NCE RK addressed to the Prosecutor General’s Office for assistance to repay damage to business

Problems in public procurement again became a topic of discussion of the Anti-Corruption Council of the National Chamber of Entrepreneurs of Kazakhstan "Atameken". At the previous meeting were considered facts of fraud or breach of trust on the part of officials, which caused damage to business. Entrepreneurs from several regions reported about this. The Council recommended NCE to apply to the Agency for Civil Service Affairs and Anti-Corruption and the Service of Economic Investigation under the State Revenue Committee of the Ministry of Finance.

However, as it was noted by the Director of the Department of Legal Protection of Entrepreneurs NCE RK Oleg Savelenko, the authorized state bodies formally reviewed the appeal of NCE, not seeing in actions (inaction) of officials signs of criminal offense. "So, the offices of the State Revenue Department of East Kazakhstan region and Karaganda region forwarded the appeal to the relevant departments of the Agency for Civil Service Affairs and anti-corruption, which, in turn, forwarded the appeal to the akimats of the regions", - said the representative of NCE.

According to NCE, the damage caused to entrepreneurs should be compensated. In this connection NCE intends to appeal to the Prosecutor General's Office.

Specific situations were reviewed once again, in which entrepreneurs suffered millions in losses due to the fault of government agencies. One of the biggest cases was the case of LLP "Engineering service company". In 2009 the entrepreneur concluded a contract with the management of the construction department of Astana for construction of a residential complex "South East", which is still in an unfinished state.

Substandard construction and installation works were carried out at the site, and therefore it was necessary to carry out further work on strengthening the load-bearing structures. Then, the company and the management concluded additional agreements on increase of the cost of work and on the extension of contracts until September 2016. LLP carried out a large amount of work on strengthening of structures, including the terms of contracts not provided in the contracts and using own and borrowed funds.

However, after an unscheduled inspection of the Department of State Architecture, Control and Licensing at the order of the Construction Department, there was issued a decision on the compliance of a new project on how strengthen the supporting structures. Thus, the management announced a public procurement tender on strengthening of bearing structures.

"Today the situation is as follows. There is a resolution, according to which we must strengthen the sixth floors. Private investors’ (shareholders) funds were involved to perform the required work. In 2010 the prosecutor's office and the financial police, didn’t detect violations of the law "On shared equity construction". Today, the situation is critical. The Construction Department can’t pay for such work, referring to the law "On public procurement" and budget savings. Our company has made a mistake by believing the written guarantees of the construction department, and now has no capability to build housing for equity shareholders. Private investors can’t get their apartments, for which they paid 7 years ago, as "ESC" spent these funds for correction of errors of state officials. People are in despair, they do not believe neither Akimat nor "ESC", so we addressed to NCE RK, to help us to resolve the issue", - said the director of "Engineering service company" Gani Zhubatkanov.

According to him, Akimat officials caused damage to the company and private investors in the amount of nearly 1 billion tenge. "The staff of LLP "ESC", i.e. 250 families were affected, investors were affected, part of them received housing, there are still 116 investors left without housing. These are our people, citizens of the Republic of Kazakhstan - a total of about 500 families", - said the businessman.

Oleg Savelenko, commenting on the situation, called the actions of the construction department of Astana unlawful, since the work on strengthening of structures is part of the main project for the construction of a residential complex. They should have been incorporated into the current project by making adjustments to the design and estimate documentation and it should be performed by the major general contractor LLP "ESC" through introduction of relevant modifications and additions to the existing construction contract.

On this fact the National Chamber sent an appeal to the National Bureau of Anti-Corruption and the Prosecutor's Office of Astana with the request of the audit the legality of the actions of the Metropolitan Construction Department.

In addition, the Union of Industrialists and Entrepreneurs of Akmola region addressed to the National Chamber. According to the applicant, the akimat of the Astrakhan district of Akmola region refused to pay for the contract works to LLP "Kokshetaugorselproekt" in the amount of 8,418,127 tenge.

As it became known from the appeal, SE "The department of building, architecture and urban development of Astrakhan region and the entrepreneur concluded the contract on public procurement for the following works:" Adjustment of design and estimate documentation with the state examination: "Construction of water supply system in the village of Kamenka of Astrakhan district of Akmola region" worth in total 2 000 000 tenge. "However, the project of 2008 was presented for adjustment, which has already lost its validity, which is contrary to the law "On architectural, urban planning and construction activities in the Republic of Kazakhstan". In this regard, according to the appeal of Kokshetaugorselproekt, in the decision of akimat of the Astrakhan region the word "adjustment" was changed to "development", and therefore the volume of work increased. Accordingly, additional funding was required under the agreement, about which the construction department has been repeatedly notified. However, the public authority didn’t fulfill its obligations, referring to the limited conditions of the announced tender for public procurement and the terms of the contract.

LLP "Kokshetaugorselproekt" was forced to go to court with a claim to increase the sum of the contract and recover the amount of debt in the amount of 5 000 000 tenge. The Appeals judicial board on civil and administrative cases of Akmola regional court rejected the claim of the entrepreneur.

"The National Entrepreneurs Chamber sees in the actions of officials of Akimat of the Astrakhan region violation of the law, which caused significant damage to the rights and legitimate interests of a business entity, due to the fact that the design and estimate documentation has been accepted by Akimat. Losses, incurred by the entrepreneur to develop such a project, were not paid by Akimat", - said Oleg Savelenko.