Medvedev orders corruption investigation into Putin's Sochi Olympics

Russia President Dmitry Medvedev has ordered an investigation into allegations that a top Kremlin official took huge bribes in connection with the 2014 Sochi Olympics. Analysts are unsure whether it's a sincere crackdown.

By , Correspondent

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    Russia's President Dmitry Medvedev chairs a session of the National Projects Council in Moscow's Kremlin, July 29. Medvedev has ordered an investigation into allegations that a top Kremlin official took huge bribes in connection with the 2014 Winter Olympics in Sochi.
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In an apparent bid to dramatize his flagging anticorruption drive, Russian President Dmitry Medvedev has taken the unusual step of ordering an investigation into allegations that a top Kremlin official took huge bribes in connection with the troubled 2014 Winter Olympics in Sochi.

To drive home his point, Mr. Medvedev jotted down his order on a copy of an article from the crusading opposition newspaper Novaya Gazeta, which published details of the scandal in June.

The Novaya Gazeta story focuses on Vladimir Leshchevsky, deputy of construction in the Kremlin's Office of Presidential Affairs – a vast empire that owns about $500 billion worth of former Soviet Communist Party property. It alleges that he took about $5.7 million in kickbacks from the Moskonversprom consortium of construction companies in connection with the renovation of two Kremlin-owned Sochi area sanitoriums.

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"To really fight corruption he would have to fire [Prime Minister Vladimir] Putin, who is at the center of the Sochi Olympic scandal, but that's not going to happen," says Boris Nemtsov, a former deputy prime minister and a leader of the liberal opposition who ran unsuccessfully for mayor of Sochi in polls last year that some criticized as Kremlin-manipulated. "So he orders an investigation of Leshchevsky, a nobody. It's just a PR action."

Neither the Office of Presidential Affairs nor Moskoversprom were returning phone calls Thursday. But the English-language Moscow Times reported that Mr. Leshchevsky, who is on vacation, has denied all the allegations.

'System of barefaced deception'

Moskonversprom's director, Valery Morozov, went to the press with the allegations after being squeezed out of the deal despite paying the alleged bribes.

Novaya Gazeta, the only Russian newspaper that would touch his story, quoted Mr. Morozov as saying that he funneled the cash, worth about 12 percent of the contracts, to Leshchevsky through various shell companies.

Morozov said that he learned in January that his company was being deprived of the construction contract. His main complaint appeared not to be that Leshchevsky took his money but that he failed to deliver the goods. That's a telling comment on the endemic nature of corruption in Russia, where many businesses include a line item in their budgets for keeping officials happy.

"It is a system of barefaced deception," Morozov said in June before fleeing to the UK. "A bribe is understood as a normal corruption tax, but they do not earn the money. They just go on deceiving people and companies."

Since Medvedev's election more than two years ago, Russia-watchers have been debating whether he is under the thumb of his powerful predecessor, Putin, or really trying to assert his constitutional prerogatives as president. Public opinion polls have consistently shown that about two-thirds of Russians believe that Putin is really in charge.

Medvedev takes baby steps

But some experts say Medvedev has made headway in his anticorruption drive: the increased scrutiny of officialdom has caused the price of bribes to accelerate. Russia's Interior Ministry, which controls the police, announced this week that the average bribe in cases it investigates has grown tenfold in the past two years and doubled in the past six months alone to about $1,500.

"Basically, the number of bribes may have gone down but the sums of cash changing hands has gone up astronomically," says Masha Lipman, editor of the Moscow Carnegie Center's Pro et Contra journal. "It would make anyone in Russia laugh if you claimed Medvedev's anti-corruption drive has been successful. So, rather than claim success, what he can do is this one-off investigation into one of his own officials."

Anton Pominov, a project director with the Russian branch of Transparency International, an NGO that tracks global corruption trends, says that some of the laws and other measures put in place by Medvedev, such as forcing officials to file income statements, might reduce corruption in the long run, but little has been achieved so far.

"We are not optimistic in the short run," Mr. Pominov says. "We do see some steps being taken, and experts differ over whether these are real or just an imitation of anticorruption activity. For it to be real, much more would have to be done. In the first place, there should be genuine political competition, free elections that would make officials directly responsible to the public. Russia is so corrupt that, without that kind of accountability, no anticorruption measures will work."

Transparency International's annual corruption perceptions index currently ranks Russia No. 146 out of 180 countries, down from No. 82 a decade ago.

'Everything has a corruption component'

Mr. Nemtsov, the former deputy prime minister, says that the cost of the Sochi Olympics could snowball to as much as $30 billion, given the current rate of cost overruns. Even the current official estimate of $12 billion comes to around 10 times the $1.3 billion price tag for last winter's Vancouver Games in Canada.

"The Sochi Olympics are one of the biggest frauds connected to the Putin years, one of the biggest corruption deals in history," says Nemtsov, who has authored a strongly critical report on the Putin years in Russia. "Every apartment, road, or stadium being built has a huge corruption component."

For example, he says, a road being constructed between Sochi and the mountaintop Olympic venue of Krasnaya Polyana cost the government $145 million per kilometer, many times the price of mountain roads elsewhere in the world.

The Carnegie Center's Masha Lipman argues that the Kremlin's opaque nature makes it difficult to know whether Medvedev's order to investigate Leshchevsky is a sincere effort to kick-start his anticorruption drive or if it is political fallout from a power struggle at the top.

"In the absence of real political competition and transparency any corruption charges are likely to be connected with bureaucratic score settling," rather than real law enforcement, she says.

"In any case, it won't do anything to change the picture of rampant corruption that permeates every aspect of life in Russia, and is getting worse by the day."

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