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Citizens of Saint Petersburg on hunger strike to claim their rights

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In Saint Petersburg, a week long hunger strike was held by 11 duped investors who lost their apartments due to fraudulent schemes of construction companies and their managers.

This hunger strike has been used by the cheated people to receive a public outcry over the problems more than 600 people encountered by them during construction of 6 residential houses in Saint Petersburg. The total space of housing lost by the people is about 25000 m2 , which is around 36 mln Euros in money terms on the housing market of Saint Petersburg. «We wanted to see the final solution to the problem of small investors in our city», - says Svyatoslav Ivanov, one of the strike organizers and participants.

The FSB agency plunders tenants  

To buy an apartment in Saint Petersburg, the second biggest Russian city, is extremely hard. The average salary being 725 Euros, the price of 1 x 2 m2 of property space is about 2000$. Mortgage can be taken out at 12% annual interest.

For example, in order to purchase a one room apartment with the space of 40 m2 , it is necessary to spend 80000 Euros. Even if you have 20 000 Euros of your own funds, the monthly payment to pay back the mortgage to the amount of 60 000 Euros, borrowed for the period of 15 years, runs into 400 Euros. And to save money, citizens get involved in schemes financing construction, which enables them to spare up to 20% of the apartment price.

The process looks like this: a construction company buys at an auction staged by the City Government the right to renting land, accumulates money from people and then begins to build a house. It is very often the case that construction companies disappear taking the investors’ money with them. The number of victims, investors, who have suffered from this type of scam, is about 1500 people. Through such share investment construction schemes, Saint Petersburg sees more than 1000 000 m2  housing built every year, so this market involves not only staunch swindlers. However, to distinguish a reliable construction project from a fraud is very complicated.

Cases have been reported when such fraud on the construction market involved state agencies and officials. For example, in the town of Pushkin, which is part of big Saint Petersburg, the area located at the address of Architect Danini street, block 9 building 1 was rented by the FSB agency, which is the successor of the ‘’famous’’ KGB, and specifically by the FSB Office for Saint Petersburg and Leningrad region. This office opted for a construction company to build the designated housing space. This company accumulated funds of 500 small investors and then cheated them. There have been other projects that involved government bodies and agencies. Unfortunately, the state court system has failed to resolve the problems of the cheated people. Courts, as a rule, mete out verdicts not favorable for the cheated investors. The state is not willing to undertake responsibility for those cheated, either, although these are the local authorities that are responsible for all the lawlessness that is perpetrated by swindlers on the market. It is the state agencies that issue permits authorizing construction and rent out land plots to construction companies. All appeals to the federal Government and their agencies does not help, either – all the complaints are returned to Saint Petersburg for consideration of the local city agencies, which do not resolve the problem.

Hospital as final destination.

The hunger strike of the investors ended on Friday, November, 25. It was only after the strike participants were taken to hospital due to heart attacks when they saw representatives of the local state authorities emerge – Deputy Chairperson of the City Government Construction Committee and a city hall deputy. After lengthy negotiations, the city civil servants promised to resolve the problems of 11 strike participants. At the same time, they announced that they were not able to resolve the problems of all the 1500 people who had fallen victims to the fraudulent construction companies. The investors suspended their strike hunger. The city authorities promised also to get representatives of the investors to become part of a public council to be set up by Saint Petersburg’ Government for discussing the problems on the local construction market. «We hope that they will deliver on their promises and our problems will be taken into consideration. Otherwise, we will once again have to stage another hunger strike», - Svyatoslav Ivanov was quoted as saying at the end the strike.

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