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The great Euro 2012 scam

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June 14, 2012, 9:09 p.m. | Op-ed — by Ostap Semerak
Ostap Semerak writes: Ukrainian taxpayers got pickpocketed by the nation's leaders.

For the first time ever, the biggest European championship is co-hosted by a former Soviet state. It is the grandest possible event for an army of fans. But the problem is that this three-week festival of football was unwittingly paid for by the fans themselves and the rest of Ukraine’s citizens, including those who have no interest in football.

We all paid the same way as when we get into crowded public transport and come out without a wallet. Except in the case of Euro 2012 it wasn’t the tram pickpocket who ran with our cash, but the highest statesmen. As a result, every Ukrainian has lost nearly Hr 2,000.

The original concept for Euro 2012 preparations created by Yulia Tymoshenko’s government envisaged that the lion’s share of financing would come from private investors, including foreign ones.According to the first draft of the state preparation program for the championship, the state budget had to set aside only about Hr 18 billion ($2.25 billion) for it.

But for President Viktor Yanukovych’s team, who view power primarily as a tool for personal enrichment, it was not profitable enough to get private investment because it’s difficult to pocket. But state expenditures, on the contrary, grew sky high, reaching Hr 80 billion ($10 billion). This was made up of direct budget expenditures, state guaranteed loans and investment in state-owned businesses. Moreover, local budgets spent another Hr 3.8 billion ($470 million). 

And to make sure that nothing stands in the way of siphoning sackfuls of cash, the government of Prime Minister Mykola Azarov legalized a mechanism of corruption soon after his appointment. First, a Cabinet decree was issued, and later the pro-government majority in parliament approved a law that canceled competitive tenders for all state procurement contracts related to Euro 2012.

We all paid the same way as when we get into crowded public transport and come out without a wallet. Except in the case of Euro 2012 it wasn’t the tram pickpocket who ran with our cash, but the highest statesmen.

The right to distribute contracts and cash was granted to the national agency for preparation and conduct of Euro 2012. It was headed by the president’s home region companion, Deputy Prime Minister Borys Kolesnikov, who was in charge of preparation. But this was the formal arrangement. In reality, key decisions were taken by the deputy prime minister himself.

This enabled state contracts to be handed over to companies which directly or indirectly belonged to government officials or a part of a corrupt pact that involves them. The scheme is very simple: the official and his chosen contractor agree to share the budget cash.

They cook up an overblown budget, and the contractor pays off a part of it back to the official as soon as he receives a transfer – usually in cash.Sources in such companies have said that this scheme allowed officials to receive (or, to put it bluntly, steal) between 30 to 40 percent of the state funds allocated for the tournament’s preparations.

We’re talking about Hr 30 billion, or up to $4 billion.The brightest illustration of this scheme comes from the biggest sites that were built or reconstructed for Euro 2012. These include Olympic Stadium in Kyiv, the new stadium in Lviv, airport terminals in Donetsk and Lviv, and big stretches of roads.By an unambiguous coincidence, when Kolesnikov took charge, all the general contractors that used to work at these sites were replaced by other companies that were connected to the new deputy prime minister one way or another.

First of all, of course, these are the legendary companies from Donetsk, Altcom and AK Engineering. The traces of the real owners (or owner) of Altcom, which received a dreamlike share, are lost in an offshore maze that leads to Central America’s Belize, while the connection between  AK Engineering and Kolesnikov is clear as daylight. (Editor’s Note: Kolesnikov has repeatedly denied any connection to Altcom.) Some data suggest that these companies alone received no less than Hr 9 billion from the state.

The construction budgets where Altcom and AK Engineering were employed kept changing and growing. Reconstruction of Olympic and the surrounding territory alone came to cost Hr 5.6 billion ($700.8 million), of which Hr 5.4 billion came from the state and the local budget.

This is a lot more than was spent on the best stadiums in Europe.Moreover, the Ukrainian statesmen did not miss an opportunity to finance a number of expenses from the state budget that clearly only benefit them or their comrades, but have nothing to do with the football championship.The biggest case in point is the construction of a helicopter pad close to Kaniv worth more than Hr 150 million (nearly $19 million). The site has nothing to do with participants or guests of Euro 2012, but it helps Yanukovych and his escort to easily get to hunting grounds located nearby.

There is also a vast discrepancy between financing of construction projects that belong or are controlled by the people close to the government, and the rest of the “poor relatives.”There are many incidents of corruption in the name of Euro 2012. One day the story will be told in detail by the prosecutors in court, where this major fraud of two decades will end up.

The court will one day rule on the fate of its inspirers and executors. That will happen one day. And in the meantime, we have a bunch of officials who have robbed their country and wasted the huge investment potential of Euro 2012. It’s only somewhat sweetened by the good start of the Ukrainian team in the tournament. 

Ostap Semerak is an opposition member of parliament of Ukraine and is the shadow minister of sport, tourism and Euro 2012.

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