Russia reviews public procurement process as Forbes publishes list of “private club”

Andrei Bokarev Iskhander Makhumodov

Russia reviews public procurement process: The rationale behind the determination of Russia’s Federal Antimonopoly Service (FAS) to break up the “private club” of businessmen who win the lion’s share of state contracts was underlined this week by Forbes Russia’s publication of the top ten members of that club. Ranked by the value of the public-sector contracts won last year by the companies they control  – or in which they have a significant shareholding – the club’s top ten reads like this

1. Iskander Makhmudov and Andrey Bokarev
   • Companies & Major Shareholdings: Transmasholding (33%), Metrovagonmash (16.9%), Oktyabrsky Electric Plant (24.5%), Roslokomotiv (33%)
   • Main Clients: The Moscow Metro, Russian Railways
2. Arkady Rotenberg  
   • Companies & Major Shareholdings: SGM (75.5%), TEK Mosenegro (75.5%)
   • Main Client: Gazprom
3. Ivan Shabalov
   • Companies & Major Shareholdings: Pipe Innovation Technologies (100%)
   • Major client: Gazprom
4. Valery Abramov and Victor Perevalov
   • Companies & Major Shareholdings: VAD (100%)
   • Main client: Rosavtodor and its regional office
5. Gennady Timchenko
   • Companies & Major Shareholdings: Stroytransgaz JSC (59.85%), Stroytransgaz CJSC (15.75%), IKSK ARKS (15.75%), USAC (15.75%)
   • Main clients: Gazprom, Ministry of Sport, Moscow’s Department of Construction
6. Alexander Pockets
   • Companies & Major Shareholdings: Eurasian Pipeline Consortium (100%)
   • Main Client: Transneft
7. Ziyaudin Magomedov
   • Companies & Major Shareholdings: Stroynovatsiya (100%), Globalelectroservice ( 100%)
   • Main Clients: Rosaviation Rosavtodor, IDGC of Siberia, Eastern UES
8. Anatoly Antipov
   • Companies & Major Shareholdings: Transugstroy ( 73%)
   • Main Clients: Moscow’s Department of Construction, Russian Railways
9. Igor Rotenberg
   • Companies & Major Shareholdings: Mostotrest (26.4%) TSM (22.2%), Gazprom Drilling (100%)
   • Main Clients: Federal Air Transport Agency, Road Service, Moscow’s Department of Construction, Highways
10. Alexey Repik
    • Companies and Major Shareholdings: R-Pharm (100%)
    • Main Client: Ministry of Health and its regional offices

“Over the year a sort of “private club” has evolved between the  customers and suppliers working in the field of public procurement which it is impossible for the average entrepreneur to join, ” the FAS noted in a recent report. The main thrust of the agency reforms will be to increase transparency in the procurement process,  to give a wider range suppliers access to government  contracts and, ultimately to reduce the cost to the state.