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Krestovsky Stadium (Zenit Arena) in St Petersburg was reported to be 548% over budget when it opened, late, in 2017. Shown here in 2016 (Godot13/Wikimedia Commons)

Billionaire Russian World Cup builder arrested on embezzlement charges

6 April 2018 | By GCR Staff 3 Comments

Construction tycoon Ziyavudin Magomedov, one of Russia’s richest men, has been arrested along with his brother on suspicion of embezzling millions of dollars of state funds.

Their sprawling holding company Summa Group owns a network of construction and logistics businesses, some of whom were involved in building World Cup stadiums in Russia’s Baltic territory, Kaliningrad, and Krestovsky Stadium St Petersburg (pictured).

Ziyavudin and his brother Magomed face seven counts of embezzlement relating to the period 2010-2013, and are accused of pocketing $35m from fraud, reports English-language newspaper, The Moscow Times.

The Kremlin has dismissed speculation that the arrests were politically motivated.

Aged 49, Ziyavudin Magomedov is the 63rd richest person in Russia with an estimated $1.4bn, according to Forbes.

He is also co-executive chairman of the futuristic tube-travel company Virgin Hyperloop One, chaired by Richard Branson.

Through his vehicle, Caspian Venture Capital, Magomedov joined Dubai ports operator DP World to inject a combined $50m into the Hyperloop venture in December.

He was arrested on Saturday, 31 March, while attempting to fly to the US, say reports.

The brothers have denied the charges.

Ziyavudin was denied bail. Deeming him a flight risk, the Tverskoy District Court in Moscow ordered him to remain in pre-trial custody for two months.

Two of the seven counts relate to Summa Group subsidiaries’ work on the Kaliningrad stadium, known as Arena Baltika, and on Khrabrovo airport in the territory, reports website Crime Russia, citing Russian media outlet, The Bell.

Ziyavudin Magomedov, 49, is the 63rd richest person in Russia with an estimated $1.4bn, according to Forbes (Virgin Hyperloop One)

One further count relates to work done by Summa Group subsidiary Inteks to reclaim land on Krestovsky Island in St Petersburg for the Krestovsky Stadium, built for the World Cup, reports Crime Russia.

The chief executive of Inteks was arrested on the same day police arrested the Magomedov brothers.

In Kaliningrad, authorities have been probing stadium-work corruption since at least last year when, in July, the arrests of the former construction minister in the territory, and the deputy head of construction supervision there, were reported.

The head of another Summa Group subsidiary, GlobalElectroservis, was arrested on corruption charges at that time.

“Companies tied to the Magomedov brothers won tenders for projects, then attracted budgetary funds for financing, increased the project’s costs and scattered money across fictitious contractors, overstating the cost of work,” a Russian Interior Ministry source told the RBC business portal, according to the Moscow Times.

“Most of the assets were wired to offshore jurisdictions through a chain of shell companies,” the source added.

The Krestovsky Stadium in St Petersburg, also known as Zenit Arena, has been afflicted by “rampant corruption”, according to Russian media, and last year, when it finally opened, was reported to be 548% over budget.

Other counts against the Magomedovs relate to alleged corruption in supplying electricity infrastructure services around the country.

Kremlin spokesman Dmitry Peskov said the move against Magomedov was part of a crackdown on corruption.

“No, these are not some one-off actions. You know that a very strict, purposeful policy is being implemented in terms of monitoring the use of budgetary funds,” Peskov said, reported The Moscow Times, citing state-run news agency, TASS.

Peskov dismissed as “political gossip” speculation that the arrest of the Magomedovs, who support Russian Prime Minister Dmitri Medvedev, was done in preparation for Medvedev’s demotion in Putin’s cabinet following the president’s re-election last month.

Image: Krestovsky Stadium (Zenit Arena) in St Petersburg was reported to be 548% over budget when it opened, late, in 2017. Shown here in 2016 (Godot13/Wikimedia Commons)

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