Trump’s Miss Universe Business Partner Built Two World Cup Stadiums. Now He’s Part of the Russia Probe.

Aras Agalarov used unpaid migrant labor on the $600 million projects, which were bestowed by Putin.

Aras AgalarovMother Jones illustration

By the summer of 2016, the workers were fed up. For half a year, they’d been pushing to complete a three-tiered, 35,000-seat stadium on a swampy island outside Kaliningrad in time for Russia’s 2018 World Cup. But it had been months, they said, since they’d been regularly paid, receiving only a small portion of their wages or being offered paltry breakfasts instead. Many foreign workers left, thinking they’d never recoup the wages they were owed by the subcontractor who hired them, or from the man ultimately in charge: a Russian oligarch who had been a business partner of Donald Trump and who would soon play a role in the Trump-Russia scandal.

After prosecutors sued the subcontractor, a local firm called Roospetstroy, a court ordered the company to immediately start paying back wages. Within weeks, Roospetstroy’s general director stopped responding to workers’ phone calls. Then he stopped coming to the office. Soon, his car was found abandoned at the local airport. A text message went out to workers: “You’ve been fired.” With their boss nowhere to be found, more than 100 complained they were each owed wages amounting to about what an average Russian makes in a month.

The battle over pay in Kaliningrad is just one example of abuses workers say they endured at two World Cup stadiums built by construction magnate and oligarch Aras Agalarov. Agalarov has become known in the United States as a key player in the Trump-Russia scandal. He and his pop-singer son, Emin, orchestrated the June 2016 Trump Tower meeting between top Trump campaign officials and a Russian emissary whom the Trump advisers believed was bringing them Kremlin dirt on Hillary Clinton. Three years earlier, the Agalarovs partnered with Trump to bring the Miss Universe contest to Moscow and afterward the Trump and Agalarov families collaborated on a Trump tower project in Moscow before the venture fizzled out. Through Trump’s three decades of trying to do business in Russia, Aras Agalarov—who was once dubbed “Putin’s builder”—became his closest business associate there, one of the few to help Trump make money in that country. Now contacts between the two clans, including the Trump Tower meeting, are being scrutinized by US investigators.

In recent years, Moscow has relied on Agalarov to build big projects for the government, including a highway and a college campus. In 2014, in a move reflecting his close ties to Putin’s regime, Agalarov’s company, the Crocus Group, won two no-bid government contracts to build World Cup stadiums in Kaliningrad, a Russian outpost bordering Poland, and in Rostov-on-Don, a city of just over a million residents in the country’s southwest. At each site, Agalarov’s projects were marked by accusations of labor abuses, including improper contracts, subpar living conditions, retaliation against complaining migrant workers, and almost 30 million rubles ($470,400) in unpaid or delayed wages. One worker in Rostov was crushed to death by a metal plate.

“In other cities, I didn’t encounter such a large quantity of violations. There were some, but not like this,” says Semyon Simonov, a Russian labor rights attorney who visited Kaliningrad and Rostov, among five other World Cup sites, to research working conditions for Human Rights Watch. “They turned out to be on the cutting edge. They were in first place.”

While the government had originally estimated each stadium would cost about 15.3 billion rubles, after urging from Agalarov they allocated significantly more: 18.7 billion rubles ($296 million) for the Rostov arena, and 17.3 billion rubles ($274 million) for Kaliningrad, making them among the most expensive Russian World Cup stadiums.

In early February 2016, a confident Agalarov went on a state-owned sports channel to announce that both construction projects were ahead of schedule. He boasted that the Kaliningrad venue would be built in “record” time. “I did some searching on the internet, and a stadium of this size has never been completed in two years,” he said. The next month, Agalarov was joined by the region’s governor at the Rostov site, where he announced that stadium was also ahead of schedule and on budget.

Inspectors from Building and Woodworkers’ International, a Switzerland-based union federation, found that at each location, Crocus had built temporary, hostel-style housing for laborers flowing to its construction sites—many of whom were migrants from former Soviet republics in Central Asia, including Tajikistan and Uzbekistan—squeezing eight workers into rooms measuring just 18 square yards.

While Agalarov boasted about coming in on budget, the workers were clamoring to be paid. In May, workers in Kaliningrad lodged complaints with local prosecutors, and in Rostov-on-Don, about 700 people left their posts to strike in front of the stadium site, holding signs demanding payment from Crocus. 

Строители стадиона «Ростов-Арена» вышли на забастовку, требуя погасить долги по зарплате!На место выехал министр…

Posted by donnews.ru – новости Ростова и Ростовской области on Thursday, May 19, 2016

Veronika Silina, a spokesperson for Rostov’s regional ministry for construction, confirmed to RBC, a Russian newspaper, that “workers employed by the subcontractor haven’t been receiving their wages.”

Laborers there told Human Rights Watch that contractors promised wages of 33,000 to 40,000 rubles a month (roughly $600 to $700), but that they were pressured to sign employment documents committing to less than half that amount. A Ukrainian migrant named Alexander, who started at Rostov in January 2016, told a reporter from his home country that his money was delayed almost from the outset. “In fact they paid twice as little,” he complained.

“We were treated like cattle,” he added. “I worked hard without money, and my family waited months for my money transfers.” After deciding he would never get the payments he thought he was owed, Alexander returned home in July 2016.

In April 2017, about 200 mainly Central Asian migrant workers in Rostov went on strike demanding 25 million rubles ($392,000) in unpaid wages, returning to the job only after Crocus promised payment. The company did not respond to Mother Jones’ requests for comment, declining to answer questions about whether these wages were paid.

“Many of these workers are poor migrants. If you want to cut corners to cut your costs, especially if the contractor is under a lot of pressure—this is the easiest place to do it,” says Rachel Denber, deputy director of the Europe and Central Asia division at Human Rights Watch. “Especially as the deadline draws near, making sure that workers get paid seems to be the last priority.”

In March 2017, after workers complained about five months worth of unpaid wages, about 30 migrants from Central Asia in Rostov who’d spoken up were abruptly deported. “The authorities just came into the cafeteria one day and took all of them,” says Simonov.

In July 2016, Simonov paid a visit to a Roospetstroy office in Kaliningrad to ask about applying for a job himself. The guards outside told him not to bother—the director was gone, they said, and there’d been many complaints about unpaid wages.

That month, prosecutors turned up the heat, lodging a criminal case against the absent director and accusing him of stiffing several dozen workers of 901,000 rubles ($14,000). He was finally arrested a year later in Krasnodar, more than 1,000 miles away. It is unclear if the wages he owes have been paid. Attempts to reach Roospetstroy were unsuccessful; corporate filings indicate that the company was liquidated this March.

Agalarov, for his part, took minimal responsibility for Roospetstroy’s actions: Crocus Group offered to pay one month of back wages to 45 Kaliningrad workers who hadn’t yet walked off the job, at the paltry rate of 59 rubles ($1) per hour, or 13,000 rubles ($206) a month. The rest of the owed money, the company said, would have to come from their subcontractor’s absent director. “This is pennies compared to the work done,” one worker told news outlet Rosbalt. “I don’t know what to do.”    

Due to loopholes in Russian law, Simonov says it would be “very difficult” for a court to find Crocus liable for any wages owed by subcontractors it paid. “It’s a persistent scheme to transfer blame,” Simonov says. “The general contractor can effectively say, ‘We fulfilled our obligations, we transferred you the money. The rest isn’t our problem.'”

Kaliningrad’s stadium contract was first awarded in 2012 to a Russian developer named Mostovik after an open bid process. But when Mostovik went bankrupt in 2014 just a month after the Sochi Olympic games—which were themselves riddled with allegations of worker exploitation, corporate corruption, contractor overspending, and government kickbacks—Prime Minister Dmitri Medvedev, rather than reopen bidding, signed a March 2014 order designating Crocus the “sole executor” of the stadium, along with the arena in Rostov-on-Don.

The pick was hardly a surprise. Novaya Gazeta, Russia’s most prominent independent newspaper, had reported for months that Agalarov would likely get the lucrative contract, despite having no history building sports facilities. An unnamed Putin aide told the paper in February 2014 that Agalarov would be chosen over aluminum magnate Oleg Deripaska and billionaire businessman Ziyavudin Magomedov, each of whose companies had extensive experience with arena construction. Magomedov had lobbied hard for such contracts but in the end won only a 850 million ruble ($13.5 million) deal to prepare the swampland on Kaliningrad’s Oktyabrsky island for Crocus’s construction. Agalarov later accused Magomedov of bungling the job, leading to Magomedov’s imprisonment pending a criminal trial.

For years, the Crocus Group worked primarily in commercial real estate, becoming known for their chain of glitzy “Vegas” mega-malls in Moscow’s suburbs. But in 2009, the Putin administration decided to take a risk on Crocus for a tough and important infrastructure project: transforming a desolate Pacific island near Vladivostok into a $1.2 billion campus for Far East Federal University. He hoped the gleaming grounds would attract Chinese investment after playing host to APEC’s 2012 Pacific Rim summit.

Agalarov delivered, erecting more than 70 buildings in a forest where before there had barely been roads, all in time for the diplomatic gathering. A year later, Putin bestowed on Agalarov the Order of Honor, a state award and medal, for his role in the project. Agalarov, Putin said, had “demonstrated high performance and social responsibility standards. I wish to thank you so much for your work and contribution to the development of this country.”

After that, lucrative Kremlin projects started rolling in. In 2013, Crocus got a federal contract to construct sections of the Central Ring road, a new highway encircling Moscow. In November of that year, the company partnered with Trump to bring Miss Universe to Russia, having assured Trump that Agalarov‘s Kremlin connections could smooth bureaucratic obstacles to staging the event. Four months after Trump and Agalarov’s relationship was cemented by the pageant, Putin tapped Crocus to build the two World Cup stadiums.

At one point, Agalarov said he considered turning the work down, given the short time frame and the headaches involved in building on swampland. “I thought about it, thought about it, but I could not say no,” Agalarov told Forbes. Plus, he told Kommersant, “It is always nice when the government invites you, without competition, to build a project.”

“These World Cup stadiums, they are distributed to the real insiders,” says Anders Aslund, a senior fellow at the Atlantic Council and an expert on Russian corruption. Ilya Shumanov, deputy director of Transparency International, echoes the point, adding that big sports contracts are a key form of leverage between Putin and Russia’s wealthiest. Building them may be difficult, but Shumanov says the projects deliver the Kremlin support that ensures oligarchs and other tycoons can keep doing business. “Those who get the contracts are the cronies of Vladimir Putin, or cronies of his inner circle, and this is a form of compensation,” he says. “They show their loyalty. And thus only they get the contracts.”

As construction began in December 2015, Agalarov again demonstrated his allegiance to Putin’s regime by penning an op-ed defending the family of Yuri Chaika, Russia’s prosecutor general and a loyal associate of the president. Chaika’s two sons, Artem and Igor, had recently been targeted by Alexei Navalny, the Russian anti-corruption activist, who alleged they had gotten rich through shady deals and their father’s connections. In reference to the Chaika expose, Agalarov went so far as to quote Joseph Goebbels: “a lie repeated a thousand times becomes true.”

Months later, Yuri Chaika became involved with Agalarov ahead of the June 2016 Trump tower meeting: The Russian emissary who met with Trump’s advisers was lawyer Natalia Veselnitskaya, a close friend of Chaika. And in the email between Rob Goldstone, an Agalarov associate, and Donald Trump Jr. that led to the meeting, Goldstone explained that he was reaching out following a meeting between Chaika and Aras Agalarov with “obviously very high level and sensitive information” that was “part of Russia and its government’s support for Mr. Trump.”

At the meeting, Veselnitskaya relied on a memo—as she advocated easing US sanctions on Russia—that was similar to a document drafted by Chaika’s office two months prior.

Agalarov’s outreach to Putin and his regime has paid off, says Aslund. “Agalarov has advanced to being under the Kremlin krysha,” he says, using Russian slang that literally means “roof” but refers to political protection. And Agalarov’s links to America’s new president helped cement his favorable reputation within the Kremlin. In July 2017, two days after Agalarov’s role in the Trump Tower meeting was revealed by the US press, his company was approved for a flashy new construction project outside Moscow.

With six games yet to come at the Agalarov-built venues, Brazil, Croatia, Nigeria, Saudi Arabia, Switzerland, and Uruguay have already delighted World Cup crowds at the arenas. Still, many workers who helped build them have not been paid. The Kaliningrad stadium went 550 million rubles ($8.5 million) over budget, and Agalarov has said he won’t make a profit on the projects. Even so, he may see them as a gamble that was worth taking: The World Cup contracts were the apex of almost a decade of Agalarov courting the Kremlin, while also forging a connection with Trump as he was emerging as an influential American political figure. “Agalarov,” Aslund says, “has come up on the back of Trump.”

“Those connections that he made with Trump, direct or indirect, they could have buttressed all this,” adds Shumanov. “For the Kremlin, it’s important to cultivate those connections: to help the success of his business so if there’s a need, he can facilitate contact.”

Image credits: Nevar Vitaly/TASS/ZUMA; face to face/ZUMA; JukoFF/Wikimedia Commons; Dmitry Rozhkov/Wikimedia Commons