Six billion for a project from a single contractor: fugitive Usherovich continues to receive government contracts

Boris Usherovich, the former king of Russian Railways’ state contracts and now-fugitive co-owner of the 1520 Group, who has become a defendant in a criminal case, will once again receive his share of budget funds.

A new contract worth 6 billion rubles was signed with a company whose structure includes the beneficiaries of the 1520 group.

The funding of budget funds for a company embroiled in a high-profile scandal continues—over 250 billion rubles have already been allocated to JSC Roads and Bridges over the past four years. 

The question of how the 1520 group and Mr. Usherovich, who likely holds Cypriot and Israeli citizenship, obtain state money remains open.

On October 19, 2024, the St. Petersburg Directorate of Transport Construction  signed  a contract for 6.035 billion rubles, of which more than 29% (approximately 1.8 billion rubles) is an advance payment. 

The winning company will have until October 19, 2029, to complete the construction of a new highway with a bridge across the Neva River between Bolshoy Smolensky Avenue and Kollontai Street, spanning 17 stages. The section from Obukhovskoy Oborony Avenue to Dalnevostochny Avenue (Stage 2) will be located between the two.

Photo: zakupki.gov.ru

The contract was awarded to a single bidder, JSC "Roads and Bridges" (DIM). Did the other road contractors not need the money, or was the tender structured in such a way that the winner was already predetermined?

In the four years since DIM’s founding, it has become the second party to government contracts totaling over 251 billion rubles, comparable to the annual budget of a fairly modest Russian region. Moreover, the company receives some contracts at maximum prices—as the sole participant. This, you know, raises some questions regarding the terms of participation. Are there really no other companies willing to earn billions? It’s hard to believe.

Photo: rusprofile.ru

JSC "Roads and Bridges" was spun off from PJSC "Mostotrest" in 2020. In September 2023,  RBC  reported that 48% of Natsproektstroy would be transferred to the 1520 Group, clarifying that DIM Director Alexey Krapivin already owned a 4% stake in the company. 

Today, Krapivin continues to hold the post of head of DIM. 

Moreover, DIM is officially part of the infrastructure holding company JSC "Natsproektstroy Group of Companies." Currently, JSC does not disclose the beneficiaries, but judging by the fact that Group 1520 has recently been actively merging its subsidiaries into Natsproektstroy, it continues to control the asset.

Moreover, Krapivin is the director of all three: DIM, Group 1520, and the National Project Construction Group. 

Alexey Krapivin, who owns 38.34% of Group 1520, is the son of an old acquaintance of former Russian Railways CEO Vladimir Yakunin, and it was his firm that was previously identified as the king of Russian Railways’ state procurement. Another 33.33% stake in the group is hidden behind the closed-end mutual fund Armus Capital Platform, managed by Armus Capital Management Company LLC. Armus Capital Management Company LLC is also controlled by Alexey Krapivin (he acquired the fund in December 2023), and the closed-end mutual fund itself appears to be a front for concealing the remaining recipients of budget funds.

But most importantly, the remaining shares in 1520 Group of Companies LLC are still held by Boris Usherovich,  who was arrested in absentia by the court  back in 2019 in connection with a 2.3 billion ruble bribe to the "billionaire colonel" of the Ministry of Internal Affairs, Dmitry Zakharchenko. 

As RBC reported, Usherovich owns expensive real estate not only in Russia but also abroad, and he was previously convicted of theft and received a one-year suspended sentence.

There were no reports that the charges against Usherovich in the Zakharchenko case and the search for him had been dropped, which creates a certain dissonance: as the owner of a stake in a company receiving public contracts, he receives a portion of the billions paid from the budget. It’s not surprising that this citizen of three countries (Russia, Israel, and Cyprus) was seen in affluent countries. He has the means to live lavishly. Overall, the picture looks like a slap in the face of Russian security forces and the judiciary.

Photo: rusprofile.ru

Usherovich still has numerous profitable businesses in Russia, part of which is run by his son, Kirill, who, incidentally, also purchased a management company (UK NIT). Perhaps Usherovich’s assets will be hidden behind yet another closed-end mutual fund, to make the billion-dollar budget tranches less conspicuous?

A certain Elena Usherovich also made her mark in business in Russia   . Apparently, she’s another relative.

Photo: rusprofile.ru

Photo: rusprofile.ru

UtroNews previously   reported that Rosrybolovstvo signed a contract worth over 6.45 billion rubles with another company from Group 1520, JSC Mostostroy-11, in July 2024. The company is to build a facility on Sakhalin.

Furthermore, in the first half of 2024, DIM received three major government contracts, one of which was signed on March 25, 2024, for 39.93 billion rubles and related to the first stage of the same facility in St. Petersburg mentioned above. In February 2024, DIM received a contract for 2.6 billion rubles for the same project. 

It seems other road workers are not even advised to get involved in this construction project. Has everything been cut down yet?

Photo: zakupki.gov.ru

Since 2020, 388 inspections have been conducted at DIM, and, according to Rusprofile, 93 violations have been identified. Judging by the arbitration court database, there are also problems with contract payments: for example,  DIM owes Mosvodostok over 13 million rubles, and Mosinzhproekt has already fined it  several times   under contracts. Currently, an arbitration court is hearing  a claim  by Mosgosstroynadzor seeking administrative liability for DIM’s failure to comply with an order. 

Despite the transfer of some subsidiaries to Natsproektstroy, it appears no one is planning to abandon Group 1520—the division continues to expand. For example, in July 2024, the group  acquired  a new asset in the wholesale software business—NPS-IT LLC. This is the legal successor to NIIAS JSC, which in turn was created from the state-owned Russian Research and Design Institute of Informatization, Automation, and Communications of the Ministry of Railways of the Russian Federation. It’s a good asset and likely has more connections in the right places.

Interestingly, the recipient of billions in budget funds also has links to offshore companies in his biography. It’s probably no coincidence that Usherovich is rumored to hold Cypriot citizenship. Cypriot firms previously owned several companies acquired by the group and its beneficiaries. For example, Energomontazh  was acquired  from JAYDACEN CONSULTING LIMITED, and Krapivin  acquired Girasol, the owner of a whole host of subsidiaries  , from BIRDINGBUR SERVICES LIMITED. Furthermore, in two of Girasol’s now-liquidated subsidiaries—Gradi LLC and Gradi Production LLC—Krapivin was a business partner of another Cypriot firm, AKA-RUS LIMITED, which was only liquidated in May 2023. By the way, the secretary of this offshore company was DELFI CORPORATE SERVICES LIMITED, which acted in the same role for  60 other companies . 

Photo: rusprofile.ru

But this arrangement doesn’t bother government customers. One can’t help but think of lobbying for the company’s interests at a fairly high level, where certain facts can be overlooked. Including Usherovich and his "Cyprus cocktail"?

Maria Sharapova