Bolshoi's financial soap opera



With the recent news that federal prosecutors have begun a criminal investigation into the disappearance of millions of roubles meant to fund the reconstruction of the historic Bolshoi Theatre in Moscow, the saga now has as much drama as the ballets that may have once been performed on its stage. The reconstruction was much needed. Originally opened in 1825, the theatre had been neglected in recent decades, despite being the venue for two world-renowned cultural institutions, the Bolshoi Ballet and Bolshoi Opera. Paint had begun to peel, performers had no more than 1.5 square metres each in which to prepare before performances and the acoustics were not what they used to be. Brickwork needed replacing and an underground river network was constantly causing cave-ins in the foundation of the building.

Awarded to the contracting company Kurortproyekt, the project was supposed to cost 98 million roubles and work was to begin in 2005 and end in 2008. But delays have been announced repeatedly, most recently giving the opening date as some time in 2013. But the real trouble began when an investigation by the Federal Audit Chamber of another federal body, the Directorate for Construction, Reconstruction and Restoration, which was wholly responsible for funding the project, found numerous irregularities in the numbers. Most alarming was the fact that the contractor had apparently been paid three times for the work, amounting to a grand total of 957 million roubles, including the handful of adjustments and additional charges that have been tacked on since Kurortproyekt initially got involved.

In attempts to gain more independence from the government, the theatre has tried to increase corporate sponsorship since the collapse of the Soviet Union, though the efforts have not been significant enough to reduce reliance on substantial state subsidies. No charges have yet been laid, but Moscow's mayor, Yury Luzhkov, has expressed concern over the delays and questionable spending in the project. The mayor has expressed vociferous opposition to the reconstruction project after not having been invited to participate in it, a fact some media have credited with slowing the project significantly.

Management at the Bolshoi Theatre maintains its separation from the construction work, saying the project details are between the government and the contractor; not it. "The Bolshoi's main task is to preserve the company and the best performances by the country's leading theatre," Yekaterina Novikova, a theatre spokeswoman, told media outlets last week. Of course, the show must go on, and so it has. The ballet and opera companies now perform to consistently sold-out shows at a new theatre - aptly named The New Bolshoi - across the street from the (old) Bolshoi, which is hidden behind scaffolding.

It is, by all accounts, a shadow of its former self. The theatre established itself as the venue for some of the best dancers and singers in Russia and, after Stalin's death, the world, though it always had a stronger association with ballet than with opera. Premieres of some of the best-known ballets were performed here, including Tchaikovsky's Swan Lake in 1877, as well as The Nutcracker, Sleeping Beauty, Giselle and Romeo and Juliet. Costumes worn in performances were once constructed by hand in the theatre's own workshops.

The theatre sits at a site in Moscow's Theatre Square, the cultural hub of the city. Before the Bolshoi, another theatre, the Petrovka, sat here as well, but burnt to the ground in 1805. Another fire burnt large parts of the Bolshoi Theatre in 1853, though reconstruction began swiftly. The theatre was again bombed during the Second World War but repaired quickly. The beloved theatre could use another quick repair now. Bolshoi means big in Russian. With the focus of this project shifting only between its delays and now a possible embezzlement scandal, it is turning into a big story indeed. But in this case, bigger doesn't mean better.

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Our legal advisor

Ahmad El Sayed is Senior Associate at Charles Russell Speechlys, a law firm headquartered in London with offices in the UK, Europe, the Middle East and Hong Kong.

Experience: Commercial litigator who has assisted clients with overseas judgments before UAE courts. His specialties are cases related to banking, real estate, shareholder disputes, company liquidations and criminal matters as well as employment related litigation. 

Education: Sagesse University, Beirut, Lebanon, in 2005.

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