WORLD NEWS
8
international
construction
july-august 2013
RUSSIA
Sochi corruption put
at US$ 30 billion
Opposition politician alleges up to 60% of the
construction budget for the 2014 Winter Olympics
has been ‘stolen’
R
ussian opposition politician Boris Nemtsov has alleged that corruption
among officials and businesses working on the 2014 Sochi Winter
Olympics has added US$ 30 billion to the cost of constructing venues
and infrastructure. He said the original budget of US$ 12 billion has rocketed
to US$ 50 billion, making the games the most expensive Winter or Summer
Olympics ever.
The allegations were made in a new report,
Winter Olympics in the Subtropics
,
written by Mr Nemtsov and Leonid Martynyuk, who is a member of the
Russian liberal Solidarity movement.
One of the examples cited in the report is that of the 40,000-seater Fisht
Olympic Stadium, which will host the opening and closing ceremonies for
the event. The initial budget for this project was RUR 7.5 billion (US$ 240
million), but the authors say this has now escalated to RYR 23.6 billion
(US$ 760 million).
This gives it a cost per seat of US$ 19,000, whereas Mr Nemtsov and Mr
Martynyuk say the average cost for Olympic venues from 1998 to 2012 was
much lower, at only US$ 6,000 per seat.
Overall, they say the cost of venues and supporting infrastructure at Sochi
is two to three times higher than previous comparable events – a disparity
which they put down to corruption.
“The overall scale of theft is about US$ 25 billion to US$ 30 billion, or
50-60% of the declared value of the final Olympics. And this is at a
minimum… What is interesting: not a single criminal case of fraud,
embezzlement, bribery and kickbacks at the Olympics did not come to
court,” said the report. The Russian government has not commented on the
report’s findings.
US
A joint venture between Skanska USA and Kiewit Construction has won
the US$ 743 million contract to upgrade the Bayonne Bridge, connecting
New York with New Jersey. The project involves replacing the main span
roadway and bridge approach structures, as well as raising the roadway,
and replacing the electrical and drainage systems, and painting the bridge.
Construction has already started, and is scheduled for completion in
March 2017.
AUSTRALIA
Fraud ban
The World Bank has banned
Australian engineer and consultant
GHD and two of its subsidiaries
– GHD Indonesian Operating
Center and PT Global Hutama
Desain – from projects it finances
for one year.
The debarments follow an
investigation by the Bank which it
said found evidence of fraud on a
management consultancy contract
for a Bank-financed infrastructure
project in Indonesia. The debarment
came into effect on June 10.
And the bans also follow a string
of similar actions by the World
Bank as it seeks to crack down on
corruption on projects it funds.
Leonard McCarthy, World Bank
integrity vice president, said, “There
is no excuse for international
companies not to ensure they have a
code of ethics and integrity that can
govern their involvement in projects
benefitting the poor.
“Meeting the provisions of the
World Bank’s compliance standards
is a prerequisite to doing business
with the Bank.”
EUROPE
Forecasts
downgraded
The Euroconstruct network of
European construction forecasters
has revised its expectations for the
market in 2013 to a decline of -3%
– deeper than the -2.5% decrease it
forecast at the end of last year.
The outlook for Europe’s
construction output in 2014 has
also changed, from expected growth
of +1% to an increase of just
+0.5%. Growth of +1.7% for 2015
is currently forecast.
The worst declines forecast in
construction output next year are
in Spain (-7.7%) and Portugal
(-3.5%), while the largest increases
are predicted for Norway (+4.6%)
and Sweden (+3.5%).
In terms of sectors, residential
construction shows the most
promise between now and 2015.
Output is expected to decline
-2.2% this year before returning to
+1.1% growth in 2014, increasing
to +2.3% in 2015.
CHINA
Guilty plea
Liu Zhijun, China’s Minister for
Railways from 2003 to 2011, has
pleaded guilty to accepting bribes in
connection with construction of the
country’s high-speed rail network.
The trail follows his arrest and
removal from office in March 2011
and his subsequent expulsion from
the Chinese Communist Party in
May 2012.
Mr Liu has admitted to accepting
CNY 64.6 million (US$ 10.5
million) in cash bribes and CNY
800 million (US$ 130 million) in
property between 1986 and 2011.
He also said he received other
inducements, including shares, cars
and works of art. They were given in
exchange for construction contracts
as well as for jobs within China’s
railway organisation.
As part of his guilty plea, Mr Liu
has asked for leniency in sentencing,
and is reported to have expressed
remorse andwept in court.The court
was also asked to recognise Mr Liu’s
positive contribution to China’s
infrastructure, particularly his work
overseeing the development of the
country’s high-speed rail network.
A date has not yet been given for
the announcement of the court’s
verdict and Mr Liu’s sentence.
Corruption can be punished by
death in China.
GLOBAL
CoST appeals
for funding
The
Construction
Sector
Transparency (CoST) initiative
needs US$ 20 million over next
three years to continue its work
to increase transparency and
reduce corruption in the global
construction industry, according to
the organisation.
CoST was launched in October
following a three-year pilot scheme.
It is designed to make information
public about construction projects
and how they are awarded.
Current funding ends in
December 2014, and the extra funds
would allow the scheme to expand
from the nine countries currently
participating to 22 and establish
regional support structures.
