RGI denies top execs are using company as 'personal bank'

RGI International has denied accusations that its CEO and chairman are using the company as a 'personal bank'. The AIM-listed Russian real estate company was responding to board member Petr Shura who has called on fellow shareholders to support an overhaul of the board.

Shura is a major investor in RGI through his company Synergy Classic. In a letter sent in recent days to shareholders, Shura made a string of allegations, including bribery and nepotism, against named directors of RGI International, and CEO Boris Kuzinez and chairman Jacob Kriesler in particular.

Shura took a 22.25% stake in the company in May after subscribing to a $90 mln (EUR 67 mln) placing. He now claims part of his funding was used to pay 'deferred salaries' to Kuzinez and Kriesler, instead of helping fund the company's development pipeline and finance new acquisitions, as previously agreed. 'The payment was made despite an agreement that such sums would not be paid until RGI was profitable,' he wrote in his letter. According to Shura, Kuzinez justified himself by saying he needed the money 'in return for bribes which he had had to give'.

Kuzinez and Kriesler have a combined 40% stake in RGI International, which has been listed on London's AIM market since 2006. The company develops high-end residential and retail schemes in Moscow and the surrounding area.

According to Shura, RGI is also incurring 'significant costs' by operating an office in Israel, where the Kuzinez family live, despite having no development projects in the area. Allegedly, management also wants to pay Kuzinez's wife $500,000 for running RGI's main development project, although she has 'no previous management experience in this highly-specialised field'.

In the stock exchange announcement, Shura called for an emergency general meeting to vote on the removal of three directors and the appointment of new independent ones. 'RGI is not being run in a manner anywhere near approaching acceptable standards for a company quoted on the Aim market of the London Stock Exchange', he said.

RGI hit back in a statement on Wednesday. 'RGI strongly denies all the allegations made by Synergy and Mr Shura against RGI and its directors in the statement issued on 13 December 2010. In particular, Synergy's statement makes a number of serious allegations against the CEO Boris Kuzinez. All such allegations are misleading and unfounded. However, as a public company, RGI takes all such allegations extremely seriously. The company's external legal counsel is currently conducting a full independent investigation of these allegations in accordance with best corporate practice.'

The statement went on to say that Shura's 'clear intention' was to apply pressure on RGI and further the interests of his own investment vehicle, Synergy.