Rosatom-owned company accused of selling shoddy equipment to reactors at home and abroad, pocketing profits

The issues of nuclear power, the nuclear fuel cycle, weapons proliferation, and safety are virtually inseparable. These latest developments at Rosatom owned ZiO-Podolsk, highlights safety and nuclear power. Bellona elaborates:

"Russian Federal Prosecutors have accused a company owned by the country’s nuclear energy corporation, Rosatom, with massive corruption and manufacturing substandard equipment for nuclear reactors under construction both at home and abroad. Charles Digges, 28/02-2012 The ZiO-Podolsk machine building plant’s procurement director, Sergei Shutov, has been arrested for buying low quality raw materials on the cheap and pocketing the difference as the result of an investigation by the Federal Security Service, or FSB, the successor organization to the KGB. It is not clear how many reactors have been impacted by the alleged crime, but reactors built by Russia in India, Bulgaria, Iran, China as well as several reactor construction and repair projects in Russia itself may have been affected by cheap equipment, given the time frame of works completed at the stations and the scope of the investigation as it has been revealed by authorities. “The scope of this scandal could reach every reactor in Russian and every reactor built by Russia over the past several years and demands immediate investigation,” said Bellona President Frederic Hauge. “Were is the political leadership in the Russian government to deal with such a crime?" Hauge expressed outrage that an alleged crime of such a massive scale was not leading to immediate action to check each reactor that may have been affected by the profit pocketing scheme, and he was frustrated that the FSB and prosecutors were not naming specific reactors that may be involved. “As long as the Russian government is not investigating this case correctly, we will have to ask international society to do it,” he said. “Bellona will be taking further action in this case.” Vladimir Slivyak, co chair of Russia’s Ecodefense agreed. “Stopping and conducting full-scale checks of reactors where equipment from ZiO-Podolsk has been installed is absolutely necessary,” said Slivyak. “Otherwise [there is] the risk of a serious accident at a nuclear power plant with cleanup bills stretching into the tens and even hundreds of millions of dollars [that] will have to be footed by taxpayers.” The criminal case was opened against ZiO-Poldolsk in December, but information about the investigation was released in the Russia media via the official Rosbalt agency only last week – a common circumstance in FSB-associated investigations. The charges leveled against ZiO-Podolsk, which is Russia’s only manufacturer of steam generators for nuclear plants built by Rosatom domestically and by its international reactor construction subsidiary Atomstroiproyekt are a staggering blow to Rosatom’s credibility. ZiO-Podolsk is a subsidiary organization of Atomenergomash, founded in 2006. Atomenergomash was acquired by Atomenergoprom, which is 100-percent state-owned, in 2007. Atomenergoprom is a part of Rosatom. But the paperwork is rather a technicality for a machine works that has been involved with the nuclear industry since its inception. Founded in 1919, ZiO-Podolsk produced the boiler for the first electricity-producing nuclear reactor at Obninsk in 1952, and has produced the boilers for every Russian reactor built ever since. A shudder in the environmental community According to prosecutors, ZiO-Podolsk began shipping shoddy equipment in 2007 or perhaps even earlier. This has implications for the safety of nuclear power plants built by, or that bought equipment from, Rosatom in Bulgaria, China, India and Iran – as well as Russia – striking a chord of outrage and distress among environmental groups. ZiO-Podolsk is also making critical parts for the reactor pressure vessel and other main equipment for the BN-800 fast reactor at Beloyarsk Nuclear Power Plant, in Russia’s Sverdlovsk Region in the Urals, a source told Bellona on the condition of anonymity. The machine works giant is also making steam generators for Russia’s Novovoronezh, Kalinin, and Leningrad Nuclear Power Plants, and Belene in Bulgaria, according to the London-based World Nuclear Association. The case assembled against ZiO-Podolsk involves embezzlement of state funding intended for purchases of raw material that are compatible with contemporary safety standards for nuclear reactors, Rosbalt reported. The FSB investigation According to the FSB investigation – which was described in unusual detail by the news wire – procurement director Shutov allegedly purchased low-grade steel for equipment in collusion with ZiO-Podolsk’s supplier AТОМ-Industriya. That company’s general director, Dmitry Golubev, is currently at large after embezzlement charges were filed against him by the same Moscow court that ordered Shutov’s arrest, Rosbalt quoted FSB sources as saying. The scheme between Shutov and Golubev allegedly involved Shutov turning a blind eye to inferior quality steel in return for a large portion of the profits reaped by ATOM-Industriya, the FSB told Rosbalt, citing transactions that were accounted for in bookkeeping documents the security service said it confiscated from the financial director of ATOM-Industriya. “This company purchased cheap steel in Ukraine and then passed it off as [a] more expensive [grade]; the revenues were shared by the scam’s organizers,” an FSB source was quoted by Rosbalt as saying. FSB agents said that ATOM-Industriya produced some 100 million roubles’ (€2.5 million) worth of pipe sheets, reactor pit bottoms, and reservoirs for ZiO-Podolsk – equipment that was delivered to Russian and foreign reactors – including an order of so-called tube plates for high-pressure heaters at Bulgaria’s Kozloduy NPP. High-pressure heaters, while having no relation to the safe operation of reactors, are used to improve efficiency of power output."