A sanctioned friend of Vladimir Putin, the businessman Gennady Timchenko, received a second state contract to build part of a massive gas pipeline to China—without having to bid for it. Despite federal laws that stipulate that there must be competitive bidding for government contracts, there was no open tender for this one. As a result, the sum Timchenko’s Stroytransgaz will be receiving from the federal budget for the construction of a 400 km segment of the “Power of Siberia” pipeline remains undisclosed, RBC reports.
Gazprom and China’s CNPC signed the agreement for the pipeline in May 2014. Earlier in 2015, Stroytransgaz was lucky to receive its first no-bid contract for 208 km of the same pipeline. Though the entire project was originally budgeted at $55 billion, a few months later the budget was increased to $60-70 billion, according to the Putin’s Administration Head Sergei Ivanov.
In addition to Timchenko, another sanctioned friend of Vladimir Putin, Arkady Rotenberg, is benefiting from contracts related to the pipeline. His Stroygazmontazh was also lucky enough to receive a no-bid contract for a reported 200 billion rubles ($3 billion) in December of last year to provide support infrastructure for its construction.
Both Timchenko and Rotenberg have placed highly on Forbes magazine’s annual list of “The Kings of State Tenders” for the past three years. As of the latest 2016 edition Arkady Rotenberg is atop the pile, having received 555 billion rubles ($8.3 billion) from state contracts. On the same list, Timchenko comes in third, with 161 billion rubles ($2.4 billion). The most recent version of the list was published before this latest news broke; Timchenko would almost certainly be ranked higher were the list published today.
Western sanctions had forced Timchenko to sell his 43 percent stake in the Swiss-based oil trading firm Gunvor, as well as various other shares of businesses around Russia. Rotenberg, for his part, has managed to keep his business in the family by passing it to his sons. Nevertheless, both men have prospered since Western sanctions have been put in place. A story has been circling around Moscow for some time, sourced to people inside the Kremlin: After the sanctions were announced, Vladimir Putin is said to have met with his businessman friends and promised them that he would compensate them for losses incurred from Western policies.
The Federal Anti-Monopoly Service offered no comment on journalists’ questions about these latest no-bid contracts.