Losing control of the ball

A year before the European football championships one thing is certain in Ukraine: preparations for the tournament will cost more than the original estimates. What is unclear is just by how much

Mladen Petrov

Aday does not pass without the Ukrainian media writing about the Euro 2012 football championships. But instead of being printed in the sports sections, news about the tournament is more and more often appearing on newspapers' investigative pages. Delayed constructions, mysterious companies, opaque contracts, orders carried out for inflated prices - journalists have never had it so good. With time running out, the government decided to allow the Ukrainian Euro 2012 agency ("?????????????????) to dispense with tenders for the biggest infrastructure projects. As a result, the choice of contractors and subcontractors, as well as many of the purchases connected with the organisation of Euro 2012, seem to have slipped out of control.

The need for light
At the beginning of this year an investigation by 'Ukrainskaya Pravda' (?Y????????? ??????') revealed that the preparations for the tournament were clearly not being conducted in a transparent manner. The report revealed that one of the most lucrative contracts (all of which were worth over EUR 285 mln in total) for the modernisation of the Olympic Stadium in Kyiv, where the final match is to be played, was granted to AK Engineering. The company joined a group of contractors in July 2010. A few months later it was awarded another contract - worth EUR 7.3 mln - for the modernisation of the Palace of Sports in Kyiv. Why should this raise any eyebrows? According to the report, AK Engineering is owned by close colleagues of Borys Kolesnikov, the Deputy Prime Minister of Ukraine and the Minister of Infrastructure, who is personally supervising the preparations for the tournament. And these contracts were awarded without a tender. Borys Kolesnikov rejects any accusations of corruption and has threatened the newspaper with a lawsuit. In his opinion, the choice of AK Engineering results from the track record of the company, which includes its work on real estate projects for Rinat Achmetov, Ukraine's richest individual and the founder of the Donbass Arena in Donetsk.

New year, old problems
Ukraine continues to have an appalling reputation for corruption. The latest report published by the Kyiv-based Agency of Legislative Initiatives and the TORO Creative Union, a partner of Transparency International, leaves us under no illusions - Ukraine has still not managed to successfully get a grip on this problem. In its summary last year, the report cites as two of the most serious issues the lack of legal protection for the public sector and the inability to make public administration employees account for money effectively. The authors of the publication highlight the fact that the institutions established to fight corruption lack both independence and power. These problems have also raised their heads during the preparations for Euro 2012. As a result of the endemic corruption, a year before the tournament Ukraine is having difficulty keeping the costs of the preparations in check - and the flagship Olympic Stadium in Kyiv is a prime example. The official cost of the project is app. EUR 327.2 mln. However, according to reports in the Ukrainian press, the sports arena might eat up over EUR 402.7 mln. And this might only be the tip of the iceberg - a considerable growth in costs has also taken place in the case of other facilities, such as airports and other stadiums. The Euro 2012 agency has stated that this is the result of the fact that the original cost estimate did not include a number of "nuances" and that after corrections are made "the estimated cost  will probably not grow any further." Oh, really?

Golden benches
An inspection carried out by the Ukrainian Chamber of Control at the end of last year showed that the renovation of the Kyiv stadium has already cost twice as much as was originally estimated. As a result, the cost of one seat amounts to app.  EUR 3,780, making the 69,000-seater stadium one of the most expensive in Europe. By comparison, the Donbass Arena, which was built from scratch, is 1.5 times cheaper than its counterpart in Kyiv. In its report, the Chamber of Control also points out that the Euro 2012 agency has not yet published any plan for the facility's development when the tournament is over, thus making it impossible to predict when the project will pay for itself. The report also highlights the "ineffective management of budget funds". Despite its work being behind schedule, the general contractor of the Kyiv stadium, Kyivmiskbud (????????????) did not have to pay a EUR 173,700 penalty. Meanwhile in Kharkiv, the issue of the so-called 'golden benches' in the underground became a sensation. Out of the seven new underground stations originally planned to be built for the event, and which have also received funds from the budget of the Euro 2012 agency, only one has been completed so far. However, it has been announced that new benches will appear at underground stations. With the cost of one bench being PLN 21,600, this is a mere trifle, really. Of course, the underground authorities bought the benches again without holding a tender. As Nikolai Tomenko, the Deputy Speaker of the Supreme Council of Ukraine points out, the preparations for the tournament have been transformed into a campaign to line the pockets of big business. In the meantime, "there are no funds left for sports infrastructure for schools or universities," claims Mr Tomenko. It is estimated that the cost of the entire event for Ukraine currently amounts to as much as EUR 12.587 bln.