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«    March 2017    »

Where were the budget billions allotted for airport construction for the World Cup 2018 spent? Investigators are looking for the answer

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Where were the budget billions allotted for airport construction for the World Cup 2018 spent? Investigators are looking for the answer

Why was an unsavory businessman given billions for the reconstruction of the largest Russian airports?

In November 2015, the Director of the “MDS GRUPP” company, Sergei Solodovnikov, was arrested on suspicion of fraud in Moscow by transportation police officers. A criminal case was opened against him according to p.4 art.159 of the Criminal Code (Fraud committed by an organized gang, or over an especially large amount). However, he was soon freed. What is the explanation for this?


A famous person

The media reported that the businessman was an accessory to large-scale theft during the construction and reconstruction of Domodedovo airport and during the reconstruction of Koltsovo airport in Ekaterinburg.                    

Sergei Solodovnikov is quite well known in the construction community. He is Director General of several construction companies, including “SU №1” Ltd. (construction of airfields and roads), “Aerodromestroy” Ltd. (construction of airfields and roads), “MDS” Ltd. (construction of buildings and structures), “Science and technology design institute for transportation infrastructure” Ltd. (design and scientific research work).

All these companies are in the “MDS-GRUPP” GC, headed by the same Mr Solodovnikov. Besides this, according to the Moscow region Arbitral Court Order dated October 13th,2015, JSC “SU №35” is the legal entity affiliated with and under the control of “SU №1” Ltd.

“MDS-GRUPP” includes Shackle Management Ltd., which is confirmed by the Moscow Arbitral Court Order dated December 9th, 2016. Running ahead of the story, it was this company that cancelled a debt to “Alfa-Bank” JSC for 428m roubles with regard to case №А40-154621/15 (in an expert’s opinion).  The question is: whose money is it?

The main activity areas of Solodovnikov’s holding are the design, construction, maintenance, repair, and reconstruction of bituminous-concrete and concrete surfaces of aerodromes and roads.

Sergei Solodovnikov is said to be closely connected with Sergei Sobianin: when Sobianin was the Tumen regional governor, the companies headed by his namesake businessman used to receive large contracts for federal-level orders.


Construction pyramid

In May, 2012, the “SU №1” company received an order for the reconstruction of Koltsovo airport in Ekaterinburg for 3.1 bln roubles from FSUE (Federal State Unitary Enterprise) “Civil airports authorities”. Within the preparation for WC-2018, the runway repairs were planned, as well as the replacement of lighting navigational aids.   

According to the contract, all the work had to be done before 2014. However, the contract conditions were not followed. The unfinished work was assessed at 640m roubles.

Experts explained the contract’s breakdown by the company’s parallel construction and repair of other objects alongside the reconstruction of Koltsovo airport. It concluded that the construction of other objects happened at the cost of the money allotted to the airport’s reconstruction.  As a result, the head of the repair work in Koltsovo airport resigned from his position and disappeared.

Where were the budget billions allotted for airport construction for the World Cup 2018 spent? Investigators are looking for the answer


A lack of financing or of conscience?

Over the course of time, “MDS-GRUPP” widened the business’s geographical range and received a tasty morsel: the governmental order for the construction and reconstruction of runways and turn-off strips in Domodedovo airport. The total cost of the project was about 35 bln roubles.

The work was to be carried out as part of the preparation for the Football World Championship 2018. In particular, 3.5 bln roubles was allotted in advance from the state budget for the construction of the third runway. The contract for construction and assembly work was concluded between FSUE “Domodedovo airport authorities” and “SU №1” Ltd. at the end of 2012.

In the summer of 2016, a criminal case was started against Solodovnikov. As the investigation ascertained, the “SU №1” company performed only part of its obligations: while reconstructing the first runway, work costing 440m roubles had not been carried out. The builders had not connected the electric power supply to the floodlight towers, had not put lighting navigational aids into operation, etc.   

In this regard, FSUE “Domodedovo airport authorities” filed a lawsuit with the Moscow Region Arbitrary Court. “SU №1” was charged more than 27m roubles for the delay in fulfilling its obligations. It became clear from materials brought to court by the plaintiff that the constructors’ debt was more than 500m roubles.  

Where were the budget billions allotted for airport construction for the World Cup 2018 spent? Investigators are looking for the answer

“SU №1” conducted the reconstruction of the second runway. The construction of the object, costing 13 bln roubles, was supposed to be completed in 2016, but the constructors will not manage to commission the object within the planned terms. Also, problems arose with the construction of the third runway which was also supposed to be commissioned in 2016.

The investigation ascertained that part of the 3.5 bln roubles advance was directed to credit repayment, and the other part ended up in the accounts of fly-by-night companies supposed to be controlled by Solodovnikov.

Besides this, it was discovered that the work actually conducted in Domodedovo did not correspond to that described in the acceptance certificates.  For example, the “SU №1” company had actually fulfilled only 10% of the total volume of work within the terms specified in the contract. The Director General of “SU №1” explained all of the violations very simply: a lack of financing.

But it seems not to be down to a lack of financing but a lack of conscience, doesn’t it? We hope to get the answers from the investigative authorities soon.  




Expert opinion

Vladislav Zemlianoy, Director General of the First consulting-investment company (“PKIK”Ltd. is also a claimholder of the “MDS-GRUPP” holding):

All of the detected violations were explained by Solodovnikov as being down to a lack of financing. However, one can see all payments that were made by “SU №1” JSC according to governmental contracts for the reconstruction of Domodedovo airport on the website zakupki.gov.ru in the “Documents” section. Execution acts filled in by the government are also published there. They show the volume of the governmental order execution.  

With consideration for the execution depicted on the website, the debt currently totals 2.8 bln roubles. 1% of the work has been fulfilled, which the data from the state procurement website confirm. The total cost of governmental contracts concluded with “SU №1” JSC for the reconstruction of Domodedovo airport is about 15 bln roubles. It follows that the construction work at Domodedovo is not being conducted properly.

The money was delivered via “Promsviazbank” JSC. “SU №1” received only the advance of 3 bln roubles, but where the money is – that is the question. The RF advance payment under the governmental contract for the reconstruction of Domodedovo airport for the WC 2018, equalling 2,982,154,547 roubles, was conducted according to the following transfer orders:

  • TO №471332 dated August 4th 2014 for the sum of 2,400,000 roubles;
  • TO №625 dated December 8th 2014 for the sum of 90m roubles;
  • TO №182777 dated December 24th 2014 for the sum of 360m roubles;
  • TO №567097 dated February 11th 2015 for the sum of 45,560,607 roubles;
  • TO №640262 dated February 19th 2015 for the sum of 44,219,790 roubles;
  • TO №747284 dated March 4th 2015 for the sum of 42,374,149 roubles.

All the money was to be directed to the reconstruction and consturuction of runways. Thus, under the governmental contract, “SU №1” received 3 bln roubles. Solodovnikos says that the financing was bad, though the advance payment was not 90% fulfilled, but according to the documents, 99% of the work was not fulfilled. 

Is “Promsviazbank” an accessory – that is another question. Additional checks are currently being carried out.

From our point of view, “SU №1” is an unconscientious contractor (art. 10 of the RF Civil Code), which constantly exploits its rights. Everybody who works in the sphere of construction should know this, to understand the risks in contracting with the companies owned by Sergei Solodovnikov… 76 executive procedures and hundreds of court cases a year, in spite of the crisis, according to the data at kad.arbitr.ru. A great number of cases are about payment delays. This is an exploitation of rights.  

The RF Prosecutor’s Office is currently conducting checks on the enumerated facts for the constituent elements of a crime under several articles of the RF Criminal Code.

But the main question – where are the 2.8 bln roubles? – has not been answered yet. And I wonder if everything will be ready for the WC 2018 guests’ reception at Domodedovo airport. Maybe the investigators will answer this question?


At the same time

The Audit Chamber has criticized the efficiency of Rosaviation’s expenditures on the implementation of the programs for subsidizing inner air transportation services and airport infrastructure development. Valery Bogomolov, the Audit Chamber officer, spoke about this at the Council of Federation sitting within the “goverment hour”.

In particular, the auditor said that Rosaviation has executed less than 60% of the budgetary allocations for the preparation for WC 2018. 11.1 bln roubles from the federal budget were unused by January 1st 2016.  This resulted from the late governmental contract conclusion (Koltsovo and Nizhny Novgorod airports), and the contractors’ failure to stick to the terms (Domodedovo, Khrabrovo, Saransk airports).

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