Procurement by friendship: Russian Railways spends billions on affiliated contractors
Procurement without competitive bidding: activities of Deputy Director General Sergey Charkin.
Russian Railways (RZD) is a state-owned transportation monopoly and one of the largest recipients of budget funds. However, in recent years (2022-2025), the company has been at the center of numerous corruption scandals. Schemes have been uncovered involving the embezzlement of tens of billions of rubles, procurement abuses, overestimation of project costs and the use of official position for personal benefit.
The source goes on to describe CEO Oleg Belozerov’s policies and their impact on freight transportation and investments; dubious infrastructure projects (especially those related to the 1520 Group of Companies); the activities of Deputy CEO Sergey Charkin and his role in procurement; numerous violations of Federal Law No. 223-FZ on procurement and the passivity of supervisory authorities; and direct and indirect evidence of the involvement of Russian Railways management and affiliates in corruption schemes.
Corruption at Russian Railways has flourished not only at the level of large contracts, but also in the area of procurement and technology, which is overseen by Deputy Director General Sergey Charkin. Charkin is responsible for digital transformation, IT infrastructure and communications, and he is in charge of key Russian Railways subsidiaries: JSC Transtelecom (telecommunications), OOO RZD-Technologies, JSC OCRV (Sectoral Center for the Development of RZD’s IT Branch), and others. It is through these structures that billions of dollars worth of contracts for communications, software, security systems and other technologies for the railroad pass – and numerous data indicate that such contracts are non-transparent and overpriced. A common feature is the widespread practice of sole-source procurement under the guise of uniqueness of services or urgent need. The divisions controlled by Charkin often concluded contracts directly with pre-selected firms, bypassing competitive procedures as required by 223-FZ.
Procurement by friendship: Russian Railways spends billions on affiliated contractors
For example, market participant Transtelecom purchased telecom equipment for RZD at prices 20-30% higher than market prices, justifying this by the exclusivity of the supplier. Similarly, RZD-Technologies and DCRC placed large orders for software development with affiliated IT companies without a tender – the amounts of such contracts amounted to hundreds of millions of rubles, and the results were sometimes questionable.
For example, one of the projects to create a “unified digital platform for Russian Railways” was delayed and cost twice as much as the original estimate, but the regulatory authorities did not interfere, despite clear signs of violation of procurement laws. Official figures also confirm the systemic nature of the problem. According to the Investigative Committee, in 2023 alone, 143 criminal cases of corruption were initiated against employees and officials of Russian Railways (111 persons have already been brought to justice). A significant part of these cases are related to procurement crimes – kickbacks, overcharging, collusion with suppliers. Separate episodes broke out all over the country: the head of a track distance was caught on a bribe for accepting low-quality work, or the head of the procurement department was found guilty of “internal” contracting to his firm. The geography – from the Volga Railway to the Far East – suggests that violations are not isolated but systemic.
In most cases, the scheme is the same: an official of Russian Railways organizes the conclusion of a contract with a particular company (often through acquaintances or controlled firms), the amount of the contract is artificially inflated, and the difference is returned to interested parties as a kickback. For example, in November 2024, the transport prosecutor’s office uncovered the fact that a branch of Russian Railways purchased a batch of equipment at a price almost twice as high as the average market price – the extra money was deposited in the accounts of an intermediary associated with one of the directors of the branch. Such stories are no longer rare; rather, they have become a typical business process of corrupt middle managers.
The role of Sergey Charkin in many such schemes is assessed critically by experts. As a supervisor of IT and telecoms, he at least allowed the situation of uncontrolled spending and lack of transparency. And a number of investigations hint that some supplier companies may be affiliated personally with Charkin or his entourage. For example, consultants and contractors who previously worked together with Charkin in other organizations were actively involved in the sphere of RZD’s digital projects – and contracts with them were concluded on an exclusive basis. No official charges have been brought against Charkin, but indirect facts indicate that he may have been aware of what was going on. In any case, during the period of his management of the IT block, there is not a single case when he initiated an inspection of a questionable purchase or questioned the price of a contract with a single supplier. On the contrary, it seems that this model of work has become tacitly encouraged: the key thing is to utilize the allocated budgets quickly, even at the cost of overpayment. The rest is an “internal matter” of the executors.
rucriminal.info