The Waste and Corruption of Vladimir Putin’s 2014 Winter Olympics

The lights of the Olympic media center near the Black Sea coast illuminate a neighboring residential building

The new road and railway to Krasnaya Polyana, the mountain resort that will host the ski and snowboard events of the Sochi 2014 Winter Olympics, start in Adler, a beachfront town that has become a boisterous tangle of highway interchanges and construction sites. A newly opened, glass-fronted train station—the largest in Russia—sits like a sparkling prism between the green and brown peaks of the Caucasus Mountains and the lapping waves of the Black Sea.

The state agency that oversaw the infrastructure project is Russian Railways, or RZhD. The agency’s head is Vladimir Yakunin, a close associate of Vladimir Putin. It oversees 52,000 miles of rail track, the third-largest network in the world, and employs nearly a million people. The 31-mile Adler-to-Krasnaya Polyana project is among its most ambitious, reminiscent in its man-against-nature quality of the Baikal-Amur Mainline railway built by the Soviet Union in the 1970s and ’80s across the remote taiga forests of the Russian Far East. Now, as then, grandeur and showmanship are as important as the finished project. Putin sees the Sochi Games as a capstone to the economic and geopolitical revival of Russia, which he has effectively ruled for 14 years. The route connects the arenas and Olympic Village along the Black Sea with the mountains above. Andrey Dudnik, the deputy head of Sochi construction for RZhD, is proud of his company’s accomplishment, given the region’s difficult terrain and the rushed time frame for finishing construction. “Few people believed,” he says. “But we did it.”

On a cloudless, 70-degree day this fall, I boarded a train—newly built by Siemens(SI) and smelling of fresh upholstery—in Adler. The train dashed along the riverbank on a curving track supported by cement columns dotting the shore. We passed into a long tunnel, lit with soft yellow light. The engineering work was so challenging, Dudnik boasts, that in 2011 RZhD was named Major Tunnelling Project of the Year at an international awards ceremony in Hong Kong.

Among Russians, the project is famous for a different reason: its price tag. At $8.7 billion, it eclipses the total cost for preparations for the last Winter Olympics in Vancouver in 2010. A report by opposition politicians Boris Nemtsov and Leonid Martynyuk calculated that the Russian state spent three times more on the road than NASA did for the delivery and operation of a new generation of Mars rovers. An article in Russian Esquire estimated that for the sum the government spent on the road, it could have been paved entirely with a centimeter-thick coating of beluga caviar.

The train glided to a stop at the Krasnaya Polyana station. The floors were buffed to the shimmery gloss of a desert mirage. The air up here was cooler; snow mottled the mountaintops ahead. Down the hillside stood a giant banner: “Sochi is preparing for Olympic records!”

At $51 billion, the Sochi Games are the costliest ever, surpassing the $40 billion spent by China on the 2008 Summer Olympics. The suicide bombings in the Russian city of Volgograd on Dec. 29 and 30 have heightened fears of terrorism and given a renewed focus to security concerns as well as questions of cost. How the Sochi Games grew so expensive is a tale of Putin-era Russia in microcosm: a story of ambition, hubris, and greed leading to fabulous extravagance on the shores of the Black Sea. And extravagances, in Russia especially, come at a price.

Back in 2007, when Russia was bidding to host the 2014 WinterOlympics, the huge amounts it was willing to spend were a point of pride, an enticement meant to win over officials at the International Olympic Committee. Putin traveled to Guatemala City to give a rare speech in English, with even a touch of French, to the assembled IOC delegates, promising to turn Sochi into “a world-class resort” for a “new Russia” and the rest of the world. His pledge to spend $12 billion in Sochi dwarfed the bids of the other finalists from South Korea and Austria.

But since then, as costs have increased, Russian officials have grown less eager to boast about the size of the final bill. “In the beginning, money was a reason and argument for Russia to win the right to host the Olympics,” says Igor Nikolaev, director of strategic analysis at FBK, an audit and consulting firm in Moscow. “But it turned out we spent so much that everybody is trying not to talk about it anymore.” Dmitry Kozak, deputy prime minister in charge of Olympic preparations, has argued that the $51 billion number is misleading. Only $6 billion of that is directly Olympics-related, he says; the rest has gone to infrastructure and regional development the state would have carried out anyway. That may be true, though it’s hard to imagine the Russian government building an $8.7 billion road and railway up to the mountains without the Games.

Bent Flyvbjerg, an expert on what are called “megaprojects” at the Saïd Business School at Oxford University, says the costs for Olympic host nations have on average tripled from the initial bid to the opening ceremonies. In Sochi, costs rose nearly five times. That these Olympics should be the most expensive in history is all the more improbable, says Allison Stewart, a colleague of Flyvbjerg’s at Oxford, because compared with Summer Games, Winter Olympiads involve fewer athletes (2,500 vs. 11,000), fewer events (86 vs. 300), and fewer venues (15 vs. 40).

Putin never saw the Sochi Olympics as a mere sporting event, or even a one-of-a-kind public-relations opportunity. Rather, he viewed the Games as a way to rejuvenate the entire Caucasus region. Once Russian officials settled on Sochi as a host city, however, they guaranteed themselves a costly engineering challenge, since organizers didn’t have much choice as to where to put Olympic venues. Sochi, once a place of recuperation for Soviet workers under Stalin, sits on a narrow slope of land between the mountains and the sea, with no wide, flat space for large stadiums and arenas. The only feasible site was the Imereti Valley, a patch of flood-prone lowlands 20 miles from the center of Sochi. Jane Buchanan, a researcher for Human Rights Watch who has authored several reports on Sochi in recent years, says, “At the beginning there was very little infrastructure there, certainly nothing close to the scale needed to host a Winter Olympics. Just a little mountain road that dead-ended in a national park.” Russia would have to build everything from scratch.

After a December snowstorm, Russian police inspect the biathlon and cross-country sites in Krasnaya Polyana

Russian police inspect the biathlon and cross-country sites in Krasnaya Polyana

Construction teams encountered problems from the start. According to Yulia Naberezhnaya, the deputy scientific secretary of the Sochi branch of the Russian Geographic Society, there was “no integration of the scientific approach” in building Olympic venues and infrastructure. Instead, she said, officials thought, “we have a lot of money, we’ll build it somehow.” According to Naberezhnaya, state planners did not properly take into account the underground streams that run beneath the Imereti Valley. Recurring flooding, she says, has meant the embankment near the Olympic Park collapsed and had to be rebuilt several times over. In December 2009, a powerful storm hit Sochi’s new cargo port, which had been built to accommodate shipments of construction materials for the Olympic venues. Scientists had warned the port was vulnerable to underwater currents and surging waves. Millions of dollars in equipment were destroyed or damaged, while deliveries of building materials for Olympic venues were delayed or rerouted at considerable expense.

Not that anyone was necessarily counting each ruble, or at least not that carefully. Government officials, big construction firms, local subcontractors—everyone knew the Sochi Games were a matter of state prestige and of great personal importance to Putin and his legacy. “For the state, the Olympics are something holy,” FBK’s Nikolaev says, which means those responsible for staging the Games “were not shy about asking for more money.” Among the few criminal cases opened by police into possible corruption involving the Olympic sites, investigators in Sochi in June 2012 filed charges against contractors at two venues—the main Fisht Olympic Stadium, which will only be used for the opening and closing ceremonies, and the bobsled course. The suits alleged the contractors inflated costs by filing false or unjustified project estimates. The alleged losses to the state budget totaled nearly $170 million at the stadium and $75 million at the bobsledding venue. Around Sochi, developers and contractors pushed to have any project, no matter how tenuous, deemed “Olympic”—such a designation would not only ensure reliable funding but also allow them to skirt existing zoning and building regulations. One owner of a local construction firm joked to me that every new toilet in town was Olympic.

Putin’s vow to spare no expense provided cover for sloppiness and mistakes in construction. When a road leading up to Krasnaya Polyana wasn’t finished on time, for example, a helicopter had to deliver the cement needed to build ski lifts. At the same time, the government’s willingness to overspend encouraged organizers to indulge their grandest, most over-the-top visions. At one point the team responsible for the opening ceremonies decided it wanted a closed stadium at Fisht and not the retractable roof that had been originally planned. That left the construction team only three months to procure a quantity of steel that would have ordinarily taken a year to get on-site. Damon Lavelle, an architect at the British firm Populous who worked on early plans for the venue, says it’s no longer so much a stadium as “the world’s largest theater.” The show for the opening ceremonies is said to include six locomotives, the troika from Nikolai Gogol’s Dead Souls, and Peter the Great commanding five ships.

Construction work was sometimes the end in itself. Alexander Popkov, a lawyer in Sochi, told me about never-ending roadwork in his neighborhood. “They’re digging up the road here, they’re digging up the road there,” he said. “The road gets sealed today, then dug up tomorrow. They put down asphalt and then in a week rip it up all over again.” He let out a laugh, then pulled his face tight. “It would be funny, if it wasn’t happening with our money.”

Two kinds of private business interests are involved in Sochi:companies hired by state-owned corporations to carry out specific work and those who came on as investors, taking responsibility for various projects and putting up at least some of their own money. Among the first group, according to the Nemtsov and Martynyuk report and opposition magazine New Times, no one has gotten more money from Sochi than brothers Arkady and Boris Rotenberg, childhood friends of Putin’s from St. Petersburg who have become wealthy industrialists over the past decade. They received 21 contracts, according to the magazine, worth around $7 billion—more than the total cost of the Vancouver Olympics and around 14 percent of all spending for the Sochi Games.

In one such deal, state-owned energy giant Gazprom (GAZP:RU) commissioned one of the Rotenbergs’ companies, Stroygazmontazh, to build a 177-kilometer (110-mile) pipeline from Dzhugba to Sochi, part of which passes under the Black Sea. The total contract amounted to more than €4 million ($5.5 million) per kilometer. By comparison, the construction of the Nord Stream pipeline running under the Baltic Sea cost an average of €3.6 million per kilometer—a price that by some estimates was already three times higher than the European average.

The main contracts awarded for construction of the $8.7 billion road to Krasnaya Polyana went to two companies: Transuzhstroy and SK Most, which before Sochi was perhaps best-known for winning a no-bid contract to build a $1 billion bridge in Vladivostok in advance of the Asia-Pacific Economic Cooperation Summit 2012. The Sochi contracts were awarded without a public tender; a Russian law that requires state companies to hold open tenders only came into force in 2012. Both companies appear to have ties with the top leadership of RZhD, including the railway agency’s Yakunin. Infrastructure company SK Most has a controlling stake in Millennium Bank, whose chairman is Oleg Toni, a vice president at RZhD in charge of Olympic projects. Natalia Yakunina, Yakunin’s wife, previously sat on the bank’s board. Toni is also one of the co-founders of Transuzhstroy, though he says that he has no financial stake in the company.

In a written statement, RZhD said it selected the general contractors for the Krasnaya Polyana road on “a competitive basis.” The chosen companies, the statement said, have been partners of RZhD for many years and “possess a strong industrial base and highly qualified personnel.” It says no RZhD employees or their family members have any financial relationship with SK Most or Transuzhstroy.

The private investors helping fund Olympic construction are most likely motivated less by the pursuit of large profits than a tacit understanding that under Putin they have certain obligations to the Kremlin and the nation at large. “They got a call with a voice saying, ‘There exists the opinion that you should build this or that [project],’ ” says Sergei Aleksashenko, a former deputy chair of Russia’s Central Bank now a fellow at Georgetown University. Interros, a company owned by metals and mining tycoon Vladimir Potanin, is building Rosa Khutor, which will host alpine events during the Games; Potanin has said he decided to invest while skiing with Putin. Representatives from Basic Element, the holding company of billionaire Oleg Deripaska that has interests in everything from aluminum to hydropower, say they couldn’t remember how Deripaska decided to invest in Sochi. Andrey Elinson, who’s in charge of all of Basic Element’s Sochi projects—which include the renovation of the airport and building of the Olympic Village—insists its Olympic ventures are not of “a charitable nature,” and that the company never expected “supernatural” profits from its investments in Sochi.

However the magnates and their companies came to the Olympic project, around 70 percent of their investment is financed by credit from Vnesheconombank, or VEB, a state development bank. “VEB is used by the government as a second budget,” says Aleksashenko, in that the state gives funds to the bank, which then lends as it chooses. By law, the supervisory board of the bank is headed by Russia’s prime minister—who, at the time many of the Sochi-related loans were being parceled out, was Putin. VEB will provide 85 percent of the financing for the skiing facility built by Interros; at the Olympic Village, a project of Deripaska’s Basic Element, it’s providing 88 percent. “The position of the state is that VEB money is not really budget money, but of course it is,” says Aleksashenko.

Even so, the Games have created friction between the Kremlin and some of its billionaire allies. Investors gripe that the state has continually shifted its demands and added new requirements. Potanin has complained that he was forced to spend an additional $500 million for work at Rosa Khutor that should have been the state’s responsibility. At the same time, the resort has lost potential revenue while the facility was closed to tourists during Olympic test events.

Newly built hotels in the mountains above Sochi will host spectators at alpine events

Newly built hotels in the mountains above Sochi will host spectators at alpine events

For its part, Basic Element has long planned to turn the Olympic Village after the Games into luxury condominiums with beachfront views as well as a yachting marina. But ever-changing demands from everyone from the Russian government to the IOC have pushed the project back and raised costs, adding what Elinson calls “additional burdens that aren’t very commercially attractive.” Although Basic Element had wanted to start selling condo units before the Olympics, VEB prevented the company from putting them on the market. “We are bearing the costs of creating these new properties, but it has not been possible to sell them,” Elinson says. (Basic Element expects apartment sales to begin early this year.) The marina, one of the centerpieces of the whole development, has been delayed by disputes over its financing and the ongoing need for the cargo port to supply materials for unfinished Olympics construction.

Both Potanin’s Interros and Deripaska’s Basic Element have asked the Russian government to provide tax relief over the next several years and to restructure their loans with VEB on more advantageous terms until their Sochi projects reach profitability—if they ever do. “We’re making a new market,” Elinson says. The opening prices at the condominium development will probably surpass those for similar real estate available in Europe. In the end, the companies are likely to get some kind of government relief, lest any high-profile projects in Sochi suffer public failures. Elinson insists Basic Element is committed to its projects in Sochi, and not just through February. “What are the Olympics?” he says. “Three days of opening, three days of closing, and 200,000 people coming and going.”

It can be hard to determine at which point inefficient and repeated work becomes outright theft, but there seems to have been plenty of that in Sochi. One owner of a local construction company told me how contractors artificially inflated costs to make up for the kickbacks they sometimes had to pay state managers awarding the contracts. As he puts it, both sides—the contractors and the officials—understood the nature of the deal: The former needed to make a profit for their business, the latter wanted to take what they could from budget funds.

Another person in the construction business says he was offered a contract, potentially worth millions of dollars, to lay a water line at an Olympic site. The officials at the state body awarding the contract weren’t interested in whether he had the necessary resources for such a large job or would do quality work—the only question was whether he was willing to pay 20 percent back to them. A third construction boss says he was invited to carry out work on transport infrastructure. As the officials offering the job spelled it out, the contract would be worth 250 million rubles ($7.7 million) on paper, but he would only actually receive 170 million rubles—the officials, presumably, would pocket the difference.

Of all the examples of Olympian excess, waste, and mismanagement, the most conspicuous is the ski jumping facility in Krasnaya Polyana. On Feb. 6, 2013, with exactly one year left until the opening of the Games, Putin visited Sochi for a personal inspection of Olympic venues. Dressed in a black overcoat, he arrived at the ski jump complex for a tour. The facility’s completion had been delayed by more than two years, and cost estimates had risen from $40 million to $265 million. Putin, clearly playing up his sense of surprise and outrage for the television cameras, was not pleased. He made a show of questioning Kozak, the deputy prime minister in charge of Olympic preparations, on cost overruns. Putin’s entourage shifted nervously. With icy sarcasm, he declared, “Well done! You are doing a good job,” and then walked off.

The next day, Akhmed Bilalov, who had overseen construction of the ski jump and was a vice president of the Russian Olympic Committee, was fired from all his posts. The police subsequently opened a criminal case against him for allegedly abusing his position as head of a state-owned company. (Among other acts of fraud, he was accused of using state money to pay nearly $100,000 for luxury travel to London during the 2012 Summer Olympics.) He fled abroad along with his brother, briefly popping up at a clinic in Baden-Baden, Germany, where he claimed to be receiving treatment for mercury poisoning, and then settled in London.

A view of the freshly constructed road and railway leading to the mountain cluster of Olympic sites

A view of the freshly constructed road and railway leading to the mountain cluster of Olympic sites

Bilalov’s odyssey now looks like a cautionary tale of a greedy businessman in over his head who also served as a convenient scapegoat. (Bilalov has denied the charges against him.) The location that Olympic organizers had selected for the ski jump was a difficult one, with particularly challenging soil full of mudstone. Underground caverns made the earth potentially unstable, especially when saturated with water. “I saw better places in the world, easier places,” said Matthias Kohlbecker of Kohlbecker Architects and Engineers, who worked on early engineering plans for the venue. Nonetheless, Kohlbecker says he thought the ski jump project was entirely realistic. (His firm was involved only in the design stage and not in construction.)

Several people familiar with the project told me the team working under Bilalov didn’t carry out the necessary geologic tests before construction began. They instead tore down trees here and there to make a wide clearing and drilled into the fragile soil before stabilizing it. Without deep tree roots to hold the earth in place, the site was vulnerable to landslides. One day in the spring of 2012, millions of tons of dirt rushed down the hillside where the ski jump was being built. Vladimir Kimaev, a prominent activist from Environmental Watch on North Caucasus, a local NGO, visited the site a few days later. “Part of the slope had been subsumed by the landslide, and the forest had been knocked over,” he says. “A tractor was buried, its shovel sticking out of the earth.” As a result, the project went even further over budget. Meanwhile, a dispute arose over who bore the responsibility for building a nearby access road—Bilalov or the state. In the end, Bilalov was saddled with the $300 million bill.

The ski jump fiasco wasn’t the first indication that the combination of big money and lax oversight was leading to inefficient spending, if not abuse. The short history of Olimpstroy, the state corporation founded in 2007 to coordinate the construction process in Sochi, illustrates the problems with so much money sloshing around. The company has gone through four directors. After each change in leadership, investigators opened criminal cases on embezzlement and abuse of office, although none have gone to trial. In 2009 a handful of Duma deputies proposed a law that would have asserted parliamentary control over Olimpstroy, conducting financial audits, studying long-term profitability, and monitoring expenses. In the end, the Duma, controlled by the pro-Kremlin United Russia party, rejected the proposed bill but passed a compromise law that gave the Audit Chamber, a state accounting body, responsibility for financial oversight of state corporations. Its full reports, however, would not be made public.

Last year, as part of its annual accounting, the Audit Chamber accused Olimpstroy of “unwarranted increases” in costs at Olympic venues worth a total of 15.5 billion rubles. Officials inside Olimpstroy, the report alleged, raised cost estimates based on “justifications that were either absent or presented with insufficient explanation.” Olimpstroy declined to make its officials available for interviews, but in a written statement said the cost of certain venues went up as the result of “additional structural and technical decisions made”at the request of the IOC and other stakeholders.

In recent months, Putin has expressed frustration with many members of his own political elite who have grown too corrupt and undisciplined. It’s received wisdom in Moscow that the state will crack down on at least some of the more egregious cases of fraud and abuse in Olympic construction—once the Games are over and attention has moved on. Stephen Sestanovich, a former U.S. ambassador-at-large to the former Soviet Union and now a fellow at the Council on Foreign Relations, says he recently met with a high-ranking Russian official who told him, “When all the celebrations are over, then the prosecutors come in.”

For some, it’s too late. One afternoon this fall, I went to see a Russian man named Valery Morozov, who lives outside London. For many years, Morozov was the wealthy and successful owner of a construction firm in Moscow, enjoying friendly ties with officials in the Kremlin and a reliable stream of state contracts. (By his own admission, he also wasn’t above paying a kickback or resolving a dispute with help from the criminal underworld, if necessary.)

In 2004 he was hired to carry out renovation work at the State Kremlin Palace, a hulking glass and concrete hall built in the 1960s for Communist Party congresses that now hosts concerts. As Morozov tells it, he completed the job only to learn that the last tranche of money owed to him had gone to a number of other firms that he suspects were linked to certain officials overseeing the project. After complaining to his contacts at the Office of Presidential Affairs, he was told to sit tight and not go to the police—the state would find lucrative work for him, he said.

That opportunity came in Sochi. The job was to oversee reconstruction of part of a government-owned sanitarium. There was a catch: An official at the Office of Presidential Affairs in charge of construction, Vladimir Leshchevsky, informed Morozov that as part of the arrangement Morozov was to turn over 12 percent of project funds to him, in bags of cash. Morozov says he informed law enforcement officers, but they told him to wait while they thought up a plan of action. Moving against a high-ranking and presumably well-protected Kremlin official was no simple maneuver.

After Sochi won its bid to host the Games in 2007, the sanitarium officially became an Olympic venue: Russian organizers named its “luxe” suite as IOC headquarters during the Games. As time passed, although Morozov dutifully paid his kickbacks in regular increments, he was not fully cooperative. He said he refused, for example, to inflate costs artificially or take on particular subcontractors pushed on him by Leshchevsky and his subordinates.

In early 2009, Morozov heard talk that he was going to be removed from the job—and maybe even “toughly,” which could mean his equipment and offices would be seized. At this, Morozov went back to the security services and told them it was time to help—otherwise, he would have no choice but to file a formal public complaint and raise a scandal. Police dispatched a team of operatives to work with him, but they said they could open an official case only after Morozov produced hard evidence of the extortion scheme. When Leshchevsky demanded a payment of 15 million rubles, they told Morozov to go through with it—but he would have to put up the cash himself. Morozov took out some money he and his wife were planning on using to buy his son a dacha. He documented the handoffs with a small camera hidden in his belt.

For the last exchange, Morozov proposed the two men meet at a restaurant not far from the gates of the presidential administration in Moscow. It was an official sting operation: The police put a wire in both the table and on Morozov himself. After he made the handoff and Leshchevsky had left, Morozov headed to the bathroom to meet up with a police agent and hand over the recording device that had been tucked under his clothes.

When he returned to the table, he saw that Leshchevsky had walked back into the restaurant, still holding the money. As Morozov remembers, Leshchevsky said, “It’s raining, I’ve got a long ways to walk, how about I sit and have a beer.” Morozov knew instantly the operation had failed—police were supposed to detain Leshchevsky as soon as he left the restaurant. Either the police lacked the authority to arrest such a high-ranking official or Leshchevsky had wriggled out of the trap. Morozov was disappointed, but not shocked. “Knowing this whole system, the idea the Kremlin would give him up, let him hang, is difficult to imagine,” he said. Leshchevsky has denied Morozov’s allegations.

After the failed sting, Morozov started talking to the press and sharing materials from the case. Dmitry Medvedev, then Russia’s president, ordered prosecutors to look into why the investigation had stalled. But investigators declined to bring charges and the case was dropped in 2012. In December 2011, Morozov went to London with his wife for New Year’s. After the holiday passed, he got a call from a contact in Russia warning him for his safety not to come back. He received asylum in the U.K. and now lives in an unremarkable, barely furnished home in the London suburbs.

Before I left, Morozov cautioned me against making too much of his story. If you look anywhere else in Russia, he said, “You will see the same thing, maybe even more.” The culture of informal mechanisms of control and the battle for influence as a proxy for personal enrichment predates the Olympics—and even Putin. “Sochi,” he said, “is just what is happening in Russia everywhere.”

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Hundreds of Rabbis expected to gather in Budapest as part of the fight against revived anti-Semitism in the country

Chief Ashkenazi Rabbi David Lau (L) and Sephardi Chief Rabbi Yitzhak Yosef will both attend the Budapest Rabbinical Centre of Europe’s convention.

BRUSSELS (EJP)—As part of the protest and fight against revived anti-Semitism in Hungary,the Rabbinical Center of Europe has decided to hold its bi-annual General Assembly in Budapest in March.

The conference, to be organized in cooperation with the Hungarian government, will take place March 24-25 and will be attended by hundreds of Rabbis from across Europe, as well as by Israel’s Chief Rabbis, Rabbi David Lau and Rabbi Yitzchak Yosef and senior members of the Hungarian government.

“It is not easy to by a Jew in Hungary in 2014. In the past few years, the number of anti-Semitic incidents has risen sharply in the country. Grave arsons, violent attacks and blood libels have become routine. The conference is aimed at showing support to the Jewish community,’’ says Rabbi Menachem Margolin, who heads the RCE and the European Jewish Association (EJA).

Around 80,000 Jews live in Hungary.

The Hungarian extreme-right and anti-SemiticJobbik party has recently been gathering much momentum in the Hungarian street as well as in the country’s Parliament where it introduced several fascist bills and verbally assault various minorities, especially Jews and Gypsies.

In an act of defiance against the local Jewish community, members of this party announced over the weekend that it will hold a political assembly in the city of Esztergom in a building that used to be a Synagogue.

The March convention will also feature a memorial ceremony in line with the Hungarian government’s own memorial project to the landmark 70th anniversary of the Holocaust in Hungary where some 800,000 Jews were exterminated by Nazis.

NYPD hunting for Hoffman’s heroin dealer after 70 bags found

NYPD hunting for Hoffman’s heroin dealer after 70 bags found

Nearly 70 small bags of heroin and enough prescription drugs to fill a pharmacy were found in the Greenwich village apartment where troubled Oscar-winning actor Philip Seymour Hoffman died of an apparent drug overdose, sources said.

Investigators found the huge heroin stash after executing a search warrant, and also discovered an assortment pills used to treat a variety of ills and ailments including anxiety and attention-deficit disorder.

Cops are trying to determine if Hoffman, 46 — who was found Sunday afternoon with a needle still in his arm — had prescriptions for the pills.

The investigators are also trying to find the drug dealer who supplied the actor with the heroin.

“An internal email went out to all supervisors asking if anyone has had any experience with those brand names of drugs,” a law enforcement source told The Post. “They’re going to try to find the source.”

Timothy Bugge, the new commanding officer of Manhattan South Narcotics, emailed the alert to supervisors asking if they had dealt with heroin labeled “Ace of Spades,” or “Ace of Hearts.”

Cops found nearly 70 glassine envelopes of heroin with those markings in Hoffman’s $10,000-a-month Bethune Street apartment.

The law enforcement source said that a process called “a nitro dump” could be key to cracking the case.

“Basically what that is, is any time we make a narcotics arrest we include the brand name on the arrest report and store it in our system so our investigators can see where those brands are being sold,” the source explained.

Once they determine a location, they can zero in on the dealer or dealers selling that particular brand.

“He could have used a middleman,” a source said of Hoffman. “They could have been delivering drugs to him. Delivery service is common in Manhattan. He’s very rich, he has the means to use his own delivery service. We just don’t know.”

Authorities also want to determine if Hoffman’s supply was laced with fentanyl – an opiate given to cancer patients to soothe their pain.

The fentanyl-heroin combination has been linked  to more than 100 deaths in America – with more three dozen deaths in Maryland since September.

Meanwhile, there have been almost 20 related deaths in Pennsylvania in the last month alone, and another  22 people dying of heroin-fentanyl overdoses in Rhode Island last month.

Fentanyl can be 10 to 100 times stronger than morphine, according to CNN.

It was not clear if the heroin Hoffman used contained the dangerous opiate.

Authorities have warned that heroin addiction is soaring and noted an uptick in the availability of the drug.

Last week, the Drug Enforcement Administration announced a heroin mill bust in the Bronx after the agency seized $8 million worth of the drug.

Among the prescription drugs found in the apartment were clonidine hydrochloride, a  blood-pressure medication, buprenorphine, an addiction treatment drug, Vyvanse, which is used to treat attention-deficit disorder, hydroxyzine, which is used to treat anxiety and methocarbamol, a muscle relaxer.

Here’s The Latest In A Russian Oligarch’s $100 Million Yacht Paint Lawsuit

Melnichenko boatReuters/Tim ChongRussian billionaire Andrei Melnichenko’s 394-foot mega-yacht “A.”

Andrei Melnichenko has extra reason to be concerned about the sunlight — and we aren’t talking financial transparency. The owner of Eurochem, a large Russian producer of fertilizers, says he has evidence that sunlight on his surfaces reveals rash, blotches, separations, lines, starring and sagging. He says he’s paid to see his face reflected on the surfaces, but because the job has been botched, he can’t. The damage he is estimating at $100 million.

That’s not Melnichenko’s person we are talking about, but the surfaces of his boat, a motor yacht named A, after his wife Alexandra, and owned by the two of them through a succession of offshore companies, starting with Niedes Ltd. of British Virgin Islands, A Yacht Charter Co. of Isle of Man, and currently Bermuda Yachts Ltd of Bermuda.

Since July of 2010 Melnichenko’s New York lawyer, Patrick Salisbury, has been suing the international paints and coatings corporation, the Dutch-registered Akzo Nobel through three of its paint subsidiaries for covering the yacht with paint which failed to reflect and failed to stick. Akzo Nobel’s shares are listed over the counter in the US, and it has a current market capitalization of almost $18 billion. One of the subsidiaries does business in New Jersey, where it calls itself “one of the most reliable marine coatings suppliers in the world.”

The case docket, No. L002634-10, in the Superior Court of New Jersey commenced with Melnichenko’s claim dated July 8, 2010. By late last month, it was running to 116 filings. Altogether, the file holds 260,000 pages, including 300 exhibits, 27 witness depositions, and dozens of contracts. So far it has cost both sides several million dollars. It is the biggest product liability claim ever made by a Russian against an international supplier.

A boat-painting expert has reportedly testified that there were no serious surface defects in the paint job causing the poor reflectivity which is the nub of the Melnichenkos’ complaint. Akzo Nobel argues that “as the only harm alleged is the subjective lack of reflectivity in the paint, Plaintiff essentially argues that paint damaged itself.”

Andrei MelnichenkoAP Photo/Sergey PonomarevAndrei Melnichenko is pictured on the left.

More detail on the Awlgrip-brand paint, and on what Mr and Mrs Melnichenko have claimed about themselves in the court papers, were sealed this past July by the presiding judge, Kenneth Grispin, on the ground that they may contain trade and commercial secrets for the paint company, and privacy issues for the Melnichenkos.

That sum, the complaint alleges, has been calculated from “ascertainable losses of at least $100 million plus attorney’s fees and costs… These ascertainable costs include those required to correct the paint and coatings defects and repaint the entire Vessel, which will take at least 18 months. Further, these costs include the loss of use of the yacht and cost of a replacement yacht during the repair period.”

The shipbuilder, Blohm & Voss, is being sued separately and elsewhere for €13 million.

According to International Paint LLC, the New Jersey company which is immediate target of the court action, the Melnichenko claim is misdirected. If the paint job turned out to be as non-reflective as the Melnichenkos are claiming, the alleged damages “if any, were not the result of any act or omission on the part of International Paint LLC, but exist by reason of operation of nature over which International Paint LLC had no control.” In short, Mother Nature is to blame. Or to be specific, Aeolus, God of the sea winds, Briareus, God of the sea storms, Oeolyca, in charge of sea waves, the Harpies (gusts and water spouts), not to mention Poseidon, God of all the sea.

According to a source close to the case, “independent inspection concluded there was nothing wrong with the paint job. They [Mr & Mrs Melnichenko] were happy with the job. They signed off their acceptance. A normal paint (ship) job would last four to five years. But that depends on the weather and sea.”

The court record reveals an uncharacteristic reluctance on the part of Melnichenko’s wife Alexandra to put her mouth where her husband’s er, lawsuit is. In September of this year, according to one of the filings by lawyers for the Akzo Nobel group, the court was told that Mrs Melnichenko had been notified that she should appear for a deposition in the spring of 2012. It then took the paint group almost a year to compel her to appear.

Akzo Nobel is also accusing the Melnichenkos’ lawyers of withholding another dozen witnesses whose testimony, the company says, is required for the court to adjudicate the claims, including Philippe Starck, the designer of the exterior shape and interior decoration of the boat.

chart1

Russia Is Looking Bad

A quick note on Russia.

We’ve been saying that it’s time to pay more attention again to the country’s economic troubles. The Ruble has been getting smoked lately, and the country is suffering from many of the same forces that are dragging down other emerging markets.

To that end, the latest PMI report from Russia is very poor looking.

From the report:

The survey’s headline figure is the HSBC Purchasing Managers’ Index™ (PMI) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy. The PMI registered below the 50.0 no-change threshold for the sixth time in seven months in January, indicating an ongoing downturn in business conditions in the Russian goods-producing sector. Moreover, the PMI declined from 48.8 to 48.0, the lowest reading since June 2009. New orders continued to decline marginally in January, amid reports of weak underlying demand. The rate of contraction accelerated slightly to the fastest since July 2011, and international demand continued to weigh on total inflows of new work as new export business fell for the fifth month running. The current sequence of declining new export orders is the joint-longest in over four years.

This chart drives home the deterioration:Screen Shot 2014 02 03 at 5.03.33 AM

Here’s more on what’s going wrong in the Russian economy from HSBC economist Alexander Morozov:

“Manufacturers started the year on a minor note, the January HSBC Russia Manufacturing PMI survey found. Indeed, all key economic activity indicators point to a broad-based contraction. Notably, manufacturing output decreased for the first time since July last year. In conjunction with the reported decline in new orders, ongoing cuts in staffing, faster suppliers’ delivery times and a stronger rise in output prices, the overall picture in manufacturing looks pretty gloomy.

“Importantly, consumer goods producers reported falling output levels for the first time in many months. Apparently, a sharp moderation of demand growth caught them by surprise, forcing them to increase their inventories for now. Intermediate goods producers got some support from growth in export demand that allowed them to increase output amid declining domestic demand.

“Generalising the January PMI results, we see the Russian economy losing its key driver– private consumption growth. Investment demand has not recovered yet to become a new growth driver, while export demand for intermediate goods is not strong enough to offset weakness in the two other sectors.

“It follows that surprisingly benign official industrial growth data for December, indeed for 2013 as a whole, will unlikely be sustained in the beginning of 2014. Manufacturers face a serious risk of recession in the coming months, we think. Partial import substitution on the back of a weaker currency and improvement in export demand could mitigate this risk.”

This chart shows a 10-year look at the dollar vs. the ruble, which really drives home the weakness of late in the Russian currency.

 

Screen Shot 2014 02 03 at 5.12.28 AM

The Shout-Outs and Easter Eggs You Missed in the Sherlock Finale

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The third season of Sherlock came to its close on American television last night with the finale episode “His Last Vow,” where Sherlock finally faced the mysterious blackmailer Charles Augustus Magnussen. Played by Lars Mikkelsen, the character is based on the titular villain of Doyle’s story “The Adventure of Charles Augustus Milverton,” who was in turn based on the real-life blackmailer Charles Augustus Howell. And that’s just the first of many hidden references and shout-outs. Read on to learn more!

WHAT WE SEE: This episode is entitled “His Last Vow.”

WHAT IT MEANS: The title references Sherlock’s vow, made at the end of the previous episode, that he would do anything to protect John, Mary and their unborn child. It also calls back to Doyle’s “His Last Bow,” the final Holmes story chronologically.

WHAT WE SEE: Charles Augustus Magnussen answers questions before a parliamentary committee.

WHAT IT MEANS: In the episode “The Empty Hearse,” a news report had mentioned a parliamentary committee was summoning Magnussen for an inquiry.

WHAT WE SEE: Magnussen approaches Lady Elizabeth Smallwood and discusses the incriminating evidence he has against her husband. She then decides to contact Sherlock Holmes.

WHAT IT MEANS: In Doyle’s “The Adventure of Charles Augustus Milverton,” Lady Eva Brackwell enlists Sherlock Holmes after Milverton threatens to reveal incriminating evidence about her past to her fiancé.

WHAT WE SEE: John searches for Kate Whitney’s son Isaac in a crack house. He also finds Sherlock, who says he is undercover.

WHAT IT MEANS: In Doyle’s story “The Man With the Twisted Lip,” Watson visited an opium den in search of Kate Whitney’s husband Isa and similarly found Holmes, who was working undercover.

WHAT WE SEE: In the lab at St. Bart’s, Molly slaps Sherlock after his return from the crack house and says, “How dare you throw away the beautiful gifts you were born with?”

WHAT IT MEANS: This mirrors the opening scene from Doyle’s story “The Sign of Four.” Watson confronted Sherlock Holmes about his use of cocaine (which was legal at the time) by asking, “Why should you, for a mere passing pleasure, risk the loss of those great powers with which you have been endowed?”

WHAT WE SEE: In the St. Bart’s lab, Sherlock is impressed by the observational skills of Bill Wiggins, whom he met at the crack house, and recruits him as an agent.

WHAT IT MEANS: A boy named Wiggins was introduced in the very first Holmes story “A Study in Scarlet.” He was leader of the Baker Street Irregulars, a group of homeless children who occasionally acted as Holmes’ eyes and ears.

mycroft

WHAT WE SEE: In Sherlock’s apartment, he easily gets the better of his brother Mycroft and forces him against the wall.

WHAT IT MEANS: In Doyle’s stories, Mycroft has the superior intellect but Sherlock has superior combat training in fencing, boxing, Japanese martial arts, singlestick fighting and firearms.

WHAT WE SEE: Sherlock compares Magnussen to a shark, asking if John has ever studied a shark in an aquarium. He mentions that while he has dealt with murderers, psychopaths, terrorists and serial killers, none turn his stomach like this blackmailer.

WHAT IT MEANS: In Doyle’s original story, Holmes compared Milverton to a snake and asked if Watson ever studied serpents in a zoo. He added, “I’ve had to do with 50 murderers in my career, but the worst of them never gave me the repulsion which I have for this fellow.”

WHAT WE SEE: Sherlock tells John that Magnussen has a personal fortress called Appledore, which houses vaults of information he uses to blackmail others.

WHAT IT MEANS: In “The Adventure of Charles Augustus Milverton,” the villain lives in the Appledore Towers estate in Hampstead.

WHAT WE SEE: Magnussen looks at Sherlock and reviews his pressure points. The list reads: Irene Adler, Jim Moriarty, Redbeard, Hounds of the Baskerville, opium, John Watson.

WHAT IT MEANS: Most of the references are obvious — except Redbeard, who was first mentioned in the previous episode “The Sign of Three” and revealed here as Sherlock’s childhood dog.

ScreenShot051

WHAT WE SEE: To John’s shock, Sherlock reveals that he has dated and proposed marriage to Janine to learn Magnussen’s schedule and gain entry to his office.

WHAT IT MEANS: In the original Doyle story, Holmes adopted the identity of Escott, a plumber, to court Milverton’s housemaid. After getting engaged to her, Holmes revealed to Watson that he had done this to gain entry to Milverton’s home. Watson was appalled, but Holmes assured his friend that there was a romantic rival ready to pursue the housemaid if “Escott” disappeared.

WHAT WE SEE: After breaking into his offices, Sherlock sees that Magnussen is about to be shot by Mary. Sherlock reveals himself, stopping the assassination attempt.

WHAT IT MEANS: In “The Adventure of Charles Augustus Milverton,” Holmes and Watson broke into Milverton’s home and witnessed a woman confronting and shooting the blackmailer. This turned out differently, however: When she continued her attack, Watson tried to stop her but Holmes held him back and they silently agreed that the murder was justice.

WHAT WE SEE: In Sherlock’s memory palace, a mental avatar of Mycroft appears and the detective suddenly feels like he’s a child again.

WHAT IT MEANS: The younger Sherlock is played by Louis Moffat, son of the show’s co-creator Steven Moffat and series producer Sue Vertue. (This episode is very much a family affair; Moffat’s mother-in-law Beryl Vertue also serves as executive producer.) Louis Moffat also voiced one of Moriarty’s hostages in the season 1 episode “The Great Game.”

WHAT WE SEE: In the hospital, Janine tells Sherlock that she’s decided to retire in a cottage in Sussex. There are beehives left behind by a previous owner, but she plans to remove them.

WHAT IT MEANS: In Doyle’s original stories, Sherlock retired from crime fighting at a relatively young age. He then moved to a cottage in the Common Downs in Sussex. While there, he kept beehives and published his studies about the insects.

Screen shot 2014-01-31 at 11.52.53 AM

WHAT WE SEE: Sherlock lures Mary to a place he refers to as the “empty house,” where he confronts her about her identity as an assassin. Mary thinks he’s sitting in a chair, then when Sherlock appears she’s convinced it’s just a wax dummy decoy, only to later realize it’s really John.

WHAT IT MEANS: The show conflates the character of Mary Morstan, John’s wife, with Moriarty’s assassin Col. Sebastian Moran. In Doyle’s story “The Empty House,” Holmes lured out Moran with a wax dummy decoy at the window of his Baker Street apartment, providing a misleading silhouette. Before Moran arrived, Holmes hid in an unoccupied house across the street.

WHAT WE SEE: Mary passes John a flash drive with the letters A.G.R.A. She explains that these are her real initials.

WHAT IT MEANS: In “The Sign of Four,” which introduced Mary Morstan, the plot involved hidden treasure found in Fort Agra in India.

WHAT WE SEE: Sherlock invites the Watsons to Christmas at his parents’ house.

WHAT IT MEANS: Sherlock’s parents are played by Benedict Cumberbatch’s actual parents, actors Wanda Ventham and Timothy Carlton.

WHAT WE SEE: At his parents’ house, Sherlock sees in the newspaper that Lady Smallwood’s husband has committed suicide.

WHAT IT MEANS: In “The Adventure of Charles August Milverton,” the woman who killed the blackmailer said that her husband had died because of him.

hudson

WHAT WE SEE: Magnussen reveals that he keep no files for the most part, but rather memorizes and stores vast amounts of information and secrets that he can mentally summon at a moment’s notice.

WHAT IT MEANS: Magnussen’s abilities echo how Doyle described Mycroft Holmes: as a living database for the British government and that he was the central exchange and organizer of all its departments. In “The Bruce-Partington Plans,” Holmes says Mycroft’s brain has “the greatest capacity for storing facts” and “his specialism is omniscience.”

WHAT WE SEE: In a government office, Mycroft mentions that his colleague thinks Britain sometimes needs a “blunt instrument.” In comparison, he says that Sherlock Holmes is “a scalpel wielded with precision.”

WHAT IT MEANS: In a 1954 interview about his character James Bond, Ian Fleming said “I wanted to show a hero without any characteristics, who was simply the blunt instrument in the hands of the government.” Fleming repeated the “blunt instrument” description in many interviews and the character M also uses it to describe Bond in the 2006 film Casino Royale. Mycroft’s “colleague” may be a reference to M.

WHAT WE SEE: After dismissing the possibility that he is experiencing brotherly compassion, Mycroft remarks, “You know what happened to the other one.”

WHAT IT MEANS: In Doyle’s stories, Holmes never said if he had siblings aside from Mycroft. But the detective mentioned coming from a line of country squires and in such families, the eldest brother was often obligated to stay home. It was common for second sons of the gentry to assume a civil service position to achieve influence, however. For this reason, many fans have concluded that Mycroft was only able to pursue work with the government because there was an older brother who stayed in the country. Doyle originally considered naming his detective “Sherrinford Hope” before settling on “Sherlock Holmes,” so some fans have adopted “Sherrinford” as the name of this hypothetical elder brother.

brothers

WHAT WE SEE: Mycroft concedes that his brother must be punished in some way, admitting that Sherlock “is a murderer.”

WHAT IT MEANS: In Doyle’s stories, Sherlock didn’t kill anyone except for Professor James Moriarty, which was arguably self-defense. He was, however, indirectly responsible for and allowed the deaths of some criminals. Believing these deaths were justified, he never expressed regret.

WHAT WE SEE: Sherlock accepts an undercover mission for MI-6, knowing that Mycroft predicts he will die in roughly six months.

WHAT IT MEANS: Doyle’s story “His Last Bow” involved Holmes coming out of retirement in order to perform a long-term undercover operation for the British government targeting a German spymaster named Von Bork.

WHAT WE SEE: As he and Watson say goodbye for seemingly the last time, Sherlock says there’s “the east wind takes us all in the end.” He says that Mycroft told him stories of the east wind seeking out the unworthy.

WHAT IT MEANS: In Greek mythology and some religious texts, the east wind is associated with misfortune. Doyle’s story “His Last Bow” took place in 1914, just before World War I. In the final scene, after deciding he is permanently returning to retirement, a 60-year-old Sherlock Holmes looks over London and considers the oncoming war. He tells Watson, “There’s an east wind coming,” and that it will take many lives, but adds that it is still God’s wind, and a cleaner, strong land will emerge after the storm.

Alan Kistler is the author of Doctor Who: A History.

New York Is About To Get Slammed Again With Up To 10 Inches Of Snow

Weather Channel Map

New York City seems to be the epicenter of this most recent snowstorm, which spans from Maine all the way to D.C.

Forecasters predict six to 10 inches in New York City, according to The Weather Channel.

Snow is supposed to continue falling in varying intensities throughout the day, heaviest in the morning and tapering in the late afternoon, with low visibility.

Commutes are expected to be a bit longer, and flights may grind to a halt, Bloomberg reports.

A Winter Storm Warning continues in the city until 7 p.m., when it turns into a Winter Storm Watch for the rest of Tuesday, according to the National Weather Service.

The National Weather Service also predicts that snow will turn into a wintry mix of sleet and rain late Tuesday Evening.

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