Case against Director of Stalkonstruktsiya: Family affairs behind economic scandal 

Case against Director of Stalkonstruktsiya: Family affairs behind economic scandal

A criminal case against Andrey Levchenko, the General Director of Stalkonstruktsiya Closed Joint Stock Company, has been submitted to court in the Irkutsk region. The businessman is charged with tax evasion and non-payment of salaries to the personnel. This is a typical situation in Russia: large businesses always experience financial problems. Somebody manages to get off the hook using resources and connections; somebody has to answer for the wrongdoing, including legal liability. But the case of Andrei Levchenko is really unique. Why is it so?

The General Director of a large enterprise is the son of the Governor of the Irkutsk region. Therefore, as soon as the investigators have started an inquiry into the situation with Stalkonstruktsiya, the suspect began positioning himself as a victim of political intrigues. The alleged purpose of this intrigues was to ruin the career of Levchenko senior. There was some logic in this statement: the investigators have expressed interest to the Angarsk-based company in September 2015 – a few weeks before the gubernatorial elections in the Irkutsk region. And Sergey Levchenko was one of the contenders in these elections.

Our
notes

Stalkonstruktsiya Closed Joint Stock Company is a major building and assembly company in the Irkutsk region and adjacent regions. The enterprise performs the full cycle of works, including design, production, and assembly of metal structures, and acts as a general contractor in construction projects. The company is registered in Angarsk; Andrey Levchenko is its General Director.


On September 2, 2015 searches and seizures of documentation have started in the corporate headquarters in Angarsk. Criminal cases have been initiated against Andrey Levchenko, the General Director of Stalkonstruktsiya Closed Joint Stock Company, under part 2 of Article 145.1 (full non-payment within more than two months of salaries, wages, pensions, stipends, benefits and other payments established by law) and part 1 of Article 199 of the Criminal Code of the Russian Federation (evading payment of taxes and (or) fees collectible from organizations on an especially large scale). According to the investigation, accounting books of Stalkonstruktsiya for 2011 and 2014 show economic interactions with a dummy company during the fulfillment of contracted works. These fake interactions with the dummy company resulted in overestimated costs, unjustified claims for value added tax deductions, and non-payment of taxes for the amount exceeding 12 million rubles. In addition the closed joint stock company was not paying salaries to the personnel: in several months, its debt to 21 employees has exceeded 1 million rubles.

It is necessary to note that Angarsk-based Stalkonstruktsiya Closed Joint Stock Company, with its humble charter capital of 438 thousand rubles and 250–500 employees in various years, had an official annual cash flow of 300–400 million rubles – but its gross profit was only 2–12 million rubles per year. This inconsistency caught the eye of tax officials who have came to the company with inspection.

Андрей Левченко с женой

Photo: Andrey Levchenko with his wife at the inauguration ceremony of Sergey Levchenko. Photo: newsbabr.com

The situation with non-payment of salaries in Stalkonstruktsiya was known to the public long ago. Back in 2012 Andrey Levchenko admitted in an interview that salary-related issues are common for the construction industry because the clients do not pay promptly for the performed works. As a result, the contractor has to collect the money in court; a litigation may last for 1.5–2 years – but the personnel of his company understand the situation; everybody is waiting for the funds to arrive; no one is leaving, and nobody attempts to collect the salary arrears in court. However, it is unlikely that employees of Stalkonstruktsiya were not terminating their labor contracts only because of their devotion to the job and the General Director. The point is that salaries there consisted – similarly with most companies in Russia – of black and white portions. And the official – white – portion was times less than the black one. Accordingly, should anyone decide to resign, he/she could expect only the official salary to be paid. Black salary arrears to some employees exceeded 180 thousand rubles as of the beginning of 2015. The management promised to fix the situation in the comings days and months – but instead, it has officially reduced the wages by introducing a four-hour workday at the enterprise. People had no money to sustain their families and started addressing the labor inspection and filing lawsuits in order to get at least their official salaries. The last straw was the announcement made by the Stalkonstruktsiya management in April 2015 – after paying an advance of 4 thousand rubles to the staff; according to the employees, Levchenko said that they have to wait another six months due to the elections in the region: his father is running for these elections, and he is going to ‘freeze’ the salary arrears to help his relative to finance the election campaign. Many people did not believe these promises, and mass resignations have begun. The bright prospects have faded: by that time, Stalkonstruktsiya Closed Joint Stock Company had incurred million-ruble arrears not only to its personnel.

In the beginning of 2015, Raiffeisenbank has laid a claim for the amount of 29,932,000 rubles against Andrey Levchenko personally. In 2012 and 2013 Levchenko junior, being the General Director of Stalkonstruktsiya Closed Joint Stock Company, acted as a guarantor for a credit received by his company. According to Raiffeisenbank, the credit was not repaid. The bank addressed the Meshansky District Court of Moscow to collect the debt. On May 14, 2015, the parties have signed a settlement agreement. However the debt to the bank still hasn’t been paid out. In the beginning of July 2015 the creditor submitted execution writs to the bailiff service – by that time, the amount owing has increased to 32 million rubles. However, even with the involvement of the bailiff service, the bank failed to collect a single ruble – so it has requested to declare Andrey Levchenko bankrupt in accordance with Article 213.6 of the Federal Law № 217 “On Insolvency (Bankruptcy)”. The credit organization asked the court to apply the executions to assets of the construction company listed in the two credit contracts as the loan security. The Arbitration Court of the Irkutsk Region was about to examine the case in January 2016 – but the plaintiff’s claim hasn’t been processed due to procedural violations during the submission of documents. Currently, no information is available with regards to the bankruptcy of Levchenko junior. According to some sources, Raiffeisenbank has withdrawn its claim. Experts note that otherwise Stalkonstruktsiya Closed Joint Stock Company would go bankrupt itself.

Иск банка

Photo: Application from Raiffeisenbank to declare Andrei Levchenko bankrupt

Another financial-criminal scandal involving the Angarsk-based construction company occurred in a neighboring region. According to local media, in August 2015, the Ministry of Internal Affairs for the Republic of Buryatia has initiated a criminal case due to swindling on an especially large scale. The police have uncovered machinations for the amount over 7 million rubles committed during the construction of a plant for Buryatmyasprom meet processing company in Ulan-Ude. Stalkonstruktsiya was the general contractor in this construction project. An independent expert assessment has found serious violations and improprieties committed by the management of the general contractor. In particular, Stalkonstruktsiya has arbitrarily, contrary to the project design and cost estimation, replaced projected construction materials with cheaper ones. For example, instead of one-piece metal I-beams, it installed welded structures. It also used a different – cheaper than the one specified in the contract – type of concrete. Furthermore, the former general contract obtained a court decision to collect from the meat factory almost 34 million rubles for unpaid construction works, and then bailiffs have imposed arrest on the production and accounts of Buryatmyasprom for that amount. This has put at risk operations of one of the major enterprises of Ulan-Ude. From the other side, the management of Buryatmyasprom Limited Liability Company decided that the general contractor has fraudulently enriched itself at the expense of the meat factory. Buryatmyasprom requested to recover from Stalkonstruktsiya Closed Joint Stock Company over 50 million rubles for construction defects identified by the independent expert assessment and addressed the law enforcement authorities – although enforcement officials of Buryatia decline to confirm this due to confidentiality reasons.

In July 2016 final charges have been laid against Andrey Levchenko – he was accused of non-payment of salaries and tax evasion. The suspect declined to collaborate with the investigation citing Article 51 of the Constitution of the Russian Federation. However, in his interview to press, he told that the criminal case against him is not only about financial machinations – because it is impossible to run a fair business in Russia without tax evasion, and every businessman is looking for holes in the legislation – while the true reason why his company is being persecuted are political intrigues against his father. After winning the elections, Sergey Levchenko, while answering journalists’ questions about criminal cases related to Stalkonstruktsiya, interpreted – similarly with his son – those as attempts of some rival political groups to pressurize him during the election campaign. The elected governor has also expressed confidence that his son won’t get a real term (although, based on the incriminated Articles of the Criminal Code, Levchenko junior is facing up to three years behind bars).

Our
notes

Sergey Levchenko was born in 1953 in Novosibirsk. Graduated from the Novosibirsk Construction Engineering Institute and Academy of the State Service under the President of the Russian Federation. Married, has two children. In the period of 1976–1982 worked in the Krasnoyarsk Branch of Stalkonstruktsiya as a foreman, taskmaster, and then section supervisor. In the period of 1992–1999 was the General Director of Stalkonstruktsiya Construction and Assembling Enterprise in Angarsk. The company is currently headed by his son Andrei Levchenko. For two years, Sergey Levchenko was the Chairman of the Southwestern District Executive Committee of the Communist Party of the Soviet Union. In the period of 1989–1991 he was the Second and then – First Secretary of the Angarsk City Committee of the Communist Party of the Soviet Union. In 1994 Levchenko became a Deputy of the 1st Convocation of the Legislative Assembly of the Irkutsk Region. In 1999 he was elected for the first time as a Deputy of the State Duma of the Russian Federation in the federal list of the Communist Party of the Russian Federation. In 2004 Levchenko was elected to the Legislative Assembly of the region; in 2007 and 2011 – to the State Duma of the Russian Federation. In December 2011 Sergey Levchenko was mentioned as a possible candidate for the Presidential Elections of 2012 from the Communist Party. In 2015 he was running for the Governor’s seat from the Communist Party of the Russian Federation for the third time. On September 27, 2015 he has won the elections in the second round of voting.

While demonstrating coolness and confidence in public, Governor Levchenko has launched a bitter behind-the-scenes struggle against the Investigative Committee officers handling the case of his son. He used all available methods – from delaying the investigation by all means to trips to Moscow. According to our sources, several attempts have been made to reach Alexander Bastrykin, Chairman of the Investigative Committee of the Russian Federation (ICR), via high-ranked fellow party members of the Communist Governor. Last month Levchenko finally managed to meet with the ICR Chairman and complain on his subordinates, specifically – on Andrey Bunev, the Head of the Investigations Directorate of the Irkutsk Region of the ICR. The Governor was not happy with activities of the regional Investigations Directorate related to identification of serious offences. We would like to remind that during the last 1.5 year, following an initiative of Andrey Bunev, almost all cases related to tax evasion and so-called shady cashing operations have been transferred to the ICR. This allowed to eliminate the black market of cash almost completely. Not only the Governor’s son has been prosecuted for tax evasion, but also Denis Shlykov, a prominent player on the forestry market.

Сергей и Андрей Левченко
Photo: Sergey and Andrey Levchenko 

So, why is the Governor making all possible efforts to save his son from prosecution? Is this about the father’s love and care only? Apparently, there are also political and commercial reasons behind the Governor’s activity. The point is that Andrey Levchenko is the General Director of the company – while its owner, according to unofficial data, is the Governor himself. It is necessary to note that the information about the company founder has been removed even from the SPARK-Interfax database – very few Russian citizens are able to perform this trick. In addition to the Angarsk-based Stalkonstruktsiya, the enterprise has some 20 subsidiary companies registered in Angarsk, Krasnoyarsk, and Moscow. All these organizations are managed by relatives or close friends of the Levchenko family. And this whole business empire might collapse, should Levchenko junior be condemned.

Such an outcome would also ruin the career of the father. Sergey Levchenko is already a candidate for dismissal – the Kremlin believes that he has failed his job: numerous scandals, forestry mafia involving regional-level officials, an intestinal infection epidemic in the Cheremkhovsky Regional Psychoneurological School Boarding House for Handicapped Children, etc. The epidemic caused death of three disabled children; the investigation has found that the tragedy occurred due to the lack of medical personnel in the institution: instead of 10 nurses required by the staff schedule, there were only 6 of them – which is unacceptable for such a specialized medical institution. Another blow to the Governor’s reputation was the transition of the regionally-owned Irkutsk International Airport Open Joint Stock Company under the management of a commercial structure without any compensation or tender. Growing illegal migration, mass acquisition of lands around the Baikal Lake by Chinese citizens, budget deficit in the region, and raising unemployment rate – all these factors do not improve the image of the Governor as well.

In 2014 Levchenko junior hit a 10-year-old girl while driving his Lexus in broad daylight; the girl was crossing the road on a pedestrian crosswalk near the municipal administration building in Angarsk. The child was admitted to hospital with a brain concussion and closed head injury. At that time Andrey – then-Deputy of the Municipal Council of People’s Deputies – managed to escape both administrative and criminal liability using his connections and money. Time will show whether he would be able to repeat this trick again. So far all attempts by the Levchenko family to settle the issue with the law enforcement authorities have failed.

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