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Friend of Putin Makes Billions for ‘Useless’ Olympic Projects

Vladimir Putin / AP
• March 19, 2013 9:34 am

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Arkady Rotenberg, a close friend of Russian President Vladimir Putin, is set to make the equivalent of billions of dollars in contracts for projects leading up to the 2014 Winter Olympics in Sochi.

These contracts will cost more than the entire 2010 Vancouver Olympics and only represent a fraction of what the total costs are estimated to be.

Bloomberg reports:

Those contracts, which number at least 21, include a share of an $8.3 billion transport link between Sochi and ski resorts in the neighboring Caucasus Mountains, a $2.1 billion highway along Sochi’s Black Sea coast, a $387 million media center, and a $133 million stretch of venue-linking tarmac that will double as Russia’s first Formula One track.

"This is a monumental waste of public money," Stefan Szymanski, a sports economist at the University of Michigan who tracks Olympic spending, said by phone from Ann Arbor. "A small number of people at the top have control of resources and there is no accountability."

Rotenberg, 61, is among a handful of men Putin has known since childhood or from his days in the KGB or St. Petersburg government who’ve amassed riches and power during his 13-year rule. Their fortunes have come at times at the expense of men who flourished under his predecessor, Boris Yeltsin, and the consequences of the differing wealth pedigrees are on display in Putin’s $50 billion push to prepare Russia for its firstWinter Games. The country is considered the most corrupt of the Group of 20 economies by Berlin-based Transparency International.

Not only are the costs exceeding high for the Sochi Games, but much of the construction is unlikely to be profitable once the games have completed.

"A lot has been built for the Olympics that is commercially useless before the games and after," Potanin said last month during a tour of his project with Putin and Jacques Rogge, president of the International Olympic Committee. "The money has been spent and interest is accumulating."

The $200 million port Deripaska’s Basic Element constructed to dispatch Olympic building materials is handling as little as one-fifth of the planned volumes because freight traffic has been redirected to railways and roads, making the venture unprofitable, according to the company.

Published under: Media, Russia, Vladimir Putin