Urban improvement a la Moscow: billion-ruble tenders and cartel agreement
In early November 2017, Basmanny Court of Moscow has satisfied the motion brought by the Main Investigations Directorate in the City of Moscow of the Investigative Committee of the Russian Federation (ICR) and remanded Aleksander Shukyurov, Director of the Capital Renovation Directorate State Budgetary Institution of Moscow, in custody. The head of the institution subordinate to the Department of Capital Renovation of the City of Moscow that had acted as the client in tenders worth dozens of billions of rubles is suspected of swindling on an especially large scale.
Aleksander Shukyurov has been arrested by the Federal Security Service (FSB) of the Russian Federation in early November. After the questioning in the Investigative Committee of the Russian Federation (ICR) on Technichesky lane, he has been charged under part 4 of Article 159 of the Criminal Code of the Russian Federation (Swindling on an especially large scale). The official faces up to 10 years behind bars.
Details of the case against Shukyurov appeared after the arrest of Evgeny Akhmadishin, General Director of Waviot telecommunications company providing wireless dispatching control for the Russian housing and utilities sector, in Moscow. Rosbalt.ru has reported that the investigation is interested in events dated 2012—2013, when ITS company controlled by Akhmadishin had announced the creation of an intellectual system for parking space monitoring adapted for Moscow and consisting of parking sensors, radio station, indicator panel, and Internet server. It was decided to equip the Moscow parking lots with the product developed by ITS. However, the company could not secure a direct contract with the Moscow Government. Initially, Yuventa Limited Liability Company was the general contractor – later it became known that it was controlled by Konstantin Sysoev, Deputy Director of the Department of Capital Renovation of the City of Moscow State Budgetary Institution. It is necessary to note that Yuventa hadn’t performed any works at all. Then Svecko Federal State Unitary Enterprise of the Federal Protection Service has replaced Yuventa and signed in 2013 two governmental contracts for the total amount of 600 million rubles ($10.2 million) with the Department of Capital Renovation to perform construction and installation works to set up the intellectual system for parking space monitoring. The company of Akhmadishin had acted as the subcontractor.
Evgeny Akhmadishin, General Director of Waviot company providing wireless dispatching control for the Russian housing and utilities sector
The FSB became concerned about the spending of budget funds in the framework of these Moscow projects. Large-scale embezzlements have been identified. The ICR has instituted a criminal case. In the framework of its investigation, Aleksander Shukyurov and Oleg Filippov, ex-General Director of Svecko Federal State Unitary Enterprise of the Federal Protection Service, have been detained.
Evgeny Akhmadishin is a cofounder of Strizh (Swift) Telecom company developing and installing remote telemetry data collection systems. In 2011, Strizh has tested sensors registering the number of vehicles on roads and parking lots and transmitting the data over a distance of several kilometers. Later this experience has been applied to the metering device system used in the housing and utilities sector. In 2014, after a meeting with participants of the Internet Entrepreneurship in Russia Forum, President Vladimir Putin has signed a number of instructions, including an instruction to the Moscow Government to examine the tools developed by Strizh for the housing and utilities sector.
The CrimeRussia became aware of some improvement and reconstruction operations performed by the Capital Renovation Directorate under the rule of Shukyurov.
According to the Charter of the Capital Renovation Directorate established in November 2008, it “performs the functions of a governmental customer in the following spheres: capital renovation of residential and non-residential premises, including roofs, fronts, balconies, and entrance spaces; deployment of transportation and transfer hubs; complex improvement of areas, routes, streets, and railway belts; and improvement of the street–road network”. The key term in this clause is: governmental customer
According to SPARK-Interfax database, in 2013–2017, the Capital Renovation Directorate had acted as the client in 4,285 contracts totaling 75.8 billion rubles ($1.3 billion).
Since 2014, the Capital Renovation Directorate was one of the main governmental customers in the establishment of new pedestrian zones and repairs of outbound routes. In 2015, the directorate has carried out a tender to improve Varshavskoe highway (1.76 billion rubles – $30.1 million), Leningradsky avenue (2 billion rubles – $34.2 million), and Ryazansky avenue (1.89 billion rubles – $32.4 million). In 2016, the directorate has spent 19 billion 87 million rubles ($326.7 million) in the framework of contracts awarded to various companies to repair electrical grids, heat supply, water supply, and sewer systems and build transportation and transfer hubs. In total, the Capital Renovation Directorate was responsible for the construction of 69 transportation and transfer hubs. According to a Moscow lawyer, multibillion contracts were signed without design documentation and construction permits, and unperformed works were accepted and paid for under these contracts.
Almost 40 billion rubles ($684.7 million) have been allocated this year for the improvement of Moscow in the framework of “My Street” program – this is twice as much as in previous years. Experts claim that the Capital Renovation Directorate has started the reconstruction of Pyatnitskaya street without government expert review. Pokrovka and Maroseika streets in the center of Moscow have been reconstructed following the same scheme. Then the contractor performing that reconstruction failed to meet its warranty obligations – but somehow the directorate under the rule of Shukyurov managed to avoid any liability. The tender to improve Bolshaya Serpukhovskaya and Lyusinovskaya streets worth 375 million rubles ($6.4 million) has been won by a company linked with Vice Mayor’s brother Sergei Biryukov. And the Moscow Government had turned a blind eye to such ‘incidents’ allowing Shukyurov to delay application of punitive sanctions to the contractors and ignore errors in the tender documentation.
Sergei Biryukov, brother of a Deputy Mayor of Moscow
What is the reason behind such a ‘forgiveness’? Aleksander Shukyurov is a subordinate of Aleksei Eliseev, Head of the Department of Capital Renovation of the City of Moscow, who used to be a Deputy Head of Avtomobil’nye Dorogi (Motor Ways) State Budgetary Institution until 2016. Eliseev was among the beneficiaries of Sobyanin’s curbs made of Ukrainian granite specially purchased by the Moscow Government. The boss of Eliseev is Petr Biryukov, Deputy Mayor of Moscow for Housing, Utilities, Amenities, and Improvement, who is a close associate of Sobyanin. Therefore, at some point, Shukyurov was even commended by the Moscow Mayor for long-lasting dedicated work in the housing and utilities sector.
The directorate of Shukyurov had repeatedly attracted the attention of the Federal Antimonopoly Service – but without any adverse consequences. For instance, one of the largest projects performed by the Capital Renovation Directorate in the framework of “My Street” program was the improvement of Sadovoye Kol'tso (Garden Ring Road) worth 11.6 billion rubles ($198.6 million). The most expensive element of the program has fallen a victim to a price-fixing cartel agreement.
The tender to perform the reconstruction of Sadovoye Kol'tso has been carried out in April 2017 with violations, including those falling under Article 178 of the Criminal Code of the Russian Federation (exclusion, restriction or elimination of competition). The tender has been won by two companies who formally were competitors: Tekhnokontsept Self-Regulatory Organization and Agency for Development of Advanced Technologies (ADAT) Joint Stock Company. Tekhnokontsept has won the right to reconstruct the 5th and 8th segments of Sadovoye Kol'tso, while ADAT – the right to reconstruct the 6th, 7th, and 9th segments. However, the Anti-corruption Foundation has found out that the same person – Daria Chugui – was the General Director of both companies. In addition, the person who has registered Tekhnokontsept as a self-regulatory organization had entered the office phone number of ADAT into the application form. Furthermore, according to the tender requirements, the bidders had to possess the relevant experience and earn 200 million rubles ($3.4 million) in the last three years for performing similar works – while Tekhnokontsept has received the certificate only a few days before filing the tender application. In other words, the company could not be allowed to participate in the tender, not to speak of winning it.
Reconstruction of Moscow streets and squares
It is necessary to note that in June 2017, the Administration for the City of Moscow of the Federal Antimonopoly Service has identified elements of a cartel agreement in tenders pertaining to the artistic illumination of the buildings surrounding the Kremlin and illumination of traffic intersections on Novorizhskoe and Kashirskoe highways. ADAT was mentioned in relation to that cartel agreement as well.
What good does the large-scale reconstruction bring to the residents and guests of Moscow? They are going to get inter alia 145 Norway maples, 200 thousand rubles ($3424) each, at the intersection of Ryazansky avenue and the Moscow Ring Road; 30 limes on Kotelnicheskaya and Goncharnaya quays for the total of 23.5 million rubles ($402.3 thousand); 11 granite tubs, 1.15 million rubles ($19.7 thousand) each, on Sadovoye Kol'tso – from Taganskaya square to Paveletsky Railroad Terminal; and Bul'varnoye Kol'tso (Boulevard Ring) improved (mostly, with benches) at the cost of 3.4 billion rubles ($58.2 million). The tile replacement on the streets is a pretty costly affair as well: on Sadovoye Kol'tso, between Krasnye Vorota (Red Gate) subway station and Pokrovka street, 8.4 thousand rubles ($144) are to be ‘buried’ into each square meter of space. Tram tracks removed from Tverskaya Zastava (Tver Gate) square near Belorussky Railway Terminal in 2008 are to be laid again there at the cost of 140 million rubles ($2.4 million). By the way, the starting price of the tender to perform the general reconstruction of that square is 954 million rubles ($16.3 million); its winner is unknown yet.
But it is obvious already that the Capital Renovation Directorate won’t be in charge of this project; furthermore, following the arrest of Shukyurov, more arrests and termination are expected in the Moscow Government.
‘VAT Queen’ Valentina Koryazina is looking for cushy job amid searches in St. Petersburg Tax Inspectorate
The Head of the St. Petersburg City Inspectorate of the Federal Tax Service (FTS) has left on vacation – and three days later, law enforcement operatives came at the tax authority with searches. Searches and arrests were performed in other territorial tax inspections of the St. Petersburg City Inspectorate as well. Amid these events, rumors started circulating in Smolny Palace that perpetual Valentina Koryazina is looking for a job in another governmental institution.