Bureau of Investigative Journalism investigation.
A Russian tycoon whose company and its executives donated £ 1million ($ 1.3million) to the Conservative Party has been linked to a landmark corruption scandal in his home country that involved companies he was in bound to pocket huge commissions for state contracts, the Bureau of Investigative Journalism may reveal.
Viktor Fedotov, 73, was the chairman of two companies that made more than $ 100 million from an oil pipeline project that turned out to be mired in fraud, costing the Russian state huge amounts of money. are.
In August of this year, Fedotov was revealed to be the owner of Aquind, a company that made big donations to the Conservative Party while seeking ministerial approval for a $ 1.5 billion energy infrastructure project, the construction of a submarine electric cable connecting Portsmouth in England to France. .
“The public will be rightly disgusted that a Russian oligarch appears to have privileged access to the prime minister.“
– Angela Rayner, Deputy Leader of the Labor Party
In a 2008 internal review, Russia’s state pipeline monopoly, Transneft, asked why some companies, including one chaired by Fedotov, received huge commissions for work that they passed on to subcontractors, depriving the public enterprise of precious resources. This led to a criminal investigation but no charges were laid and Fedotov was not personally charged with any wrongdoing.
The report was first made public in 2010 by Alexei Navalny – the Russian opposition activist who survived poisoning in Novichok this year – and raises questions about the man who controls Aquind, a company that, together with its director Alexander Temerko, donated to the Conservative Chancellor Rishi Sunak, Business Secretary Alok Sharma and Northern Ireland Secretary Brandon Lewis. The commission’s landmark report raises the question of where some of Fedetov’s wealth came from.
Transneft conducted its review after a change of management and summarized its findings in the report. Fedotov was not identified in the report, and the Bureau of Investigative Journalism has confirmed his position in business through company records.
Temerko, which has no connection with the Transneft report, has donated just under $ 925,000 to the Conservative Party since obtaining British citizenship in 2011. The party accepted £ 243,900 (323,000 $) donations from Aquind since March 2019, when Fedotov took sole ownership.
The issue of political donations takes on new urgency as the Planning Inspectorate is due to advise the government to approve Aquind’s infrastructure project in March 2021.
“These reports raise even more serious questions about why the Conservative Party is happy to be funded by Fedotov and Aquind,” said Deputy Labor chief Angela Rayner. “The public will be rightly disgusted that a Russian oligarch appears to have privileged access to the prime minister and government ministers because of his huge donations to the Conservative Party.
Tory insiders have expressed dismay that the party has accepted Aquind’s donations seemingly without seeking a full picture of how his owner amassed his wealth. “There is a part of the party that really doesn’t want to see donations come when you don’t really know where they’re coming from – and especially when the donor is waiting for some sort of government decision,” said a senior Conservative lawmaker.
A party spokesperson said: “Donations to the Conservative Party are reported correctly and transparently to the Election Commission, published by it and are fully in accordance with the law.
Boris Johnson’s government has already been hit by a string of scandals in which Tory donors and others with personal ties to party leaders have landed billions in COVID-related contracts or won lucrative decisions in their favor.
Steve Goodridge of the Transparency International UK campaign group said: “Any politician or political party should have a clear understanding of the nature of their benefactors. Doing due diligence towards those who sponsor your activities is a strong safeguard against embarrassment or subsequent scandal. We urge politicians to consider not only whether the funds they receive are lawful, but also whether accepting them demonstrates good judgment. “
Many lawmakers had expressed doubts about the lack of transparency surrounding Aquind’s ownership before Fedotov was revealed as its owner (via a Luxembourg company) by The temperature in August.
Fedotov, Temerko and Semyon Vainshtok – a former chairman of Transneft who briefly served as a director of an Aquind group company – have sown the seeds of their involvement in the UK energy sector since December 2006, when they met at a private party. at Kensington Palace held under the auspices of Prince Michael of Kent, the Queen’s cousin.
The event was hosted by Vainshtok’s daughter Inna and hosted by Temerko, whose time at the top of the Russian oil industry straddled that of Fedotov and Vainshtok and who lived in exile in London after Vladimir Putin’s regime attacked his former employer, Yukos. (The previous year, the Russian state had failed in its attempt to have him extradited, with a judge dismissing the fraud charges as politically motivated.) According to a source familiar with the event, Vainshtok attended the party with Fedotov, with whom he shares a long trading history in the troubled world of energy deals in Russia.
“[Pipelines] are Putin’s political instruments and everyone understands that they are losing money … But the guys who build pipelines get very, very rich.“
– Mikhail Krutikhin, partner at RusEnergy
Two months later, Temerko joined the board of directors of SLP Engineering, a UK-based sister company of Aquind that has built offshore oil rigs. The following year he was joined there by Fedotov and Vainshtok, who had just left a post to which he had been appointed by Putin, overseeing preparations for the Sochi Winter Olympics.
Vainshtok had been chairman of Transneft for eight years, stepping down in 2007, but it wasn’t until 2010 that details of the commission scandal during his time there were made public by opposition activist Navalny. poisoned.
Navalny’s revelations were based on a review by Transneft of its own contracts, undertaken after Vainshtok left the state monopoly. The review looked at the agreements awarded for the construction of the East Siberia-Pacific Ocean pipeline during Vainshtok’s time as president. He said contracts worth 303 billion rubles (around $ 4 billion) had been awarded – more than half of which went to companies doing nothing more than taking a commission and finding others. operators to get the job done. Vainshtok has not been the subject of any specific finding or procedure.
Fedotov was the chairman of two companies which the review found to have benefited from the contracts: All-Russian Research Institute for Pipeline Construction and Operation, companies in the fuel and gas sector – known by its Russian acronym , VNIIST – and Network IP.
The Bureau of Investigative Journalism, which identified Fedotov as the chairman of VNIIST and IP Network in documents filed by the companies, was unable to independently corroborate the allegations in Transneft’s internal review.
Mikhail Krutikhin, partner at Moscow-based research consultancy RusEnergy, highlighted the level of corruption that has always surrounded Russian state-commissioned energy projects. “These are Putin’s political instruments and everyone understands that they are losing money, they are not making a profit,” Krutikhin said. “But the guys who build pipelines get very, very wealthy by building unnecessary and redundant pipelines. The same was true of the pipeline to the Pacific coast. “
Transneft’s report led to a criminal investigation in 2009 into allegations of embezzlement by companies it hired as subcontractors, but the investigation did not result in any further proceedings.
The Bureau made several attempts to contact Fedotov about the story, but received no response.
Aquind’s ties to the British ruling party run deeper than donations. Months after losing his seat in the 2017 general election, former Tory lawmaker James Wharton took on a paid role advising Aquind’s board of directors. He went on to become the campaign manager for Boris Johnson’s successful leadership bid and was selected by Johnson for a lifetime peerage that year. In September, he took a seat in the House of Lords, as Baron Wharton of Yarm, and remains in his role as an adviser to Aquind’s board of directors, according to his LinkedIn profile.
Another Conservative member of the House of Lords, Lord Martin Callanan, served on Aquind’s board of directors for over a year, until the end of June 2017. In July of this year, the government appointed him. appointed to an international anti-corruption post.
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