Siberian face of Universiade-2019: Who siphons student games budget off?
Bitter struggle for budget funds allocated for construction of sports facilities for the Winter Student Universiade-2019 is ongoing in Krasnoyarsk. An influential local Deputy-lobbyist – and concurrently, the Director of Sibiryak (Siberian) construction company – used to win the lion's share of all the governmental contracts for a long time. But then Moscow-based ElinAlfa company backed by Senator Vyacheslav Fetisov managed to drive him back. The cost of the upcoming sports event continues to grow. Is this another major sinecure for contractors?
The Universiade-2019 is more than two years ahead – but Krasnoyarsk has already got used to scandals related to the construction of sports facilities for this event. The most recent incident has resulted in the dismissal of Ivan Akman, the Deputy Director of the Executive Directorate of the XXIX World Winter Universiade Autonomous Non-Commercial Organization. This venturesome man used his official position to help his father to make some money. In 2014, a decision has been made to build the Ice Arena for the Winter Universiade near the Fourth Bridge exit in the Sverdlovsky district of Krasnoyarsk. A road has to be built to the Ice Arena; it crosses a privately-owned piece of land. By a fortunate coincidence, in fall 2014 – when the construction of the Ice Arena and the access road were under consideration – the father of Ivan Akman had purchased this land lot for only 478 thousand rubles. Now the land must be bought out at the budget expense – and the businessman who had made such a good investment would get a sum exceeding the original cost manifold. Today, the cadaster cost of the land is 9.5 million rubles. It is impossible to predict how much the lot would cost next year – when the time comes to buy it for the road construction. But it is obvious that the government has to pay. And it also has to pay the businessmen who managed to privatize a part of a mountain on the Nikolaevskaya mound, where the main Universiade facilities will be located.
Ivan Akman was dismissed after the scandal
There is no criminal case so far because the land hasn’t been purchased by the government yet, and the owners haven’t gained the profit. But after a high-profile scandal in the local media, the Directorate of the Universiade decided to sacrifice Ivan Akman. On November 28, 2016, the official has been terminated “upon mutual agreement of the parties”.
This spring, the Executive Directorate of the XXIX World Winter Universiade Autonomous Non-Commercial Organization had already been at the center of a scandal. The Auditing Chamber of the Krasnoyarsk Krai has checked activities of the Directorate and identified violations related to expenses irrelevant to the construction and reconstruction of the sports facilities. As of the end of 2015, some 81 million rubles have been spent on goods, works, and services; out of that amount, 19 million rubles have been spent contrary to the current legislation. Only 37.5% of the acquisitions have been made on the competitive basis. The credibility of the estimated cost of the facilities also raises questions – an overcharge of 15 million rubles had been found.
But in fact, all these monies are little things. Billions are being made not on land lots or acquisitions – but on construction tenders for Universiade facilities.
The following facilities will be constructed or reconstructed for the Krasnoyarsk World Winter Universiade-2019: the Academy of Winter Sports, Bobrovy Log (Beaver Ravine) all-season sports and recreation park, Platinum Arena multifunctional sports and entertainment complex with an ice arena, Ice Arena located on Partizana Zheleznyaka street, Academy of Biathlon multifunctional complex, Arena Sever (North) multifunctional complex, Central Stadium named after Leninsky Komsomol, Sports Palace named after I. Yarygin, Rassvet (Dawn) ice palace, Pervomaisky indoor ice rink, and Yenisei stadium. In addition, a village will be constructed for the Winter Universiade-2019, including Peria (Feathers) and Universitetsky residential complexes and a multifunctional center of the Siberian Federal University Federal State Education Institution. The following health care facilities are to be reconstructed: the Regional Clinical Hospital and Krasnoyarsk Inter-District Clinical Hospital of Emergency Service Named after N.S. Karpovich; a Medical Center of the Winter Universiade-2019 Village will be constructed.
Krasnoyarsk-based Sibiryak (Siberian) construction company has already got a major share of the lucrative budget cake – it is a general contractor for six Universiade facilities. The company has won a tender to construct Peria student hostel complex at the cost of 1.3 billion rubles. It will also build Sopka (Mound) multifunctional sports complex at the cost of 1.7 billion rubles, reconstruct the Clinical Hospital of Emergency Service for 682 million rubles, and build Raduga (Rainbow) multifunctional complex and a start-complex with a ski stadium – parts of the Academy of Winter Sports complex located on the Nikolaevskaya mound – for 1.545 billion rubles. It will also build a road on Volochaevskaya street.
The wins of the Krasnoyarsk company could be appreciated – but there are certain doubts in their fairness. Sibiryak has won four tenders out of the six. Interestingly, the company has won two tenders despite the fact that its prices were not the lowest ones. The two other contracts had been won by Sibiryak on a sole source basis: Vladimir Egorov, the General Director of Sibiryak and concurrently a Deputy of the Municipal Council of Krasnoyarsk, is its main lobbyist. During the approval of the General Development Plan of Krasnoyarsk Until 2033, he managed to allocate most perspective development projects to Sibiryak, including Predmostnaya square in the center of the city and lands of the former Combined Harvester Plant, where an elite neighborhood will be erected.
Vladimir Egorov, the Deputy and builder
To outplay his competitors, Vladimir Egorov uses all the possible tricks. Back in the beginning of the 2000s, the businessman was involved into a high-profile criminal case against Valery Suladze, ex-Deputy Governor of the Krasnoyarsk Krai. In 2002, Egorov has given him – under the surveillance of the Federal Security Service (FSB) of the Russian Federation – a bribe of $250 thousand for major contracts to construct residential buildings in the framework of the North-South Program – and then Suladze was arrested in his office. Egorov was a witness in that criminal case. A few years ago, after losing a contract to construct an oncological center in Krasnoyarsk due to specific tender requirements (the same lot included both the hospital construction and provision of medical equipment), Egorov started sending complaints to the Governor of the Krasnoyarsk Krai, Legislative Assembly, and the Prosecutor’s Office. The loser had been accusing the winners of overcharging medical equipment prices. And he managed to obtain a decision of the Federal Antimonopoly Service of the Russian Federation recognizing the builders of the oncological center guilty of a cartel agreement.
Striving to win most lucrative governmental contracts, Egorov does not really care of the quality of works – as a result, Sibiryak has already been recognized the worst construction company in Krasnoyarsk. A glaring example: in 2013, Sibiryak had commissioned a student hostel complex consisting of three 25-floor buildings for the Siberian Federal University. In September 2014, a major fire had occurred in Krasnoyarsk and was broadcast by all federal TV channels: in a few seconds, the fire ran through a similar 25-floor high-rise building – a new home on Shakhterov street. The subsequent inspections have found that the building was finished with cheap composite panels of G3 flammability class not meeting the fire resistance requirements. Such panels can ignite from a cigarette butt or a spark – which has ultimately happened.
After the fire, large-scale checks have started in Krasnoyarsk. Dozens of buildings with ventilated facades – that could burst into flames like torches – had been identified. Their exact number and addresses had been classified – allegedly, to prevent a panic among the population. The authorities announced that there was no need to publicize the whole list because all the flammable facades would be removed and replaced with new ones shortly. However, the name of the person powerful enough to classify the list of flammable buildings has become known soon: a student hostel built by Sibiryak has got fire. The fire was extinguished promptly, but the dangerous panels are still in place – Egorov has enough connections to avoid the extra costs.
Egorov uses his colossal influence in Krasnoyarsk to completely close access to the Universiade pie for all outsiders. If he is unable to win immediately, he uses all possible methods to drive the competitors back. For example, in September 2016, a tender to build a road on Volochaevskaya street for 3.328 billion rubles had been announced. Novosibirsk-based Sibavtoban company, who offered to perform all the works for 3.278 billion rubles, has won the tender. However, Sibiryak – who offered a price 824 million rubles higher than Sibavtoban – did not give up and submitted a complaint to the Federal Antimonopoly Service. And pretty soon, the agency has agreed that the tender commission had wrongfully recognized Sibavtoban the winner – because this company failed to confirm its experience as a general contractor for the last three years. The bidding was officially annulled – and the contract has been awarded to Sibiryak – a bidder who had offered the highest price in comparison with other competitors. Its application was the only one meeting all the tender requirements.
However, one competitor turned out to be too tough for Egorov. This June, a tender to reconstruct the Academy of Biathlon (built, by the way, pretty recently – in 2011) for the Universiade has been conducted. The starting price of the contract was 1.275 billion rubles. Moscow-based ElinAlfa Limited Liability Company, who offered to perform the works for 1.23 billion rubles, has won the tender. Sibiryak, with its price of 1.2 billion rubles, has lost – and this time Egorov somehow did not rush to submit complaints.
But after the second winning of the Moscow company, the patience of Egorov has run out. This July, ElinAlfa has won a tender to construct the Ice Palace; its bidding price was 3.149 billion rubles – while the starting price of the governmental contract was 3.5 billion rubles. Altai-based ROU Co. Closed Joint Stock Company, who offered to build the ice palace at a cost almost 1.5 times lower than the starting price, was barred from the bidding. Sibiryak, who suggested to perform the works for 3.06 billion rubles, attempted to challenge the tender results. On the next day, the Krasnoyarsk company has addressed the Federal Antimonopoly Service asking to reconsider the results. The losing bidder had stated that the decision of the tender commission was illegitimate because the bidding application of ElinAlfa did not not meet requirements of the federal legislation: the bank security provided by the Moscow company did not include a statement of the right to demand transfer in case of a client change, and the pages in the document were not numbered. Strangely, but the Commission for the Governmental Acquisitions of the Federal Antimonopoly Service has agreed with Sibiryak – although the bank security of ElinAlfa was on one page and did not require numbering. The complaint by Sibiryak was found reasonable, and violations have been identified in the work of the tender commission. Still, the Federal Antimonopoly Service hasn’t annulled the tender results. Vladimir Egorov, the Director of the Krasnoyarsk-based company, has described the situation vaguely in his interview to Delovoy Kvartal (Business District) portal and did not provide any names: “I was asked to leave. I did not argue. We had been recognized right with regards to the Ice Palace. A weird decision: grant our request but not annul the tender protocol. Apparently, some powers have intervened. We could win the courts, but I abstained from this”.
It is unknown who is lobbying the interests of ElinAlfa in the Krasnoyarsk krai. But according to SPARK-Interfax, some Aleksey Mochalov, a person close to Vyacheslav Fetisov, a famous athlete and Senator, owns 100% of ElinAlfa Limited Liability Company, which has been registered in October 2005.
In that context, it becomes clear why Egorov “did not argue and fled”, leaving the most juicy piece to the Moscow competitor. It would seem that Krasnoyarsk only benefits if at least one Universiade facility is constructed not by Sibiryak. However, despite all the reputation of Egorov’s company, it is unlikely. The reputation of ElinAlfa is also not perfect. For example, in 2014, the Moscow-based company has won a tender to build Uralmash stadium in Yekaterinburg and constructed it in one year. But later the Auditing Chamber of the Sverdlovsk Region has reviewed the construction project and found violations totaling over 100 million rubles. ElinAlfa had called the claims of the auditors unreasonable, and this was the end of the story. But who can guarantee that a similar story does not occur with the facilities constructed for the Universiade-2019?
Taking that the biddings and tenders are being won not by those offering a lower price, but by those who have more power, it becomes clear why the cost of the Winter Universiade-2019 is growing steadily. The total cost of the Summer Universiade in Kazan was 228.4 billion rubles (including 80.6 billion – i.e. 35.3% – from private investors). The initial cost of the student games in Krasnoyarsk was 16.1 billion rubles (including 6.3 billion rubles from the federal budget and 9.8 billion rubles from the regional budget). In May 2016, the Krasnoyarsk Krai Government has increased the funding by 13.2 billion rubles (including 11 billion rubles from the federal budget and 2.2 billion rubles from the regional budget). Then the requested amount has increased to 52.5 billion rubles. And on November 30, 2016, Tatiana Aleshina, an Auditor of the Auditing Chamber of the Krasnoyarsk Krai, has commented the results of the monitoring of preparations for the student games and stated that the planned amount will not be sufficient. So far, 52 out of the 74 projects are being implemented, but it is already obvious that additional funding would be required again.
The prosecutors want the former Russian Federation Council member to go to prison for 14 years instead of 9 and pay a 500-million-ruble ($8.8 million) fine instead of 70 million rubles ($1.2 million).