Life and Morals of the P. Era. Part 3

In 2021, Elforma Studio , which was then called Elitvolgostroy × received an unusual order from the construction firm Velesstroy to design interiors for an ‘object of extreme importance’. The studio’s employees had already completed many assignments for Velesstroy – this is confirmed by the company’s financial statements, which Proekt managed to obtain. These documents indicate that Elforma regularly received payments from Velesstroy × , and they knew from the words of their superiors as well as from media reports that this company was close to the Russian authorities. 

Yet the new order was more important than the previous ones. One of Elforma’s employees recalls that shortly before receiving the assignment, he watched Alexei Navalny’s film ‘Putin’s Palace. History of World’s Largest Bribe.’ You can imagine his surprise when he suddenly discovered that the blueprints of the facility resembled the luxurious palace from that sensational investigation. 

The only thing that confused the employee was that the working documentation referred to the facility as an ‘apart-hotel’. The rest of the content of these documents clearly contradicted that designation – the building was supposed to be equipped with the luxury of an actual palace. The data obtained by Proekt and ACF confirms that the ‘apart-hotel’ really is a palace built for Vladimir Putin. 

Brief history of the world’s largest bribe

The facility on Cape Idokopas near Gelendzhik was originally called a ‘boarding house’ – at least that is how it was dubbed in the investment agreement that the Presidential Administrative Directorate signed in 2005 with the investor, the Lirus company run by Nikolai Shamalov (who was also a friend and later even a relative of Putin). This deception was quickly uncovered – in late 2010, Shamalov’s business partner Sergei Kolesnikov published an open letter addressed to then-President Dmitry Medvedev, in which he directly stated that the palace was being built for Putin, and cited important documents to confirm his words. It turned out that since 2000, businessmen had been asked to chip in to a fund that was supposed to promote the development of medicine, but in reality was syphoning the money to offshore accounts. In 2006, this money was used to build a palace in Gelendzhik Putin’s spokesman Dmitry Peskov officially stated at the time that his boss ‘had nothing to do with this building and has nothing to do with it’. The Prosecutor General’s Office found no grounds for an anti-corruption investigation. Head of the Presidential Administrative Directorate Vladimir Kozhin also denied any connection to the palace, saying that it had ‘nothing to do with either the Administrative Directorate or the head of the government’. However, Novaya Gazeta was immediately able to find documents confirming that it was Kozhin’s department that approved the palace project, and that the documents bear his name and signature × .

The first photos of this object appeared on the Internet in 2011. Later, eco-activists and a Sobesednik journalist broke into the palace, but were detained by officers of the Federal Security Service (FSO), which protects Putin, among others. It became increasingly difficult to hide the palace, so they decided to formally transfer it to another owner. In March 2011, businessman Alexander Ponomarenko announced that he had allegedly bought land and buildings near Gelendzhik for $350 million (Navalny’s investigation later revealed that the deal was actually worth only $350,000) and planned to build tourist facilities there. Of course, Ponomarenko was not just some random person: he is a business partner of Putin’s other friends, brothers Arkady and Boris Rotenberg. It soon became clear that the sham deal apparently did not prevent Putin from continuing to visit the palace – at the very least, activists filmed his yacht, Olympia, moored off Cape Idokopas and escorted by patrol ships. The facility was managed by people connected to the FSO and Shamalov . In 2017, Sobesednik noticed another attempt to conceal the real owner of the facility – the management of the palace was transferred from the InvestStroy company owned by Tatyana Kuznetsova, the wife of the ex-head of the FSO’s military unit 1473, to OOO Complex, a company indirectly linked to Shamalov × . 

Interest in Putin’s palace was revived in 2021 thanks to the already mentioned film by Navalny. In addition to a memorable tour, the authors of the investigation proved that the construction of the palace was financed by state companies and Putin’s cronies . We are talking about Transneft and Rosneft, as well as Yuri Kovalchuk and Gennady Timchenko × , and managed by people associated with Putin’s lovers Alina Kabaeva and Svetlana Krivonogikh.

In response, the authorities decided to pull another ‘boarding house’ stunt. Russian propaganda showed footage from inside the palace, where the walls were completely bare and construction workers were walking around. Arkady Rotenberg said that he now owns the building and plans to open an apart-hotel here, and that’s what the builders are for. He even indicated the deadline for the completion of the facility – in 1.5 to 2 years, that is, by early 2023, the businessman promised to invite a journalist of the pro-Kremlin media outlet Mash to inspect the finished hotel. However, nothing of the sort happened in the time specified by Rotenberg – at least no media, including Mash, reported about the opening of the hotel on the site of the palace, and it did not appear on any booking services. No one knew what was going on in the palace all this time. Until today. 

FSB-supervised construction

The reconstruction was carried out in utmost secrecy , an employee of one of the firms involved in it recalls × . Workers were taken to work in chartered buses, but were often not allowed onto the site straight away. They would arrive at the checkpoint and have to wait for several hours without food and water. The men would then conclude that someone important had arrived. Inside they were forbidden to use phones and intimidated by claims that FSB officers were watching over their work. No one explicitly mentioned Putin’s name. ‘Just like Voldemort . The name of the main villain in the Harry Potter books was not allowed to be spoken aloud × ,’ sneers Proekt’s interlocutor. – There were mentions that it is an object for the first person of our country’. The contractors called the palace ‘Project South’ among themselves. – the same name that was given to this place many years ago, when construction had just begun , as Kolesnikov told × . The business correspondence of Velesstroy, which Proekt gained access to, features a more complicated wording – “South of Russia Project Group”. 

The workers gradually came to realise how complex the project was. During construction in the late 2000s, the designers did not take into account that the heavy plaster mouldings would put a serious load on the ceilings, but most importantly, they did not think about waterproofing. “In rainy weather everything in the theatre hall would simply flood, there was mould there,” Proekt’s interlocutor heard from colleagues. Another source acquainted with the palace managers also mentioned poor waterproofing in the palace – according to his version, many rooms, including the bedroom, would get flooded. However, Proekt’s interlocutor in one of Velesstroy’s contractors does not rule out that the previous interior design was simply outdated, and this could also have influenced the decision to reconstruct the premises. 

One of the interlocutors describes the essence of the refurbishment as follows: they changed the overall design, the purpose of several rooms, some brick and plasterboard dividing walls, but the engineering systems remained largely the same, so they were not able to eliminate all the problems in the palace. “The ceiling there might actually collapse at some point,” he reckons.

Western companies involved in the construction of the palace

The working documentation at Proekt’s disposal lists in detail the materials used by the builders during the refurbishment of the palace. Among them are quite a few Western brands, and representatives of some of them were in direct contact with the commissioners of the works in Gelendzhik, meaning that they were almost certainly aware of how and what their products were used for.  Here is an overview of these companies:

Knauf, a building materials manufacturer. This German company is constantly mentioned in the work documentation as a supplier of various materials like plasterboard sheets and putty. This company was caught in the middle of a scandal in early April 2024, when the German TV channel ARD broadcast a report that Knauf was involved in the rebuilding of occupied Mariupol on behalf of the Russian Ministry of Defence. At the time, the company claimed that it had no contracts for direct deliveries of its products to consumers in Russia, and that it could not be responsible for the numerous traders supplying their materials into the country. Proekt’s source claims that Knauf representatives visited Putin’s palace many times up until the work was completed.

Tikkurila, a Finnish manufacturer of paint and varnish products. The documentation mentions such products as interior paints, finishing putty, and moisture-insulating primer. 

Wallpaper from the French company Ananbo was used for decorative cladding panels

Bathroom equipment and accessories for the palace came from Jorger, Tese, Emco and Hansgrohe (Germany), Gessi and Vismara Vetro (Italy), Geberit and Laufen (Switzerland), and Omoikiri (Japan).

Accessories such as door handles were supplied by Colombo Design (Italy) and Sherle Wagner International (USA)

For lighting, products of Flos (Italy), Mantra and Aromas del Campo (Spain), Modular (Belgium) and Osram (China) were used, including LED lamps, ceiling and recessed lights.

Baguès and Baccarat (France), Vaughan (UK), Arizz, Estro&Luminara (Italy) and Il Paralume Marinai (Italy) supplied numerous luxury chandeliers, sconces and table lamps.

Italian exclusive furniture suppliers Zanaboni, Scappini & C, Salda, Provasi, Roberto Giovannini, OAK, Mobili Di Castello, Angelo Cappellini, Andrea Fanfani and Medea provided the palace with numerous dressers, cupboards, tables, sofas, armchairs, sideboards, display cabinets, mirrors and other products.

The gym equipment was almost entirely purchased from Panatta (Italy), but there is also separate equipment from the Hoist (USA) and Les Mills (New Zealand).

Carpets were made by Édition Bougainville (France) and Ragolle (Belgium). 

By the time this article was published, only Gebberit had responded to Proekt’s enquiry, stating that it had ‘drastically reduced its activities in Russia since the beginning of the war’, leaving only a small service firm that does not engage in sales, but the company itself has no way of preventing its products from being supplied through other channels from third countries.

In February-March 2023, i.e. approximately by the date specified by Rotenberg, the palace was completed. Two contractors who carried out work at the palace told Proekt that this is when all the contractors left. One of them specifies that hypothetically some finishing work could still be carried out after that date.

Financial records of the owner of the palace, OOO Complex . AO Binom, which owns this firm, does not disclose its owners, but it is known that it is run by Rotenberg’s former manager × indirectly confirm that the palace was commissioned in the first quarter of last year. By early 2023, this structure gradually stopped transferring large sums to companies related to the construction industry. For example, the technical customer for the construction project, OOO Athena, which is linked to another friend of Putin’s, Yuri Kovalchuk, received more than 3 billion rubles in September 2021 . This St. Petersburg-based company is engaged in engineering design, construction project management, construction control and supervision. Its owner is a businessman named Alexander Krivopusk. Until mid-2023, he also owned the Virazh company, which is controlled through a chain of legal entities by a non-profit partnership established by the Kovalchuk family × . In 2022, this company received another 500 million rubles, and in 2023 payments to the accounts of this technical customer virtually ceased , dropping to a symbolic 12 million rubles × . 

The general contractor Velesstroy received its last payment in September 2022. Transneft-Terminal was last paid for consulting services for the construction of the “main building” of the palace, provided in December 2022 – the firm received the payment in March 2023, but its details stated “for December 2022”. In total, Transneft-Terminal has received more than 20 payments totalling more than 60 million rubles for work related to the main building. It is now being paid for consulting on the construction of other facilities × . Moreover, financial records of Complex available to Proekt indicate that in the spring of 2023, i.e. the same time when the contractors left the palace, this firm ceased all operations for three months, even though it had been previously paying an average of 800 million rubles a month to its numerous contractors. However, we cannot rule out that this is the result of a technical failure in the system where Complex’s reports are stored.

How Velesstroy is connected to Putin

The media had previously reported that Velesstroy was linked to the palace as the tenant of some premises, but it was not previously known that it was the general contractor of the construction. In the working documentation at Proekt’s disposal, the name of this company appears on the first page, which usually indicates the general contractor or general designer (Proekt’s source claims that the company was the general contractor), and the financial records of Complex indicate that since 2019 it has received over 400 million rubles for construction and installation work. 

The ultimate owner of Velesstroy has not been showing up in the Unified State Register of Legal Entities (USRLE) since October 2023, as it has been classified by the state. However, back in 2022 85% of it was owned by Croatian-born Kresimir Filipovic. The media previously claimed that this man is called ‘Putin’s wallet’ in the Balkans, and the OCCRP suspected Velesstroy of syphoning millions of dollars received from state-owned Transneft abroad and laundering it. In 2019, Sobesednik claimed that Filipovich is the common-law husband of Moscow Vice Mayor Anastasia Rakova and attends meetings with many high-ranking officials.  In 2017, Putin presented him with a certificate of honour in gratitude for his work.

Thus, Proekt can affirm that the refurbishing of the palace has been completed over a year ago. Has the place really been transformed into an apart-hotel with all its proper attributes?  

From strip club to chapel

Shortly before the works were completed, one of the builders was walking around the almost finished palace. Despite the strict ban, the man had taken his phone inside and was now carefully trying to hide it. The man first filmed the first floor, where 11 bedrooms are located, and then went down to the ground floor, where there used to be pole rooms, a casino, a gaming area and an aquadiscotheque. He did this for a reason – the footage was soon received by the Anti-Corruption Foundation. After that, another person involved in the construction sent Proekt floor plans of the basement and two main floors, as well as working documentation with the names of many pieces of furniture and materials used.

Combining all the data received, we counted at least seven pieces of evidence that the palace is not actually a hotel. Three of them clearly hint that the facility is intended for Vladimir Putin personally. And that’s on top of the fact that, as we explained above, the palace was built by a “court company” in the utmost secrecy.  

1. Lack of a reception area

The palace has no reception area or space for a hostess to welcome the guests. At least, they are not marked on the ground floor plan, which is drawn in great detail.

2. Tampered documentation

Many of the rooms on the floor plans have false names, apparently for conspiracy purposes. For example, the room on the ground floor labelled “Apartment No. 12” is actually a security room. This is evidenced by a desk with many surveillance monitors and telephones. Security is a high priority in this building – next to the observation room, there is a room with a meeting or lunch table for eight people and a lounge for two people. A cooler, refrigerator and microwave oven are also provided for the residents of this “apartment”.

3. Shared dining

For the rest of the inhabitants of the building there is a room labelled “Restaurant”. However, it is furnished quite unusually for a hotel – visitors are forced to sit family-style at a single table for 16 people. There are no tables for smaller groups to be seen on the plans.

4. Cost

The ‘hotel’ is furnished so expensively that it can hardly ever break even. This is well illustrated by the room now labelled as “Lobby No. 1” and formerly called the reading room. Before the refurbishment, it was decorated with numerous gold medallions with double-headed eagles and frescoes. There are no state symbols here anymore, but in this room alone, one of the many rooms of the palace, we have found items with a total value of at least 150 million rubles, according to our lowest estimates.

Even making one step on the floor of this room should be scary for a commoner – the two handmade French carpets cost at least 10 million roubles Edition Bougainville Patrimoine Collection, Desmirail Custom with a non-standard size of 640 x 460 costs about 5-9 million rubles, and the second one, Edition Bougainville Patrimoine Collection, Fontainebleau Custom Oval Shape with a non-standard size of 350 x 490 is another 5 million rubles × .

But the most striking thing in here are the two crystal chandeliers Zenith Red 84L from the elite French manufacturer Baccarat. In total, they are worth about 100 million rubles.

The same “Lobby No. 1” is where we unexpectedly discovered one of the proofs that the building was meant for Putin. This room, along with several others, shows how much the true owner of the palace has changed recently. 

5. War-related art

When Putin walks up the stairs of the Grand Kremlin Palace on 7 May, the day of his inauguration, there will be many pictures on the walls, but the first one he will see is a large painting by Sergei Prisekin titled “Whoever Comes to Us with a Sword Shall Perish by the Sword” and depicting Prince Alexander Nevsky.

We found a fragment of the same work in the refurbished palace in Gelendzhik.

The former reading room is now filled with paintings – all of them strikingly different from the frescoes of the parks and gardens that were there before the refurbishment. Prisekin’s painting takes centre stage among them. The saying that gives it its title: “Whoever Comes to Us with a Sword Shall Perish by the Sword” is borrowed from the film “Alexander Nevsky”. Putin also likes this saying. In March 2020, he ended one of his interviews with these words. Prisekin himself was not a random pick either – he has painted portraits of many modern military and officials, and once portrayed Putin in a white kimono.

Other paintings in the “Lobby No. 1” are also dedicated to battles in which many Russian and enemy soldiers died, but which are generally considered victorious for Russia.

6. One of the rooms of the palace literally has Putin’s name written in it

Many viewers of Navalny’s video about the palace found the entertainment areas particularly remarkable: they featured a strip pole, a casino, and a room with toy cars and a miniature railway. None of these things are present in the “hotel” anymore, and here is how these rooms have changed:

But the former toy room has been transformed the most. It is now a genuine house church with a triptych iconostasis and a wooden throne. It would suit a bishop like Tikhon Shevkunov, or even Patriach Kirill himself, quite well.

The house church is probably the only room where the name of the real owner of the palace is written in plain text. It can be seen on the triptych. On the left, as it should be, is Mary, and in the middle – Jesus Christ. On the right, the Orthodox traditionally depict either John the Baptist or Saint Nicholas. Hence, it is quite unexpected to see the figure of Saint Prince Vladimir there.

Two art historians and one iconographer – we only provided them with a photograph of the triptych, without telling them where exactly it is located × confirmed to us that this is a completely unique combination, and that the icon of Saint Prince Vladimir is a nominal one, referring to its owner. Archpriest Andrei Kordochkin also suggests that the triptych was made to order and depicts the heavenly patron saint of the customer. That is, if the owner of the icon was called Andrew, then Andrew the Apostle would be depicted, and if his name is Vladimir, then it’s Saint Prince Vladimir. Having examined the triptych from the palace, Kordochkin also suggested that the customer was not married – otherwise a family icon depicting both spouses’ patrons would have been used

By the way, back in the Rus times there was a tradition to create patronal icons for the rulers, which eventually began to be placed in the Cathedral of the Annunciation in the Moscow Kremlin. Putin traditionally visits this place after his inauguration. 

7. The phones

Apparently, special communication equipment has been installed in the Gelendzhik palace. At least, a room called “Communications” has been set up on the basement floor. Two businessmen who used to own large hotels in Russia told Proekt that they could not fathom why an 11-room hotel could need a separate communications room. One of them (we did not tell our interlocutors which facility we were actually talking about) recalled that in the old days such rooms could be used for tapping the guests, but clarified that modern equipment allows to do so without a separate room. A consultant from a company selling PABXs for hotels, whom a Proekt journalist contacted under the guise of a customer, suggested installing a telecommunications cabinet measuring 19 inches (a little more than half a metre).  

Large-sized equipment is needed to organise government special communications. Here is what a former employee of the Federal Guard Service told the Dossier Centre:

“Many people may have thought at first that special communication means simply setting up a phone. Unfortunately, it’s not that simple: we have encryption equipment, we have channel-forming equipment. In order for the phone to work, we need a lot of additional equipment… And the equipment we have, just so you understand it better, takes up at least half of a Kamaz truck even for a simple business trip. And if the volume of tasks on this business trip is large, then the whole back of the truck gets filled with the equipment needed for the work.”

Judging by the floor plans, several rooms of the palace have special phones. For example, there are several in the office, which is located on the ground floor and is clearly not intended for the manager of the “hotel”.

The ceiling in this room is decorated with black-red-gold ornaments. The furniture is not excessive, but it is hardly intended for the service staff, or even the head manager – the smallest coffee table – Roberto Giovannini Intagli d’autore 1252 × costs a quarter of a million rubles. 

The huge T-shaped table is of particular interest. The designers paid special attention to it in the plans, depicting not only a monitor and a keyboard, but also four landline phones at once. Moreover, on the shelf at the bottom they marked a panel with a receiver, resembling a government telephone, which is called ‘balalaika’ in Kremlin slang. This combination of a monitor, several landline phones and a ‘balalaika’ can be found in any of Vladimir Putin’s residences. 

There are no anomalies in most of the palace’s bedrooms – for example, in the largest of them, overlooking the sea, one can find a bear figurine remotely resembling the symbol of United Russia, which stands on a Provasi dresser model 1225 Z × priced at over 2 million roubles. But there are no traces of government special communications here, as in the other “suites”. The exception is a relatively modest room overlooking a radio tower. Here one telephone is located in the bedroom, on the bedside table, and three more are on the table in the living room. Why would a visitor to the palace need four phones at once? One possible option is that a person responsible for the communications of one of the more important residents lives here.

Along with the bedroom and the office with four telephones, another important area is the treatment room on the basement floor. The plans do not mark any equipment with which this room can be fitted. However, a comfortable medical bed could be used for both medical and cosmetological procedures. 

* * *

On 7 May, Putin’s fifth term will begin. However, this man is not the same person he has been in previous years. He used to be interested in secular amusements like striptease, casinos and game rooms, but now he surrounds himself with icons and pictures of death By the time of this story’s publication, representatives of Putin, Rotenberg, Velesstroy, Studio Elforma, and other contractors and suppliers of the palace had not provided Proekt with any comment × . 

Editing — Mikhail Rubin
Fact checking  — Roman Romanovsky