Samara Governor was hiding from corruption charges? 

Samara Governor was hiding from corruption charges?
Prior to his disappearance, Governor Nikolai Merkushkin was seen last time at an official event on October 8, 2016

Residents of the Samara region remained confused in the recent weeks: they have lost their Governor. The people could not understand whether the Head of the region has fled abroad or was dismissed? Or maybe, arrested without a public notice? Some people supposed that Nikolai Merkushkin is seriously ill and receives treatment in a leading world clinic. Others explained his disappearance by numerous corruption scandals associated with his rule. But suddenly he returned and resumed his duties as if nothing had happened.

Fled? Resigned? Arrested?

Prior to his disappearance, the Governor Nikolai Merkushkin was seen last time at an official event on October 8, 2016 – at a meeting with Maksim Sokolov, the Minister of Transport of the Russian Federation, – but this was 34 days ago. Initially the Governor’s Administration had stated that Merkushkin is on a scheduled vacation; then 63.ru news portal reported, citing Ilia Chernyshev, the Head of the Governor’s press service, that Nikolai Merkushkin is back and performing his duties as usually. The Head of the region had been allegedly conducting work meetings and drafting an abstract for his annual message to the Deputies of the Samara Gubernia Duma and residents of the region.

But still, no one had seen Merkushkin at that time. ProGorodSamara.ru information portal notified the residents that the Governor will not attend the Memorial Parade on November 7, 2016 on Kuibysheva square in Samara – although Aleksander Fetisov, the Deputy Head of the Regional Government, had earlier promised that the event would start from a welcome address by the Governor.

Amid numerous speculations and rumors, the most popular versions were related to a possible resignation or serious illness of the Governor. There was also a version that the decision on Nikolai Merkushkin’s dismissal has been already made at the top level, but not publicized yet because the functionary is reluctant to leave the lofty perch.

The long absence of the Governor has resulted in his downgrade in the Russian media rating by 50 points at once – to the 65th position out of the 85. Merkushkin has also lost 8 points in the media mentioning rating of regional leaders of the Volga Federal District and found himself at the 10th position out of the 14.

Suddenly, on November 11, 2016, the governmental media reported that Merkushkin has met with Sergey Kandeev, the Minister of Finance of the Samara Region, and Oleg Fursov, the Head of the Samara Urban District. Although the press service had made several announcements on behalf of the Governor during his absence, finally, he was shown to the residents in person.

Меркушкин проводит встерчу

Nikolai Merkushkin, the Governor of the Samara Region, at the meeting with Oleg Fursov and Sergey Kandeev. Photo: Igor Kazanovsky

What sort of a Governor is he?

The whole life and career of Nikolai Merkushkin had been linked with his native Republic of Mordovia. Since 1995, he had been ruling it for 17 years. On May 12, 2016, he has assumed the office of the Governor of the Samara Region. His candidacy was approved by the Deputies of the Gubernia Duma following a proposal from the Russian President.

Samara residents unhappy with the performance of the new regional leader had repeatedly mentioned in social networks that he is an outsider for them and a henchman of the Kremlin. Merkushkin himself has also provoked numerous scandals.

For example, according to Novaya Gazeta, in August 2016, answering a question from a female employee of AvtoVAZagregat plant who complained on long delays with salary payments, he has accused the woman of abetment:

“What I want to say is: if you speak this way – never! Never! Go ask [for money] those who incite you,” – the Governor stated.

This dialogue occurred during a meeting between Merkushkin and residents of the Avtozavodsky district of Tolyatti.

According to Rosbalt information agency, on August 24, 2016, at a meeting with residents of the Leninsky and Samarsky districts of the regional capital, the Governor said that if the ruling party does not gain 97% of votes on the single voting day (September 18, 2016), it would be the fault of the residents that nothing is being done for them – while his conscience will be clear. The speech of Merkushkin implied that the federal support for the region directly depends on the number of votes for the ruling party.

Another high-profile scandal involving the Governor occurred in the end of 2015. According to Znak.com information agency, Samara blogger Dmitry Begun – charged with extortion – had confessed to posting in his blog, as per Governor’s orders, publications about high-ranked politicians, including federal-level ones. As a result, the enforcement structures have started a complex check of Nikolai Merkushkin’s activities.

Being an outsider in the Samara region, the functionary has come into conflict with a number of local politicians and businessmen. For instance, with creatures of Rostech State Corporation, which is very powerful in the region, and the team of Dmitry Azarov, the ex-Mayor of Samara, who has transferred to the Council of the Federation in 2014. 

Дмитрий Азаров

Dmitry Azarov, the ex-Mayor of Samara

Lobbied interests of alcohol producers

During the governorship of Merkushkin, the Samara region has been rumbled by corruption scandals on a regular basis. Back in 2013, the Federal Antimonopoly Service (FAS) of the Russian Federation has become concerned with his activities and initiated a case against the Governor due to violations of part 1 of Article 15 of the Law № 135-FZ of July 26, 2006 “On Competition Protection” and Article 15 of the Law № 381-FZ of December 28, 2009 “On the Bases of State Regulation of Trade Activities in the Russian Federation”.

The grievances of the Federal Antimonopoly Service were related to overzealous efforts by Merkushkin to secure interests of local alcohol producers. The head of the region had set a task to his subordinates: in two–three years, the share of vodka produced in the Samara region must reach 80% at the regional market. To pressurize retail chains, an additional – so-called voluntary – certification had been introduced for alcohol from other regions. In addition, the stores had to set a higher trading margin for imported vodka brands and provide more retail space for local ones. Incompliant retailers had been deprived from licenses to sell spirits by subordinates of Merkushkin.

A number of business structures and retail chains had opposed the active lobbyism for local vodka producers. The FAS suspected a personal interest of the Governor in such an open support for Samara-based distilleries. Later the case has been procrastinated and ultimately – forgotten. At least, no official reports on the case progress had been published.

Residence at a budget expense

Another corruption scandal directly involving Nikolai Merkushkin was related to the allocation of budget funds for improvement of the Governor’s residence. Legends circulate among residents of the region about an elite cottage community located on the bank of the Volga River near Pervaya Proseka street. Heads of all Samara ministries and governmental agencies – as well as Merkushkin himself and people close to him – live there.

According to Novaya Gazeta, a new road to the Governor’s residence has been built in 2015. Its cost was 60 million rubles. Based on the official documents, these budget funds had been allocated for different purposes.

Резиденция Меркушкина

Residence of Nikolai Merkushkin  

According to the Federal Register of Governmental and Municipal Contracts, in the period of 2012–2015, over 123 million rubles from the Samara regional budget had been spent for the improvement of the Governor’s residence. A half of that amount was allocated for capital renovations of administrative facilities, sewers, and lighting and security systems, while the other half – for capital repairs of pedestrian pathways, access routes, and septic tanks. In other words, the Administrative Department of the Governor, who was retaining the contractors, had not included the construction of a new 500-meter road into the project budget. In addition, the governmental contracts do not include any information pertaining to forest felling, asphalt laying, and safety barrier installation.

The construction of the new road was disguised in official documents as capital renovations of the existing transport infrastructure. Two companies have performed the works: Samaraportstroy Limited Liability Company and GlobexStroy Limited Liability Company. All contractors involved into the capital renovations of the Nikolai Merkushkin’s residence were affiliated with him. Since the Governor’s inauguration, these companies have received plenty of money from the Samara regional budget.

Conflict with the regional prosecutor

Nikolai Merkushkin had also a conflict with Murat Kabaloev, now-former Prosecutor of the Samara Region. The cause of the conflict between the two high-ranked functionaries was the reserve fund of the Governor established on December 29, 2012 by Decision № 255. According to this Decision, the Governor had the right to use the budget funds at his sole discretion for a variety of purposes, including other unforeseen expenses.

Murat Kabaloev, then-Prosecutor of the Samara Region, was indignant at the creation of a reserve fund for the Samara Governor at the expense of taxpayers – especially taking that Nikolai Merkushkin has granted himself the authority to use the funds at his own discretion. In fall 2015, Murat Kabaloev has submitted an official protest to the Samara Gubernia Duma requesting to declare the financing of the Governor’s fund from the regional budget illegal.

Мурат Кабалоев

Murat Kabaloev, the ex-Prosecutor of the Samara Region

According to the Press Service of the Samara Gubernia Duma, on November 23, 2015, at a scheduled session of the Committee for Budget, Finances, Taxes, and Economic and Investment Policies, the Deputies have declined the Prosecutor’s protest. This decision was based on paragraph 1 of Article 81 of the Budget Code of the Russian Federation that allows to establish reserve funds for executive governmental authorities, which include the Governor of the Samara Region. In addition, the Deputies have taken into consideration that heads of such regions as the Republic of Ingushetia, the Republic of North Ossetia-Alania, the Republic of Mordovia, the Chechen Republic and the Republic of Tatarstan also have their personal reserve funds.

The Prosecutor’s Office in the Samara Region disagreed with the decision of the Samara Gubernia Duma – demonstrating loyalty to the Governor – and appealed it in court. The case had been transferred from one judicial instance to another several times. The Superior Court of the Russian Federation has ultimately delivered the final verdict on April 13, 2016 and confirmed the legitimacy of the reserve fund creation and use by the Governor of the Samara Region.

According to Kommersant newspaper, the Prosecutor Murat Kabaloev had noted that officers of the watchdog authority used to find corruptogenic factors in official documents approved by the regional government and Governor even before the story with the reserve fund – but the regional authorities never fulfilled the requirements of the Prosecutor’s Office to rectify those.

In his response to an inquiry from Dmitry Litvinov, the Deputy of the Samara Gubernia Duma, Murat Kabaloev wrote as follows: “The resources of the fund are being used for financing of other unforeseen expenses by decisions of the Governor of the Samara Region. The term other unforeseen expenses does not allow to determine time frames, conditions, or grounds for the Governor’s decisions to allocate funds for various purposes”.

Still, Nikolai Merkushkin has won the case, and shortly after the Superior Court decision, the Governor started liaising with the Prosecutor General’s Office of the Russian Federation in order to remove the Regional Prosecutor from his post.

Personal treasury of Merkushkin

Accusations of corruption have been brought against Nikolai Merkushkin on a regular basis. For example, the Moscow Post has published interesting findings of the regional Chamber of Audit following an audit of activities of the Samara Regional Treasury of Assets State Unitary Enterprise in the period of 2011–2014.

It turned out that the regional budget has received only 3.3 million rubles in four years from the privatization of various assets. So, where is the rest of money?

The auditors have uncovered an illegal scheme involving sales of vehicles at artificially low prices. For instance, a new owner of a VAZ-21102 car purchased from the Samara Regional Treasury of Assets State Unitary Enterprise resells the car soon at a price 75 thousand rubles higher than its purchase cost. Or the real market value of a VAZ-21093 vehicle is 110 thousand rubles higher than the amount received by the regional budget from its sale. According to the auditors, this illegal privatization scheme has resulted in damages to the regional budget for the total of 20.8 million rubles.

Also, based on the official documents, the state unitary enterprise management had never used commercial premises with the total area over 3 thousand square meters – for example, the regional budget did not receive any money from the lease of Shakhterskaya Slava (Miners’ Glory) health complex located in the city of Anapa and belonging to the Samara region. The lost governmental income from the use of the commercial real estate in 2011–2014 is 34.2 million rubles.

Inspectors of the Chamber of Audit have supposed that the funds lost by the budget due to activities of the Samara Regional Treasury of Assets State Unitary Enterprise had to go somewhere. And it is unlikely that Nikolai Merkushkin was not aware of this.

Not only municipal officials flee from Russia out of fear to be charged with corruption – but also high-ranked functionaries: ministers, generals, and heads of federal agencies.

Гутенев

Vladimir Gutenev

Oleg Molchanov, the local political expert, has stated on October 10, 2016 that Merkushkin can be removed from his post any day. “The decision has been made a few days ago, but the dismissal order has not been published yet because it is still unclear who would be the successor,” – he wrote. He also stated that a candidate from Rostech State Corporation would be appointed the Head of the region; it could likely be Vladimir Gutenev, the former Counselor for the General Director of Rostech. Since then, no one had seen Merkushkin – as well as an order to dismiss him, though. Rumors were circulating that the Governor had been meeting with important people in Moscow to acquit himself and retain the chair.

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