Billionaire Arkady Rotenberg’s company tops list Moscow’s main outside contractors under Mayor Sobyanin
Russian billionaire Arkady Rotenberg, a friend of President Vladimir Putin, has been the main outside contractor for the Moscow authorities during the ten years that Mayor Sergey Sobyanin has been in charge of the city, reports a new joint investigation from the investigative site Proekt and business magazine Forbes.
Under Sobyanin, Moscow’s budget increased nearly threefold —
from 1.11 trillion rubles to 3.15 trillion rubles (from about $14.5 billion to
$41.1 billion). The mayor’s office spent the excess profits mainly on
construction and urban development, to the tune of 8.5 trillion rubles ($110.8
billion) over the last ten years. During the same period, the city allocated 9
trillion rubles ($117.4 billion) towards social spending. According to Proekt,
this distribution is a rarity among regional budgets, which typically earmark
more than 60 percent of funds for social spending.
In just ten years, Moscow has spent 4.3 trillion rubles
($56.1 billion) on urban development and construction, 2.3 trillion ($30
billion) on the urban economy, and 1.5 trillion ($19.6 billion) on
transportation and transport infrastructure. As it turns out, the
municipality’s biggest contractor is Mosinzhproekt, an engineering company
directly owned by the city government. It has received 832 billion rubles
(about $10.9 billion) worth of municipal contracts in the last ten years. The
company became the capital’s biggest customer simultaneously, placing a total
amount of orders exceeding 1.5 trillion rubles ($19.6 billion).
As the investigation points out, placing orders through
government-controlled joint stock companies — rather then on behalf of
government bodies directly — allows for procurement to be carried out more
flexibly: the buyers set their own procurement policy themselves, can sign
contracts more freely, and are not required to issue single-source contracts.
Overall, the journalists behind the investigation concluded
that under Sobyanin, the major construction contracts that form the basis of
Moscow’s government contracts were handed out to a select number of large
companies, whose owners “are either closely linked to the mayor’s office, or
are friends with the country’s president, or are hidden by nominee and offshore
companies.”
Arkady Rotenberg’s Mostotrest construction company takes
first place in the ranking of outside contractors; in the last ten years, it
received a total of 441.5 billion rubles (about $5.8 billion) worth of
contracts from the Moscow government. For the most part, these contracts were
related to road construction: for example, Mostotrest was responsible for
reconstructing the interchange between the Moscow Ring Road (MKAD) and
Leningradsky Avenue, as well as building sections of the North-Eastern Chord
and North-Western Chord highways. Rotenberg's company also got the construction
contract for part of the Sokolnicheskaya subway line.
The engineering company Metrowagonmash came in second place
with 402 billion rubles (about $5.25 billion) worth of municipal contracts for
building subway and tram cars. Notably, Vice Mayor Maxim Liksutov, head of
Moscow’s Transportation Department, was on the board of directors for
Metrowagonmash’s parent company, Transmashholding, for a long time. Liksutov
was also a minority shareholder in the company.
In third place was MISK (short for Moscow Engineering and
Construction Company), which is involved in road construction, and its
subsidiary IFSK (short for Investment and Financial Construction Company),
which received a total of 286 billion rubles (about $3.73 billion) worth of
contracts from the city. IFSK secured a significant portion of these contracts
from 2011–2015, before it was bought out by MISK. At the time, the company was
controlled by Russian oligarch Gennady Timchenko, another friend of President
Putin’s.
Finishing off Moscow’s list of top ten municipal contractors
is the EKS Group, which received 64 billion rubles worth of contracts from the
mayor’s office. Nothing is known about this company’s beneficiaries. But
despite the fact that its owners haven’t been made public, the company has
successfully secured contracts in St. Petersburg, Nizhny Novgorod, Yaroslavl,
and Tula, as well as in Moscow. In a separate joint investigation, Proekt and
Forbes revealed that the company’s real owner could be 36-year-old businessman
Maxim Krylov, who is linked to the Rotenberg family.
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