The story of the construction of Zenit Arena is the story of Russian state capitalism.
In principle, it’s a fairly simple structure. Not a standard one, of course, but, sorry, it’s not a crystal bridge on Mount Everest either. Large stadiums are built quite successfully all over the world, including in developing countries.
They poured in a sea of money, then an ocean of it. And, naturally, stole half an ocean. Every time, everything was supposedly taken under “personal control.” They changed contractors. They fiddled the contracts. There was constant duplication of work (asking for money for things already paid for/done). They even claimed they would bring in paratroopers to help with construction.
Just the other day, they finally set a final completion date (after yet another allocation of enormous sums of money). And they still failed to deliver on time, so another billion rubles was allocated.
The ACF (Anti-Corruption Foundation) says the latest state contract is once again a scam and a falsification. Its justification is an “emergency situation that has occurred.” An obvious lie meant to circumvent competitive procurement rules.
Our demand: the St. Petersburg Construction Committee (the state-side client) must publicly report and disclose full public accounting for all stadium expenditures, all signed KS forms, the dates of state reviews of the design documentation, and other information so that an open audit can be conducted to determine why construction has been repeatedly delayed.
It’s clear that deadlines are critical, but throwing another 1 billion rubles into this black hole is simply criminal. Until there is an open audit, Zenit Arena’s main purpose is not sport, but enriching the officials feeding off the construction budget.
Let me remind you of the sad history of all the state contracts related to Zenit Arena:
2008–2013 Contract for 22.5 billion rubles dated 17.12.2008 Terminated in September 2013. 9.9 billion rubles paid. Contractor: ZAO Inzhtransstroy
2013–2016 Contract for 12.5 billion rubles dated 19.11.13 Terminated in July 2016. 12.3 billion rubles paid. Contractor: ZAO Inzhtransstroy
2014–2016 Contract for 1.77 billion rubles dated 06.11.14 Terminated in July 2016. Paid in full. Contractor: AO Transstroy Corporation
2014–2016 Contract for 9.2 billion rubles dated 10.11.14 Terminated in July 2016. 6.9 billion rubles paid. Contractor: Inzhtransstroy-SPb
2016–present Contract for 2.39 billion rubles dated 19.08.2016 The money has been transferred in full. The contract record currently shows the status “in performance.” Contractor: OAO Metrostroy
2016–present Contract for 5.39 billion rubles dated 19.08.2016 There is no information on payment. The contract record currently shows the status “in performance.” Contractor: OAO Metrostroy
And the latest state contract, concluded on December 20, 2016, but only posted on the website on December 26, the day before yesterday, at 10 p.m.: Contract for 952,086,000 rubles dated 20.12.2016 Contractor: OAO Metrostroy
Two state contracts were signed in the summer, and the ACF filed complaints about them because the initial contract prices were not properly justified and the wrong procurement methods had been chosen.
Sobol’s detailed post on the substance of the ACF complaint.
About the outcome of the complaint review by the Federal Antimonopoly Service.
The Federal Antimonopoly Service rejected our complaint. But there is an important detail: when the complaint was being reviewed by the Russian Federal Antimonopoly Service, representatives of Zenit Arena’s former general contractor were present before the commission and explained that the new tender had been announced unlawfully, because some of the work was duplicated (the work had already been completed under the previous state contract). At the time, they estimated the total value of the duplicated work at 1 billion rubles.
The latest state contract was concluded on December 20, 2016 (the media wrote about it the day before yesterday because it was only posted on the website that evening). It was concluded unlawfully, because it was awarded without a tender supposedly due to some emergency situation that had occurred:
The law clearly defines what qualifies as an emergency situation:
Since there was no fire, flood, or anything else of the kind in St. Petersburg, it follows that these crooks simply broke the law by awarding the contract without a tender on that basis. The law does not recognize official stupidity and corruption as an emergency situation.
And this is not a mere formality. We are not nitpicking here. All the problems with Zenit Arena stem from the fact that state contracts were handed to insiders’ companies the entire time. The logic was: let’s give it to our own people because they’re “reliable.” Then the money was looted, and the “reliable companies” missed deadlines and asked for even more money.
- “Okay,” says the state, “what matters is finishing everything.” And then it signs a new state contract.
And so it goes in circles. If the contractor had been selected from the very beginning through a genuinely open competition, including with foreign construction companies allowed to participate, rather than by the criterion of “who will pay the biggest kickback to St. Petersburg officials,” the stadium would have been completed long ago.
There has been plenty of time since 2007—more than enough to build it at a normal pace—but now, in a rush, they suddenly need to sign yet another billion-ruble contract.
Our complaint to the antimonopoly service requesting the opening of a case for violation of antimonopoly law.
Our statement to the prosecutor’s office demanding that it go to court and have the state contract annulled.
And a few more important details about the latest state contract:
1) On December 26, the day before yesterday, an additional agreement was signed to the state contract dated December 20, 2016. And under clause 3.8 of the state contract, the contractor will now be paid the full cost of the work—952,086,000 rubles—as an advance within the next 15 days. In other words, 100% of the value of the state contract. This is before all certificates are signed, before the work is accepted, and so on.
It is not even certain that the stadium can be used normally at all. The Center for Hygiene and Epidemiology found excessive concentrations of ammonia and formaldehyde inside the stadium premises: http://www.fontanka.ru/2016/11/17/086/ (Fontanka has the expert report attached directly in the article).
There is one trick builders use to finish work faster: they add an ammonia solution to the concrete, which makes everything set more quickly, but afterward the buildings cannot be used for their intended purpose. This already happened with a school in Moscow that was completed and then immediately closed because ammonia levels exceeded the norm several times over: https://rg.ru/2011/08/24/ammiak.html
“Ammonia in concrete is generally used to make the mix set faster. ‘Builders resort to this method when construction deadlines have been missed and the pace of work needs to be artificially accelerated. Ammonia does not dissipate from concrete over time—the concentration of ammonia in a building constructed using this technology will always exceed the norm.’” https://www.novayagazeta.ru/articles/2014/07/15/60347-betonnye-osnovaniya
So, just as I wrote at the beginning, all the hallmarks of Putin-era state capitalism are here:
- first, extremely expensive;
- then twice as expensive again;
- very slow;
- then even slower;
- very poor quality, and harmful to people’s health.
- and the officials are sitting pretty and have made out very well.
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