At the bottom of negligence, or why won't USC get rid of the corruption load? | Latest news The Moscow Post
22 October 2021

"At the bottom" of negligence, or why won't USC get rid of the corruption load?

In July 2020, President of the Russian Federation Vladimir Putin confidently reported on the significant success of the shipbuilding corporation, its CEO Rakhmanov, and how things really were...

In close cooperation with the National Research Institute of Corruption Problems, The Moscow Post covers the issues of the round table and the progress of the Research Institute's investigation as part of the report on problems in the Russian shipbuilding industry.

Due to the conflict between the United Shipbuilding Corporation and the contractor, the only Russian aircraft carrier has no place to repair. Using the example of the repair of the aircraft carrier Admiral Kuznetsov, we tell you what is wrong with our shipbuilding, who is to blame for this, and why even the decisions of the Prosecutor General's office do not help business in the fight against state corporations.

In 2019, the Russian shipbuilding market fell by 19%, and the number of ships launched fell by 17% compared to 2018. Only 103 ships were built for the entire country in 2019 – even during the 2014-2015 currency crisis, when sanctions were tightened and oil prices collapsed, twice as many ships were built. And in the crisis year 2020, the situation is unlikely to improve.

The Russian authorities have been actively trying to revive the shipbuilding industry, which was almost destroyed in the 90s, for at least 13 years. In 2007, by decree of Russian President Vladimir Putin, the United Shipbuilding Corporation (USC) was established to consolidate the industry. USC includes 19 large shipbuilding and ship repair enterprises, research centers and design bureaus – 80% of the entire shipbuilding industry in the country.

Alexey Rakhmanov, President of the Corporation, sets ambitious goals for the giant company - "to make up for everything that has not been done for 20-25 years". But during the existence of USC, Russia's share in the global shipbuilding industry has not increased (in 2013, for example, it was 0.2% compared to 1% now), and the Corporation's customers are increasingly criticizing it because of the rise in the cost of ship construction. They criticize that Alexey Rakhmanov has to justify himself to the President at a meeting with Vladimir Putin. Ship owners avoid Russian shipyards (shipyards in the country are not half loaded), preferring to build and repair ships abroad. The shipbuilding industry, in which USC is essentially a monopoly, is not helped by multibillion state support, as well as by the President's statements against placing orders for the construction of ships abroad.

The International Fund for the fight against corruption on the example of the story of the repair of the only Russian aircraft carrier Admiral Kuznetsov figured out what was wrong with our shipbuilding, why their business partners were in conflict with USC, and what it could threaten the Russian Navy.

The history of the aircraft carrier Admiral Kuznetsov is the personification of the history of modern Russia. Launched in 1985, 6 years before the collapse of the Soviet Union, the cruiser barely survived the 90s: from 96 to 98, the ship was under repair, which was greatly delayed due to lack of funding. Then the ship was almost scrapped. In 2000, Admiral Kuznetsov participated in the Northern fleet practice, during which the Kursk submarine sank. In 2007, the aircraft carrier led a detachment of warships that went on a trip to the Atlantic ocean and the Mediterranean sea, and after the campaign, it embarked on an eight-month repair. Since 2011, the cruiser, which American experts have recognized as the worst aircraft carrier in world history, has made several trips to Syria. On the last trip, the ship lost two carrier-based fighters (an unprecedented case for Russian aviation): they just fell into the sea, apparently due to the breakage of the cables of the aerial finisher. Finally, after returning from this campaign, the ship in 2018 stood up in Murmansk for another repair – black smoke was coming from the aircraft carrier's pipes.

At first, it was planned that this repair would be completed in 2020, and the cruiser would return to the Northern fleet in 2021. But things didn't go according to plan. The two-year story of repairing the aircraft carrier, which is produced by the Zvezdochka ship repair center controlled by the United Shipbuilding Company – is a continuous series of tragedies, after which the cruiser has to be repaired again. Yes, repair after repair.

First, in October 2018, the floating dock of Zvezdochka, where the aircraft carrier was being repaired, sank in Murmansk. As a result of the accident, a 70-ton tower crane fell on the cruiser. Four people were injured. According to the head of the press service of the Zvezdochka ship repair center, Yevgeny Gladyshev, the reason for the flooding of the dock was the shutdown of pumps caused by a power surge in the power grid: in Murmansk, a power line collapsed under the weight of snow, and when electricity was given, this "jump" occurred on the cruiser. Gladyshev did not explain why the only floating dock in Russia capable of receiving our only aircraft carrier did not have a backup power supply system and sank under the onslaught of a snowstorm.

A criminal case was brought upon state of emergency on the floating dock as regards 2 articles 216 of the criminal code "Violation of safety rules at conducting other works, entailed on imprudence death of the person". Head of the USC Alexey Rakhmanov then stated that additional repairs to "minor damage" on the aircraft carrier would cost 70 million rubles, but the ship would be transferred to the fleet on time – in 2021. The total cost of repairing the ship at that time was estimated at 40 billion rubles.

But in December 2019, a fire occurred on the cruiser – during welding work, a spark got into the hold, after which the remains of fuel oil caught fire. The fire killed serviceman Alexander Raldugin and the commander of the emergency rescue division, captain of the third rank Viktor Izmailov. 12 people were taken to the hospital. The cost of additional repairs to the cruiser was first estimated at 251.4 million rubles, but in August 2020, Rakhmanov said that the cost of repairs "is in the range of 300-350 million rubles." At the same time, the total amount of the contract after the fire increased to 60 billion rubles (for comparison, the budget of the entire Kirov region for 2020 is 61 billion rubles). And the timing of the ship's return to the Navy has shifted to 2022. At the same time, Rakhmanov tried to confuse journalists, saying that the deadlines were not being shifted, and the ship was originally planned to be returned to service in 2022.

But to date, even plans to return the aircraft carrier to combat duty in 2022 have failed completely: there is simply no place to repair the long-suffering cruiser.

After the floating dock on which Zvezdochka was repairing an aircraft carrier sank in 2018, The company decided to reconstruct the dry dock of the 35th Ship Repair Plant in Murmansk in order to carry out repairs there. To do this, they decided to combine the two dry dock chambers into one large dock. According to the head of the press service of Zvezdochka, Yevgeny Gladyshev, they decided to dock the aircraft carrier in this way, because "they had no alternative".

The tender for the reconstruction of the dock was won by a well-known St. Petersburg company in the construction industry Investment. Engineering. Construction (I.E.C.), which has a track record of more than 100 complex hydraulic engineering facilities commissioned over its 15-year history.

Zvezdochka's contract with I.E.C. for the amount of 23.8 billion rubles was signed in July 2019.

According to the agreement, the work was divided into two stages, which had to be carried out simultaneously so that in June 2021 the Admiral Kuznetsov could enter the unfinished dock. There, he was to install the bottom-side fittings, screws and shafts, after which the cruiser would leave the dock, I.E.C. would have completed it. As reported by RBC 48-year-old beneficiary of I.E.C. Gleb Yevtushenko, the advance that Zvezdochka agreed to pay under the contract amounted 7.1 billion rubles.

Immediately after signing the contract, I.E.C. started deploying its equipment on the construction site (from cranes to drilling rigs) and brought 257 of its workers to Murmansk.

In order to receive an advance from Zvezdochka, I.E.C. had to provide a Bank guarantee under the contract. In order to provide a guarantee, the banks required I.E.C. to provide design and estimate documentation with a positive conclusion from Glavgosexpertiza. The customer was obliged to send these documents to the contractor, but it turned out that he did not have these documents. Therefore, Zvezdochka had to come up with a new agreement providing for the replacement of a Bank guarantee with a guarantee agreement of Gleb Yevtushenko.

The agreement was signed, but the design and estimate documentation for the first stage of reconstruction was sent by Zvezdochka only six months later, and the second — it was not sent at all, said Yevtushenko to RBC. His words were confirmed by a check of the Prosecutor General's office: "During the trip to the Murmansk region, your arguments about the late transfer of design and estimate documentation and other permits by the customer were confirmed."

In order for the Admiral Kuznetsov to complete the docking on time, the I.E.C. had to reconstruct the dock without the necessary documents. Moreover, of the 7.1 billion of the advance payments stipulated in the contract, I.E.C. has received only 2.67 billion – Prosecutor General's office indicated that the non-payment of the advance for the 2nd stage was the failure of I.E.C Bank guarantee, the same one that I.E.C could not obtain due to the fact that the customer had not provided the design documentation! Vicious circle.

The problems didn't end there. The state corporation during the reconstruction of the dock for some reason decided not to pay for the work performed by I.E.C. The editorial office has one of the registers of acts of work performed by I.E.C. The Document includes a set of works carried out by the company from January 28, 2020 to March 10, 2020 – from the manufacture of steel piles to the operation of diving stations. The cost of work after offset of the advance payment of 42% is 123 million rubles.

The final cost of the work is signed by Dmitry Galimov, Deputy General Director of the 35th Ship Repair Plant, which is part of Zvezdochka. Despite the fact that the register was signed by Galimov, representatives of I.E.C. spent the whole of March trying to get the payment of this money from Zvezdochka. Sergey Marichev, the company's General Director, received at least two letters from Dmitry Tishchenko, the acting General Director of I.E.C. (the letters are available to the editorial board), in which he demanded to pay for the work. But the work was not paid, and on March 27, I.E.C. applied to the Prosecutor's Office of the Murmansk region. In a statement, I.E.C. said that due to the lack of funding from the USC, construction site workers do not receive salaries, while 21 builders wrote written applications for suspension of work. In May of this year, I.E.C. submitted applications to the Prosecutor General's office and the Security Council.

Usc's unwillingness to settle with the construction company looks strange – the contract is about billions, and even some small money by the standards of the state corporation cannot be payed. Even more strange is USC's public stance on its contractor. Judging by the statements of representatives of the corporation in the media, instead of settling normal relations with the I.E.C. and to complete the reconstruction of the dock, USC drowned the contractor.

Since the end of December 2019, in the media there began to appear statements from the USC management that they were not satisfied with the progress of the dock reconstruction. In December, in an interview with Kommersant, the head of USC Alexey Rakhmanov unexpectedly confessed that the decision to work with I.E.C. "was partly forced": "Three giants, construction companies that are well known in the Russian market (apparently, we are talking about IC Most, Stroytransgaz and TITAN-2 — ed. note), refused to participate in this risky project for them. We chose the best available." Rakhmanov did not specify why the companies refused to cooperate with the state corporation and a profitable contract. It is doubly strange that the head of USC called the contract for the reconstruction of the dock "risky". Later, one of the representatives of the USC, commenting on the application submitted by I.E.C. to the Prosecutor General's office, said that I.E.C. "objectively does not cope with the project." According to the representative of the Corporation, the reconstruction of the dock is delayed due to a significant deterioration in the financial situation of the contractor (the representative of the Corporation did not dare to link this "deterioration in the financial situation" with the fact that USC does not pay for the work).

The reasons for all these delays in documents, non-payments and charges against I.E.C. by USC were explained in March of this year. When the reconstruction of the dock was almost a year old.

On March 23, a meeting on the reconstruction of the dock was held in the office of USC President Alexey Rakhmanov (the protocol of the meeting is available to the editorial board). At it, representatives of the USC accused the I.E.C. in the fact that the company did not increase the pace of work on sinking the pipe shunt, and the work on drilling piles is completely stopped. After a reasonable remark by Gleb Yevtushenko that the I.E.C. simply did not have the means to settle with suppliers, USC accused the company of blackmail. And then suddenly demanded to pass 100% (!) stocks of I.E.C. in the property of the company "Regional construction and installation management". The management of this company is considered by the media to be related to the leaders of USC.

The situation is anecdotal due to the fact that earlier the Regional SMU company acted as a subcontractor of construction – the state corporation imposed this company on I.E.C. However, during the inspections carried out by Fincontrol, I.E.C. during the reconstruction of the dock, it was revealed that funds were misspent, and the company terminated the contract with Regional SMU. In addition, I.E.C. filed a lawsuit against Regional SMU for the refund of the advance and notified the Prosecutor's office of the Murmansk region about the situation with the subcontractor. But USC wasn't fazed. The corporation was not confused by the fact that the requirement to transfer a full stake of I.E.C. to another company is, in fact, extortion.

When this Regional SMU appeared on the horizon, the state corporation suddenly found the 123 million that it had to pay to I.E.C. for the work performed. On March 26, the money was transferred to the I.E.C.'s Bank account. But I.E.C. was required to transfer all funds to the Regional SMU (as if this firm did all the work on the construction site), and when I.E.C. refused to do so, the money was withdrawn!

And after at a regular meeting with Rakhmanov about the reconstruction of the dock, the management of I.E.C. under the video stated that USC was putting pressure on it, the contract with the company was unilaterally terminated. All the losses associated with downtime and penalties, I.E.C. estimates at one billion rubles.

The company repeatedly tried to renew the contract (the contract was terminated just during the pandemic, when three hundred workers of I.E.C. and its subcontractors were at the construction site), but there was no response from USC. In the fight with the corporation, Chairman of the Board of Directors of which is a former Governor of St. Petersburg Georgy Poltavchenko, and in the Council itself, there is a Deputy Chairman of the Gazprom management Board, Vitaly Markelov, even the definition of the Prosecutor General does not help. It, by the way, says about "improper organization of work by the enterprises of the JSC United Shipbuilding Corporation group and the weakening of the corporation's control over the implementation of the project that affects the execution of tasks of the state defense order."

What will happen to the Admiral Kuznetsov is unknown. A new general contract agreement, with much easier conditions for the contractor than the contract with I.E.C., was concluded with the Moscow company Orgenergostroy. The contract was concluded without competition, it was even refused to sign by the General Director of Zvezdochka Sergey Marichev and the chief builder (then he quit), but Alexey Rakhmanov gave a direct instruction to conclude the contract. Rakhmanov also dismissed the general designer of the project and transferred the redesign to Orgenergostroy.

At the moment, the project for the reconstruction of the dock has risen by 17 billion rubles – up to 40 billion. At the end of November 2020, only 50% of the first stage of reconstruction was completed. Experts of the National Research Institute of Corruption Problems have released a report "United Shipbuilding Company of Russia and its residents", which also touches on the conflict between the United Shipbuilding Corporation and I.E.C. The authors of the report agree that Orgenergostroy "performs construction and installation work at an extremely slow pace, with fatal deviations from design decisions", and "the docking period is disrupted for at least a year".

Despite the fact that in the public field, USC made claims against I.E.C. precisely because of the speed of work, and in fact the contract was terminated under article 717 of the civil code of the Russian Federation, which provides for the possibility of unilateral refusal of the Customer from the contract without explanation, with payment to the Contractor of all losses caused by this action. It turns out that Alexey Rakhmanov reports one thing to the President of Russia, but in fact spends state funds to cover losses from his own decisions! Self-management? Criminal negligence? Inaction? "The Investigative Committee qualifies the actions of the USC managers in accordance with the relevant articles of the criminal code of the Russian Federation," says Sergey Sapronov, Director of the National Research Institute of Corruption Problems.

Sergey Sapronov believes that the conflict between the USC and the I.E.C. involved a corruption component. The demand of the state corporation to transfer a full stake and gain control of the I.E.C., he connects with the desire of USC to concentrate in their hands the cash flows coming from the State Treasury for the reconstruction of the dock. The same is associated with the termination of the contract with an uncontrolled I.E.C. and its conclusion with another, less effective company.

"As a result, I believe that criminal cases should be initiated for causing property damage to the state, and law enforcement agencies should check all the conclusions set out in the report," Sapronov says. - The corporation deliberately delayed the deadline. USC has been operating inefficiently for years. The corporation's total debt is 150 billion rubles, and in May 2020, USC adopted financial recovery programs totaling 68 billion rubles. They were supposed to introduce the icebreaker Viktor Chernomyrdin in 2015, and they introduced it in 2020."

The aircraft carrier Admiral Kuznetsov, meanwhile, has been under repair since 2018. Our country has no other aircraft carriers and they are not expected yet. However, they cheerfully report to the President that everything is fine... and are not even ashamed. What does this mean? Will the complete irresponsibility of the head of the largest state corporation remain unnoticed by the President of Russia, or will there be a reaction?...

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