Vostochny cosmodrome a la St. Petersburg: history of Zenith Arena larcenies
Despite political scandals, the 2018 FIFA World Cup is nearer and yet nearer. One of the stadiums to host this tournament is an immense sports arena on the Krestovsky Island, popularly nicknamed Zenith Arena or Peter Arena. Too bad, but this grand construction, similarly with the infamous Vostochny cosmodrome, is marred by corruption scandals. In addition, in some situations the construction companies have demonstrated outright botchery, incompetence, and negligence.
In the morning of July 6, 2016, officers of the economic police department of the General Administration for St. Petersburg and the Leningrad Region of the Ministry of Internal Affairs of the Russian Federation (MIA), jointly with colleagues from the Investigative Committee of the Russian Federation (ICR), performed a series of searches in the framework of a fraud case related to Zenith Arena construction. The primary contractor, Transstroy Company (also known as Inzhtransstroy–SPb), and its subcontractors are suspected of larceny. Operations of Teatralno-Dekoratsionnaya Masterskaya (Theater Scenery Workshop) Company (TDM) attracted attention of law enforcement authorities. An agreement was made with TDM in the beginning of 2014. In the framework of this agreement, 2 contracts have been signed: the first one – for 168 million rubles – to supply a video display, and the second one – for 148 million – to build the loadbearing structure of the sliding roof. The subcontractor received advance payments: 50 million rubles for the first contract and 100 million to supply rails and 28 trolleys for the roof. A year later, the pre-paid equipment still was not supplied. An additional agreement was signed to extend the work completion date, and the contractor promised to supply the equipment before the autumn. When Vitaly Lazutkin, Director of Transstroy Company, personally checked the status of works and found no progress, he addressed law enforcement authorities.
The investigation believed that the payment went through a chain of intermediary companies, has been cashed and stolen. The ICR has initiated a criminal case under Part 4 of Article 159 of the Criminal Code of the Russian Federation (Swindling committed on an especially large scale). The investigators have already tracked the chain of companies for the 50 million rubles paid for the display: primary contractor Transstroy Company – subcontractor TDM – Stage Technology Construction Limited Liability Company – Promelektronika SPb who cashed the funds. Searches have been performed in apartments of Aleksander Shimberg and Vladimir Khalif, TDM founders and managers. It is necessary to note that TDM had already participated in major projects, including reconstruction of Bolshoi Theatre in Moscow and Tovstonogov Bolshoi Drama Theatre in St. Petersburg and construction of the second stage for the Mariinsky Theatre. According to rumors, some contracts had been awarded to TDM with support of Marat Oganesyan, St. Petersburg Vice-Governor for Construction, who, we would like to remind, has left this position in pretty scandalous circumstances. Some sources state that his activities caused displeasure among both the St. Petersburg establishment and high-ranked enforcement officials – Oganesyan brought to Smolny Palace a team of Moscow managers who helped Moscow companies to win various governmental construction contracts in St. Petersburg.
Initially, the stadium construction was not related to the 2018 FIFA World Cup. The main alarm signals for any construction project are: multifold cost overruns and endless delays of the completion date. The construction started in 2007. The posted price of the first governmental contract was 6.7 billion rubles and the stadium was supposed to open in 2009. Five years later (in 2012), after spending 16 billion rubles, the total cost has increased to 34.9 billion rubles (various sources provide different figures). On September 1, 2012 Premier Minister Dmitry Medvedev expressed dissatisfaction with the progress and cost of the project. National Audit Office officials were very surprised by the huge costs and initiated a review of the stadium construction. Olga Galkina, a Deputy of the Legislative Assembly of St. Petersburg, also attempted to initiate a separate review, but the Legislative Assembly Control Group declined her request. The primary contractor Transstroy SPb Engineering Corporation stated that the drastic hike in the project cost is related to new FIFA and UEFA recommendations.
The construction was marred by a series of corruption scandals. The first one rumbled in February 2013 and was related to the stadium design. The contractor, Sintez-CUI Limited Liability Company later renamed into Avant, had signed contracts with a number of subcontractors. During the contract implementation, it became known that one of the subcontractors, Stary Gorod (Old City) Limited Liability Company, overcharged the price of auger piles more than twice. Ultimately, Dmitry Korshunov, the director of the former subcontractor Stary Gorod, was found guilty under part 4 of Article 159 of the Criminal Code of the Russian Federation (Swindling committed by a person through his official position, by an organized group, by previous concert, on an especially large scale) and sentenced to a conditional 4-year term for inflicting damages of 570 million rubles to the St. Petersburg city budget. In April 2016 the court ordered to recover the stolen funds from Korshunov.
Another scandal was linked with the supplying of construction equipment for the project. On May 18, 2016 searches have been performed in several Moscow and St. Petersburg buildings related to Stroyelektromontazh contractor company. Investigative actions have been also performed in the office and apartment of Aleksey Vatutin, Director of the St. Petersburg State Public Institution “Fund for Capital Construction and Reconstruction”, in relation to a 70 million ruble larceny from the St. Petersburg budget. Stroyelektromontazh, who won an open tender in 2015, was accused of larceny performed through a sham scheme. In the framework of the contract, the company received a half of the total contract cost (which was 347 million rubles) as an advance. The company supplied lighting equipment for 30 million rubles, while according to the papers, its cost was 100 million rubles. Furthermore, the contractor purchased the equipment form SEM Komplekt Company also belonging to the owner of Stroyelektromontazh. Following the searches, Vasily Slivkin, principal general of the Moscow Stroyelektromontazh company, was arrested.
Perspectives for Arena
While scandals occur in relation to every single screw of the unfortunate stadium, the building is slowly decaying itself from idleness. Officers of the MIA Administration for Economic Security and Combatting the Corruption have already found cracks, leaks, and mold. The issues were discovered back in December 2015, but this information surfaced only in February 2016. Technological omissions are named as the reason for cracks. FIFA is doubtful whether the stadium is safe to host of the tournament and would not be better to leave the ill-fated Arena alone? However, Igor Albin, St. Petersburg Vice Governor, assures that all works will be successfully completed in 2016.
Currently, the completion is scheduled for December 2016, but no one can guarantee this. It is insulting that such a grand idea, instead of giving us another architectural masterpiece and national pride, turns into an endless story of carving-up, kickbacks, and other fraudulent schemes.
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