Vladimir Putin

Putin cronies milked Sochi Winter Games for US$30b, opposition claims

Opposition leaders say corruption largely to blame for Winter Olympics costs quadrupling

PUBLISHED : Saturday, 01 June, 2013, 12:00am
UPDATED : Saturday, 01 June, 2013, 5:46am


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Russian businessmen and officials close to President Vladimir Putin have stolen up to US$30 billion of funds intended for preparations for the Winter Olympics in Sochi next year, according to a report released by opposition leaders.

Putin, who has staked his reputation on a successful Games, faces criticism over allegations of corruption and cost overruns that have pushed up the price tag for the event to US$50 billion - more than four times initial estimates, making them the most costly Olympics ever.

"In preparing for the Olympics US$25 to US$30 billion was stolen," Russian opposition leader Boris Nemtsov said on Thursday.

The report, written by Nemtsov and Leonid Martynyuk, another Putin critic, alleges the most expensive sports facilities built for the Games were commissioned without competition or public tenders. "Only oligarchs and companies close to Putin got rich," he wrote on his blog. "The absence of fair competition, cronyism … have led to a sharp increase in the costs and to the poor quality of the work to prepare for the Games."

Putin's spokesman, Dmitry Peskov, declined to comment on the criticism, saying he had not seen the report.

Russian contractors and others who have been involved in the building boom to prepare for the Sochi Games have complained of widespread corruption, but government officials have dismissed such reports and defended the cost overruns.

Comparing Sochi's price tag with that of previous Games, the report says the final cost of Olympics over the past 16 years was on average about twice the amount initially planned.

By contrast, it says the Sochi Games - which Russia said in 2007 would cost about US$12 billion - are more than four times pricier than planned.

But it does not provide specific detail of how or from which construction projects funds were allegedly embezzled.

"The fact is that almost everything that is related to the cost problems and abuses in preparation for the … Games was carefully concealed and continues to be covered up by the authorities," Nemtsov wrote on his blog.

Corruption is endemic in Russia's construction industry, anti-graft activists say. To create the infrastructure in what was one of Russia's least developed areas, almost everything had to be built from scratch in the past six years.

Thirteen official facilities are being built, including a stadium for 40,000 people and venues for ice hockey, skiing, snowboarding and skating.

Nemtsov's report casts doubt on the wisdom of planning the Games in a subtropical climate and staging ski events in peaks near the palm-tree lined streets of the Black Sea resort city.

Russian Deputy Prime Minister Dmitry Kozak, who is responsible for the 2014 Games, dismissed the criticism and vowed the Olympics would be a success.

"In spite of envious people, the Russian Winter Olympic Games will be held in the southern capital - subtropical Sochi," he said.