Cost and conflict overshadows Sochi Winter Games

Corruption claims have dogged preparations for the Sochi Winter Olympics, writes Nataliya Vasilyeva

Cost and conflict overshadows Sochi Winter Games

AN interactive website launched last Monday by anti-corruption activist Alexei Navalny paints a vivid picture of the suspected cost overruns and conflicts of interest at the Sochi Winter Olympics.

Russia has spent about €37bn to deliver the Sochi Olympics, making them the most expensive games ever, even though as a winter event it hosts many fewer athletes than summer games do.

Navalny claims that Russia spent twice as much as necessary to build at least 10 of the Olympic venues — including the Bolshoi Ice Palace, the Fisht Stadium for the opening/ closing ceremonies and the speed-skating arena.

Allegations of corruption have dogged preparations for the Sochi Games for years. Navalny’s new website — sochi.fbk.info — combines data gathered during his own investigations along with media reports and other activists’ analysis.

Using colourful graphics, the website makes a wide range of data accessible in English and Russian.

“Athletes are not the only people who compete in Sochi,” Navalny, who finished a strong second in Moscow’s mayoral election last year, wrote on the website. “Officials and businessmen also took part in the games and turned them into a source of income.”

Vladimir Putin, the president, has rejected claims about rampant corruption in Sochi, saying the inflated prices were due to the honest mistakes of investors who underestimated the costs.

“If anybody has got this information, please show this to us,” Putin said in a recent television interview. “But so far we haven’t seen anything except speculation.”

A 2012 report by the government’s Audit Chamber found about 15bn roubles (about €370m) in “unreasonable” cost overruns in the preparations for the Sochi Olympics. Auditors found that the work of some staff members at Olympstroi, the state company in charge of Sochi construction, between 2008 and 2010 was “conducive to incurring unreasonable cost overruns”. At least three criminal investigations against Olympstroi employees have been opened, but none of them has reached court. Olympstroi has since changed its management.

The Sochi Organising Committee would not comment on Navalny’s new website. When asked about it, Thomas Bach, president of the International Olympic Committee, said it stands “against any form of corruption”.

“Whenever there have been concerns and accusations and information in the past, they have been passed on to the organising committee,” Bach said.

Navalny does not seem to provide solid evidence of how money was stolen during the many Sochi construction projects. This has proven extremely difficult to do, because the games were not covered by Russian laws on tenders and procurement, making officials unaccountable for the money spent.

Olympstroi was given free rein by Putin to “determine the ground rules for selecting investors and contractors” for Olympic venues. This created fertile ground for corruption in the allocation of funds, according to Ivan Ninenko, deputy director of Transparency International in Moscow.

Olympstroi “is even less transparent than companies in [Russia’s] state-owned sector, where corruption is rife”, he said.

The total amount of state contracts overseen by Olympstroi was about 700bn roubles, or €16.2bn, according to deputy prime minister Dmitry Kozak, the government official in charge of the games.

A website Navalny set up in 2010, called Rospil, has monitored thousands of Russian state contracts and appealed to law enforcement agencies to get the murky ones annulled. Rospil has been successful in overturning nearly 130 contracts worth nearly €1.48bn in taxpayers’ money. Not for the Sochi Games, though. “Opportunities for public control are very limited” for Sochi contracts, said Konstantin Kalmykov, who works for Navalny.

All it takes is a presidential or government decree to award a contract to a specific firm. “If there were regular public control in place, that would be a big factor in saving funds and increasing efficiency of spending,” said Kalmykov.

Navalny’s new website lists several Sochi construction projects with evident conflicts of interest. In one of the most glaring examples, the Ice Cube curling stadium was built by a company controlled by businessman Alexander Svishchev, the father of Dmitry Svishchev, president of the Russian curling federation, the website said, citing public records. One of the key beneficiaries of lucrative Olympic contracts was Putin’s childhood friend Arkady Rotenberg. Through a majority-owned subsidiary, Rotenberg holds nearly 39% of the Mostotrest company, which amassed a dozen Olympics-related state contracts to build nearly all of the highways in the area.

“The biggest contractor is Arkady Rotenberg, who is — surprise! — Vladimir Putin’s friend,” Navalny said. “And we saw here the same people who are Vladimir Putin’s friends and who traditionally win such big tenders.”

Mostotrest’s contracts in Sochi amounted to €2.2bn, including a €1.18bn bypass for Sochi, as well as tunnels, bridges and railroads, the company confirmed to the Associated Press.

The Russian business daily Vedomosti in 2009 analysed scores of tenders for Olympic contracts and discovered that the majority of bids were very close to the maximum the state said it would pay and in many cases bidders were barred from running, leaving one company to claim the contract. Mostotrest won the €1.18bn bypass contract after firms owned by tycoons Oleg Deripaska and Roman Abramovich dropped out of the competition in 2009. Mostotrest offered to build the road for 59.36bn roubles, just barely below the maximum state price of 60.9bn roubles.

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