I am watching with great alarm as this elephant in the room—this **ELEPHANT**—goes unnoticed and is barely discussed. This is important, so let me try to explain.
This concerns transport, and public transport in particular. There is no shortage of discussion—they talk about everything from tolls for entering the MKAD (Moscow Ring Road) to some nonsense about little dogs that will help parking attendants.
Meanwhile, the crooks in the Moscow city government and our dear transport minister, Liksutov, are rolling out a scheme that demands the urgent attention of all Muscovites. Mandatory attention, because our next chance to change anything will come only in 30 years.
This is about the procurement of railcars for the Moscow Metro, which has turned into a massive scam.
Here’s how it happened:
Public discussion about Moscow urgently needing to buy some unimaginable number of railcars began a year and a half ago. In March 2013, Sobyanin gave an interview to Vedomosti (a Russian business newspaper), where he described the Moscow Metro’s near future in great detail—and at times with outright enthusiasm.
Sobyanin complains that until now the Metro had supposedly been “forced” to buy railcars from Transmashholding, but now, he says, the situation is about to change.
That is pleasant news to read. Especially in light of the fact that at the time, Sobyanin’s subordinate, Deputy Mayor Maxim Liksutov, may or may not have been a shareholder in Transmashholding, while actively getting tangled up in the question of when exactly he sold his stake.
Back to the article about the railcars:
And we, too, rejoice along with Sergei Semyonovich and the “representative of the transport department.”
The claim about the size of the order is absolutely true. We reviewed reports on railcar purchases by other major metro systems around the world, and nowhere did we find orders of such colossal scale.
That interview was given in March 2013. I deliberately quoted it at length, because nothing illustrates better the scale of the lies and incompetence that is obvious today.
Apparently, Siemens staff read that interview too and quickly began preparing in earnest:
In the fall of 2013, several months before the tender was announced, Siemens brought a full-size mock-up of a metro car to an exhibition in Shcherbinka.
In the video, the then-head of the Metro praises the design, spins tales about localizing production, and talks about imminent participation in the tender.
The tender was ultimately announced at the very end of 2013, and the results became known in February 2014. The Moscow Metro purchased 832 railcars together with 30 years of maintenance for 144 billion rubles.
Contrary to the hopes and enthusiasm of Sobyanin, Besedin, and Siemens, only 2 companies took part in the tender. Both were part of the TMH holding group.
And after that, such a mess began that it is hard even to reconstruct what happened.
In January 2014, even before the announced tender for 832 cars had been completed, they were already saying that another 2,200 would be purchased. This is unbelievable—stop already!
“Interest” in the tender is now being shown not only by Siemens, but by several other foreign manufacturers as well:
Four months later, in April, Moscow government minister Reshetnikov says that they are just about to buy 1,500; then in May:
As for the participants? Same as ever:
But in May, nothing happened. No tender was announced for either 1,500 cars or 2,200.
In August, things started moving again. 4 participants, 3 of them international, intended to take part in the tender in September.
Want to guess what happened in September? Nothing. Another postponement:
A September article said the purchase would be smaller in scale, while the number of contenders would be even greater. No fewer than 6 companies were lined up at the starting line!
And finally, in October, the long-awaited event took place. A tender was announced for the purchase of 768 railcars for 133 billion rubles. From the chronology above, you might think that the Moscow tender platform had become the scene of a real bloodbath among competitors—that Siemens, CAF, Bombardier, and Hyundai had all entered a fight to the death over this enormous and very expensive contract.
One participant. A Transmashholding structure. No foreign companies at all—the very ones Sobyanin had pinned such hopes on. No joint ventures with production in Russia. Another batch of railcars, along with 2 depots for 30 years of use, goes to Transmashholding.
I will never tire of reminding you: this is the very same Transmashholding in which Liksutov was a shareholder until his sham divorce (and we are convinced he still is).
And the talk in September about a “reduced delivery plan” also turned out to be a lie. The 1,500-car plan was simply split into two separate contracts: 768 cars were announced in October, and by the end of the year they promise to announce another 736. That makes 1,504 cars.
Even before the formal end of the tender, it became known that two potential participants—Bombardier and CAF—had filed a complaint with the regional office of the Federal Antimonopoly Service (UFAS) about what we had all already begun to suspect:
The companies claim that the tender documentation was written in such a way that only TMH could meet the stated requirements. These include, for example, the requirement that participants have their own design bureau and prior experience manufacturing metro cars in Russia. The companies also argue that unjustifiably strict requirements were imposed on bidders’ net profit—it had to be at least 1 billion rubles annually starting from 2011.
UFAS found the complaint partially justified, but the tender was not canceled.
And it would seem that this could have been the end of it. TMH had “muscle-flexed” its way into yet another 133-billion-ruble tender. Obviously there would be another one for 128 billion. But no. From yesterday’s publication by Kommersant , we learned some astonishing news.
Despite the fact that TMH had not yet officially won the tender to supply 768 railcars (the results were to be announced on December 8), it had already asked for state support, claiming that without budget funding it would be unable to deliver the cars.
And even details like these became known:
At a personal meeting with Putin, three weeks before the tender results were announced, Bokarev discussed with him the fact that they would need budget money.
To sum up, here is what happened over the course of the year with the procurement of metro railcars:
The moral of the story is simple: they have been stringing us along the whole time. Sobyanin was misleading people at the start of 2013, and they kept doing it throughout 2014—promising foreign participants, a competitive tender, the best prices and terms. All year long they were cooking something up, changing their promises, postponing things, and for some reason splitting one huge 400-billion-ruble procurement into three smaller ones. Two of them have already gone to TMH, and the third is obvious as well. It will use the same documentation, the same impossible requirements, and it is unclear why this tender charade is needed at all.
One way or another, Transmashholding wins the tenders. In 2014, it won two tenders worth 277 billion rubles and will most likely win a third any day now, bringing the total to 405 billion rubles in 2014 alone.
And the saddest part is that they are doing it quietly, and we almost missed an event of this scale. It passed somewhere on the fringes of the media, even though it should have been front-page news. Just think about it: we are talking about twice the “official” budget of the Olympic Games in a single year. And all of it went to one company, TMH—without anyone else even having a real chance to bid.
The former (let’s say) shareholder and executive of this fortunate company, Maxim Liksutov, is now the head of the Moscow Department of Transport—the agency to which the Moscow Metro reports directly. He served on Transmashholding’s board of directors for 8 years, from 2003 to 2011, and then went straight to Moscow City Hall. After that, in rather strange fashion, he sold his stakes, divorced his wife, and “forgot” about offshore companies registered in his name.
In our assessment, this situation is an example of a gigantic conflict of interest that requires the immediate attention of journalists, City Hall, and residents.
In any case, what we are seeing is a contract of enormous scale—one that will affect public transport in Moscow for decades—being awarded not in a model, transparent manner, as it should be, but in murky circumstances.
I would very much like reporters from *Vedomosti*, RBC, *Forbes*, *Kommersant*, *Slon*, and other outlets that work well with numbers and facts to really dig into this situation. Because, once again, we are discussing little dogs helping parking attendants, but not fraud on the scale of 405 billion rubles.
We are also looking into this ourselves and will present our conclusions later. If you know anything related to any of these tenders, past TMH deliveries, or any related matters, please write to Black Box.