A neon-lit “family fun factory” in Hastings might seem an odd place to pop up for a wealthy Tory donor who once paid £160,000 at a party fundraiser to play tennis with David Cameron and Boris Johnson.
But earlier this year Lubov Chernukhin, the prominent donor to the Conservatives, was revealed as the owner of an amusement centre on the south coast full of arcades, mini golf, and interactive games.
She claimed the venture would help rejuvenate the town by bringing more than 45 jobs and lots of visitors to Hastings. The project was given a £150,000 government grant from Johnson’s flagship levelling up fund to help town centres.
Despite this and her £4m investment, the centre abruptly shut its doors last month, less than a year after opening in October 2022.
A spokesperson for Chernukhin said: “The temporary closure is estimated to last two to three months, and we will of course convey any significant updates, as well as provide support to those affected.”
But the closure, apparently on health and safety grounds, has left concession owners in the dark, ticket holders confused, and 31 staff members without a job.
The project is now also mired in disputes and finger-pointing. A building contractor claims he is owed £157,000 and the businessman who came up with the idea has been forced out and is understood to be claiming he is £400,000 out of pocket.
The uncertainty over the future of Owens raises questions over whether supporting the project was the best use of taxpayers’ funds.
The Guardian can also reveal that the taxpayer-backed project was at least part-funded by Chernukhin via a £1.5m loan from a British Virgin Islands (BVI) company, Sunny Gulch Village Ltd. The company was previously owned by her husband, Vladimir Chernukhin, a former deputy finance minister in Putin’s Russia and former chairman of VEB, a Russian bank.
No ordinary owner
Chernukhin, 50, has long made use of offshore structures with her husband. The Pandora papers leak suggested that the couple use a sprawling network of BVI-based shell companies to maintain their lifestyle, including a £30m London townhouse and a £10m country mansion in Oxfordshire. These assets and their staff appear to have been funded in part from offshore wealth, despite the fact that the couple had relocated to the UK by 2004.
Chernukhin’s spokesperson said: “Lubov is a British businesswoman and investor … Her investment into C&O [the company that operates Owens] is derived from her personal funds.”
They added: “Lubov is not a non-dom, and she is entirely within her rights to own companies wherever she wishes.”
For the average new business in Hastings, a BVI company is not the regular method of investment – and Chernukhin was no ordinary owner.
She was first drawn to the project around May 2021. A local Hastings businessman, Graham Owen, was seeking investors for a new venue to follow his previous entertainment venture in Brighton based on Phileas Fogg. The pair identified a shuttered Debenhams building in Hastings as the future site for the centre, to be called Owens.
Work began in December 2021. Concession holders to operate various attractions were lined up. The summer was spent installing the amusements, including a bowling alley and table tennis, and preparing a space for arcade machines. Arcade machines were a particular fascination for Chernukhin. She wanted “the best machines”, making specific demands for Donkey Kong and Space Invaders.
“I feel there is no choice but [to] spend more money on the machines,” she wrote.
By the beginning of September 2022, months of hard work had paid off. Space Invaders, Pac-Man, and Donkey Kong were in place. A soft play area, a pirate-themed restaurant, air hockey tables, mini golf and other attractions were ready. Councillors were lined up for a visit, a month before its planned opening in October.
There was other good news. Separately, another £150,000 was on the way, this time through Hastings council from the towns fund, a levelling up project. A further £250,000 went to the landlords from the fund. One source told the Guardian there was a “desperation to rebuild our tourist offering”, so Owens’ promise of being an all-year attraction, suitable rain or shine, was appealing. Chernukhin had no involvement in the grant application.
She did not appear as a director of the company until February 2023 and the notification that she was a person of significant control only appeared on Companies House in June.
Owens opened its doors in October, with a gala opening in November at which the mayor cut a ribbon. The winner of Big Brother 17 came along. Chernukhin attended, as did a special guest, the Conservative MP Theresa Villiers. And at long last, Chernukhin’s involvement was proudly announced to the media.
She told the Hastings Observer: “This has been an idea long in the making and I am immensely proud to bring to fruition projects that help to revive our high streets, create jobs for local people and grow local economies.”
But through 2023, the relationship with Owen broke down. In February, Owen went on a week’s holiday. Shortly after his return, he was removed as CEO and director. A resignation letter was drafted for him by Chernukhin’s Mayfair-based wealth advisers in her family office. Share options he had in the company ended with his employment.
The primary reason given for his dismissal, less than six months after Owens opened, was the poor financial performance of the centre. He disputes this.
Attempts were made in the early summer to entice more visitors, with discounts for Hastings residents, and there were complaints to local councillors from some residents living next to Owens about the noise issues from the bowling alleys.
About the same time Chernukhin, who is rarely seen in Hastings, attended a glitzy Conservative fundraising dinner in London.
Owen remained in the centre that bore his name, operating with his wife a number of concessions. Matters deteriorated further, and letters from London-based lawyers acting for C&O Entertainment began to appear.
They added further reasons for Owen’s dismissal and made claims regarding fire safety issues with concessions. Owen denies the allegations. Owen says he has invested about £400,000 of his own money in his attractions and is seeking to be able to remove his attractions and less than a year’s payment in lieu.
A building contractor, Chris Dodwell, says Chernukhin and C&O also owe him £157,000 for the outstanding work he did. C&O’s lawyers say these sums are in dispute.
The disputes continued through the summer.
In early September, with no warning, Owens announced its doors would be shut until further notice. C&O initially told concession holders that this was due to a “potential unconfirmed finding of Raac concrete”. They were later told the closure was for health and safety reasons, a refurbishment, and having found asbestos.
Chernukhin’s spokesperson said the new management were working to reopen the centre as soon as possible and that they understood the importance of providing certainty to the remaining staff, concession holders and the community.
They also said that they were deeply sorry for the situation, which they blamed on disputed issues with previous management.
“We are using this time for a full refurbishment and rebrand, and upon reopening, the local Hastings community and beyond will be able to enjoy an entertainment centre that offers exciting new experiences and an entirely new food and beverage offering,” they added.
In the meantime, concession holders remain uncertain about the situation and their investment in their stalls. Employees have been laid off. Parents have had reservations for children’s parties cancelled.
