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Sochi Games come with Olympic-sized corruption, official says (+video)

A Swiss Olympics official says that as much of one-third of Sochi's $55 billion price tag has simply been embezzled.

By Correspondent / January 10, 2014

People toured the recently finished Olympic village near Sochi in early January. A study by a former Russian official found that building anything in Russia typically cost about three times more than a similar road, stadium, or athletic facility anywhere else in the world.

Maxim Shemetov/Reuters

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Moscow

A Swiss member of the International Olympic Committee has publicly conceded an embarrassing reality that most Russians have long known about: the looming Sochi Olympics have been a virtual potlatch of corruption, with about a third of the $55 billion in mostly-state expenditures siphoned off in bribes and kickbacks by greedy officials.

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Gian-Franco Kasper, president of the International Ski Federation and a Swiss member of the IOC, told a Swiss radio station Thursday that corruption appears to be an "everyday matter" in Russia, and that he estimates as much as $18 billion of Sochi's vast construction and development budget was simply embezzled.

That's a big step forward, according to Boris Nemtsov, former Russian deputy prime minister and author of a study that exhaustively details the corruption that he says pervaded all aspects of the preparations for the Sochi Games.    

"We've been trying to interest the IOC in this issue for quite awhile, but to no avail," says Mr. Nemtsov. "Until now there's been no clear acknowledgement of the issue, even though the facts are widely available. The attitude is that 'all is well' and if there's any corruption it's a problem for the host country and not the IOC."

But, he adds, the Olympic Charter stresses that the Games are an international event whose conduct sets an example for the world and therefore must be carried out in a responsible, honest, and transparent manner. In his study, Nemtsov compared the costs of Olympic construction in Sochi with several previous Games, and found that building anything in Russia typically cost about three times more than a similar road, stadium, or athletic facility anywhere else in the world.

"They are obliged to pay attention to this. Though there has been considerable attention to the issue of gay rights in advance of the Olympics, and the IOC has taken a stand on this, they have largely ignored corruption, environmental destruction, and other types of human rights violations that have been occurring," Nemtsov says.

The extravagant levels of graft have not gone unnoticed by the Kremlin, as costs for Sochi have ballooned nearly fivefold from the original estimate of $12 billion, making it by far the most expensive Olympics in history. Former President Dmitry Medvedev ordered an investigation into reports of massive kickbacks in construction contracts back in 2010, but the probe went nowhere.

A year ago, President Vladimir Putin staged a dramatic televised confrontation with a top Olympic official, Akhmed Bilalov, over cost overruns of almost 700 percent in construction of Sochi's main ski jump. Mr. Bilalov was stripped of all his positions, charged with "abuse of his position," and subsequently fled to Britain for "medical treatment." He has not returned to Russia, and no one else has ever been charged in connection with Sochi's runaway costs.

"This Swiss IOC member is certainly correct. Corruption is part of the system in Russia," says Leonid Polyakov, professor of political science at Moscow's Higher School of Economics. "Of course, we should note that all the Olympic facilities in Sochi are ready on time, so even with all this corruption things continue to work. Putin made an example of Bilalov, and gave a clear signal to the others." 

With the long preparations for Sochi coming to an end, Russian experts say the attentions of Russian construction firms and the officials whose patronage they traditionally secure through bribery are turning to the 2018 Soccer World Cup, to be hosted by about a dozen Russian cities

The initial state budget for building stadiums, railways, and other infrastructure for the soccer events is around $20 billion, which will make it the most expensive World Cup ever held

Experts warn that if costs follow the same trajectory they did in the long runup to Sochi, they could balloon to as much as $100 billion. Some experts warn that could be simply ruinous for Russia's already stagnating economy.

"To curb corruption is the single most crucial task for Putin in his current term and his next," says Mr. Polyakov. "He has no alternative."

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