Recently, President Medvedev lamented that no progress is visible in the fight against corruption. The corrupt officials must be hiding from Medvedev. He just can’t spot them, even though he peers keenly through his lorgnette in every direction. President Medvedev even proposed fining corrupt officials with multiple-based penalties. Apparently, as traffic police officers (GAI, the old name for Russia’s traffic police) like to explain in such cases, “we’ve run out of receipts.” What remains unclear, however, is whether the Guarantor of the Constitution carried on the traffic-cop tradition by suggesting they could “settle it on the spot.” Even if Medvedev can’t see the corrupt officials through his lorgnette, they are perfectly visible to us. They’re simply too big and too conspicuous to miss.
Here are two guys: Vladimir Putin and Arkady Rotenberg. They are quite openly and crudely looting the country’s largest company, Gazprom, using a very simple scheme. As Vedomosti has learned, in the very first full year of Arkady Rotenberg’s work in the contracting business, his company rose to second place in the industry by revenue. This was driven above all by contracts with Gazprom. The company Stroygazmontazh appeared two years ago. And by 2009 it had already broken into the top three among oil and gas contractors. Its revenue under Russian accounting standards was nearly 89 billion rubles, according to Rosstat data. That is the highest revenue in the “Construction” category among the Rosstat figures available in the SPARK-Interfax database. And the company’s consolidated revenue was 100.3 billion rubles, says a source close to Stroygazmontazh. /////// The scheme looks like this (I can’t draw it out graphically; maybe someone can help): Putin constantly pushes Gazprom into idiotic, incomprehensible, and obviously loss-making projects, each involving construction on a massive scale: all these differently colored “Streams,” the pipeline to Vladivostok, and so on. I won’t go into a detailed analysis of whether any of this construction makes sense. I refer everyone to the blogs of m_korchemkin and nalymov, where people whose expertise is beyond doubt have written about this many times. Gazprom agrees to all these mega-projects, but then puts its construction subsidiaries up for sale (in 2008). That might have made sense if selling off non-core businesses had increased competition and lowered costs. But let’s look at what happens next. Arkady Rotenberg, Vladimir Putin’s childhood friend and his judo coach/sparring partner, buys these subsidiaries at the starting price. That is how the “revamped” Stroygazmontazh appears on the market.
4. Just two months later, Gazprom orders start pouring into Stroygazmontazh as if from a cornucopia. And the juiciest contracts go to Stroygazmontazh without any tender at all. The money invested in buying the company pays for itself almost instantly. Here you can clearly see how much better life became for Stroygazmontazh once Putin’s childhood friend showed up among its owners.
And now, attention: first, the quote “The key to our success is skilled, high-quality, and fast work, as well as resources—people and equipment,” emphasizes a representative of Stroygazmontazh. and now the table (sorry it’s in English. It’s a slide from my presentation that I gave at a conference in Houston)
(thanks for the data to m_korchemkin). These are entirely official figures from Gazprom itself. We can see that comparable pipeline sections in the Nord Stream system COST THREE TIMES MORE when built by Gazprom’s contractors than when built by European contractors. Let me note that this construction is not taking place in Siberia or on the Moon. It is in the European part of Russia, with identical projects under identical climatic and geographic conditions. And yet in Europe: labor is more expensive; technical regulations and environmental laws are stricter; And in general, costs should, in theory, be higher. So Gazprom sold its construction divisions to Rotenberg on the cheap, and the very next day ordered construction from them at three times the market price. Thus the Vladimir & Arkady business tandem is operating at a brisk 300% profitability and feeling just fine.
I can just imagine them laughing out loud, mocking Skolkovo Innovation City and D. A. Medvedev with his iPhone. An excavator, a shovel, and millions of railcars of sand written off to construction still bring in more money than brilliant bespectacled geeks in garages. Forbes magazine should have revised its billionaire ranking long ago. I don’t understand who can still believe that all of this happens “by accident,” and that Putin personally has nothing to do with it.
The ultimate beneficiary of all these remarkable maneuvers—from Stroygazmontazh to the oil trader Gunvor—is citizen Vladimir Vladimirovich Putin. The Rotenbergs and the Timchenkos are merely trusted nominal owners. There he is: the chief oligarch of our country, the owner of a fantastic fortune.
It doesn’t matter where he keeps the money—at UBS or VEB (Vnesheconombank, a Russian state development bank), in his own name or in the names of childhood friends. It changes nothing. The question is for us: will we ever manage to have that money frozen and confiscated in favor of the Russian Federation, or will we go on sitting in our kitchens, doing nothing and missing everything around us?