‘King of governmental contracts’ seizes 2.5 billion rubles from Novosibirsk in court 

‘King of governmental contracts’ seizes 2.5 billion rubles from Novosibirsk in court
Sibmost declared war to all Novosibirsk residents by seizing some 2 thousand rubles from each city dweller Photo: The CrimeRussia

Siberian oligarch Albert Koshkin decided to make some money on the residents of Novosibirsk. Due to ‘mistakes’ made by certain officials, Sibmost company belonging to the billionaire managed to seize by court action a huge amount of money – 2.5 billion rubles – from the municipal administration. Koshkin will get this sum as a compensation for some hypothetical losses sustained during the construction of the Bugrinsky bridge across the Obi River. Why no one dares to hold Vladimir Gorodetsky, the ex-Mayor of Novosibirsk, whose actions have resulted in the catastrophic loss to the municipal budget, liable for the situation?

On November 17, 2016, there was a session of the Arbitration Court of the Novosibirsk Region. It lasted for only 40 minutes but has caused an unprecedented public stir. Judge Yulia Pechurina has satisfied in full the claim of Sibmost Joint Stock Company, the general contractor in the construction of the Bugrinsky bridge across the Obi River, against the Department of Road Construction and Department of Transport of the Novosibirsk Municipal Administration. Sibmost has requested the Municipal Administration to compensate its financial losses in the amount of 2.5 billion rubles. According to Sibmost, the company had sustained the losses due to delays in the provision of lands by the Municipal Administration for the construction of the bridge and transport junctions caused by longer than expected resettlement of the residents. According to the original contract, the Bugrinsky bridge had to be commissioned in April 2012, but the project had been extended by 2.5 years. Sibmost claims that the extension of the construction has caused a considerable increase of its costs due to the loan servicing, rising prices on construction materials, greater volume of overtime works, additional taxes, wages, etc. The total amount of the alleged losses is 2.5 billion rubles – an enormous sum for the Novosibirsk budget. Especially taking that the municipal budget for the next year would be deficit-ridden anyways: the expenses exceed revenues by almost 800 million rubles. According to Renat Suleimanov, the Vice Speaker of the Novosibirsk Council of Deputies, the sum of 2.5 billion rubles would allow the city to build 20 kindergartens, or 5 schools, or 3 policlinics, or completely repair all the municipal roads. Dmitry Kozlovsky, a Deputy of the Legislative Assembly of the Novosibirsk Region, has characterized the situation as follows: by claming 2.5 billion rubles from the Municipal Administration, Sibmost has declared war to all Novosibirsk residents – because it translates into some 2 thousand rubles collected from each city dweller.

“The contract to construct the third bridge across the Obi River, later named the Bugrinsky bridge, had been signed in 2009; the works had to be completed by 2012, and the fixed contract price was 14.8 billion rubles. The bridge has been commissioned in fall 2014. Since 2014, Sibmost Joint Stock Company has been trying to collect a penalty from the Novosibirsk Municipal Administration in arbitration courts. In October 2014, Sibmost has filed a lawsuit with the Novosibirsk Arbitration Court to collect 1.5 billion rubles from the Department of Road Construction and Department of Transport of the Novosibirsk Municipal Administration. In April 2015, the claimed amount has been increased to 2.5 billion rubles, because the original amount had been calculated up until November 2011. In November 2014, the Novosibirsk Arbitration Court has dismissed the claim of the contractor. In the end of December 2015, Sibmost tried to appeal this decision in the Seventh Arbitration Court of Appeal of Tomsk, but unsuccessfully. On April 4, 2016, the company submitted a cassation appeal to the Arbitration Court of the West-Siberian Economic District (Tyumen) that has cancelled the decisions of the previous judicial instances”.

Мост

The Bugrinsky bridge

The announcement that Novosibirsk has to pay additional 2.5 billion rubles for a bridge that had already cost 14.8 billion rubles to the budget has shocked everybody – from residents to officials of various ranks. The Novosibirsk Municipal Administration has stated that it strongly disagrees with the verdict. Margarita Maslova, the Head of the Legal Department of the Novosibirsk Municipal Administration, has stated that the decision of the arbitration court is illegitimate. The bottom line is that the contract signed with Sibmost did not set specific dates for the provision of lands. And the court decision recognizing the fact of delay with the provision of lands was based on the admission of this fact by the defendant (i.e. the Municipal Administration under the rule of the former Mayor). It was not even specified what land lots – out of the 400 – were not provided in due time. The court verdict neither ascertains the fact of losses sustained by Sibmost, nor does it establish links between these alleged losses and actions of the Municipal Administration. The only evidence used by the court to justify its verdict was a forensic report stating that Sibmost had sustained losses not due to any actions of the Municipal Administration – but due to macroeconomic processes. Furthermore, the court hadn’t requested the company to provide a single document confirming its losses. Renat Suleimanov, the Vice Speaker of the Novosibirsk Council of Deputies, has brought into question the forensic report used as the basis for the court decision: “How the forensic examination could confirm the losses not supported by accounting documents?” Therefore, Maslova believes that the procedural defects are plain, and the Municipal Administration is going to submit a complaint against judge Yulia Pechurina to the qualification board of judges.

On December 20, 2016, the Novosibirsk Municipal Administration has appealed the decision of the arbitration court. The appeal, filed on behalf of the Department of Road Construction, refers to the above-mentioned procedural defects. Lawyers for the Municipal Administration note the lack of the cause-and-effect linkage in the court verdict: the forensic report provided by Sibmost states that the losses claimed by the company had been caused by “macroeconomic processes”, not actions of the Municipal Administration. “The expert himself has stated that there is no cause-and-effect linkage between the extended project duration and the fact of losses – the losses had been sustained due to the inflation,” – Margarita Maslova emphasized.

The Novosibirsk Council of Deputies also attempted to rectify the situation: it has invited Albert Koshkin, the President of Sibmost Joint Stock Company, to the session scheduled for December 21, 2016 to explain him the illegitimacy of his claims. But Koshkin did not consider it necessary to attend the session in person and instead has sent Sergei Savchenkov, his Deputy for Security and former Head of the Regional Directorate of the Federal Security Service (FSB) of the Russian Federation. The Deputies have heard his arguments and concluded that Savchenkov failed to provide any strong evidence supporting the demands by Sibmost.

Igor Salov, a member of the Novosibirsk Council of Deputies and Head of the Commission for Science and Production Development and Business, has escalated the conflict to another level. The parliamentarian suggested to go back and figure out how Sibmost had managed to become the general contractor for the construction of the Bugrinsky bridge. The tender had been carried out in 2009; the starting cost of the municipal contract was 18.7 billion rubles. The government expert assessment has determined the statutory duration of the construction project: 1,826 days (5 years). In that situation, Salov is wondering how could Sibmost win the tender at all, taking that it had reduced the project duration twice, to an unrealistic term of 2.5 years, and reduced the contract cost by 20% – from 18.7 to 14.8 billion rubles? “There are no doubts that all the current events are consequences of certain arrangements between Sibmost top managers and the Novosibirsk Municipal Administration... Can you imagine how strongly they wanted to win, what guarantees and arrangements were required for this? Let us ask a rhetoric question: who in the Novosibirsk Municipal Administration could provide such guarantees? Of course, it could not be the Head of the Administration for Road Construction Municipal Budgetary Institution of the City of Novosibirsk, neither could it be the Head of the Legal Department,” – Salov said. 

Sibmost has won the tender due to the fantastic reduction of the project cost and duration. Then it has, in fact, returned to the statutory duration of 5 years – the term that is actually required to construct such an object. However, Sibmost has decided to put the blame for the ‘disruption of construction deadlines’ upon the Municipal Administration – although the company management had never intended to complete the project 2 years ahead of the original schedule and clearly understood that the completion deadline must be extended. Vyacheslav Ilyukhin, a member of the Novosibirsk Council of Deputies, has reminded that back in 2011, Albert Koshkin had told Igor Levitin, the Aide to the President of the Russian Federation for Transport, that the third bridge in Novosibirsk would be commissioned in 2014. In the same period, during the video conference with Vladimir Putin, Koshkin stated that the construction should be completed in October 2014. “OK. You are currently on schedule, right?” – Putin asked Koshkin. “Yes, we are currently even ahead of the schedule,” – the Sibmost President responded. Apparently, patrons of Koshkin in the Novosibirsk Municipal Administration were fully aware that the construction deadlines are to be disrupted and never reacted to such his statements. 

Deputy Igor Salov has reasonably identified elements of a corruption scheme not only in the victory of Sibmost, but also in the chronology of the project implementation: “In 2010, the Municipal Administration, due to unknown reasons, – perhaps, out of humanitarian considerations – has paid a 10% advance to the contractor. Then, in 2012, – another 20% advance. This is a gross violation of the Federal Law №94, there were no such provisions in the municipal contract”. 

According to Salov, the most glaring evidence of the corruption scheme is the voluntary admission of the delay with the provision of lands by the Novosibirsk Municipal Administration – although, as Margarita Maslova has noted, the contract signed with Sibmost did not set specific procedures or dates for this. “We can not understand why the Municipal Administration had admitted, without litigation at law, its failure to provide the lands in due time. Based on this admission, Sibmost has filed a lawsuit requesting to compensate its losses in the amount of 2 billion rubles,” – Salov has emphasized. This is how the patrons of Sibmost in the Municipal Administration have helped the general contractor to resolve the second (after the unrealistic project duration) issue – the low cost of works. According to the parliamentarian, all attempts to resolve it in a different way have failed: “In 2013, Sibmost had addressed the Municipal Administration in writing suggesting to increase the project budget. The Municipal Administration has reasonably responded, referring to the federal legislation, that this was possible. It was necessary to perform additional calculations and address the representative authority (i.e. the Novosibirsk Council of Deputies) in according to the standard procedure. But this option was not acceptable for Sibmost. Apparently, there were no justified extra costs – only appetites and obligations to the patrons”. Therefore, Sibmost has made arrangements with some superior functionaries in the Municipal Administration, made up a story of allegedly sustained losses – and ultimately managed to get a favorable verdict in the arbitration court. 

“Sibmost has returned to the original completion deadlines by stating that it falls behind the new schedule. And now it has returned – through litigation – to the original project cost. In other words, the company wants to recover everything that it had ‘slashed’ during the tender” – Vyacheslav Ilyukhin, a member of the Novosibirsk Council of Deputies, agreed with his colleague. The parliamentary said: “It is necessary to strike all the bells, go to the Presidential Administration and explain that there is an insolent company that demands lost profits from us. Because there are no actual damages”. Deputy Igor Salov suggested to recommend the Prosecutor General’s Office and Federal Antimonopoly Service to check the Bugrinsky bridge construction contract signed in 2009.

Expectedly, not a single Novosibirsk politician dares to pronounce the names of officials responsible for the situation. Anatoly Lokot, the Novosibirsk Mayor, has stated that the acknowledgment of the claim would be “an acknowledgment that the team working here before me had committed serious violations”. Everybody knows that during the construction of the Bugrinsky bridge, Vladimir Gorodetsky was in charge of the Novosibirsk Municipal Administration. However, no one links this politician with the high-profile lawsuit because currently he is the Governor of the Novosibirsk Region.

Городецкий

Vladimir Gorodetsky, Governor of the Novosibirsk Region 

Vladimir Gorodetsky denies any guilt in this story. The Governor believes that the lawsuit filed by Sibmost is a “civilized way to resolve” an ordinary “economic dispute”. Furthermore, Gorodetsky even tried to convince everybody that the contractor has reasons to claim the money: “The contract budget had been calculated based on the prices of 2009; during the 4 years of construction, prices on many materials have officially increased by many percentage points, primarily, the prices on metal – the main element of the bridge. Therefore the contractor has arguments to request a compensation from the client”. Later, the Governor has promised that the Novosibirsk region would share the financial liability with the regional capital in respect to the Sibmost lawsuit and co-finance the compensation – which indirectly implies his involvement into the scheme.

However, no actual evidence of a corruption conspiracy between the ex-Mayor and Sibmost had been found so far: Albert Koshkin is an experienced businessman and knows how to make arrangements with officials without leaving traces. He had never been involved into corruption scandals – although his company wins tenders to construct bridges and roads in the region on a regular basis; these works are funded from the federal, regional, and municipal budgets. His largest projects to the moment are the construction of the Bugrinsky bridge across the Obi River worth 14.8 billion rubles and construction of the Northern Bypass of Novosibirsk worth 15.6 billion rubles. In 2013, Sibmost has won a tender to maintain 34 bridges in the Novosibirsk region and signed a contract to construct a road for the Industrial–Logistics Park of the Novosibirsk Region for 1.44 billion rubles – this cost will be covered from the regional budget. It is necessary to note that many parliamentarians of the Regional Legislative Assembly had repeatedly questioned the practicability of spendings on the Industrial–Logistics Park. However, their protests have brought no result: hundreds of millions of budget rubles are being spent on the development of the Industrial–Logistics Park; a major share of these funds goes to Sibmost.

Sibmost manages to get money from the regional budget even for accommodation of Ukrainian refugees. In 2014–2015, the Regional Complex Center for Social Adaptation of Citizens State Autonomous Institution has signed more than 10 contracts with the company to accommodate refugees in Zolotoy Bereg (Golden Shore) resort at the cost of 4.7 million rubles provided by the regional and federal budgets. In 2016, Sibavtoban, a subsidiary company of Sibmost, has won a major (some 700 million rubles) contract to construct two sections of Ob’edineniya street. Currently, this is the only project in Novosibirsk funded from the municipal and regional budgets despite the crisis. One kilometer of the first section of that road has cost 205 million rubles to the budget.

Albert Koshkin gets the lion’s share of budget contracts in Novosibirsk and the region not only because of his ability to get along with the officials, but also thanks to a lobby in the Regional Legislative Assembly – where his son Vladislav is a Deputy. Since 2015, this Deputy representing Edinaya Rossia (the United Russia) Party is a member of the Committee for Transport, Industrial, and Information Policies – which in theory allows him to influence the governmental funding of road construction projects. Concurrently, Koshkin junior is the First Vice President of Sibmost, Head of Sibmost-Invest, and Head of Sibmost-Stroyproekt Limited Liability Company, an Omsk-based subsidiary company of the construction juggernaut.

Кошкин

Albert Koshkin, President of Sibmost 

In fact, Albert Koshkin is perfectly capable to make arrangements with ‘right’ people on his own: Sibmost manages to win tenders not only in the Novosibirsk region, but in neighboring regions as well. For instance, in 2012, Sibmost has won a tender to build the forth bridge across the Yenisei River in Krasnoyarsk; in 2015, it won a tender to build a bypass around the town of Mariinsk in the Kemerovo region; in 2016, Sibmost has won a tender to construct a bypass road around Khabarovsk – this project is funded by revenues from the Platon Electronic Toll Collection system. The total cost of governmental contracts awarded to the company in the last five years exceeds 105 billion rubles; therefore, Albert Koshkin has been nicknamed ‘king of governmental contracts’.

The President of Sibmost has made a fortune on budget-funded projects – in December 2013, Status magazine estimated his value at 9.971 billion rubles. In 2012, the Siberian oligarch has been listed in the Forbes rating for the first time. The name of Koshkin is also mentioned in the Panama Papers: the native of Novosibirsk has been named a beneficiary of Caden Finance S.A. registered in Dubai. According to the dossier, his permanent residence address is 2 Chaplygina st., Novosibirsk. However, based on 2gis.ru, there are a dormitory and a hotel of the regional consumer's association at this location. Still, Albert Koshkin proudly bears a tile of an Honorary Resident of Novosibirsk – which has not prevented him from robbing the fellow townspeople through an enormous lawsuit.

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