To mark the opening of the cycling season, the Anti-Corruption Foundation has prepared an investigation into how much the flashy bike-sharing scheme organized by Sobyanin and his "effective manager" Liksutov cost taxpayers.
This investigation took us a bit longer than planned: there was very little information available, and, more importantly, it was hard to work with our jaws constantly dropping at the scale of the astonishing theft/waste of budget money and the sheer incompetence of Moscow City Hall and its transport department.
Here’s the story. Everyone has seen the city bikes whose season opened the day before yesterday:
According to official data, Moscow City Hall paid 450,000,000 rubles from the budget for the bike-sharing system (4,500 bicycles and 300 stations). That comes to 100,000 rubles per bike. At this point, one might already say, "that’s outrageously expensive, it’s not worth it," but the reality is much worse.
In addition to the 450 million from City Hall, another 300 million in sponsorship money was paid by Bank of Moscow, a state-owned bank within the VTB group. In return for this sponsorship contribution, Bank of Moscow was entitled to advertising space and "branded" red bicycles. Again, you want to say: "that can’t be right—where have you ever seen a bicycle cost 167,000 rubles?"
But that’s still not all. Looking at the photo, we can see that the bike-sharing system has another sponsor, also state-owned:
It turns out that Sberbank is involved too. And apparently on the same scale as Bank of Moscow. Despite several official requests we submitted through the media, both Sberbank and the Traffic Management Center (the project customer on behalf of the Moscow Transport Department) refused to disclose any details of this sponsorship. This tender is also nowhere to be found on the procurement website. Kommersant reports that the total sponsorship contribution was 600 million rubles, which supports our hypothesis that Bank of Moscow and Sberbank each chipped in 300 million.
Let’s use that figure as our baseline. Total: 1,050,000,000 rubles.
Every time TV and Liksutov’s paid bloggers try to sell you the line, "oh, how wonderful, they gave us bikes, this is real Europe now," remember that each bicycle, together with the parking and rental infrastructure, cost the Moscow budget and state-owned banks 233,000 rubles. At the exchange rate at the time, that was about $7,700 apiece. Not bad.
So why is it so expensive?
The only explanation for such an astronomical cost is that the bicycles must apparently have a small time machine built into them. Look: the tender for supplying the rental system was completed on June 26, 2014.
And that was only the tender—the paperwork stage. After that, according to the project documentation, the system still had to be developed and 4,500 unique bicycles with sophisticated terminals had to be delivered to the city.
And yet on June 9, 2014, Sergei Semyonovich Sobyanin and Maksim Stanislavovich Liksutov were already inspecting a completed rental station with new bicycles, a new payment system, and even new Sberbank branding. There were still 17 days left before the tender for supplying what they were inspecting would even be completed! Isn’t that miraculous?
That should give you an idea of just how honest that tender was and how the money side of things was handled.
Now let’s look at what actually happened, using data and statistics for the full 2014 cycling season.
According to the contract that Liksutov’s agency, the Traffic Management Center, signed with the obscure company JSC "Citybike," the 450 million rubles were split evenly over three years. For 2014, City Hall paid 150 million rubles.
The documents for this state procurement clearly specify the quantity and timing of the services: 4,500 bikes starting in 2014.
By the way, I recommend that everyone download the file titled "lot documentation" from the set of documents provided.
It captures the reality of this procurement with piercing honesty and remarkable accuracy.
Bank of Moscow’s 300 million ruble sponsorship contract was spread over four years. Based on Kommersant’s reporting, we assume Sberbank had the same terms, meaning the two banks paid another 150 million rubles for 2014. According to the procurement documents, the scope of services provided matches what was described above: they place advertising at the same 300 stations.
So in 2014, the bike-sharing system cost 300 million rubles, half of it fully funded from the budget and the other half provided by state-owned banks.
The catch is that there were never anything close to 4,500 bicycles and 300 stations. In reality, only half as many stations were installed, and there were only about 1,500 bicycles.
Here is Liksutov’s outright lie, dated October 2013:
The official City Hall website provides detailed statistics on the number of rental stations. On July 3, 2014, Moscow had only 41 stations in operation with 480 bicycles. More precisely, 480 bicycle slots, meaning the actual number of bicycles must have been even lower—there should have been some empty spaces at the stations.
That means more than 4,000 bicycles were not delivered, in violation of the terms of the contract signed by City Hall.
By September 29, at the very end of the season, the number of bicycles had risen to 1,396.
And apparently, in pursuit of nicer-looking reporting figures, City Hall added a few more stations by October 2014:
By the end of the 2014 season, Moscow had 150 stations and, by the most generous estimate, 1,700 bicycles.
The number of stations and bicycles at them does not comply not only with the terms of reference in the main state contract, but also with the provisions of Bank of Moscow’s sponsorship contract.
The latter clearly states how many stations there should be and by what deadline:
But according to the Moscow Open Data portal, as of October 3, 2014, there were only 121 stations in total.
Even though the operator is required under the contract to send almost daily reports to the Moscow government, we know almost nothing about how Muscovites actually used the bike-sharing system. All our requests were met by City Hall with a nasty brush-off.
Here are at least some figures from velobike.ru (the official website of this bike-sharing system):
That means 4,688 rubles in public money were spent on each of the 64,000 people who used the bike-sharing system. For not much more than that, everyone who rode one of these bikes for even 10 minutes could simply have been given a bicycle of their own.
Each kilometer ridden on a rental bike actually costs 284 rubles. Compare that with taxi fares, for example:
Independent websites, Liksutov himself, and plain common sense all suggest that in 2014 those 64,000 users made about 80,000 trips in total.
Thus, the actual cost of a single bike-sharing trip in 2014 to the Moscow budget and the sponsoring state-owned banks was 3,740 rubles.
Is that normal?
The average trip is unlikely to last more than an hour, so the cyclist himself pays only 150–200 rubles for the ride. Moscow City Hall also left unanswered the question of payment—where this money goes and how it is spent. We were unable to find any trace of these revenues.
The issue of payments deserves separate attention altogether, because at present there is no open data on this topic. None at all.
The main state contract for 450 million rubles does not specify where the money from bike-rental payments goes. Every other clause is spelled out in great detail, including the methods by which payment can be made, but which account it goes to—or even whether it goes to the contractor or to the Moscow budget—is unclear. It creates the impression that this issue is being deliberately avoided.
We all remember the offshore scandal involving the company that owned the paid phone number used for parking payments in Moscow. At present, it is unknown whether the money from bike rentals goes directly into the Moscow budget, passes through offshore companies, or whether the crook Liksutov hands it straight over to his wife, from whom he is "divorced".
We do not know, but experience shows that wherever things are unclear, there is always some kind of fraud.
By July 1, 2015, Liksutov had promised only 300 stations and 2,700 bicycles.
This stops making any sense at all, first because the contract specifies one and a half times more bicycles for the same number of stations, and second because that number of stations should have been opened a year earlier.
But in any case, we are documenting this promise and very much want to find out whether Liksutov lied this time as well.
In summary: the bike-sharing project implemented by Sobyanin and Liksutov is either (a) a disgrace and criminal negligence, (b) embezzlement of budget funds, or—most likely—(c) both at once.
The Anti-Corruption Foundation is filing criminal complaints over corruption and continues to demand clear and direct answers from Moscow City Hall to the following questions:
- how much money in total was spent on public bike sharing, and what share was contributed by one of the project’s main sponsors, Sberbank, - which accounts receive the money from bike rentals, and who owns those accounts, - why in 2014 the Moscow government decided to fund the project at roughly 150 million rubles per year if in 2013 the project had been carried out with private money and was deemed successful, - why, according to media reports, on June 9 "Sergei Sobyanin inspected the updated Moscow bike-sharing system" when the tender for installing the bicycles and public rental stations was only completed on June 26, 2014?
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