‘Russian Silicon Valley’ Skolkovo Falls Victim To Corruption

Two representatives of the Skolkovo Innovation Centre, the Russian answer to the Silicon Valley, have been accused of misappropriating around 24 million roubles (£514,000) that were provided by the government to develop the infrastructure and support local start-ups.

Kirill Lugovtsev, the finance director of the Skolkovo Foundation, and Vladimir Khokhlov, the head of the Skolkovo Customs Finance Company, are under investigation by the federal authorities, suspected of defrauding the project.

The Russian state plans to spend $3 billion (£1.9bn) on Skolkovo by the end of 2013. In addition to government sponsorships and state-of-the-art infrastructure, foreign companies that move to the Innovation Centre will enjoy unique conditions, such as tax exemptions and a special legal status.

Pocket money

The Skolkovo project was announced by the Russian President Dmitry Medvedev in November 2009 and since then, participant status has been granted to over 300 companies, including Siemens, IBM, Nokia, Intel, Microsoft and Cisco.

But it’s not just the big corporations who are interested in the technology hub being built outside Moscow. Any start-up can apply for a government grant, which can range anywhere between $50,000 (£32,000) and $10 million (£6.35m).

The strategic goal of Skolkovo is to “concentrate international intellectual capital” and encourage Russia’s best minds not to leave the country in search of better prospects abroad. It also seeks to decrease Russia’s dependence on oil and gas.

According to Reuters, a criminal investigation was launched by the Investigative Committee of Russian Federation after an audit uncovered that up to $800,000 of funds earmarked for development went missing.

Alexander Chernov, vice president of the communications department at the Skolkovo Foundation, said that one suspect, Lugovtsev, had already left his position in the organisation, while the other, Khokhlov, was currently on temporary leave.

Not much is known about the case, since the findings of the audit were classified, but the Russian news agency RIA reported that Lugostev was also temporarily relieved of his duties as the head of the national energy agency (Rosenergo), pending the results of the investigation. It also said that the money was embezzled through a scheme involving real estate rental.

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