Monday 1 June 2009

Goodbye Cote d’Azur, hello Yeruda

It must seem a world away from a luxurious villa in the south of France. Russia's richest man, Mikhail Prokhorov, is moving to a remote Krasnoyarsk village - well, for philanthropic tax purposes, anyway.
From being linked to the world's most expensive villa, to a tiny village in the depths of Siberia - Russia's richest man has become the 89th resident of the little-known settlement of Yeruda.
But far from being a wily tax dodge or a first step to political stardom, Mikhail Prokhorov's relocation to Central Siberia is being painted as a philanthropic gesture.
The mining tycoon accrued much of his according-to-Forbes $9.5 billion fortune from the region's nickel and gold reserves.
And the tiny hamlet of Yeruda, which produces 80 per cent of the region's gold, will now reap a tax windfall as Prokhorov's 1.6 billion rouble tax returns are paid into the coffers of the Krasnoyarsk region.
The decision has some echoes of fellow billionaire Roman Abramovich, who registered his business interests in remote Chukotka when he was governor of the Far Eastern province.
But unlike Abramovich, who played an active political role on the region's behalf, Prokhorov's people say there is no plan to get involved with the regional authorities.
"Mikhail has always said that he is interested in business, not in politics," said a spokesman for his Onexim holding company, who declined to be identified.
The spokesman insisted that there was no change in Prokhorov's or Onexim's tax liabilities if he registered as a resident of Yeruda, Moscow or anywhere else in Russia.
But the decision to move his registration is seen as a further gesture of support for workers at the main mine owned by Polyus Gold, one of Prokhorov's biggest earners.
"Moreover, for a period of five years Mikhail Prokhorov has been financing a charity fund which operates there," the spokesman said.
It's unlikely that the 43-year-old, often dubbed Russia's most eligible bachelor, will be taking up permanent residence in the village, which is a tortuous 13-hour, 700 kilometer road journey from the regional capital Krasnoyarsk.
In practical terms his spokesman says the move is a simple question of paperwork, and there is no requirement to give up his current home in Moscow, a further 4,400 kilometres from Krasnoyarsk.
But Donat Podnyek, a senior manager in the tax division of KPMG in Moscow, warned that "technically" any individual should be living in their place of registered residence "permanently or primarily".
However the billionaire has bought a flat in Yeruda and has already stayed there while visiting the Polyus site, according to Onexim.
Prokhorov's reputation as a bon viveur has travelled from Moscow to exclusive alpine ski resorts - but the Krasnoyarsk region may struggle to compete with these attractions.
The major attractions of the region are outdoors - hunting and fishing are popular in the vast Siberian wilderness. But skiing is less of a glitzy leisure pursuit and more an essential mode of transport during the long, cold winters.
Heading for the Siberian wilderness is a far cry from the tycoon's last headline-grabbing property deal.
Prokhorov was reportedly behind a 500 million-euro bid for Villa Leopolda, the famous mansion built for Belgium's King Leopold II on the Cote d'Azur, between Nice and Monaco, last summer.
Prokhorov denied bidding for the villa. Had the deal gone through it would have been the most expensive house purchase ever.
However, the economic slump made a record-breakingly expensive villa look like a duff deal and reports in February said the plan had been sunk after he failed to negotiate a better price.
Flats in the town of Lesosibirsk, 200 kilometres from Yeruda, start at around 2.5 million roubles ($64,000) - similar to the costs of a cheap apartment on the edge of the Moscow region - meaning his new home will be a much cheaper investment.

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