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Official's Wife Gets City Contracts

Inzhstroi-City Monolit got billions of rubles worth of city construction contracts, including some for road building. Sergei Porter

The head of City Hall's department of bridge and road construction is under investigation for signing at least 8.5 billion rubles ($279 million) worth of contracts with a company headed by his wife.

A city oversight body as well as the Prosecutor General's Investigative Committee are investigating the activities of Alexander Levchenko, federal and local officials told Vedomosti.

The inspection documents, seen by Vedomosti, say the department has signed contracts with companies close to Levchenko since 2005. In particular: 29 contracts for 8.124 billion rubles with Gornoprokhodcheskiye Raboty No. 1, or GPR-1, and 19 contracts for 8.124 billion rubles with Inzhstroi-City Monolit.

Levchenko confirmed that these contracts were signed. "For several years in a row up to 2007, the department ordered engineering work, roads, power and heat stations and waste treatment plants on behalf of the state," he said. Now the department only oversees the work.

The main owner of Inzhstroi-City Monolit is Levchenko's wife, Nadezhda Buravleva, said several construction market players. Levchenko didn't deny this information.

According to the state registry of legal entities, the founders of the company are Nadezhda Buravleva, with a 62 percent stake, and Semyon Svirsky and Valentin Lerner, each with a 19 percent stake.

Levchenko said he has no stake in GPR-1. "I worked for a long time in GPR-1, during the privatization period, as an employee. I received a small percentage [of stock], but I don't own it any more," he said.

According to Interfax's SPARK database, 48.23 percent of GPR-1 is owned by Mosinzhstroi, 47.78 percent is held by VTB, while about 2 percent is owned by Yunion, 11.1 percent of which is owned by Levchenko. In 2002, Buravleva co-owned (about 13 percent) SPU-19, which owned a controlling stake in GPR-1. Levchenko is currently the chairman of GPR-1.

"Inzhstroi-City and GPR-1 participated in tenders, the outcome of which I had no influence over," Levchenko said, adding that it was unfair to say these companies won the majority of the tenders. In Moscow, he said, there aren't that many companies capable of implementing difficult engineering projects: Mosinzhstroi, SUPR, GPR-1, Geoton, ARKS and Termoservis.

Inzhstroi-City Monolit and GPR-1 win not more than 8 percent to 10 percent of state orders in different fields of work, he said. Other companies have bigger levels of state orders. Mosinzhstroi, for example, had 20 billion rubles per year.

A law enforcement official said the Investigative Committee is carrying out a pre-investigation inspection.

The fact that a company owned by a close relative of a government official wins several contracts doesn't necessarily mean that the law was broken, said Ilya Rachkov, a partner at the Noerr law firm. The law, he said, is formulated so that everyone can participate in tenders no matter who owns the company.

It's a different matter if the company winning an order is close to the person making it, he added.

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