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Putin Fires Russian Olympics Official as 1-Year Countdown Starts

President Vladimir Putin decided to fire a senior official on Russia’s Olympic Committee because of delays in construction work for the 2014 Winter Games, which start in a year.

Akhmed Bilalov will be dismissed as an Olympic committee vice president and head of North Caucasus Resorts, which is developing ski areas in the region, after Putin criticized him for rising costs and failing to build a ski jump complex on time, Deputy Prime Minister Dmitry Kozak said in the Black Sea city of Sochi, where the Games will be held. Putin is visiting the region this week.

“When obligations aren’t met, it’s not just Mr. Bilalov, a citizen of Russia, who fails to fulfill them, it’s the entire Russian Federation,” Kozak told reporters today.

Putin has fought for Russia to host global events, including the Olympics, the 2018 soccer World Cup and last year’s Asia-Pacific Economic Cooperation summit. The president, who has been in power for 13 years, is seeking to raise Russia’s international profile and boost regional growth through state and privately funded infrastructure projects. Russia is the world’s most corrupt major economy, according to a 2012 index by Transparency International. The games begin Feb. 7, 2014.

“People who can’t meet their responsibilities on such a scale can’t head the Olympic movement in our country,” Kozak said.

Jean-Claude Killy, a former Olympic skiing champion and head of the IOC’s coordination commission for Sochi, highlighted the need to focus on finishing the ski-jump facility during talks yesterday with Putin.

Cost Overruns

Putin criticized an almost sevenfold increase in costs to 8 billion rubles ($266 million) and a more than two-year delay on the project by Bilalov’s Krasnaya Polyana. In May, state-run lender OAO Sberbank took over the building company, Kozak said during the tour, according to comments broadcast on national television.

Total costs for building Olympic sites and infrastructure in the Sochi region have reached $50 billion, Kozak said Feb. 5.

The Olympic sites are 80 percent ready, Kozak said. The media village is 25 percent prepared, according to a Sberbank information stand.

“The construction is far from completed, but there’s no panic,” Putin said today. “Even where there are some delays,” everything will be finished and on time, he said.

The skiing area, Roza Khutor, is owned by billionaire Vladimir Potanin. It is 66 percent after suffering from a lack of financing since November, he said.

‘Commercially Useless?’

Potanin, the CEO of OAO Norilsk Nickel, the world’s biggest producer of the metal, asked Putin yesterday to ensure state development bank VEB will continue its financing. With construction costs of about 69 billion rubles, the deficit is about 3 billion rubles, he said. Loans from VEB, while holds the resort as collateral, account for about 70 percent of funding, according to the billionaire.

Potanin told reporters he hopes VEB will close the funding gap by Feb. 15. Roza Khutor may be unprofitable, risking the money he’s invested, Potanin said.

“A lot has been built for the Olympics that is commercially useless before the games and afterward,” he said. “The money has been spent and interest is accumulating.”

Bureaucratic stumbling blocks can be cleared, while “the main issue is to be sure nobody steals anything,” Putin said.

To contact the reporter on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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