Prosecutor General’s office to check validity of Kronospan’s chipboard mill construction in Bashkiria

The General Prosecutor’s office and the Ministry of Internal Affairs of Russia will check the validity of the chipboard mill construction in Bashkiria being implemented by Austrian company Kronospan.

For several months in a row, local activists protest against construction of the mill near Ufa, as they suppose it has environmental hazards.

During the audit it was learnt that the decision to include the project into the priority list and provide maximum tax concessions on property and income taxes was made in violation of the regional investment legislation.

The decision was taken on the basis of data prepared by the investor himself and was not assessed in terms of budgetary efficiency. The company started to build the mill without environmental and construction permits, as said in the message from inspection bodies.

The auditors were also doubtful about tax exemptions: according to the law, tax incentives are available for investments into new technological equipment, while Kronospan delivered equipment dismantled from the plant in Liverpool which served for not less than 10 years. Mill’s chief lawyer Aleksey Orlov in response said that the equipment specified in the auditors’ conclusion presents “only 10% of the equipment that will be imported, and the rest will be new.”

Based on the results of the check, auditors have recommended the president of Bashkiria Rustem Hamitov to carry out environmental examination and assessment of budgetary efficiency of the investment project.