Fabled ruler: Who paid for ‘Little Europe’ in Central Russia?
Under the disguise of city needs, the local kinglet had satisfied his own whims at the federal expense and cheated contractors when he was short of money.
On January 11, 2017, a new criminal case has been instituted under Article 222 of the Criminal Code of the Russian Federation (illegal acquisition and storage of ammunition) against Leonid Markelov, ex-Head of the Mari El Republic, earlier charged with bribe-taking. After that, the detention period for Markelov has been extended until April 13. However, his lawyer Igor Trunov believes that the investigation against the former regional head is stalemated. Allegedly, the rounds ‘found’ in the Markelov’s apartment were needed to justify his further detention. Trunov insists that the episode interpreted as bribe-taking by the investigators was, in fact, a commercial deal and claims that he has evidence of this. According to Trunov, the entire prosecution of the ex-Head of Mari El is politically charged and it may be terminated immediately after the presidential elections.
However, residents of the region governed by Markelov for 16 years may tell plenty of interesting things about him in addition to the sole bribe-taking episode and some ammunition rounds.
His own ‘little Europe’
The main development trend in the Mari El Republic during the reign of Markelov was architecture – not everywhere, but only in its capital Yoshkar-Ola. Specifically, in the city center where his workplace was located. A fabulous neighborhood broadly covered in the media has been erected there.
This is not a movie set, but the center of Yoshkar-Ola. (Photo: Stepanov Slava)
In an interview to Dozhd (Rain) TV channel, Markelov told that because of his passion for architecture, he has drawn sketches of many buildings erected in the city center at off-work time. “I was finding nice palaces and telling: let’s do this,” – the republican head has proudly noted.
As a result, copies of the Moscow Kremlin Spasskaya Tower, Venice Doge's Palace, German Neuschwanstein Castle, Moscow Saint Basil's Cathedral, St. Petersburg Church of the Savior on Blood, quay of the City of Bruges (it even has the same name), etc. have been built on a small area.
“Each person has talents, it is necessary to bring these talents to light. I have done this. Using the administrative resource, I managed to make our historical center looking as a beautiful European city and absolutely modern,” – Markelov told. Leaving the office in April 2017, he has hinted who is the true owner of this luxury and said that 70% of the buildings accommodating governmental structures are privately owned.
Markelov is not alone in his passion for replicas. For instance, there is a miniature park in Istanbul featuring over 100 reduced copies of various architectural monuments from Turkey and other countries on 6 ha of land. After the unveiling of this park, many private hotels on the seashore started creating similar grounds to attract tourists.
East-European gypsies also like the kitsch culture: to demonstrate their wealth, they build ornate homes in baroque and rococo styles.
World renowned Chinese copiers build entire replica cities.
Some residents of the Mari El capital liked the Markelov’s style. Their main argument was: better this way than nothing. However, they live in the rest of the city – in gray 5-storey concrete buildings erected in the 1950–60s and surrounded by bumpy roads.
The term “kitsch” applies not only to the artistic ‘merit’ of these building, but to the very approach to their construction as well. The German word “Kitsch” originates from two verbs: kitschen (fudge) and verkitschen (sell what was not ordered).
Almost all the architectural fantasies of Markelov have been implemented by Marigrazhdanstroy company belonging to his old friend Gennady Aleksandrov. The details of the interaction between the developers and governmental authorities went public only after the conflict between Markelov and Aleksandrov who has published in 2013 an open letter accusing the regional authorities of causing financial hardship to his company.
His letter states inter alia that in 2010–2012, Marigrazhdanstroy has won a number of tenders and signed with the Mari El Republic, in the person of various ministries, governmental contracts to build important facilities at the regional budget expense. The following objects have been build under these contracts: National Presidential Boarding School for Gifted Children, Republican Puppet Theater, Civil Registry Office, administrative buildings for governmental institutions, etc.
However, in the course of the construction, it turned out that the funding for these projects was not included into the Mari El budget. As a result, the debt of the republican government to Marigrazhdanstroy had exceeded 170 million rubles ($3 million) in the beginning of 2013. The construction company had no money to pay salaries and cover operating costs. To recover its debt, Marigrazhdanstroy had to address the Arbitration Court – and received a counter-claim for missing the completion deadlines. Furthermore, Aleksandrov was brought to liability for late payment of salaries.
According to Aleksandrov, concurrently with signing the governmental contracts, Marigrazhdanstroy had to sign construction contracts with 12 Region TV Company to build 11 facilities in the center of Yoshkar-Ola in the framework of Arkhangelskaya Sloboda (Arkhangelsk Settlement) project. Marigrazhdanstroy claims that not a single acceptance certificate was signed until the completion of almost all the 11 structures and then the buildings have been accepted with a decreasing coefficient of 0.4. In other words, only 40% of the construction costs had to be covered without any justification – while Marigrazhdanstroy had to use its own operating funds in the amount of almost 40 million rubles ($710.8 thousand) to implement this, in fact, private project.
Later Marigrazhdanstroy has also filed a lawsuit against 12 Region TV Company to collect debts under 12 contracts totaling 66 million rubles ($1.2 million).
The financial claims against Marigrazhdanstroy were growing symmetrically. Not only governmental structures, but also former partners of the construction company were filing lawsuits against it. It is hard to say now who was a real victim of Marigrazhdanstroy and who had just played its role to ‘sink’ the company – but the number of claims has quickly reached several dozens, while their amount exceeded hundreds of millions of rubles.
Amid these events, Markelov said on the air of a local TV channel that the privatization of Marigrazhdanstroy was illegal because one person can not privatize an entire enterprise.
In February 2016, Marigrazhdanstroy was declared bankrupt.
One hand rubs another
However, it is difficulty to have sympathy with the builder. Apparently, it became a victim of an unspoken scheme used by the authorities in their liaison with major developers: you give us (i.e. Markelov) architectural kitsch in the city center, while we give you governmental contracts. Apparently, the builder knew what it was signing up for.
Established back in the Soviet period, Marigrazhdanstroy has been privatized by Aleksandrov in the early 1990s. At that time, many enterprises had difficulties with work orders. However, after the ascension of Markelov to power, the situation has drastically changed for the developer. Concurrently with running business, Aleksandrov became a Deputy of the Federal Assembly of the Mari El Republic and Deputy Secretary of the Regional Political Council for Agitation and Propaganda of Edinaya Rossia (United Russia) Party.
The administrative support had affected adversely the quality of the company’s work. Local media described one of the tricks used by Marigrazhdanstroy: after building a residential home for displaced persons with numerous deficiencies, Marigrazhdanstroy hasn’t submitted it to the State Commission for acceptance – but instead established a homeowners association that, in turn, signed an agreement with Marigrazhdanstroy Housing and Utilities Sector Limited Liability Company. This has allowed the developer to avoid audits of the State Commission – in fact, Marigrazhdanstroy has delivered the building to itself.
After the commencement of large-scale construction projects in Yoshkar-Ola, Marigrazhdanstroy started winning the most lucrative governmental contracts. For instance, in 2007, the company had participated in 5 governmental tenders and won all of those. The total amount of governmental contracts awarded to Marigrazhdanstroy in 2007 was over 240 million rubles ($4.3 million). In 2010, with the beginning of the active development phase in the city center, Marigrazhdanstroy had participated in 12 tenders and also won all of those. In that period, the company has received over 1.6 billion rubles ($28.4 million) from the budget. In 2011, it has won 17 governmental tenders and so forth... In these ‘fat years’, the company has built the Oncological Department of the Republican Hospital, Host Resurrection Cathedral, Church of Dormition of the Mother of God, and administrative buildings for the republican Ministries of Finance, Sport and Tourism, Education, and Forestry. It has also restored the Tsarevokokshaisky Kremlin and other structures in the city center.
It is necessary to note that all the governmental contracts were won by Marigrazhdanstroy in that period on a sole source basis. Therefore, in the absence of any competition, the cost of construction works was maximum. Later, during the exchange of claims, it became known that the company of Aleksandrov had neither financial nor human resources to implement all the governmental contracts awarded to it – and the region had to assist it at the budget expense. For instance, a Decree of the Republican Government of June 21, 2008 has granted Aleksandrov interest rate subsidies for credits totaling over 165 million rubles ($2.9 million).
However, the financial aid could not improve the professional level of the company. As the saying runs, don't shoot the pianist, he's doing his best... A couple of years after the construction completion, defects started popping-up. For instance, molding began falling from the National Arts Gallery – the one resembling the Venice Palace – in 2016. Experts of Mariiskgrazhdanproekt explained this by technological violations and poor quality of work.
With regards to above-mentioned 12 Region TV Company Limited Liability Company whose involuntary contractor was Marigrazhdanstroy...
After the arrest of Markelov, his ex-wife Irina Markelova (nee Starygina) and stepmother Tatiana Markelova have testified that in 2005, Markelov had asked his spouse to “fill the vacant residential construction niche in Yoshkar-Ola”. At that time, Irina was a Deputy Director of 12 Region TV Company Limited Liability Company. Somehow this advertisement and media holding has transformed into a construction company. Markelova admitted that, being a Deputy Director of the company, she has also acquired Iyun’ 2006 (June 2006) Limited Liability Company, Mariisky Tsement (Mari Concrete) Limited Liability Company, 50% of shares in Chukshinsky Kar’er (Chukshinsky Quarry) Limited Liability Company, 51% of shares in MNVK (Mari Independent Broadcasting Corporation) Limited Liability Company, and over 80% of shares in Teplichnoe Open Joint Stock Company, the largest agricultural enterprise in the republic. After their divorce in 2012 – shortly before the filing of another income and asset declaration (according to some sources, this divorce was fictitious), the construction business has been transferred to the elderly stepmother of the Head of Mari El.
It is necessary to add that, according to a statement of commercial activity of Tatiana Markelova, Voskresensky Park Limited Liability Company, and Kardinal (Cardinal) Limited Liability Company specializing, similarly with Iyun’ 2006, in security market trade, have been added to her portfolio of legal entities. Obviously, both Irina Markelova and Tatiana Markelova were just dummy persons. In the last years of his reign, Markelov stopped denying that his ex-wife owns assets bringing billion-ruble revenues. In one of his last interviews, he said that Irina Markelova was the owner of several companies and he had to control those “in order to pay salaries to the people”.
Irina and Leonid Markelov
When Markelov became deeply involved with construction, the existence of such enterprises as Mariisky Tsement (Mari Concrete) and Chukshinsky Kar’er (Chukshinsky Quarry) owned by his relative was very beneficial to him. Later it became known that construction and finishing materials for the new projects were supplied by these companies at high prices. In other words, Markelov gave everyone a good dressing-down – except for ordinary residents of the region.
It must be admitted that Markelov has some talent indeed: it is one thing to bury money into the earth by doing pothole repairs and it is a totally different thing to waste money on the architectural pseudo-splendor. Financial limitations of the local budget prevented him from filling the entire Yoshkar-Ola with replicas – but Markelov simply could not stop: it was planned to extend the quay, develop the Park of the 400th Anniversary of Yoshkar-Ola, equip a helicopter pad, and fell down and reconstruct the Valley of Health.
According to Aleksandrov, in order to secure credits in commercial banks, the regional authorities have mortgaged the Presidential Boarding School, buildings of the ministries, and the Republican Military Registration and Enlistment Office. After the arrest of Markelov, the investigators have found 23 real properties in his possession.
The main outcome of the Markelov’s reign is the huge governmental debt of the republic. Aleksander Evstifeev, the new Head of Mari El, has to deal with a budget hole amounting to 19 billion rubles ($337.6 million). It is a scary thought that the notorious ‘kinglet’ could continue ruling the region.