Confiscation of Garifullin’s personal reserve not to affect indictment? 

Confiscation of Garifullin’s personal reserve not to affect indictment?
According to defense attorneys, there is no direct evidence that the SUV received by Garifullin was a bribe Photo: The CrimeRussia

The defense of the former Deputy Head of the Administration for the Siberian Federal District of the Federal State Reserve Agency has evidence that Ilgiz Garifullin had purchased a Porsche Cayenne SUV on his private savings – i.e. it was not a ‘gratitude’ for winning a tender. Despite the confiscation of multimillion assets belonging to the official, his lawyers insist that all the charges against him are unsubstantiated.

In mid-March, the Zaeltsovsky District Court of Novosibirsk has confiscated, following a motion brought by the Prosecutor General’s Office, assets of Ilgiz Garifullin, ex-Deputy Head of the Administration for the Siberian Federal District of the Federal State Reserve Agency (Rosrezerv), charged with bribe-taking, as well as assets of his relatives and confidants. Cash, real properties, a fleet of luxury cars, collections of watches and hunting rifles with the total value of 200 million rubles ($3.5 million) have been seized to the state revenue.

People who see the list of assets seized from Garifullin are mostly shocked, and the question is: how could a governmental servant earn such money?

The personal reserve of the former official is now limited to Omega watch worth 150 thousand rubles ($2.6 thousand) purchased by Garifullin prior to his enrollment with the civil service – he has provided a documentary evidence of this. With regards to other luxury watches in his collection, the law enforcement authorities have strong doubts that an official with the monthly salary of 46 thousand rubles ($801) could legitimacy acquire those. With that salary, Garifullin had to support his unemployed wife, daughter (who is a second year student), and son (who is a schoolboy). Garifullin’s statement that, prior to his employment with Rosrezerv, he was a successful businessman specializing in grain, fur, and tobacco trade and managed to put by over $1 million ‘for a rainy day’ hasn’t dispelled the doubts. Especially taking that he could not provide a documentary evidence for this.

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The CrimeRussia already wrote how the ex-official with declared income of 557,695.55 rubles ($9,715.56) for the year of 2015 had distributed the assets among his middle-class relatives. A simple calculation performed by the Prosecutor General’s Office has revealed a major discrepancy between the revenues of the civil servant’s family and their expenses. Due to the lack of evidence that the assets had been acquired legitimately, the prosecutors have requested to seize those in accordance with the Federal Law “On Control over the Consistency between Expenses of Persons Holding Governmental Positions and their Revenues”. This is the second largest pecuniary lawsuit against a governmental official in Russia: only Aleksander Khoroshavin, ex-Governor of the Sakhalin Region, was richer than Garifullin: he had to return over 1 billion rubles ($17.4 million) to the state.

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The Federal Law “On Control over the Consistency between Expenses of Persons Holding Governmental Positions and their Revenues” was enacted in 2012. It has come into effect on January 1, 2013 and enabled the prosecution authorities to go to court with claims to seize assets of state and municipal officials acquired on undeclared revenues to the state revenue. According to the authors of the document, it has become an effective tool in the struggle against corruption.

 

Little is known about Ilgiz Garifullin. He had worked in Novosibirsk Rosrezerv for at least 7 years. Has a civil service grade (state counselor of the Russian Federation 2nd grade) equal to the military rank of lieutenant colonel. Interestingly, on the day of his arrest, a new Head of the Administration for the Siberian Federal District of Rosrezerv has been appointed. Major general Vladimir Kapishenko, 56 years old, has arrived from Perm. Vyacheslav Zavitaev was the Acting Head of Novosibirsk Rosrezerv since the retirement of Yuri Barannikov and until the appointment of Kapishenko.

According to the materials collected by the Regional Directorate of the Federal Security Service (FSB) of the Russian Federation, a few months ago, Ilgiz Garifullin had received a gift – a Porsche Cayenne SUV worth 6 million rubles ($104.5 thousand) that was later officially transferred to the spouse of the official. The vehicle had been presented to the Rosrezerv functionary by the head of a private company as a ‘gratitude’ for winning a tender. 

Porsсhe Cayenne-S

Porsсhe Cayenne-S 

So, what is Rosrezerv and why is it of interest for the business? The Federal State Reserve Agency is responsible for the creation, storage, and maintenance of so-called state material reserve – i.e. reserves kept for such situations as wars, natural disasters, etc. requiring urgent assistance from the state. This is one of the largest governmental contracting authorities and one of the most classified organizations in Russia. According to the Federal Law №79 “On State Material Reserve”, “all information pertaining to stock accumulation standards, dispenses, allocation to reserve, renewal, dislocation, and actual volumes of the state reserve” is classified. Therefore, most contracts signed by Rosrezerv have a secrecy label. 

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The Granary Department established in Russia in the 15th century and managing granaries storing grain reserves for bad harvest years is believed to be the ancestor of the modern state reserve system. In the end of 1931, Rosrezerv has been established in a form very close to the modern one; it was named the Reserve Committee of the Council for Labor and Defense. Since then, the organization has been under control of the People’s Commissariat of Internal Affairs and its successors – governmental agencies responsible for the state security.


Rosrezerv never discloses information on goods acquired for storage and goods dispensed to be replaced by new ones (every item in the strategic national stockpile has its own lifetime). From that perspective, the state reserve structure is of the utmost interest for the business. Its purchasing prices are 15–30% higher than the average market price, while the prices of goods sold by the reserve are 30–40% lower those that on the market. Such discrepancies with the market prices pertain to specific Rosrezerv requirements to the acquired products.

According to the official Rosrezerv web site, any company can participate in auctions of goods dispensed by Rosrezerv. The list of required documents is pretty short: a statement of intention produced in accordance with a standard form, copy of the company charter, and copy of the license to work with classified information. But a company may be denied access to the tender due to incorrectly filled-up documents, missed submission deadlines, or absence of the goods declared by it. The web site does not provide information what specifically is in stock – only a general list of goods drafted “in accordance with the All-Russian Classifier of Types of Economic Activity, Products and Services”. Therefore, an ‘outsider’ has a very little chance to start collaboration with one of the most classified governmental institutions. The number of intermediaries, suppliers, and purchasers working with the agency gets smaller and smaller over time; long-term contracts are being signed with the suppliers and purchasers – although up until now, the tenders had been carried out on the annual basis. This practice is beneficial for the long-term partners of Rosrezerv – it enables them to make long-term business investments. On the other side, it becomes increasingly difficult to become a long-term partner of the agency. And sometimes businesses are ready and willing to pay for such an opportunity.

This is what had happened during the ill-fated tender that has ultimately resulted in the confiscation of assets totaling 200 million rubles ($3.5 million) from Ilgiz Garifullin, ex-Deputy Head of the Administration for the Siberian Federal District of the Federal State Reserve Agency.

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In September–December 2015, the Administration for the Siberian Federal District of Rosrezerv had carried out a closed tender to enter into an agreement of purchase and sale in relation to certain material assets dispensed by the state mobilization reserve. In that particular case, the ‘material assets’ were railroad components – i.e. rails and sleepers: every railroad requires a reserve to replace lost components in case of a natural disaster or war. This reserve had to be renewed. A Rosrezerv representative responsible for preparations to the tender had thought that only one organization could save the railroad – Lenpromtransproekt company specializing in complex design of industrial and transport infrastructure. Of course, there are many other similar organizations in Russia – and virtually all of them would be ready and willing to win a contract worth 80 million rubles ($1.4 million). But not each of them would get access to such tenders on equal terms. Especially when one of the bidders has connections with ‘right people’ in the tender management. The ‘right people’, in turn, have no doubt that their assistance won’t go unnoticed. Therefore, from the very beginning, the tender was designed to be won by the ‘right company’. All the tender terms had been drafted specifically for it. As a result, Lenpromtransproekt Closed Joint Stock Company was the sole bidder, and the tender has been declared void. In that situation, in accordance with paragraph 25 of part 1 of Article 93 of the Law № 44-FZ, since the application from Lenpromtransproekt has been recognized meeting the requirements of the Law № 44-FZ and requirements set in the quotation bidding notice, the customer, according to the rules, could sign the contract with the sole supplier/contractor. Therefore, the contract worth 80 million rubles ($1.4 million) has been awarded to the sole bidder from St. Petersburg. And the entire scheme seemed perfectly legal – except for a luxury foreign-made sports car that has later emerged there.

Garifullin, being a member of the tender commission and having the deciding vote there due to his post, had represented Rosrezerv in this deal. Stanislav Kabanyachy had represented the St. Petersburg company. According to the investigation, in the period of December 2015 – January 2016, he has transferred for use a Porsche Cayenne-S worth 6.1 million rubles ($106.9 thousand) to the functionary in Novosibirsk in exchange for his assistance in the participation of Lenpromtransproekt in the closed tender and winning the contract. Then the special services have interfered and made all efforts possible to bring both the bribe-giver and bribe-taker to justice (normally, only one of them is prosecuted in such situations, while the other one acts as a witness). As a result, the criminal case against Ilgiz Garifullin has been initiated under part 6 of Article 290 of the Criminal Code of the Russian Federation (bribe-taking), while the criminal case against Stanislav Kabanyachy has been instituted under part 5 of Article 291 of the Criminal Code of the Russian Federation (bribe-giving on an especially large scale). In May 2016, the both suspects have been remanded into custody. Kabanyachy is facing up to 12 years behind bars for bribe-giving, while Garifullin faces up to 15 years in jail for bribe-taking.

However, the experience shows that in Novosibirsk, former governmental officials can ‘enjoy the luxuries of the prison live’ only while staying in the pretrial detention facility.

For example, a former colleague of Garifullin, who used to work in an institution subordinate to Rosrezerv, was amnestied six months ago. Yuri Tufanov, ex-Head of Rezervstroy Federal Unitary Enterprise subsidiary to Rosrezerv, was convicted for “infliction of property damage on an especially large scale”. According to the court verdict, his actions had resulted in a loss of 34 million budget rubles ($594.7 thousand) sustained by another enterprise subordinate to Rosrezerv – Kombinat Gigant (Giant Combine) Federal State Budgetary Institution. The indictment materials had been submitted to the Investigative Committee of the Russian Federation (ICR) by the same Novosibirsk Regional FSB Directorate. The court has found Tufanov guilty, sentenced him to 2.5 years conditionally, and relieved from criminal liability due to the amnesty. But unlike Tufanov, Garifullin has already received the most severe punishment for any official of any rank – confiscation of his assets to the state revenue.

Илгиз Гариффулин в суде

Ilgiz Garifullin in court

Andrei Zhukov, a defense attorney for Garifullin, believes that the case against the former official is truly unique: normally people are caught with bribes red-handed – while in this particular case, the bribe has been discovered by the FSB operatives post factum. Zhukov claims that the defense has evidence that Ilgiz Garifullin had purchased the Porsche Cayenne SUV on his private savings – i.e. it was not a ‘gratitude’ for winning a tender. The attorneys are ready to provide documentary evidence to the court, but the investigation does not pay much attention to such claims yet. Zhukov insists that the prosecution does not have evidence that Garifullin had really helped Lenpromtransproekt Closed Joint Stock Company to win the multimillion contract. Allegedly, Garifullin, being a deputy chairman of the tender commission, did not have such powers. According to the lawyer, his client has been accused of non-sending tender invitations to 77 potential bidders. But such invitations are sent out by the administrative office. No one has checked whether Garifullin had instructed the office to send out the invitations or not, who had received these invitations, and why potential bidders had abstained from participation in the tender. The lot price was pretty high – 80 million rubles ($1.4 million). Many companies simply do not have such money. Therefore, only three companies had applied for this tender, but there was a mandatory requirement: a 10% advance payment in the amount of 8 million rubles ($140 thousand). Only Lenpromtransproekt was able to make such a payment. Therefore, the tender has been declared void and the contact awarded to the sole bidder.

Andrei Zhukov believes that the investigation is currently being delayed on purpose. There is no direct evidences against his client, and the investigation is looking for other criminal episodes by checking all the Rosrezerv deals involving Garifullin since 2014 – at that time, he had become employed with this organization – but so far, with no result. Should new episodes have emerged in this case, the defense would be already notified. According to Zhukov, continuous extensions of the detention term for his client demonstrate a weak position of the investigation. The investigators believe that if Garifullin is released, he might put pressure – either directly or using his connections – on the other suspect, Stanislav Kabanyachy charged with bribe-giving. Similarly with Garifullin, he denies any guilt – but unlike Garifullin, Kabanyachy was released on bail back in December 2016.

Based on some preliminary information, the case might be transferred to the court this summer – provided that no new episodes are uncovered. The defense for Garifullin is optimistic and supposes that the existing evidentiary basis is not sufficient for a guilty verdict.