Audit inspection revealed a number of violations of legislation in actions of Astana Department for Construction

In February 2016, at the next meeting of the Council on combating corruption and the shadow economy of the National Chamber of Kazakhstan "Atameken" was considered the case of LLP "Engineering and Service Company". The company in 2009 entered into contracts with Astana Department for construction for the construction of residential complex "South East", which has not yet been completed. As it turned out, former contractors poorly made construction and assembly work, due to which there was a need to strengthen the supporting structures. Then, the company and the Department for construction signed an additional agreement on increase of the cost of work of contracts and postponing of the completion of construction of the object until September 2016. Partnership carried out a large amount of work on strengthening of designs, including those, which were not stipulated by the terms of contracts at the expense of own and borrowed funds.

However, after an unscheduled inspection by the Department of State Architectural Control and Licensing by the order the Department for construction, there has been developed of a new project of strengthening the supporting structures. That is, the Department announced a public procurement tender for the execution of these works.

The Department of Legal Protection of the National Chamber of Entrepreneurs, commenting on the situation, said that in actions of Astana Construction Department, there are signs of violation of the current legislation. Work on strengthening of the structures is a part of the main project for the construction of a residential complex, respectively, it should be provided in the current project by making adjustments to the design and estimate documentation and carried out by a major general contractor in the face of LLP "Engineering service company" with the introduction of relevant amendments and additions to the current construction contract.

In addition, it is possible that by the results of the tender two general contractors will work on the same object have that violates the rights of LLP as the owner of the object.

As it was stated by the leadership of LLP "Engineering service company", as a result of the actions of officials of akimat, the company suffered a major damage to property.

In this regard, the National Chamber of Entrepreneurs of Kazakhstan "Atameken" has sent an appeal to the National Anti-Corruption Bureau and the metropolitan prosecutor's office to verify the legitimacy of actions of Astana Construction Department in public procurement.

At the request of NCE the Metroplitan Inspection of Financial Control has organized thematic control on the validity of the use of budgetary funds and compliance with public procurement legislation.

As it was revealed by financial controllers, Astana Construction Department was falsely added the work volume on the execution of construction works to the original contractor LLP "Agat-7" totaling more than 450 million tenge. Astana Construction Department did not to recover the amount of damage caused to the state by LLP "Agat-7" in the amount of 350 million tenge as a result of poor quality of construction works.

Thus, the State suffered damage totaling 800 million tenge from the original contractor in the face of LLP "Agat-7", which subsequently led to a decrease in the amount of the contract concluded with LLP "Engineering and Service Company", and put the contractor in an awkward position in which the later would not be able to perform all of the work provided by the project and commission the object.

Astana Construction Department has approved the construction of a new project and conducted a tender for procurement of works to strengthen the supporting structures for the total amount of 798 million tenge, which is equal to the amount the contract was reduced, which has been concluded with LLP "Engineering service company".

According to the Financial Supervision Authority, the Department tried to shift some of the costs to the alleged new object, whereas in fact it is another object of appreciation, the construction of which continued from 2007.

Furthermore, the arguments of department of legal protection of NCE that following the results of the announced tender by Construction Department, the facility will be built by two general contractors were confirmed. There is no clause in any contract which of them will be responsible for commissioning of the object and the quality of work performed.

By the results of the audit, conducted by the inspection of financial control, "Atameken" sent a statement to the Prosecutor General of Kazakhstan and the Prosecutor's Office in Astana for further action in respect of Metropolitan Department for Construction.