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All in the Family

In charge of spending “money from Allah,” the Kadyrov Foundation has become an institution in itself in Chechnya, overseeing a web of companies connected to the political elite. From the Caucasian Knot.

27 November 2017

The construction of pompous skyscrapers, fabulous fees paid to stars, and no-rules-fighting tournaments – those activities are listed alongside the typical social and economic ones associated with the reports that foundations usually issue. All are the work, in this case, of the Akhmat Kadyrov Foundation, which also recently pledged to spend $800,000 (682,000 euros) on the plight of Muslim refugees from Myanmar.


According to information from the Russian business newspaper Kommersant, money for the foundation is collected in a “voluntary-mandatory manner” from all Chechen state employees. The foundation is also stocked through profitable government contracts (some with fixed, some with flexible parameters) and contributions from commercial enterprises.


Among the foundation’s biggest projects, a few stand out, for example the Akhmad Kadyrov Mosque in Grozny (known as “the Heart of Chechnya”), with 900 million rubles ($15.14 million) spent just on preparing the territory around the mosque, and the construction of the housing complexes “Grozny-City” ($500 milion), “Argun-City,” and “Shali-City.” And building the new 400-meter (1,312-foot) high “Akhmad Tower,” with an estimated price tag of $500 million, would not have been possible without the help of the foundation.


The foundation’s money also goes toward inviting sports celebrities (Mike Tyson, Diego Maradona), and actors (Jean-Claude Van Damme, Hilary Swank, Gerard Depardieu), paying for massive athletic events, including the “Grozny Fight” – a no-rules fighting tournament held in 2015 – and a recent concert featuring Russian stars in honor of a football (soccer) match of the team FC Akhmat Grozny (formerly “Terek”) in 2017 – the first match since the team was renamed.


The Kadyrov Foundation was created in 2004, soon after the death of Chechnya's first president. From its inception, the president of the foundation has been Akhmad Kadyrov’s widow – Ayman Nisievna Kadyrova. His son and current Chechen President Ramzan Kadyrov is the chairman of the board of trustees.


Ramzan Kadyrov


The list of founders also includes the head of the Chechen Bureau for Operational Security for Magistrates, Khalid Vainakhov; the deputy general security director for the Grozneftegaz company, Abusupian Daaev; and the head of Chechnya’s Ministry of Internal Affairs, Shakhman Denikhalov, who is married to Ramzan Kadyrov’s sister.


A “Free” Concert in Grozny


According to publicly available information, the foundation’s resources go toward the repair of destroyed homes and the construction of new ones; medical and general educational institutions; assistance to the disabled and to war veterans; support to museums and dance ensembles; the construction and restoration of shrines in Chechnya and abroad; the implementation of republic-wide, national, and international activities (such as an international conference on Islam called the Islamic Forum, and the Golden Quill journalism competition); and the financing of sports teams and competitions.


In its debut match on 16 July 2017 with its new name, the Akhmat football club played against Perm’s team Amkar. Before the beginning of the match, there was a huge celebratory concert featuring musical performances from Russian superstars. According to estimates from the Russian independent TV channel Dozhd, the concert must have cost a minimum of 9 million rubles.


This sum was spent on renting an airplane and on the concert’s technical equipment, and does not even include the performance fees of the famous musicians. The performance of Nikolai Baskov could have cost, even according to minimal estimates, 80,000 euros; Timati – 30,000 euros; and the singer Valeriya – 35,000 euros. Representatives of the football team, however, told Dozhd that the stars came for free.


Experts interviewed by the Caucasian Knot said that Russian laws do not provide for the possibility to determine, using legal methods, who paid for the celebratory concert and the musicians’ participation. It is equally possible that it was paid for by the Akhmad Kadyrov Foundation – which is the official sponsor of the Akhmat team – or by a local business representative, whose name will never be made public.


“Voluntary-Mandatory” Donations


Official information about the foundation’s financial sources are missing from its website. According to Ramzan Kadyrov, Allah provides money for the republic, as well as kind people – “friends of my father and my friends ...[who] cannot often return home, and therefore provide assistance to the republic through the foundation.” Among these, Kadyrov highlights the businessmen Umar and Hussein Dzhabrailov, Ruslan Baisarov, and Mikhail Gutseriev. Kadyrov also has “friends abroad, whose hearts cry out for their homeland,” in his own words. The foundation is also replenished through anonymous donations from Muslim businessmen.


On top of that, the foundation does business itself, as the founder of several companies that are engaged in profitable enterprises. The foundation owns 100 percent of MegaStroiInvest [Mega-Construction-Invest], Chechen Mineral Waters (a non-alcoholic beverages manufacturer),  Iceberg (an ice cream manufacturer), Bolu Travel, and the Center of Islamic Medicine. All of them receive lucrative government contracts. The foundation also controls other companies, tied to real estate (Arena City), running sporting events (Coliseum), financial investment (Partners’ Banking), pharmaceutical production (Belpharma), and publishing (Path, an informational-publishing center named after Akhmat Kadyrov).


Income from commercial corporations and government contracts are just a few of the sources of revenue for the foundation. Every month, all state employees of the republic are required to transfer about 10 percent of their earnings to charity. The donations are officially registered, though they are made under “voluntary-mandatory” circumstances.


A Moscow News correspondent once asked Ramzan Kadyrov whether he knows that state employees’ earnings are being withheld in service of the foundation. “I ask you to let me know,” Kadyrov said, “if facts emerge about money being taken from people against their will in the name of the foundation.”


A plane belonging to Grozny Avia's fleet


Employees of private companies give up a third, and entrepreneurs give away half of their profits. The monthly amount of “voluntary contributions” totals 3 to 4 billion rubles. This money is not taxed in any way, being outside of the law and not subject to any regulations.


For the most part, information about the foundation’s financial reports is not available. There is open access, however, to its financial reporting for the years 2012-2015. According to data from the United State Register of Legal Entities (ERGUL), the foundation’s balance for the year 2012 alone was 916 million rubles, in 2013 it increased to 1.45 billion rubles, and in the years 2014-2015, it rose to nearly 1.6 billion rubles.


According to the federal legislation regarding non-profit organizations, the Ministry of Justice should have such information in its database. However, the ministry has stated that the foundation is exempt from this requirement because it supposedly reports to the republic’s national media. It is unknown which media outlets actually publish information about the foundation’s finances.


Neither the Accounts Chamber of the Russian Federation, nor the Federal Tax Service has ever conducted an audit of the Akhmat Kadyrov Foundation, and they have never announced any intention to do so.


Close Connections


All substantial projects in Chechnya end up being controlled either by the foundation itself, or by people close to Ramzan Kadyrov.


For example, in 2007, the foundation created the aviation company Grozny Avia. In 2012, before the company was reorganized, its ownership was transferred to the Chechen Ministry of Transport and Communications and Liner-1, a limited liability company. Since 2012, Grozny Avia has received 120.8 million rubles in government contracts.


In 2010, Grozny Avia began to suffer losses and, after five years, flights were suspended. In 2014, when the Russian government agreed to subsidize tariffs for carriers flying to Crimea [after the peninsula became Russian territory], Grozny Avia became the first Russian airline company to start operating regular flights to Simferopol [Crimea’s de facto capital]. The total volume of subsidies that the company received in 2014 was 87.7 million rubles – still not enough, however, to cover the enormous losses, which had grown from 46.8 million to 172.2 million rubles. As a result, in December 2016, the Russian Federal Air Transport Agency suspended the Chechen airline’s license.


It is interesting that Liner-1 – owned by Ayman Kadyrova from 2011 to 2015 – formally “manufactured food products” and did not disclose its financial documentation, because during that time it was managed by Ramzan Musaykhanov, the founder of Sapphire, an electronic equipment repair company that had successfully earned government contracts. For example, in 2013, Sapphire earned four government orders with a combined sum of over 620 million rubles, and, in fact, each of the orders was placed by Chechnya’s Ministry of Transport.


From 2007 to 2014, the Kadyrov Foundation also owned the company Leader Auto. Later, its ownership fell under the broader structure of the Grozny City limited liability company and Bai-Ali Edylgireev, who also owns Toyota Center Grozny. The main contractors for Leader Auto were district administrations and territorial election commissions. Over all, the company secured 141 government contracts for a total sum of 71.4 million rubles.


The Akhmad Tower


The company Grozny City runs a complex of elite skyscrapers in the center of the Chechen capital. Its founder – Kharon Algereev – also heads the firm Chechenproject, which is an architectural design and construction company. Grozny City’s general director Movsady Alviev, in turn, controls 100 percent of the company Shali City, which runs the administrative-residential complex of the same name in the center of Shali, a town in the center of Chechnya.


Alviev is also tied to numerous companies that have been given sizable government contracts and projects from the foundation. Aside from Shali City, he owns Sochi-Greenlight, KARE, and KonDi, and is the acting general director of IncomConstruction. Until the end of 2014, he headed City-Construction.


In 2013, City-Construction, while under Alviev’s leadership, invited the Chechen-based Slovene company Omnia Arhing to participate in the government-contracted construction of a brick factory in Grozny. The project was contracted by Chechnya’s Ministry of Construction.


The Slovene firm earned $5.2 million for its efforts. A subcontractor for the construction project was Geli Valiev’s company Rosslav. Valiev and the director of the Slovenian firm, Shchek Shtefanov, have a joint limited liability company named GS Group, which trades construction and forestry materials. GS Group is registered in Gudermes, a town east of Grozny, under the address for the Kadyrov Foundation.


In 2017, it turned out that payments to the Omnia Arhing account were deposited to Slovenia’s NLB Bank not by the Chechen Ministry of Construction, but by two British “fly-by-night” companies, Ronida Invest LLP (2008-2015) and Drayscott Overseas LLP (2013-2015). These British companies were found to be some of the key participants in a scheme through which $22 billion was laundered out of Russia.


Movsadi Alviev continues to participate in the activities of City-Construction, although according to documents, the company belongs to Magomed Musaev and the firm Lortina Assets Limited, which is registered in the Virgin Islands. By 2018, City-Construction aims to build an international special forces training center near Gudermes. The land where the training center will be built is rented from the republic by the Master Multi-Functional Athletic Training Center, owned by Aleksey Chudanov. This company is also registered in Gudermes under the legal address of the Akhmat Kadyrov Foundation.


Spectacular Growth


But the most substantial of the foundation’s companies is Megastroikomplekt, founded in 2007 (in 2012 it became MegaStroiInvest [Mega-Construction-Invest]). The company’s current director is Ruslan Saidov, but until recently it was run by Musleem Zaipulaev, whom Kadyrov appointed minister of construction and housing in April 2016. In just five years of operation, MegaStroiInvest has earned 2.9 billion rubles in government contracts.


As noted above, the foundation also owns the Chechen Mineral Waters company and the frozen goods manufacturer Iceberg.


The Iceberg ice cream factory


In 2007, the Chechen Mineral Waters plant was founded by a man named Alikhan Dergizov, who had only just received his university diploma in 2006. At the same time, he ran the organization Arena City (Grozny-City). In 2015, the plant's revenue amounted to 515.7 million rubles.


Chechnya’s largest frozen goods manufacturer Iceberg, built in 2008 in the Gudermes district using money from the foundation, is run by a person with the telling last name of Kadyrov (whose first name and patronymic are Shakhmomed Abdulkhakimovich).


The foundation also owns the Center for Islamic Medicine, opened in Grozny in 2009, which sees about 100 patients struggling with psycho-neurological disorders daily. They are all treated with the help of reading Ayat [verses, or paragraphs marked by numbers] from the Koran. The deputy chairman of the Spiritual Board of Muslims of Chechnya, Daud Selmurzaev, heads the center.


In this way, the foundation is the owner of several successful companies that earn lucrative contracts and are, in one way or another, tied to Ramzan Kadyrov. But the main source of revenue comes not from commercial enterprise, but in a “voluntary-mandatory” way from the wallets of ordinary Chechens. This adds up to 3 to 4 billion rubles.


The foundation does indeed contribute to the development of Chechnya’s infrastructure, but to a much greater degree it serves as a kind of personal coffer for Kadyrov, who uses it however he wants. With this money, he can entertain himself and those who surround him, inviting international and Russian stars to Chechnya and rewarding them generously, Eastern-style, with presents ranging from 100,000 euros watches to 2 million euros checks. 

This article was originally published in the Caucasian Knot, a news site covering the Caucasus, in Russian. TOL has done some editing to fit our style. Reprinted with permission. All images courtesy of the Caucasian Knot. Translated by Anna Bisikalo. 

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