By Khalil Aminov, Anna Pushkarskaya
Russia's Ministry of Regional Development is seeking damages over the failure to build St Petersburg's flood protection system on schedule.
The Ministry has filed the damages claims, demanding $19 million from Alfa Bank and $9 million from Oleg Deripaska's Transstroy, for failure to commission the second stage of the city's flood protection dam.
When Prime Minister Vladimir Putin opened a navigation channel through the dam on his birthday in October last year, Dmitry Kozak, Minister of Regional Development at the time, described the project as the "Putin Dam." His subordinates reported that construction was proceeding ahead of plan.
Engineering Corporation Transstroy (Ingtransstroy), a unit of Mr Deripaska's Transstroy, and Rosstroy signed a contract worth 4.7 billion roubles in October 2005 for the construction of a second stage of flood protection infrastructure in St Petersburg. The dam was also to become part of the Ring Road assessed at 85.2 billion roubles.
The Ministry of Regional Development took over when Rosstroy was terminated in May 2008.
In November 2007, Alfa Bank issued a bank guarantee for $19 million to Ingtransstroy, which was to be turned over to the Regional Development Ministry if the company failed to implement the contract.
On Mr Putin's birthday in October 2008, the navigation channel through the dam was commissioned in an official ceremony attended by the Prime Minister. Mr Kozak told Kommersant that it was Mr Putin's dam and that they presented the Prime Minister with a mockup of it for his birthday.
Ministry officials told Mr Putin that work on the dam was proceeding ahead of schedule.
However, last week, it transpired that the ministry no longer considers the dam a finished project. Mikhail Grishin, director of Alfa Bank's legal department, told this newspaper that the Regional Development Ministry demanded the bank to repay the $19 million bank guarantee. The Ministry's case against the bank was registered on the website of the Moscow Arbitration Court on February 4 (Case No NA40-10992/09).
The plans for building the dam were drafted in 1977. 70% of the project was completed by 1995, when it was suspended until 2005. A year later, a federal programme was approved for completing the project. Vladimir Kogan, who sold his stake in Promstroybank to VTB by that time, has been responsible for the project since 2006.
Part of the Ring Road linking the northern and southern districts of St Petersburg and Kotlin Island runs across the dam. The overall length of the project is 25.4 km; the project is to be commissioned in 2011.
According to the Regional Development Ministry, Ingtransstroy was to complete the construction of the S-2 navigation channel and the drawbridge by March 18, 2008. The Ministry claims it has not done so. In particular, as of January 22, 2009, work estimated at $2.12 million has not been accepted by the project operator accountable to the Ministry.
"The contractor did not formalise the requisite documents before the expiry of the contract, which prevented us from commissioning the project," said Alexei Vasilyev, director of the Foundation for Investment Construction Projects (Russian abbreviation FISP, the financial agent of the project operator).
However, the press service of Ingtransstroy said they had fulfilled the agreed volume of work, and explained the delay by the fact that, in March 2008, the Regional Development Ministry instructed them to suspend work for the inventory of the facilities within the project.
"The Ministry has not provided the documents proving that it has sustained losses to the declared amount," said the head of Alfa Bank's legal department.
The state has not paid Ingtransstroy in full for building the project. Payment delays began when Vladimir Kogan, director of the Ministry's department of capital investment, former co-owner of Promstroybank and former head of Rosstroy, was instructed to supervise the project.
"He began by reviewing the results of the tenders held before his appointment," Mr Vasilyev, of the FISP, said. In his words, Ingtransstroy has received $182 million of the $190 million to be paid for completing the project, while the contractor has not received the remaining $8 million because of failure to formalise acts of acceptance.
Mr Vasilyev said the Regional Development Ministry had filed a $9 million case against Transstroy for failure to fulfil the contract.
In its turn, Transstroy filed two cases against the Ministry with the Moscow Arbitration Court. In the first lawsuit, the corporation contests the Ministry's demand that it should repay Alfa Bank's guarantee. In the second lawsuit, Transstroy claims that the client did not take into account additional volumes of work done by the contractor, and that it postponed payment without good reason, which allowed the corporation, it said, to prolong the contract for at least 193 days.
