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Business news, 28.10.2005 14:24

Mitvol Threatens LG’s Moscow Plant

LG Foreign investors building factories in the Moscow region have become the latest target for Oleg Mitvol, a former businessman turned environmental crusader.

Motivated by environmental concerns, Mitvol’s actions threaten the construction of a $100 million factory being built by South Korea’s LG Electronics, as well as the operations of Dutch-Italian confectioner Perfetti Van Melle.

“They seem to think that the laws don’t apply to them. We want to show that in Russia the laws apply to everyone,” Mitvol said by telephone on Wednesday. Mitvol is deputy head of the Federal Service for the Inspection of Natural Resources Use.

Mitvol argues LG started the construction of its plant — which is to manufacture appliances such as televisions and washing machines — before ordering the required ecological study.

“Without a state ecological study, you can’t build. And they don’t have an ecological study,” he said of LG’s plant in the Ruzsky area of the Moscow region.

Perfetti Van Melle, which makes brands such as Mentos and Fruittella, is under fire for allegedly illegally clearing 9 hectares of trees at its site in the Istrina area of the Moscow region.

In LG’s case, Mitvol’s agency first discovered the paperwork discrepancies in an inspection on Sept. 7, he said.

After missing a Sept. 21 deadline to come up with the required documents, Mitvol’s organization then decided to refer the matter to the Interior Ministry, which could stop construction of the factory, due to be completed in spring 2006.

LG does not have the environmental study yet, said Mia Satar, an adviser to the CEO of LG Russia. However, the study is being carried out, he added, with the relevant documents having been sent to the Federal Service for the Inspection of Natural Resources Use in the Moscow region over a month ago.

“The ecological study is underway,” he said, adding that like many factory projects in the Moscow region, construction was going on in parallel to the bureaucratic process.

Generally, a positive state environmental study is required to secure a construction permit, said David Broderson of Moscow real estate firm Noble Gibbons.

But it is possible the company had previously come to an agreement with the Moscow region to allow construction due to the size of the investment, Broderson added.

Meanwhile, Mitvol’s agency asked the Interior Ministry three months ago to initiate criminal proceedings against Perfetti Van Melle, Mitvol said, adding that he was not currently aware of what stage the process was at.

Perfetti Van Melle was unavailable to comment on the case.

Former businessman Mitvol has attracted huge attention since taking up his post at the Natural Resources Ministry in the summer of 2004 by targeting what he sees as ecological violations in high-profile places.

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