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Home News Olympics: Russia alleges $250 mn Sochi Games swindle

Olympics: Russia alleges $250 mn Sochi Games swindle

Published on 09/08/2012

Russia on Thursday charged two firms building the central stadium and another high-tech venue for the 2014 Winter Olympic Games in Sochi with trying to swindle more than $250 million in state funds.

The politically damaging case — reportedly part of a much larger probe — emerged just days after a watchdog warned of cost overruns possibly delaying an event billed by Russia as a showcase of its emerging post-Soviet might.

Russia’s sport-mad President Vladimir Putin brought the Winter Games to the Black Sea summer resort town against strong odds in 2007 and has since helped funnel more than $20 billion in state and private funds into construction.

But the interior ministry said that state-authorised construction firms had been deliberately overstating their cost estimates in contracts so that they could pocket the extra cash.

The ministry’s statement said unnamed “heads of commercial organisations” had tried to steal more than eight billion rubles ($250 million) in budget money by falsifying their expense accounts and cost estimates.

“Action by the police averted all losses to the federal budget,” the interior ministry said, adding that two criminal cases had been brought.

Russian media reports said the initial alarm was raised by Olympstroy — a state corporation created in 2007 specifically for the purpose of overseeing the huge Sochi project.

An audit chamber source told the Izvestia daily that the firm was concerned about its managers overcharging state and private financiers some 17.7 billion rubles ($550 million) through false accounts.

The money allegedly covered construction of the central stadium and the luge track as well as the ice hockey and skating arenas.

But state news agencies said Thursday the interior ministry probe only covered the luge track and central stadium.

RIA Novosti identified one of the suspects as the management team of Mostovik — a firm that identifies itself on its website as “one of Russia’s largest design and construction enterprises.”

Mostovik is reportedly accused of trying to cheat the state out of 2.5 billion rubles ($80 million) on the luge track.