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Tuesday
Jan282014

Navalny takes aim at Sochi Olympics

Photo courtesy of The Anti-Corruption Foundation by Alexei NavalnyRussia's top opposition leader and most popular anti-corruption blogger launched a website Monday that shows alleged conflicts of interest, collusion, and huge cost overruns at the Sochi Winter Olympics.

Alexei Navalny's interactive site shows the original budget and actual spending for about 10 of the Olympic venues. He also includes notes about the parties involved in the major contracts.

Russia said it has spent about $51 billion so far for the Sochi Olympics to be held February 7 - 23.

President Vladimir Putin has said there was no corruption in Sochi and instead the cost overruns resulted from legitimate bidding mistakes for construction of the venues.

The charismatic Navalny was sentenced to five years in prison for embezzlement last year. After his surprise release a day after sentencing, he returned to Moscow and continued his campaign to be mayor. He lost but made a strong showing against a popular candidate backed by the Kremlin.
 
His new website's "graft map" includes notes in Russian and English about the contracts for the venues.

One of Navalny's examples is a 17 kilometer relief road for Kurortnyi prospect in Sochi, which allegedly cost $2.5 billion.

The companies of two billionaires, Arkadii Rotenberg and Oleg Deripaska, were engaged in the construction. The project was highly money- and time-consuming — the opening was postponed for a year. The head of the main contractor, Levan Goglidze, was arrested and accused of embezzlement of $3.9 mn from state budget funds. Vneshtorgbank (VTB) demanded the repayment of $71.9 mn of loans through court. Oleg Deripaska, whose companies led the construction, got away clean.

Navalny told the AP that Putin's childhood friend Arkady Rotenberg won a dozen Olympics-related contracts to build most of the new highways in Sochi. The contracts went to the Mostotrest company, 39 percent controlled by Rotenberg, according to reports.."

On the website, Navalny said, "Athletes are not the only people who compete in Sochi. Officials and businessmen also took part in the games and turned them into a source of income."

In 2010, Navalny became famous in Russia and beyond when he accused Russian pipleline giant Transneft of fraud that resulted in $4 billion in losses for the state-owned company.

A 2012 report by the Russian government audit unit found about $500 million in "unreasonable" cost overruns related to development projects for the Sochi Olympics.

Police have launched at least three criminal investigations into graft for development of the Sochi venues.

Ivan Ninenko, deputy director of Transparency International in Moscow, said Olympstroi (the company responsible for $22 billion of Sochi's contracting) "is even less transparent than companies in (Russia's) state-owned sector, where corruption is rife," according to the AP.

The Sochi Organizing Committee didn't comment on Navalny's website allegations. 

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Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.