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. Last Updated: 07/27/2016

Ministry: Millions Misspent On Road

The head of a Moscow construction company is accused of pocketing millions of dollars that were supposed to have been spent on the grand reconstruction of the outer ring road, or MKAD, and the embezzlement case may soon be expanded to other firms, federal investigators said.

Oleg Khomenko, head of the SU-802 joint-stock company, is charged with having embezzled 103 million redenominated rubles out of some 2.5 billion that it got from the city government for work on the MKAD from 1995 to 1998. During those years, the ruble fluctuated from roughly 4 to 6.5 to the dollar up until the August 1998 devaluation: By the end of 1998, it had dropped to 20 to the dollar.

No trial date has been set, but the Interior Ministry's investigative committee has gathered enough evidence to feel confident that the case will reach the court, committee spokesman Vladimir Martynov said Monday.

Among the evidence are documents showing that Khomenko transferred millions of rubles in city reconstruction funds from SU-802 to several front firms that were set up to pose as the company's subcontractors from 1995 to 1997, said Martynov. SU-802 won a municipal tender in 1995 to reconstruct about one-fourth of the MKAD: the 24-kilometer stretch of the road between the suburbs Kapotnya and Golyanovo.

Martynov said Khomenko tried to cover up the embezzlement either by signing contracts with these front firms for work they never did or buying construction materials from them to later enter in his company's books at inflated prices and pocket the difference.

From the front companies, the money was either cashed in a commercial Moscow bank or wired via foreign banks to Khomenko's personal accounts abroad, said the spokesman. One of these foreign banks was the Bank of New York, the newspapers Vremya-MN and Kommersant reported.

Investigators have already found one such account in Khomenko's name in a Swiss bank in Geneva, into which he transferred $700,000 in 1997, said Martynov. He would not comment on a recent report in Kommersant that identified the bank as the Swiss Bank Corp.

Khomenko was arrested in December by officers in the Interior Ministry's main economic crime department, who alleged that many of SU-802's 52 MKAD subcontractors were front firms registered with the help of lost passports. The department's officers declined to comment when reached by telephone.

Khomenko, who remains in a Moscow detention facility, could not be reached for comment, nor could anyone from his company. SU-802 could not be found in city telephone books.

Two more people could soon be charged with having been involved in the same alleged embezzlement scheme, said the Interior Ministry spokesman.

He identified them as Sergei Popovich, who heads the Fobos joint-stock company and is chief engineer of the SU-802 construction company, and Mikhail Karasyov, who headed the Moscow company SBTs Reutovo.

Fobos and SBTs Reutovo were among those subcontractors that received cash from SU-802 for work they "possibly" never did, Martynov said.

He said his committee's investigators have sent repeated summonses to the two men to appear for questioning since the beginning of this year, but they have failed to show up.

The Martynov said he "cannot rule out the possibility" that his committee may open more cases to investigate alleged embezzlement during the reconstruction of the MKAD. It was unclear how many companies took part in the reconstruction of the 109-kilometer multilane highway that circles Moscow.

The project was overseen by Boris Nikolsky, a deputy prime minister in the city government. Reached by telephone Friday, an aide to Nikolsky refused to either transfer the call to her boss or comment herself on the embezzlement case.

The city government also declined to comment. An aide to city construction chief Vladimir Resin said by telephone Friday that the city government will not comment on any embezzlement "rumors" until there is a "court verdict."

It remains unclear exactly how much the city spent on reconstructing the road. Vremya-MN cited unidentified experts earlier this year as saying the project should have cost some $580 million, or $5.36 million per kilometer.

According to Kommersant, however, Khomenko acknowledged it cost $15 million to reconstruct an average kilometer of the MKAD. This is compared to the $6 million that is spent on similar projects in Germany, said the newspaper.

Former federal tax chief Alexander Pochinok once noted that MKAD could have been paved with silver ingots if the city and constructors actually spent as much as they declared.