Corruption Weekly: 11-15 December

Our weekly digests of the most interesting investigations
18.12.2017
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December 12, Transparency International - Russia came out with an investigation on public procurement for road construction for the 2018 FIFA World Cup. The organization’s office in Ekaterinburg conducted analysis in 11 Russian regions where the competitions will be held, as well as in the Udmurtia region.

Authors of the investigation found 435 purchases with violations. Almost two thirds of the tenders involve additional requirements for participants suitable for the ‘right’ contractor. In addition, journalists found cartels connected with the authorities almost in every region.

The damage from such procurements was estimated at 2.5 billion rubles.

On December 13, RBC told about individual entrepreneurs receiving the largest state contracts in Russia. The rating includes 15 businessmen. The first place was taken by 38-year-old Muscovite Alexei Sharkov, who supplies rubber products to Russian Railways (3.31 billion rubles). The second in the list is Ekaterina Fraas from the Chelyabinsk region. She supplies food to regional hospitals and schools (2.13 billion rubles).  On the third place is 45-year-old Alexander Utemov from Chelyabinsk. He supplies drugs to the local network of state pharmacies (1.8 billion rubles).

The ‘IP’ status, or ‘Individual entrepreneur’, has many advantages: an entrepreneur can extract money from the cash desk in any amount and for any purpose, as they work under special tax regime, and the Administrative Code provides milder punishment for them.

RBC also notes that the law allows turnover of no more than 120 million rubles a year for firms with tax preferences. Bur in fact, businessmen with higher revenues still have the status of ‘IP’.

On the same day, The Daily Beast reported on the blocked bank accounts in Cyprus belonging to Russian billionaire and head of ONEXIM group, Mikhail Prokhorov. According to the publication, the businessman had money on 23 accounts of the Bank of the Federal Bank of the Middle East (FBME Bank Ltd.). The accounts formally belong to people connected with companies registered in the British Virgin Islands.

In 2014, the US Treasury Department accused the bank of money laundering, arms sales, evasion of sanctions and financing of terrorism. In May of this year, the bank was closed because of its failure to comply with the law on countering legalization of funds received by criminal means.

On December 14, TV Rain released the second part of a documentary about Vladimir Putin and his associates who worked with him in St. Petersburg. Journalists found state contracts that Rothenberg brothers have received for the last year. It turned out that together they got almost 600 billion rubles of budget money. The state funds were allocated for construction of the Kerch bridge, the Platon system and demolition of five-story buildings in Moscow.

"Rotenbergs have been successfully working with state contracts for a long time, and this is often connected with the fact that Arkady Rotenberg used to train as a child in one section with Vladimir Putin. The entrepreneur himself denies this connection of his childhood friend to his business success," TV Rain reports.

P.S. Business Petersburg edition conducts its annual analysis of business on Nevsky Prospekt in St. Petersburg. This year, the publication has made an interactive map showing owners of the buildings from Square of Vosstaniya to Dvortsovaya Square on both sides of the avenue. The project was published on December 1. 

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