Local officials admitted to mismanagement, delays and corruption.
The Sochi venue is 2 years behind schedule...and now estimated to cost $50 billion.
It is Russia's first international event since the fall of the Soviet Union.
Back in Moscow...PM Dmitry Medvedev has suffered a number of personal setbacks.
A scathing anonymous attack video suddenly appeared...and 3 insiders told Bloomberg that Putin is frustrated with Medvedev's failed efforts at boosting economic growth... increasing only 3.4% in 2012.
A Putin loyal newspaper described the PM as 'underperforming'.
A presidential advisor claims Medvedev, 47...is in a 'very precarious position.'
Medvedev didn't help his standing by delivering what many called a 'poor' keynote speech at Davos.
Former FinMin and Putin ally...Alexei Kudrin...is again being touted as possible PM.
Then-President Medvedev fired Kudrin in 2011.
AND...TO READ: A 60 minute Medvedev 'treason' video appeared on YouTube...slamming him as weak...and responsible for the 2011 overthrow of Russian ally Gaddafi.
It's the 2nd Medvedev attack video to appear in 6 months.
LSO: Reuters interviews jailed former oil billionaire Mikhail Khodorkovsky, 49.
He believes Putin's efforts to intimidate citizens from protesting...and killing Russia's 'Snow Revolution' will fail.