Secret Contracts Hide Cost of Skopje Makeover
via Valentina Stojanchevska and Olivera Nikodinovska of BalkanInsight
With many construction contracts for the revamp of the Macedonian capital still secret – and annexes added to them all the time – the total sum being spent on Skopje 2014 remains a mystery.
The Skopje 2014 project, aimed at remaking the run-down capital of Macedonia in grand style, is in danger of becoming a bottomless financial pit as costs overrun and contracts for new buildings and monument multiply. Far from the 80-million-euro price tag initially estimated by the government, some believe that close to 200 million euro have been spent already on bronze, marble and concrete structures intended to beautify the city. This estimate is based on data from the website of the Public Procurement Bureau – but as the data do not cover all the latest constructions, the true figure could well be far higher. Significantly, some contracts for the largest buildings that are part of the revamp remain unpublished or appear to have vanished. As annexes to published contracts have also multiplied, no precise figure as to how much this project is costing the cash-strapped country can be made.
The main opposition Social Democratic Party, SDSM, meanwhile claims that the project may have devoured as much as 350 million euro – or more. Estimate shows that over 63 million euro have been spent on only four buildings and sculptures in central Skopje, in which the Ministry of Culture was the formal investor. But this is not the final bill even for these four, because two of these buildings, the National Theatre and the Philharmonic, are incomplete, so additional resources will be required. Furthermore, although the contracts for the Theatre and nearby Museum of the Macedonian National Struggle were signed in 2007 and 2008, they are still not published, making it difficult to determine precise expenditures.
When construction of these buildings started, the Culture Minister, Elizabeta Kancevska-Milevska, said the Theatre would cost 6 million euro and the Museum 4.5 million euro. But additional annexes and new contracts for the Theatre, still under construction, have pushed the price of this building alone to over 34 million euro, while the Museum bill has now hit 14.5 million.
Skopje 2014 was first presented to the public through a video clip released in 2010.
The revamp, among many other things, envisages a new building for the Foreign Ministry, a 16-million-euro initial contract. It also encompasses reconstruction of the parliament, estimated at 12.8 million euro, and a new bridge across Vardar called “The Eye”, costed at 2 million euro, though this does not include the cost of dozens of sculptures to be placed on it. But the list has grown. Within the last two years, Skopje 2014 has been extended by the addition of several new buildings, monuments and reconstructions.
As part of the project the city has also decided to build classical facades for some 20 existing buildings in the city center. For example, only for the reconstruction of the facades of three buildings that gravitate around the main square, the authorities so far spent over one million euros.
The museum and theatre
One puzzle concerns how much money has gone on the Museum of the Macedonian Struggle.
Although the most subsequent contracts and annexes for the Museum have been published, the initial contract awarded in 2008 has never been disclosed. The Culture Ministry has repeatedly stated that the initial contract, signed with the construction company Beton Stip is worth 4, 5 million euros. However, this contract cannot be found on the Ministry’s web page. Some doubt that this document will ever be revealed, following the opposition allegations made last year that employees of the Culture Ministry forged and destroyed official documents.
Last year, the police filed criminal charges against three employees at the ministry for destroying and forging business books. According to the law such documents need to be kept for at least five years. Despite calls for resignation, Culture Minister Elizabeta Kanceska Milevska insisted that the missing documents were not linked to large sum contracts for the “Skopje 2014” revamp. Only the three employees were penalized, while the suspicions remained for a wider cover up in the affair that was dubbed “Patriotic Broom”.
The opposition parties that made this claim listed the procurement documents for the Museum contract among the allegedly destroyed documents. The ministry has never produced the actual contract in order to rebut the opposition accusations. In the absence of the original contract, the remaining official documents for the Museum include six annexes with a total value of 2.8 million euro, while another 7.2 million has gone on the interior decoration. Thus, instead of the initially announced 4.5 million euro, the Museum, which opened last September, has cost at least 14.5 million euro.
The National Theatre, still under construction, has been marred by similar controversies.
The Ministry has again not published the original contract, awarded in 2007. The cost of this project, meanwhile, now stands at 34.2 million euro, five times the originally projected amount – largely as a result of annexes added to the first contract. For example, over half a million euro were allocated in an annex for “additional and unpredicted matters”, without explaining what this meant. Other annexes, related to interior decoration, installations, lights and others, added an enormous 27.7 million euro to the price tag. Many believe that vague annexes to contracts are a deliberate tool used to conceal the real cost of these monuments. This is because it is not legally necessary to launch a regular procurement procedure if the cost of an individual annex does not exceed that of one-third of the cost stated in the original contract.
The complete cost of monuments erected in the central area of the city, now more than 30 in number, is also a mystery. This is mostly because the authorities rarely publish the authors’ fees, or the transportation costs for what in some cases have been giant marble and bronze pieces casted and moulded in Italy, Serbia and elsewhere.
The authorities have already conceded spending 9.4 million euro on the 24-metre-high equestrian statue of Alexander the Great in Macedonia Square, having initially budgeted for 4.5 million – less than half that amount. Some 5.3 million went on the bronze sculpture while the rest went on the decorated pedestal and fountain. The monument by sculptor Valentina Stevanovska was cast by Italy’s Fernando Marineli foundry. Stevanovska is also the author of the equally vast monument to Alexander’s father, Philip, which the authorities say cost 5 million euro.
The sums spent on other monuments in the city centre, such as the Ottoman-era revolutionaries Goce Delcev and Dame Gruev, Byzantine Emperor Justinian I, Czar Samuel, Sts Cyril, Methodius, Clement and Naum, the wartime hero Metodija Andonov Cento and others, vary.
The range from 80,000 euro to 1.7 million each, depending on the size or material used.
According to the Public Procurement Bureau data, the cost of over 30 monuments and pedestals in the city centre, as well as the new bridge, has come to 33 million euro.
Delays push up Philharmonic bill
Construction of the Philharmonic has lagged behind the tempo of construction in respect to other buildings in the project. The concert hall is far from complete, even although construction began back in 2009, before many other projects. It was ambitiously announced that the project would be finish by the end of 2011. But following last year’s budget re-balancing, 246,000 euro intended for this building were redirected to the Museum of Macedonian Struggle. Finalization of this project has been put back to 2013 and current costs have now reached 7.5 million euro.
This contract was initially estimated at 5.9 million euro, but this amount has since increased as a result of annexes for “additional and unpredicted work”. The State Audit Office report from January 2012, related to the work of the Ministry of Culture, noted that the Ministry first engaged an acoustic expert from Germany for 250,000 euro for his services. But only a month after he began work they announced that his position had become vacant.
“We conclude that the vacancy announcement procedure was conducted only to formally satisfy the requirements of the Law for Public Procurement while the institution had already previously started ongoing work related to the acoustics of the building,” the auditors’ report said.
The union of construction workers complained on several occasions to the Ministry about the slow pace of construction. The official explanation was that such a complex project required a longer time frame.
One of the highpoints of the 2014 revamp is the 21-metre-high Triumphal Arch, called “Macedonia”, which opened earlier this year, costed at 5.4 million euro. Also designed by Valentina Stevanovska, it is ornamented with over 30 reliefs in marble representing different phases of Macedonian history.
The basic contract that the Ministry of Culture made with the Granit construction company was signed at 4.3 million euro. But two annexes for additional and unexpected work have since added another 248,000 euro while another 817,000 euro went on for interior decoration and 30,000 euro on designing and professional supervision of the construction.
For the government of Nikola Gruevski the “triumph” in question is the creation of an independent, sovereign Macedonia. But some have asked critical questions. The Association of Macedonian Architects, for one, asked for construction to stop, expressing concerns about the transparency of the procedure and about the chosen location.
The government has already spent 35.2 million euro on construction of the building holding the Constitutional Court, State Archives and the Archaeological Museum, although the basic agreement signed in 2009 was set to 24.8 million. During construction, the contract was supplemented by five annexes. Officials, in this case from the government bureau for General and Administrative Matters, justified this again by referring to “additional and unforeseen costs” that jointly increased construction costs by 5 million euro. An additional 5.4 million euro was spent on interior decoration such as relief compositions as well as on the supervision of the project.
The building has also decorated with five more marble sculptures featuring the god of wine, Dionysus, and four muses – costing almost half a million euro. An additional 2.5 million went on floors, ceilings and windows. The completion of the building was set for the end of 2011, but it remains unfinished.
Millions spent in a week?
During a recent debate in parliament on the budget, the opposition claimed that the government recently spent an amazing 18 million euro on Skopje 2014 in just one week. Radmila Shekerinska from the Social Democrats, in a written initiative to parliament supported by 40 opposition legislators, claimed that the government spent 250,000 euro on three willows planted on platforms in the Vardar River, 1.7 million on a fence on the new bridge, 5 million on three fountains, 2.4 million on a sculpture of Prometheus opposite parliament, 5.5 million euro on the monument to Philip of Macedonia, 2.4 million for four golden horses, 146,000 euro for the interior decoration of the Museum of Macedonian Struggle and 850,000 for the interior decoration of the Triumphal Arch.
The opposition argues that the government made major cuts in capital investment, education and health budget owing to the European crisis – but did not cut anything on a project that is basically a luxury for a poor country.“The Skopje 2014 project bears all of the characteristics of the economic policy of the government of Nikola Gruevski: investment in unproductive expenditure, careless spending of taxpayers’ money, criminal and corrupt procurement procedures and annexes and unpaid obligations to the construction companies,” members of the opposition said.
Meanwhile, the State Anti-Corruption Commission says it sees nothing problematic in the addition of numerous annexes to construction contracts, so no inquiry can be launched. They maintain that the annexes meet the terms of the Law on Public Procurement. Sabina Fakic, from the Skopje based anti-corruption watchdog, Center for Civil Communications, CCC, says that murky annexes are not a problem for Skopje 2014 alone, but are a problematic issue generally in public procurement in Macedonia. The CCC says that while annexes to government contracts worth some 23 million euro were signed in 2010, the number almost doubled in 2011 to 41.5 million euro.
“Another problem is the lack of control by the official institutions to assure the objectivity of these additional contracts and to eliminate suspicions of their possible misuse,” Fakic said.
This article is funded under the BICCED project, supported by the Swiss Cultural Programme.