Jerry Lampen / Reuters Members of the Russian delegation celebrate during the closing ceremony of the Vancouver 2010 Winter Olympics. Russia will host the Winter 2014 Olympics in Sochi

It's starting to seem as if the Olympic gods have it in for Russia. A month ago at the Vancouver Games, the Russian team had its worst showing ever at a Winter Olympics, leading the head of the country's Olympic Committee to resign in disgrace. Now Moscow's big chance to redeem itself  hosting the Winter Games in Sochi in 2014  is shaping up to be an even bigger embarrassment. In the past few weeks, a number of problems have exposed the deep rot at the heart of Russia's Olympic foibles: a shortage of funds, mismanagement and widespread public discontent.

Perhaps the nastiest scandal emerged with a video taken by one of the construction workers at the Olympic site who have gone on strike to demand months of unpaid wages. Posted March 11 on the website blogsochi.ru, the video shows squalid conditions like overflowing latrines, fields of mud, an army tent serving as a chow hall and a shower stall that had been padlocked shut. "It's totally unsanitary," the anonymous narrator says. Another worker confirmed to TIME that he went on strike because he hadn't received his full wages since September. "After a week or so, the bosses stopped feeding us until we called off the strike, so a few brigades have now gone back to work," says Igor Pechorin, 48, who left his family in Siberia in order to operate a cement mixer in Sochi, thousands of miles away. "I went to see a prosecutor to complain ... But he just stared at me like a zombie." (See pictures of the Vancouver Olympics.)

Grim stories like these have been showing up in the Russian press with increasing regularity in the past two weeks, prompting prosecutors in Moscow to go into damage-control mode. In a statement released March 17, the prosecutor general's office said it had already forced private contractors in Sochi to shell out 1.2 million rubles (about $40,000) in back pay. But Pechorin says he hasn't seen any of the back pay yet, and neither have any of the workers he knows.

The problems extend to the construction of the facilities. Sochi is known primarily as a sleepy beach resort on the Black Sea, not a skiing village. So not only will the Russians have to revamp much of the decaying Soviet infrastructure in the area  everything from roads to power lines  but they must also build six stadiums from scratch, along with an elaborate sports complex in the mountains outside the city. (See a TIME postcard from Sochi.)

All of this costs money, and with a federal-budget deficit of more than 6% forecast for this year, Russia does not have a lot to spare. Prime Minister Vladimir Putin has pledged an initial outlay of $12 billion from the budget to fund the construction projects, but that is not expected to be enough  and private investors have indicated that they may not be willing to make up the difference during the economic downturn. There are also signs that the initial cost estimates have been way off. Last July, the government said the total construction bill would run about $6.6 billion, but just a couple of months later, it revised that figure to a whopping $34 billion, according to the Russian news service RIA Novosti. Amid concerns that construction is running behind schedule  a problem exacerbated by the workers' strike, now in its second week  political pressure is mounting for the organizers to build faster and cut costs. (See pictures of Putin on vacation.)

International organizations and local activists say this is leading to severe neglect of the environment. In a March 16 report, the U.N. Environment Programme said the Olympic construction sites are causing irreversible damage to the region's ecosystem. Greenpeace Russia followed with a statement a day later, reporting that the Mzymta River valley running between the planned Olympic venues is being polluted with heavy metals and industrial waste, destroying the habitats of the local bear and bird populations. "So far, practically everything that we supposedly agreed to with the government and the contractors has in the best case remained only on paper," the group said. Both Greenpeace and the World Wildlife Federation have broken off ties with Russia's state-owned Olympstroi construction firm, citing an unwillingness of the company to cooperate. (When reached by TIME, the company declined to comment.)

But despite all the problems, Putin insists that everything in Sochi is fine. "So far, both the timeline and the financing [are] going according to plan," he told RIA Novosti last month. For him, the stakes are enormous, as he made it his personal mission two years ago to win the Olympics for Russia. He even delivered a speech to the International Olympic Committee in English  a first for a Kremlin leader before a Western audience  and promised members that the Sochi Games would be "safe, enjoyable and memorable." He even guaranteed that there would be snow. With the Olympics now seen as Putin's pet project, it may be harder for him to divert the blame if things don't go as planned.

See "The Sochi Olympics: A Win for Putin."