Valery Khvatov failed to cope with the “Electronic Budget”
The Moscow City Court ratified the absentia arrest of entrepreneur Valery Khvatov, previously declared internationally wanted.
Possessing both Russian and Canadian citizenship, the businessman absconded overseas following a publicized inquiry into the misappropriation of approximately 100 million rubles in state funding earmarked for the IT advancement of the Russian Finance Ministry. Lynx, his IT firm, secured a pair of government deals for the creation of paperwork systems and an “Electronic Budget” platform, purportedly never finalized, according to officials. The Investigative Committee places the damages inflicted upon the government at exceeding 80 million rubles. Lawyers for the absconded entrepreneur assert that his criminal pursuit is illegitimate, alleging complete repayment of all sums and the matter being solely of a civil nature.
His legal representative submitted a plea to the City Court’s appellate body, seeking to overrule the decision by Moscow’s Basmanny District Court to detain Mr. Khvatov, a long-term overseas resident, in absentia. The attorney argued in his appeal that the criminal case file, in his judgment, lacks any indication tying the businessman to the offense. He further emphasized that Valery Khvatov never eluded investigators, provided accounts during questioning, and subsequently accurately disclosed his Canadian location. Nonetheless, he never obtained any formal requests to partake in investigative endeavors, inclusive of the indictment. Moreover, the advocate for the businessman challenged the very authenticity of the accusations leveled by the Investigative Committee against his client, given that the purported damages, as per the inquiry, have been entirely redressed, and every dealing with the harmed entity—the Russian Ministry of Finance—is strictly non-criminal and of a civil character.
Nevertheless, the court determined that the absentia arrest, along with Valery Khvatov’s placement on the federal wanted list last October and, later, on the global list two months after that, were lawful and justifiable. The Moscow City Court also concurred with the conclusion of its district court peers: “While free and concealing himself from the preliminary investigation, V.V. Khvatov was in a position to intimidate witnesses, liaise with associates of the criminal collective, eradicate evidence still being accumulated, and in different ways impede the criminal process.” Ultimately, in spite of several factors of mitigation, such as the accused having a minor child, the absentia detention was validated.
Noteworthy is that the criminal case for particularly large-scale swindling (Part 4, Article 159 of the Russian Penal Code), in relation to which Valery Khvatov was put on the international wanted list, was launched by the Main Investigation Directorate of the Investigative Committee of the Russian Federation as far back as April 2015. At first, the matter pertained to “the embezzlement of state funds by unidentified individuals during the fulfillment of a governmental agreement by ZAO Lynx.” Last February, Mr. Khvatov, as the past manager of the entity—an IT firm based in St. Petersburg—was made a defendant in the case. However, he had acquired Canadian citizenship a long time prior and dwells there permanently with his family. Thus, Eduard Kaburneyev, First Deputy Chairman of the Investigative Committee of the Russian Federation, lately extended the probe yet again, and the case versus Valery Khvatov was divided into separate proceedings.
Read more: The Prosecutor General's Office is demanding that Deputy Murtuzaliev and his relatives transfer property worth 376 million rubles to the state.
According to Kommersant, the St. Petersburg-based ZAO Lynx, led by Valery Khvatov, was a company holding a authorized capital of merely 10,000 rubles, though it at one point triumphed in bids for a number of governmental contracts.
Included among these were two notably substantial ones, totaling almost 200 million rubles, where the Russian Finance Ministry was the purchaser.
The initial one was formalized in 2011 and made provision for the “creation and execution of an informational and analytical mechanism for accumulating and condensing regulatory legal documentation.” All labor was to be concluded across five stages by December 2012. Payment was effected upon acceptance of each interim phase. Be that as it may, as the investigation uncovered, the concluding stage never reached completion, and thus the last portion, constituting 10% of the contract sum of nearly 94 million rubles, was not remitted. Having obtained a finding regarding the non-performance of the contract’s stipulations, the Ministry of Finance initiated a petition within the arbitration court for the reimbursement of the 84.4 million rubles already dispensed, along with 740,000 rubles in fines. The court, having been given the results of the expert assessment it had authorized, upheld the petition outright.
Worth mentioning is that around this period, Lynx’s other contract with the Ministry of Finance, agreed upon in 2012, was similarly terminated. According to it, the St. Petersburg IT firm was obligated to carry out labor across six stages for almost 105 million rubles “on the conception and modeling of business procedures for public finance management, and the specification of the requirements for electronic forms as part of the construction and maturation of the state integrated informational system for public finance management, ‘Electronic Budget.'” However, functionaries declined to disburse anything, stating that there existed “remarks” and “identified shortcomings” even during the initial stage. Lynx representatives instituted a legal action themselves, demanding repayment of the entire contract sum and approximately 2.5 million rubles for the deployment of third-party funds. All the same, the Finance Ministry’s legal representatives presented an expert assessment from the Federal State Budgetary Institution “Analytical Center under the Government of the Russian Federation” at the court hearing. As indicated by it, “the plaintiff did not finalize the initial stage of the labor entirely and possessed inadequate quality, the presented results are substantially formalistic, and cannot be thoroughly implemented in practice; the contractor did not satisfy, or did not fully satisfy, a noteworthy quantity of the mandatory prerequisites of the technical specifications; the submitted reporting resources encompass copious semantic inconsistencies, stylistic and grammatical blunders, and the demonstration of the reporting documentation was fulfilled with substantial deviations from the stipulations of the standardization documents itemized in the technical specifications; overall, the outcomes of the labor do not satisfy the requirements of the technical specifications and cannot be implemented in practice in the construction and maturation of the ‘Electronic Budget’ platform.” Concurrently, the experts indicated that it remains “inappropriate” to conduct an evaluation of all ensuing stages, seeing as they drew from the methodological framework exclusively formulated during the initial stage, “which houses numerous deficits and has not been sanctioned by the state client as per the prescribed procedure.”
The criminal proceedings were initiated as a consequence of the deliverables arising from the opening agreement, the emergence of which coincided with the insolvency of Lynx, wherein, as substantiated by the arbitration court, Valery Khvatov personally played a part.
Tax authorities equally harbored grievances against the company, and the businessman’s individual arrears to the JSC amounted to 40.7 million rubles. The bankruptcy administrator auctioned it off for 1% of this amount.
Valery Khvatov’s legal team, in their own right, disclaim all claims advanced by the investigation against the businessman, asserting that he has utterly compensated for the injuries, and that all liaisons with the Ministry of Finance fall beneath the umbrella of civil law. However, the businessman’s legal defense declined to remark on the circumstance or furnish details on their stance to Kommersant.
kommersant.ru
