Polonsky’s Cambodian Islands Up for Grabs?

Tuesday, 19 May 2015; News by Khmer Times/Jack Laurenson and Igor Kossov

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Sergei Polonsky’s lawyer Sergei Vladi (L) and Polonsky’s wife Olga Deripaska (C) talk with reporters Sunday night at Moscow’s Domodedovo  airport. Deripaska had accompanied her husband on his nine-hour deportation flight from Ho Chi Minh to Moscow.  Photo: Xinhua

SIHANOUKVILLE (Khmer Times) –Cambodian military police are guarding the island empire left behind by Russia’s deported tycoon Sergei Polonsky. The government is deliberating the fate of his properties – and of his associates here.

Of Mr. Polonsky’s eight islands, business appears to proceed normally at Koh De Kol. Royal Cambodian Navy gunboats have been spotted around Damlong Island, the distant island where he and five Russian-speaking friends were arrest on Friday.

Here on the coast, police and Mr. Polonsky’s security staff are guarding the long single-lane bridge to Koh Puos, or “Snake Island.” Security is not airtight. Curious photographers have made their way onto the bridge.

Island Left Empty

On Saturday, 21 people, a mix of Cambodian and foreign employees of the tycoon, were arrested on Damlong Island. They were taken to Sihanoukville for questioning, essentially completing the evacuation of the island. 

Meanwhile, managers of hotels and restaurants here are breathing sighs of relief after the deportation was carried out Sunday without violence. Gangland style infighting among rival Russian business groups have given this city a bad image, tourism representatives say.

“There has been a lot of talk about Russian mafia disputes here in Sihanoukville, which has tarnished the city’s image,” said Douglas McColl of the Sihanoukville Tourism Association. “Whether the deportation of Mr. Polonsky helps in reality I don’t know, but I believe it will improve the general perception of the authorities willingness to take action.”

Properties Left Behind

Mr. Polonsky had promised to invest $1 billion to develop island-based eco tourism here. The businessman boasted of having leased eight islands, including Koh Damlong.  

According to Chris Devonshire-Ellis, founding partner of the law firm Dezan Shira & Associates, Cambodian islands in the Gulf of Siam belong to the state. 

Mr. Devonshire-Ellis said that it is likely that Mr. Polonsky entered into fixed-term lease agreements, rather than outright purchases. 

“Such agreements generally have default clauses which would nullify the agreement, should Mr. Polonsky be found to be in breach,” he explained. “Typically, under such circumstances, the land would revert to the landlord, in this case, the Cambodian government.”

“It may also be due damages from Mr. Polonsky in terms of any unpaid terms, or re-development losses,” he added. 

Physical improvements on the island – basically buildings – may belong to Mr. Polonsky’s friends or his common law wife, Olga Deripasko. According to her Facebook page, the businessman gave her at least one small island.

If Mr. Polonsky participated in joint ventures, equity belonging to a defaulting partner can be seized or sold on, after an audit to determine residual value. 

Associates Detained Here

Along with Mr. Polonsky, five other Russian nationals were arrested Friday.

Major General Ouk Heiseila, chief investigator at the Ministry of Interior’s Immigration Department, commented about the five people now in Phnom Penh.

“Those Russian nationals have a passport with visas to stay in Cambodia,” he said in an interview. “Even though they have a passport, we have charged the Russian nationals with ‘affecting Cambodian national security.’”

“After our immigration police investigated and researched their personal Facebook pages and laptops, we found that currently, those Russians have posted illegal weapons and other illegal instruments on the internet,” Mr. Heiseila added. 

All are staying at the immigration department in Phnom Penh for further pending processing. Other government officials have said they will be deported from Cambodia.

Moscow Charges

In Moscow,  Mr. Polonsky is currently in a cell at the city’s notorious Matrosskaya Tishina jail. Since opening in 1945, there have been only four escapes.

On Monday, Russian authorities charged Mr. Polonsky with fraud for allegedly embezzling 5.6 billion rubles from 80 people in connection with two real estate developments in Moscow: Kutuzovskaya Mile and Rublyovskaya Riviera. At current rates, that is $174 million.

“Today, the investigative division of the Ministry of Internal Affairs of Russia charged Mr. Polonsky with large-scale fraud,” said Ministry of Internal Affairs representative Yelena Alekseyeva. “Immediately afterwards, in accordance with the law, he was questioned as a defendant.”

Polonsky’s People Cry Foul

The businessman’s allies, including Ms. Deripasko, lawyers Slavic Brsoyan and Sergei Vladi, as well as London-based PR firm Powerscourt Group blasted the arrest and deportation as a violation of international law. 

“Undoubtedly, all actions in Cambodia were conducted against both Cambodian and international law,” said Mr. Brsoyan. “As it is known, the Supreme Court of Cambodia ruled that Sergei Polonsky cannot be extradited to Russia.”

On Sunday evening, on arriving at Moscow’s Domodedevo International Airport on the same flight from Vietnam as her husband. Ms. Deripasko denounced the visa pretext for his deportation as “nonsense.” 

At a curbside press conference, she told Russian reporters that she and Mr. Polonsky have Cambodian visas valid through November. 

In Cambodia, the businessman’s lawyer, Benson Samay, said the same thing. The immigration department says Mr. Polonsky had a copy of his extended visa, but lacked his passport or other documents. Apparently, he was not given  the opportunity to look for them.

“It was absolutely beyond limits,” Ms. Deripasko told Life News, a Russian internet site that specializes in juicy crime news.

“A boat with men with assault rifles approached – there were two such boats – they didn’t show any documents and when asked why they were doing this, they responded ‘because we have weapons,’” she said. “It was simply an abduction.”

In London, Powerscourt Group, a public relations group retained by Mr. Polonsky, blasted his arrest as “false and politically motivated.” 

It charged the long-running campaign to apprehend him was masterminded by Lt. Col. Oleg F. Silchenko, the lead police investigator of Sergei Magnitsky, a Russian lawyer. In 2009, Magnitsky died in custody in a different Moscow prison, Butyrka. 

The firm speculated that Russian authorities wanted to apprehend Mr. Polonsky because Interpol was considering removing his name from its Red Notice alert system.  

Recently,  Moscow Arbitration Court cleared the businessman of wrongdoing in the Kutuzovskaya Mile residential development. 

Alexander Dobrovinsky, a former lawyer for the flamboyant tycoon, speculated on Facebook that Cambodian authorities simply got sick of the Russian businessman’s constant troubles with the law.

Sergei Polonsky’s yacht, pictured here, is believed to have been seized by Cambodia’s Royal Armed Forces. Photo: Facebook