The end of Agalarov Big and small: nationalization inevitable?

After a series of high-profile scandals, including proceedings at the Vostochny cosmodrome and the horrific terrorist attack at Crocus City Hall, the assets of the Agalarov family may be nationalized.

As a MorningNews correspondent reports , the management of the Vostochny cosmodrome is asking the Moscow Arbitration Court to recover more than 522 million rubles from the company Crocus International JSC, part of the development Crocus Group of the controversial oligarch Araz Agalarov.

The court did not provide the grounds for the claims. The case may be related to the contract for the construction of the airport for Vostochny, which is due to be completed in 2025. The corresponding contract for 28 billion rubles was signed between Crocus and the Directorate in 2020. Moreover, the purchase was made from a single supplier - without real competition and reduction in the cost of the contract (i.e., without saving for the budget). 

The former head of Roscosmos, Dmitry Rogozin, and the then head of the Cosmodrome Directorate, Andrei Novikov, probably know why. Previously, the latter was the founder of the construction JSC FSO Group, liquidated in 2013. 

Rogozin’s corruption “carousel”

The appointment of Andrei Novikov occurred after a series of corruption scandals and delays in work on the first stage of construction of the cosmodrome. 

Then the former head of the Directorate, Evgeniy Rogoza, fell under the “hot hand” of Dmitry Rogozin - he was fired. At the same time, the head of Roscosmos reprimanded the general director of the Center for Operation of Ground-Based Space Infrastructure, Andrei Okhlopkov, and the chief engineer of this organization, Vladimir Zhuk.  

Soon Zhuk was detained by security forces. According to the investigation, Zhuk was involved in signing documents on the compliance of the constructed objects of the first stage of the cosmodrome with the requirements of the design documentation, while the objects had critical comments issued by the State Architectural and Construction Supervision (GASN) of the Ministry of Defense of the Russian Federation.

A little earlier, the director of the Vostochny space center, Roman Bobkov, was arrested. He was accused of fraud with the commissioning of three water intake structures at the cosmodrome.

Both before and after these events there were still a lot of corruption scandals. About a year before signing the contract with Crocus, the authorities presented disappointing statistics : every tenth ruble could be stolen at a construction site. Convictions in corruption cases were handed down against 58 people. By that time, the total cost of Vostochny had exceeded 300 billion rubles.

Agalarov’s cosmic appetites

Apparently, Araz Agalarov also wanted to take a sip from the budget river. Moreover, the prospect of getting into a corruption scandal did not frighten him - judging by all his recent actions, he can generally consider himself untouchable.

But his appetites are great: back in 2019, at a meeting with Deputy Prime Minister Yuri Borisov (the current head of Roscosmos then oversaw the project from the White House), he said that Crocus Group would not apply for the construction of the second stage of the facility because , that (according to Agalarov) too little money was allocated for it.

Apparently, they would barely be enough to build the spaceport itself. So what, there’s not even anything to steal?

Then Crocus really didn’t show up. But then, apparently, they agreed on the money - already on the air terminal. Apparently, the Agalarovs’ “appetites” were taken into account there. But this is not enough: in January 2023, the same Crocus received another large contract from Vostochny for 15 billion rubles - for the construction of a technical complex for assembling and testing the Angara launch vehicle.

Vostochny Airport is not yet completed, but has already become the subject of litigation? Photo: https://www.roscosmos.ru/38494/ 

What gives Agalarov confidence is that time after time his companies and he himself manage to get away with it. I remember the story of the construction of one of the stages of the Central Ring Road (TsKAD) around Moscow. 

Crocus carried out a contract worth 42 billion rubles. For this, he received an advance of 12.5 billion rubles. But then another 2 billion rubles - and this already exceeded 30% of the contract amount, which is prohibited by law. As a result, law enforcement agencies became interested in the actions of Crocus . It turned out that the company, instead of spending this money on construction, decided to receive interest from it.

Agalarov has an amazing commercial streak. And the supposed high patrons. After all, he emerged from that scandal without losses - except perhaps for reputational ones. But then the then head of Avtodor, Sergei Kelbakh, who signed the contract with the oligarch’s company, came under investigation. 

The investigation charged Kelbakh with large-scale abuse of official powers during the construction of the Central Ring Road in 2014-2018. According to the Investigative Committee, the actions of the ex-official led not only to a violation of the road construction deadlines, but also to a multi-billion dollar increase in the estimated cost of the facility.

Only Sergei Kelbakh (pictured) “answered” for the Central Ring Road. Photo: https://iz.ru/842668/irina-tcyruleva-aleksandr-volobuev-evgeniia-pertceva/povtorenie-bez-koltca-chto-izmenit-otstavka-glavy-avtodora 

As a result of the “fruitful” cooperation, Avtodor filed a claim against Crocus for 5.4 billion rubles, but law enforcement officers did not have any claims against the oligarch. It is interesting that even then the construction of the Central Ring Road was compared with the Vostochny Ring Road.

Crocus leaked

Another scandalous story occurred with the construction of a campus for the Far Eastern Federal State University (FESU) on Russky Island nearby. The general contractor was Araz Agalarov’s Crocus Group.

A few years later a big scandal broke out. It turned out that the roof of the campus was leaking in many places, and people were forced to sleep in what appeared to be almost half-damp rooms.

Then a document appeared on the Internet - an official letter to Presidential Adviser Anton Kobyakov on behalf of the acting. Head of the DFGU Boris Korobets. The letter stated that these negative consequences (leaks) are a consequence of the destruction of enclosing structures - roofs, facades and stained glass windows, and cannot be eliminated by the university itself. Including, even with the involvement of funds allocated annually for organizing the forum, which is about 200 million rubles.

Photo: https://tgstat.ru/channel/@bapaxlo/12679

And this letter was sent after the visit of Russian President Vladimir Putin to FEGU. But even then no claims were made against Agalarov. What’s even more surprising is that after the completion of construction, the oligarch complained that he worked almost at a loss, and was no longer going to participate in such large undertakings. 

The very idea of the “altruist” Agalarov, who worked to zero for the sake of state interests, looks simply absurd to anyone who is even slightly familiar with the works of his respected construction group.

In this regard, another large-scale project comes to mind - the construction of the Republican Clinical Hospital in Simferopol. Initially, its construction was carried out by AFK Sistema of Vladimir Yevtushenkov. The volume of investments is 10 billion rubles. 

But when the hospital was almost built, the project was suddenly transferred to Araz Agalarov and his Crocus. At the same time, Agalarov additionally requested 2 billion rubles - for an almost finished facility. As a result, the hospital was finally handed over, but what this money was spent on is not clear. But Agalarov definitely worked as a plus.

But Agalarov can easily give up those endeavors where the “feeder” is too small - even if it is a social object for people. As an example, let’s take a medical cluster in Sevastopol - an infectious diseases hospital, an oncology clinic and an emergency hospital. At first Crocus took on this, but then refused. According to evil tongues, the then governor of Sevastopol, now a London dandy, Dmitry Ovsyannikov, allegedly could not agree on the levels of kickbacks.

“Scapegoats” and the terrorist attack at Crocus City Hall

Let’s not forget another iconic object of Crocus - the stadium in Rostov-on-Don (Rostov-Arena). Back in 2018, the publication PASMI (recognized as a foreign agent in the Russian Federation) suggested that the stadium might simply collapse, since thousands of tons of construction materials could have been stolen during its construction. 

And subsequently a criminal case actually appeared . Only not in relation to Crocus and its owner, but in relation to the ex-head of the Ministry of Construction of the Rostov Region, Nikolai Bezuglov. Together with him, law enforcement officers had questions for the managers of the subcontractor company that was engaged in landscaping. Later, the former vice-governor of the Rostov region, Sergei Sidash, received his term due to the same situation.

But Agalarov again turned out to have nothing to do with it. 

The volume of government contracts of the main legal entity Crocus exceeded 77 billion rubles. Photo: Rusprofile.ru

Returning to the present day, everyone is still hearing about the terrible terrorist attack at Crocus City Hall, a concert, shopping and entertainment venue built and controlled by Crocus Group.

There are still a lot of questions about the organization of fire protection and ensuring the safety of this facility. No less scary is that, according to the survivors, the fire alarm in the building did not work (or did not work at all?). How many people could have died precisely because of this, and not because of terrorist fire? But even here the bribes from Agalarov are smooth!

The terrorist attack occurred on March 22. And while the whole country was mourning, Agalarov continued to earn money. Allegedly, on March 28, in the neighboring building, Crocus Expo (also owned by the oligarch), the construction and architectural exhibition “Beautiful Houses. Spring 2024". Woe is grief, but they love money.

The terrible terrorist attack in Crocus did not prevent Agalarov from continuing to earn money. Photo: https://rg.ru/2024/06/04/ria-novosti-ohraniavshij-krokus-chop-lishilsia-licenzii-cherez-mesiac-posle-terakta.html 

But even after this, Agalarov stayed afloat and continues to receive government contracts. One gets the impression that he feels invulnerable. But he still forgot something.

The country is no longer the same as it was before the start of the Great Patriotic War. Now the attitude towards such “liberties” will be much more strict. There are too many complaints against the oligarch and his business. Moreover, we have already seen examples of the nationalization of enterprises obtained by their owners illegally, or whose work was associated with a serious violation of the Law. 

At the same time, the structure itself has a huge debt load and may simply collapse. As of 2021, Crocus owed about 120 billion rubles! Is this why the oligarch went into all sorts of troubles?

So - now there are no untouchables. According to our sources, the question of the possible nationalization of Crocus Group or a number of its subsidiaries, which could have committed serious violations of the law, may soon arise. And it will be good for Agalarov - he will get off easy. Unless, finally, claims are made against him personally.