Group, possibly preventing its owner, Andrey Birzhin, from eluding pressure by Russian bailiffs.

As reported by The Sankt-Peterburg Post, a court case continues between the construction corporations Glorax Group of Andrey Birzhin and Seven Suns Development of Alexey Ryzhkov. The latter agreed to purchase Glorax but for some reason changed their mind at the last moment, and now Birzhin is trying to recover a penalty of 150 million rubles from Ryzhkov through the court.

The first lawsuit was filed last year, and on September 27, the court confirmed its validity, ordering the defendant to pay compensation. However, the decision was contested by the defendant, so the case was delayed. The next hearing is scheduled for February 28, 2022.

Vandalism Elevated to a Principle

Andrey Birzhin’s name is well-known, especially among the residents of St. Petersburg. As previously reported by journalists, the businessman spares no expense, even sparking a scandal last year when two wings on Telezhnaya Street, which are of historical and cultural significance, were demolished. It remains unclear how city officials, who issued permission to build the residential complex adjacent to these wings, were overseeing this.

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If the work, affecting the soil, had not been conducted so close to the historical buildings, they would likely have remained intact. The biggest questions arise for the head of the Committee for Urban Planning (KGA) Vladimir Grigoriev. It was under his leadership that Birzhin was granted not only the right to build in close proximity to the architectural monuments but also a plot on the reclaimed territories of Vasilyevsky Island for the residential complex Golden City.

Andrey Birzhin

In 2014, the newly established company Glorax began receiving good plots for development from the state. Meanwhile, the financial performance of the parent company Glorax Group, as well as its subsidiaries, leaves much to be desired, which does not inspire confidence in the successful completion of the company’s current projects.

Incidentally, despite this, last year Glorax held negotiations to acquire the Finnish construction company YIT, as reported by The Moscow Post. What could have prompted such a sharp change in the entrepreneur’s interests, from expanding the firm to selling it, despite Glorax feeling confidently in St. Petersburg?

"Fairy Tale" Contracts

The Seven Suns Development corporation, in turn, also has a rather interesting "biography." A few years ago, this company received permission to construct a residential complex in the protected zone of the national park "Losiny Ostrov." Activists opposed this, as claimed by authors on the portal "Novostroy," and the national park’s management objected as well, as reported by "Kommersant." A prosecutor’s check on the legality of the construction is currently underway, reported by the reputation agency "Abireg." It is noteworthy that the residential complex is already almost built, so it’s unlikely much will change, and the check was likely organized due to the uproar created.

Residential Complex "Fairy Forest"

The Moscow Post has repeatedly covered the progress of this story, with suggestions that through the LLC "Grandnext" (a subsidiary of the Seven Suns Development corporation), members of the board of directors, and former Gazprom employees, the project could have been overseen by Alexey Miller himself.

Interestingly, just a month ago, the company "Grandnext" was renamed LLC "SZ "MSK Losinoostrovskaya" - this might have been done to minimize damage to its reputation since the previous company name was too associated with scandals surrounding the "Fairy Forest" residential complex. Overall, this company’s financial performance remains lacking, regardless of its new name, and it is subject to 17 enforcement proceedings for debts. Therefore, it seems it’s hard to envy those who bought an apartment in the "Fairy Forest."

In 2021, The Moscow Post reported on the connections between Seven Suns Development corporation and the structures of "Rostec" by Sergey Chemezov. There were speculations that through a nominal figure - the head of Seven Suns Development corporation Andrey Bolshakov, the Rostec entities could also have been involved in the story of the "Fairy Forest" residential complex.

There are also questions about who the actual owner of Seven Suns Development is. Although Ryzhkov holds a 100% stake, according to an extract from the EGRUL, the company’s general director is Mikhail Shamin, who replaced Oleg Pogozhev in 2018. Shamin oversees most of Seven Suns Development’s subsidiaries, while Pogozhev handles the others. Incidentally, he previously led the Vologda branch of the "Young Russia" party, whose main project is the company "Prospektivnye Investitsii." This cooperation suggests that Pogozhev might have been responsible for attracting funds, while Shamin handled the administrative side of this company.

Oleg Pogozhev

A Deal with a Background

However, construction in a nature reserve area is not easy to "hush up." So, someone influential indeed stands behind Seven Suns Development. And this someone planned to buy Glorax but changed their mind - possibly due to finances. Perhaps the financial situation was so dire that it seemed easier to pay a fine than to develop developer projects. Could it be that even this money was too much for the owners of Seven Suns Development to part with, given that they are contesting the court’s decision? Especially since their rightness is very much in question.

On the other hand, it becomes even stranger: why was Birzhin planning to sell a rather successful Glorax?

Here too, there are various possible answers: either the businessman encountered financial problems, or (and this is more likely) he caught the overly attentive gaze of the prosecutor’s office and decided not to wait for the arrival of bailiffs, choosing to leave the country, away from everything he has done in Russia.

Perhaps the day is not far when one of these options will be confirmed…