Aleksey Orlov: Bankruptcy on regional level
There is almost no headline-making news on controversial appointments, dismissals or corruption scandals coming from the Republic. It is unlikely an average Russian citizen knows the name of the Republic Head if asked. But still water runs deep… Kalmykia is in tremendous debt. Meanwhile, Aleksey Orlov, the Republic Head, builds his family empire.
It is getting harder and harder for Russian regions to cope with their budgetary obligations. It seems like districts and republics are going to follow in the footsteps of bankrupt companies and citizens soon; Kalmykia seems to be at the forefront of this unfortunate trend.
Hitting the rock bottom
Regions starve while federal civil servants who think current economic period is dietary lament about “the prosperous noughties”. The Republic seems to be the new starvation leader. Nearly all the residents and Republic itself are in tremendous debt. There seems to be no way out of the unfortunate situation, too.
Kalmykia has been ranking 1st among the regions with the heaviest loan debt burden among its citizens for several years now. The Republic residents spend the average of 51% of their income on credit payments. Enforcement proceedings have been launched against 100 000 local residents, according to data presented by Vladimir Evstigneev, the Head of the Kalmik Directorate of the Federal Bailiff Service of the Russian Federation. Bear in mind, there are 280 000 residents in the Republic. But probably the best testament to how awful the things are over there would be the situation with gas debt; the Republic residents owe 342 million rubles. However, Energoservis Power Company is the biggest Gazprom’s debtor in the Republic. It owes the company 404 million rubles. The total amount due by Republican municipal public companies amounts to 823 million rubles (82% of exported gas).
Aleksey Orlov is the only one who remains optimistic in the time when the region is in tremendous debt. He carries on Kirsan Ilumzhinov’s traditions. The man preferred not to deal with the region’s relevant issues, constructing New Vasyuki instead. Mr Orlov is interested in something else, however. He dreams of building the biggest Russian fattening facility in the region that is not even able to pay for its gas. However, the Republic Head expects the Vnesheconombank Bank to fund the project. He is also concerned about branding of Kalmyk products. It is worth mentioning he is going to accomplish it through the agency of Italian marketing experts. Relevant issues the regions faces are nothing to him. It is no wonder it is, however, since prosperity of Mr Orlov’s big family drastically improved over the 6 years he has been the Republic Head.
Aleksey Orlov, the Republic Head
One Flew over the Eagle’s Nest (The Republic Head’s last name roughly translates as Eagle’s - translator’s note)
Manner in which Mr Orlov’s relatives worked their ways up the corporate ladder are impressive. Let’s start with Tatiana Bakinova, Kalmykia’s First Lady. The spouses spend so much time together that she was appointed the Region Minister for Land and Property Relations soon after Mr Orlov took the office. She held the position up until June 2016. Ms Bakinova is the executive director of the Kalmniigiprozem R&D Company now. The company was the ministry’s favorite contractor while the woman held the office. The company is registered at the same address as many, many other legal entities. RKHK Zemproekt, a Moscow company with 100 000-ruble authorized capital, is its incorporator. It is worth mentioning Kalmniigiprozem’s authorized capital amounts to 3 million rubles. Zemproekt is registered at the same address.
Business of Mr Orlov’s mother is also on the rise. Svetlana Orlova is the owner of the Yug-Minioil-Kalmykia Company. The company won the auction for development of the 4th site of the Arshanievskoe sand field as soon as Mr Orlov assumed the office. The data was carefully erased from the website of the Ministry of Natural Resources and the Environment of the Republic of Kalmykia. However, search engines still store records of the Orlovs victory. Yug-Minioil-Kalmykia was liquidated soon after the auction was held. Svetlana Orlova is a co-owner of the Treiding Company and sole owner of the Kalmoil Company that has 2 affiliate companies as of now.
The Crimerussia did not forget about other family members either. Petr Bakinov, Mr Orlov’s cousin, is the Head of the Republican Service for Financial & Budgetary Oversight. Saglar Bakinova, his wife, is the First Deputy Chair of the People's Khural of the Republic of Kalmykia. Karina Dordzhieva, Mr Orlov’s cousin, was appointed the Deputy Head of the Republican Magistrates' Court Service in November 2011. She worked as an average lawyer in several companies, including Yug-Minioil-Kalmykia, prior to the appointment. Should we even mention countless friends and classmates of Mr Orlov who he helped get jobs? That is what we thought.
A letter from Kalmyk law enforcement officers addressed to Yuri Chayka, the Prosecutor General, has recently popped out on the Internet. The officers ask him to get involved and put an end to Mr Orlov’s corruption network. They included references to not only the abovementioned instances of nepotism, but to currently investigated cases in which the Orlovs are involved.
A case concerned with stealing of 39 million rubles from the Mramornoe Myaso Meat Producing Company is what the officers were talking about. It is worth mentioning that the Republican Ministry for Land and Property Relations is the company’s incorporator. Petr Lantsatov, the First Deputy Chair of the Republican government, and Bator Aduchiev, a former member of the People's Khural of the Republic of Kalmykia and a sitting member of the State Duma of the Russian Federation, were behind the swindling, according to police. Out of the amount, 15 million rubles were transferred to Mr Orlov through a chain of Dagestani companies. The investigation was effectively suspended due to actions of the high-ranking suspects. They plan on declaring P.M. Okonov the perpetrator. Mr Okonov was one of the suspects; he has conveniently died recently.
Petr Lantsanov, Bator Aduchiev
It is a common practice to blackmail large entrepreneurs in the Republic. Mr Orlov receives the bulk of the money raised this way. Kirill Botov, the Republican Minister for Construction Activities, Transportation, and Public Roads, and G. K. Badinov, the Deputy Chair of the Republican Government, are suspects in a case concerned with blackmailing. They allegedly blackmailed entrepreneurs who had won public tenders for 10% of the contracts. S. B. Badmaev, the head of the Upravlenie Kalmeliovodkhoz Company, implemented a similar criminal conspiracy. Mr Badmaev supervises construction of a water pipeline from the Levokumskoe field. All the general contractors working on the projects have to pay him a cut that amounts to 25% of the contract sum. Mr Orlov was directly involved with elaboration of the conspiracy, according to the officers.
Finally, the Orlovs are suspected of stealing from the Housing & Utility Sector. The Republic police detected multi-million misappropriations of money paid for housing & utility services rendered by public companies. M.G. Vadizhev, the head of the Yashaltinsky District, Kalmykia, was the key figure in the misappropriations. He took the office thanks to Mr Orlov, too. It is worth mentioning that the Prosecutor General’s Office of the Russian Federation is yet to comment on the evidences presented.
Who will government inspector come after?
The federal Government has already shown interest in the reason behind the Orlovs’ prosperity and Republic’s impoverishment. Auditors of the Account Chamber of the Russian Federation conducted an inspection in 2012. They detected many violations in allocation of budgetary funds committed by the Kalmykia executive authorities. Some of the violations were concerned with the Yug Rossii Federal Program.
The Program was aimed at development of economy of the Southern beneficiary regions. Apparently, Kalmyk public servants saw it as a pleasant addition to the existing federal subsidies. The Republican government completely changed the Program 5 times between 2008 and 2011. They altered performance criterions, reduced expenses, and blatantly excluded articles they did not like. The Program attracted only 5% of private investment, i. e. only 5 kopecks of private funds for every ruble of federal money. The total of 3.2 billion rubles was spent under the Program in the Republic over the 4 years. It is virtually impossible to find out how the money was spent, considering how much effort the local government put into smearing criteria for assessment of the Program efficiency.
The results of a Kalmyk regional budget inspection turned out to be even more impressive. It is worth mentioning that while Mr Orlov is not the only one to blame for the Project failure (for he assumed the office only in 2010, which makes Kirsan Ilyumzhinov, his predecessor, accountable as well) he is solely responsible for misappropriation of budgetary funds committed in 2012.
For example, the Republican Government submitted the 2012 budget for approval to the Ministry of Finance of the Russian Federation 4 days later that required. It is worth mentioning that it calculated the 2012 expenditures based on the 2011 estimated expenditures before 2011 was out. The budget did not provide for minor repairs and major overhauls, as well as for indexation of public employee wages, as a result. It is no wonder the local population has such a tremendous loan debt burden with such a social policy.
The local budget received 1.6 times more money than last year despite the Republic being in tremendous debt. One can form their own opinion on ways in which the money was spent by taking a look at whooping 16 reports on unauthorized budgetary expenditures executed in 2012. It only got worse over the 4 years. For example, the Kalmyk Government received 581.8 million ruble federal subsidy for development of school and pre-school education in 2014. The money was meant for construction of kindergartens for 190 children. The Government successfully spent all the money. Unfortunately, kindergartens are yet to be built. The Republic owes 103.4 million rubles to the Federal Compulsory Medical Insurance Fund of the Russian Federation alone. The total amount due by the Region exceeds its total budgetary income as of now. Mr Orlov could soon be held accountable for all his crimes even despite the Chamber’s audit inspection coming to nothing and Prosecutor General’s Office remaining silent. His career may end any moment now due to almost daily major stuff changes.
DocumentsLetter to Yuri Chaika
FSB officers detained Leyla Mammedzade along with Ziyavudin and Magomed Magomedov on March 30 this year. After questioning her for two days, they released her. In April, Mammedzade stepped down from her post. At the moment, she is not a defendant in the case of Summa Group owners.