Delicate situation: Who makes money on State Duma acquisitions?
Little-known Perm-based Prominform company – that charges astronomically high prices and raises numerous questions in the Audit Chamber – somehow managed to become the general contractor of the Russian Parliament.
Deputies of the State Duma are very generous when it comes to their comfort – although they continuously complain on its low level. In the end of the last year, amid calls from Vyacheslav Volodin not to hold corporate parties, the Deputies decided to renew the furniture. The total cost to redesign State Duma offices was some 185 million rubles. Then it became too dark and frowzy for some parliamentarians at the State Duma sessions. Volodin is sensitive to wishes of his colleagues; currently he i s about to perform a reconstruction of the assembly hall, including replacement of the air conditioning system. So, what is the cost of the Deputies’ comfort and who is responsible for it?
Little-known Prominform company has been the main equipment supplier for the State Duma for a number of years. Contracts with Prominform dated 2012 can be found on the governmental acquisitions web portal; the official site of the company states that it had provided equipment for the assembly hall of the Supreme Soviet of the RSFSR. The site also provides an extensive list of projects performed for the State Duma and Council of the Federation.
The company has distinguished itself not by its unique technologies. It is hard to find a single tender involving Prominform that complies with the legislation regulating governmental acquisitions. Take, for example, the last tender won by Prominform and directly linked with Deputies’ complaints on frowziness. The contractor has been retained to supply special equipment in October 2016. In addition to its own products, the list of equipment includes ZPAS and Rittal ventilation panels, Panasonic video camera, and other foreign-made products. The prices on the imported equipment are truly generous.
According to Market.Yandex.ru, the retail price of a Rittal DK ventilation panel does not exceed 13.6 thousand rubles – while in the contract with Prominform, its cost is 26.3 thousand rubles. But the real champion is the Panasonic video camera purchased for 1.34 million rubles: the web portal of suppliers offers a similar Panasonic model for only 417 thousand rubles.
The total sum of contracts with Prominform allows to estimate how overpriced are its own products. The Perm-based company has earned some 100 million rubles on ten governmental contracts with the State Duma of the Russian Federation. Contracts with the Council of the Federation have brought it the same amount. But the majority of its contracts pertain to state institutions of the Perm krai and adjacent regions. The grand total of governmental contracts awarded to Prominform exceeds 600 million rubles. Co-owner of Prominform Dmitry Burdi has unashamedly told in his interview to Ekho Moskvy (Echo of Moscow) in Perm radio station that governmental orders constitute less than 50% in the total volume of company’s operations.
Almost parliamentary immunity
Several years ago, the contracts signed with Prominform have attracted the attention of the Audit Chamber of the Russian Federation. The control agency has identified numerous violations committed by the company while supplying a hardware and software complex for the State Duma assembly hall. Prominform has breached all the possible contract terms: it failed to provide a draft breakdown of the works into phases, missed the contract deadline, did not provide a work acceptance certificate, and hasn’t identified the equipment service life – neither for the entire hardware and software complex, nor for its individual components.
But the Russian parliamentarians were surprisingly loyal to the presumptuous contractor. Despite the numerous breaches, not only did not the client terminate the contract, but hasn’t even collected penalties in the amount exceeding 250 thousand rubles. Deputy Valery Gartung has later said in a fit of anger that it would be better to purchase iPads for them – iPads demonstrate higher status and are more functional.
Experts of the Audit Chamber have overlooked one important detail: Prominform manages to win governmental tenders unbelievably easy. Out of the ten State Duma contracts awarded to the Perm company, it has won several tenders on a sole source basis, while others have been won ‘in competition’ with IVS Seti company also incorporated in Perm. IVS Seti had participated in the largest tenders won by Prominform by submitting its proposals always slightly later than its competitor and offering the same price.
What are the reasons behind such a generosity of the both houses of parliament to an ordinary regional company weirdly winning governmental tenders? The answer is in the names of its beneficiaries. Prominform Closed Joint Stock Company has been founded by Dmitry Burdi owning 50% of its shares and Sergei and Lyudmila Gilev owning 25% of shares each. Aleksander Burdi is the general director of the company. The Burdi family also owns a development business in Perm. In addition to 50% of shares in Prominform, Dmitry Burdi also owns 97% in Kapitel company. The remaining 3% belong in equal proportions to Viktor Selivanov and Gennady Shilov. Shilov is a Deputy of the Legislative Assembly of the Perm Krai representing Edinaya Rossiya (the United Russia) Party and the virtual general director of the Perm branch of Sibur company. This explains the high loyalty of the local authorities to Kapitel – it is allowed to exceed the maximum height of the buildings and receives lots for construction in most prestigious parts of the city.
It is necessary to note that Prominform is thriving not only at the expense of the State Duma and Council of the Federation. It is hard to find a governmental institution in the Perm krai not having a contract with it. The company has expanded its operations to the adjacent regions as well. It is obvious that Prominform had polished the scheme used to win tenders in the regions. However, the patronage of a regional Deputy is not sufficient to get such an indulgence in the State Duma of the Russian Federation.
The point is that Burdi is not the sole proprietor of Prominform. Although the names of Sergei and Lyudmila Gilev are not so well-known, apparently, these co-owners provide the connections required to get access to the highest circles of power. Sergei Gilev used to be the Head of the Debt Collection Center of Otkritie (Discovery) Financial Holding co-owned by Aleksander Mamut. Later Gilev and Mamut had joint business projects. The influence and powers of Aleksander Mamut, member of numerous governmental commissions, are enormous. Apparently, the name of Mamut was sufficient for Gilev to make Prominform the favorite contractor of Deputies and Senators. This is what the friendship makes. And who needs those Ipads?