“In modern society, a history of every major company is a history of continuing crimes”
Giorgio Napolitano, President of Italy
Like any important event, the closure of the European Embankment investment and construction project in St. Petersburg and the decision to build on its site a complex of buildings for the Supreme and Supreme Arbitration Courts of the Russian Federation (moving to the Northern capital of Russia) have raised a whole layer of different problems, including not only non-public but also criminal and shadow ones that, at first glance, are not directly related to the latest St. Petersburg sensation.
Investigation along the Embankment
Today, the back side of the closed up project has been already submitted for public display. It became widely known that almost at the same time with the presentation of the European Embankment at the investment exhibition in Cannes, it was taken into investigation by specialists of a different profile - from the Main Directorate for Economic Security of the Russian Ministry of Internal Affairs and the St. Petersburg and the Leningrad region Directorate for Economic Security of GU MVD (Ministry of Internal Affairs). The result was a police investigation in respect of the heads of Federal State Unitary Enterprise Russian Scientific Center ‘Applied Chemistry’ (the SIACh - the State Institute of Applied Chemistry, well-known in the Soviet past and connected to the name of the last Secretary of the Leningrad Regional Committee of the CPSU Boris Gidaspov) - Alexander Shapovalov and his deputy Alexey Karpenko. In respect of the latter, a criminal case on embezzlement in especially large amounts was soon initiated, but he managed to escape outside of Russia.
An the next stage of the investigation, the attention of the law enforcement bodies was focused on the Baltic Construction Group (BSG) as the general contractor of the work for the SIACh and the Technopark Kapitolovo Managing Company headed by the founder of the BSG Rostislav Pashuto. The operational procedures provided the basis to assume that Mr. Pashuto in agreement with Mr. Shapovalov had inflated the cost of some works and objects. The economic police operatives prepared a package of materials for the Investigation Committee concerning several structures of the SIACh involved in the process of the conclusion of especially volume contracts. It is expected that a complex criminal case under Art. 201 of the Criminal Code – “Abuse of authority” will be initiated soon.
And besides, it became known about some intense contacts of the law enforcement officers engaged in the above-mentioned area with the management of VTB Bank. This State Bank supervised financial and investment components of the European Embankment. The immediate implementation of the project was administrated by VTB-Development JSC, headed by Sergey Matvienko. And there iss a transitional step from the last, already held, sensation to a sensation alleged. According to informed sources of Rumafia, in the foreseeable future, the “case of the SIACh” as part of the investigation of abuses connected with development of investments in the European Embankment project, will be added with elements concerning of an absolutely different area - telecommunications.
The investigation on frauds around the St. Petersburg Metrocom Company may become the subject of the next “expected surprise”. Well, better late than never. And the ambiguity, expressed by the question “What is the connection?”, partly clears up by a common denominator - the name of Sergey Matvienko.
Illegitimate birth on subway
It can be read on any official site what the company is (its capitalization) at the moment:
- The operator of its own fiber-optic communications in St. Petersburg (720 knots, coverage of 2500 sq. km.);
- 250 thousand subscribers in its own telephone network;
- More than 720 of its own payphones;
- Service of the Government of St. Petersburg, lines of governmental and special communication, high-speed Internet access, participation in the Electronic government program, provision of services to trading on stock exchanges, as well as to tenders (competitions and auctions) for carrying out city and state orders...
That is, significant pieces of budget financing of specific sweet taste.
The company was established in October 1992 by the founding of a closed joint stock company (then it was called as CJSC) by the state enterprise Peterburgsky Metropoliten and the American Andrew Corporation Company. The shares were in the ratio of 55:45. All would be good, but – the Peterburgsky Metropoliten gave the established JSC fiber-optic and other communications lines laid in tunnels. Before, those lines served “state, defense, and other special needs connected with the functioning of bodies of state authorities, defense, and security”. They could be incorporated and especially passed into private hands neither by the acting laws on privatization nor by the legislation on security and defense capability of the country.
The privatization then carried out on the basis of the decree No. 341 (December, 1991) of the President of the Russian Federation. He approved “Main Provisions of the State Program of Privatization of State and Municipal Enterprises in the Russian Federation for 1992”. The January Decree No. 66 “On Accelerating Privatization of State-Owned and Municipal Enterprises” defined the practical mechanism of privatization. According to the decree No. 341, privatization of enterprises of communications (except Soyuzpechat retail network) and objects of engineering infrastructure was prohibited. But privatization of “enterprises for production and repair of systems and components of any kinds of weapons, production of ammunition, explosives, pyrotechnic products; enterprises performing scientific-research and developmental works in specified areas; civil defense and mobilization objects; military and technical equipment which is subject to utilization” was allowed only by a special resolution of the government of the Russian Federation.
In this case, criminal liability for violation of the law of the Russian Federation “On Defense”* came under the Art. 69 of the Criminal Code – “Sabotage” (let the reader not to confuse by the old formulations –the Code of the RSFSR even acted at the time). An every “action or inaction aimed to undermine the industry, transport, agriculture, monetary system, trade or other sectors of the national economy, as well as activities of state bodies or public organizations with the aim of weakening the Soviet state, if the act is committed by using of state or public enterprises, institutions, organizations, or by countering their normal operation, is punished by imprisonment for a term of eight to fifteen years with confiscation of property”.
However, the primary constituent documents contained signatures of the most interesting people - Mr. A.A. Sobchak (may he rest in peace, and say nothing but good of the dead...) and Mr. V.V. Cherkesov (at the time - head of The St. Petersburg Department of the Ministry of security, intermediate structure on the way from the KGB of the USSR to the FSB of the Russian Federation (which return to communist ideals resembles the “fight for peace” of the creator of the hydrogen bomb academician Sakharov). And there wasn’t the required resolution of the government on the papers.
In everyday language, this means that the creation of Metrocom JSC (just the fact of it) was illegal as it contradicted the presidential decrees existing at that time, and was a state crime under the law “On Defense” and the Criminal Code. We can add that “Sabotage” constitutes crimes, which were to be investigated by the bodies of the state security.
In December 2001, Menatep bought the share of Americans. Remember that at that time the company was led by Mikhail Khodorkovsky and Platon Lebedev, who, if you believe the presidential administration, ”not only violated financial legislation of the Russian Federation, but also in some cases acted as representatives of the interests of large foreign companies connected with the interests of countries such as Israel and the United States”. And that weighted not as much as “Sabotage” under existing criminal code but as the Art. 64 (“Treason to Motherland”) or Art. 65 (“Espionage”).
The transaction was agreed by the Presidential Plenipotentiary Envoy to the North-West Federal district (at the end of 2001, this institution was as powerful and influential as ever before or after). The position of the President Plenipotentiary in NWFD was occupied by Viktor Cherkesov.
There is a dilemma. Either the general of state security didn’t have elementary information or the executive and judicial authorities slander against Khodorkovsky and Lebedev. There is, however, a third option: it may be that General Cherkesov was an accomplice of the state of crimes covered by articles of espionage and treason...
In March 2005, it became widely known that the Peterburgsky Metropoliten transferred its 55% stake in Metrocom to the city, represented by the St. Petersburg City Property Management Committee. It seemed to be all right as nationalization of property, which wasn’t subject to privatization under any laws, begun. But it's more complicated than that. At the same time the 45% package of shares went to Comstar Company.
And here a long-term retreat is necessary.
In warm company
The Comstar is a daughter company of AFK Sistema. The head of the Sistema is Vladimir Yevtushenkov, originally associated not only with the half- forgotten now mayor of Moscow but with Mr. Patrushev, former Director of the FSB (the Federal Security Service) and the Secretary of the Security Council of the Russian Federation.
By the time the country had already governed by a business pool of top government and law enforcement officials (silovikis). Its main businesses were oil, gas and budget funds placed in ADR through Alexei Kudrin. But some members of the pool specialized in different kinds of exotic, for example, in communications and telecommunications. (By the way, no one knows what is more profitable. Quotations of telecommunication companies grow more stable than ones of raw materials companies, regardless of crises and political circumstances. And most importantly, the business is connected with power over information flows and, therefore, with power in principle.)
At the time Valentina Matviyenko already held the post of the governor of St. Petersburg but yet was not vigorous enough. However, she perfectly understood the importance of such an asset as Metrocom - from the business point and from the point of real power. Therefore, having given the initiative to the Moscow secret services for a while, she skillfully played upon contradictions in the supreme pool. And she arranged a place for her even then not quite responsible son.
The Comstar UTS Company (affiliated with MTS and AFK Sistema) still bought its stake for $ 22.5 million. However, the purchase was tricky: 12 million and 200 thousand dollars were paid directly in the city budget, but 10 million and 300 thousand dollars went to pay off debts of Metrocom to creditors. The main of which was Bank Saint Petersburg, which belongs to the sphere of influence of the same Patrushev. That is the person to shifted money from one pocket to another). There were no state crimes – there were simply financial frauds qualified under the Art.158 of the Criminal Code (“Theft”), Art.201 (“Abuse of authority”), and Art.178 (“Prevention, restriction or elimination of competition”).
In March 2007, Comstar sold for $ 20 million (net, without any “repayments” and “offsets”) its share in 45% of the MST CJSC. The MST abbreviation simply stands for “Sergey Matvienko and companions”. Money for the purchase was taken on credit from VTB-24 bank. And it transferred to the accounts of the Bank Saint Petersburg.
Then things began even more interesting.
According to official data of tax authorities, the company's revenue soared upwards: in 2007 - $ 51.4 million, in 2008 - $ 54 million, in 2009 - about $ 44 million. And a net profit shown was about 15-17% of revenues.
It is interesting to note two issues here:
- Where did the net profit go?
- Why was such a sharp increase?
According to minutes of the Board of Directors (its head was the vice-governor of St. Petersburg Mikhail Oseevsky at that time), ALL of net income went on the company development. That is, passing the budget. At the same, meeting of the Board of Directors on distribution of net profits held exactly six months after the end of the next financial year. Before that, the money had cooked in the accounts of the two banks – Bank Saint Petersburg (Patrushev) and VTB-24 (Matvienko).
At least two state agencies must have responded to such events: the Financial Control Committee of St. Petersburg ** and the Control and Audit Chamber. Metrocom showed “legality, rationality and efficiency” of use of the budget funds within three years without any reaction of the FCC. After all, the relevant issues in the government of Saint-Petersburg were supervised by Mr. Oseevsky ...
This is the first issue. We will proceed to the second one.
Even in May 2007, the company won an open tender for development of technical documentation and execution of construction and starting-up and adjustment works for construction of the “Complex automated system of protection of informational support of anti-terrorist security of the underground” (lot “Construction of fiber-optic communications network and transport multiservice network”). In 2008, the project on organization of a subnet of educational institutions worked on connection of 1320 objects of education.
In 2007, 85.35% of the budget of the Informatization and Communication Committee of the administration of St. Petersburg Budget Committee went to the Metrocom. In 2008-2009, this figure dropped slightly - about 60%. And in 2010, they began to prepare the Metrocom for sale.
The total capitalization from the city only to the Informatization and Communication Committee and only to Metrocom amounted to about $ 200 million for 2007-2010 fiscal years. In 2007, 85.37% of city orders were placed by bidding, but more than 78% of the money went to Metrocom. What did the head of the FAS (the Federal Antimonopoly Service) Oleg Kolomiychenko do? Did not notice? Agreed? What about the Art. 178 of Criminal Code – “Prevention, restriction or elimination of competition”? And what about the Art. 201 – “Abuse of authority”?
Overall, the Metrocom profits were set down in officially approved city investment programs. That is, as pebbles across the surface of water, they fluttered among personal accounts of the Treasury Department of St. Petersburg (it seemed they were included in the budget but then were immediately “bounced off” and went to future projects of the same Metrocom). Moreover, in 2008, the Treasury Department transferred the accounts to the Finance Committee for services, and the committee, in turn, “optimized the management” by sending them to the VTB-24. Sergey Matvienko, one of the Metrocom owners, began to control execution of relevant articles of the budget of St. Petersburg, as well as the spending of its funds. That was strictly prohibited by the Budget Code of the Russian Federation. It is senseless to list articles here, for the entire Budget Code in principle imbibed the spirit of accounting - with its double and separate accounts.
What a situation developed! Taxpayers' money circulated in private companies, brought them income, and increased their wealth. People worked for nothing (or rather, for the son, but not their). The authority represented by the administration and law remained silent. All they were, as they say, in the know. Who was not in the know, he was with shares.
According to statistics, in 2008, 8.7% of St. Petersburg residents had income below the minimum cost of living. In the same year, Sergey Matvienko spent about 120 thousand dollars for one night in an erotic club Golden Dolls.
Elegant withdrawal without partition
In 2009, discontent with activities of the Committee for Information and Communication of the Administration of St. Petersburg began to grow. Under the influence of the FSB, close attention was paid to activities of St. Petersburg State Unitary Enterprise St. Petersburg State Information and Analitical Center. Some suspicious activity started in St. Petersburg State Unitary Enterprise ATS Smolny. Both companies were directly controlled by the FSB, where its own tectonic shifts occurred. At the same time, Sergey Matvienko’s breakdowns connected with his poly-drug addiction increased the frequency. It got to clinical deaths.
But the head of the Informatization and Communication Committee Evgeny Tsivirko, whether in naivety or brutality, didn’t hesitate to become a minority shareholder of the Metrocom. He, as a friend Sergey Matvienko, owned 1% in the MST as well. This is a colorful example of corruption: the administrative Committee conducted a competitive bidding, and the winner was the company, where the chairman of the Committee was a shareholder ... This is a classic “conflict of interests in the civil service”. ***
By law, Tsivirko was subject to immediate dismissal. In the case of the slightest hint of self-interest, he would have a pure form of abuse of power under the Art. 201. But Tsivirko was indifferent: young and in party with Denis Bortnikov (son of the director of the FSB) and Matvienko (from the times of the collaboration in the Bank Saint Petersburg in 2001-2003) - in general, he was a good guy.
But the fun started to slowly bother. So, Valentina Matvienko suggested including the city shares of Metrocom in the privatization program for 2010.
At the same time the MST sold its 45% stake. They were put as a single lot at the auction of the Property Fund of St. Petersburg in June (city package) and July (MCT package) of 2010. At the same time - what is very interesting – that was Mikhail Eduardovich Oseevsky who announced the sale of Metrocom “as a package”. Thus, constituent elements of the next crime of the federal legislation appeared ****. Sale “as a package” wasn’t described and wasn’t regulated in the legislation. The Antimonopoly Department of St. Petersburg and the city Prosecutor's Office had to supervise that. But, apparently, neither the first vice-governor of St. Petersburg, nor the head of FAS, nor the prosecutor of St. Petersburg knew the laws. Or – we can’t assume another version - - they ignored the laws.
On October 7, 2010, at the Fund's assets auction, all the shares of Metrocom went practically to the only buyer - the MegaFon JSC - for 2 billion and 40 rubles. Practically there was no an auction. Two members came, and after the first fall of the hammer, the amount, designated by the City Property Management Committee, Metrocom went ... to Alisher Usmanov. And it went for the sum of two and a half times less than the city's budget invested in the development of the company only in 2007-2009.
Oseevsky explained that Metrocom needed to be sold because of big problems in the city budget. It is not clear again: how to solve such problems by selling property of the city ten times less than its face value? If it was not Oseevsky, but, say, one of the chairmen of the Budget and Finance Committee of Legislative Assembly, for example, the current speaker Vyacheslav Makarov, then it is clear - what to take from an idiot? But Oseevsky still a professional ...
The money for the sale of Metrocom was received almost immediately: from the credit account of Megaphone in the bank VTB 24 to its own correspondent account. There are no a further “breakdown” of the received money in the report on the execution of the budget of St. Petersburg according to the income for 2010. That is, money twisted again in a bank - and what got into the budget, it disappointed there. There is no official reliable information. But there is another: the received money was accounted through a single accounting record, that is, without separation of state and business parts.
Let's tell more simply: the company was easily stolen in a little tete-a-tete. And it was stolen a lot. According to independent experts, Metrocom weighed more than 700 million dollars ... This amount would be enough to build housing for all young professionals of the social sphere of St. Petersburg.
... “A history of the continuous crime” is going on exactly according to the formula of Italian Eurocommunist. And it would have lasted probably forever if there hadn’t been general political changes in the country and the specific situation with the closure of the European Embankment, which affected the state bank VTB. Powerful penetration into different business and corruption areas is economically advantageous but politically dangerous. In what, it seems, the son of the Chairman of the Federation Council is to be convinced.
* The RF law “On Defense” was adopted on September 24, 1992.
The Art. 7 – “Powers of the governing bodies and administration of the republics of the Russian Federation, autonomous regions (oblasts), autonomous areas (okrugs), territories (krais), regions, cities of Moscow and St. Petersburg and the local authorities in the field of defense” - said: “State governing bodies and administration of the republics within the Russian Federation, an autonomous region, autonomous areas, territories, regions, cities of Moscow and St. Petersburg and local authorities, in cooperation with the military authorities within its territory: <...> carry out activities for preparation the territory and communications in order to defense”.
The Art. 27 added: "Officials of state authorities and administration, local authorities, enterprises, institutions and organizations, irrespective of their departmental subordination and forms of ownership, and citizens, guilty of failure to fulfill duties on defense assigned to them or impeding the implementation of the tasks of defense, bear disciplinary, administrative, civil or criminal liability under the laws of the Russian Federation”.
** According to the provision of the FCC on September 21, 2004, the Committee is obliged to “organize and control for legality, rationality and efficiency of the budget of St. Petersburg” (p. 2.4) and for “use of state property of St. Petersburg by executive bodies of state power of St. Petersburg, state unitary enterprises and state institutions of St. Petersburg”(p.2.5).
*** provided and described in the Federal Law “On State Civil Service” (No. 79-FZ) and the Federal Law “On Counteraction of Corruption” (No. 273-FZ).
**** The Federal Law “On privatization of state and municipal property” No. 178-FZ, in Articles 18 (“Sale of state or municipal property at auction”), 19 (“Sale of shares of open joint-stock companies at specialized auctions”), and 35 (“Payment for State and Municipal Property”) defines a clear order of sale and payment of the state shares (or municipalities) in joint stock companies.