Category Archives: Crime and Corruption

It’s All Relative (Part II)

Regret the delay in returning to the rest of this summary of the Oboronservis scandal from Newsru.com.

“The ‘Oboronservis’ Affair:  Figures and Episodes”

“Despite, more precisely, thanks to his unconstructive, in the SKR’s opinion, silence, Serdyukov continues to keep his witness status in the ‘Oboronservis’ affair.  At present the number of accused has reached eight.  And the charge of particularly large-scale fraud has been leveled at the former head of OAO ‘Oboronservis’ Vasilyeva (the restraint measure is house arrest), Smetanova (personal recognizance) and Zakutaylo (arrest).  Smetanova is also implicated in commercial bribery as a result of investigation of activity which the ‘Oboronservis’ affair initiated.”

“Another branch of the anticorruption investigation concerns OAO ‘Slavyanka’ and ZAO ‘Security and Communications.’  The three affairs, united into one case, arose over falsely signed statements of completed construction and cleaning work on Kolymazhnyy Lane, the Military Academy of the General Staff and a number of other facilities.  As of today in this affair the charge of particularly large-scale fraud has been leveled at five:  former general director of ‘Slavyanka’ and ‘Security’ founder Aleksandr Yelkin; Andrey Luganskiy, who has been general director of ‘Security’ since April 2011; ‘Security’ head bookkeeper Yuliya Rotanova.  And also Nikolay Ryabykh and Konstantin Lapshin — former acting chief of the Defense Ministry’s administrative directorate and chief of ‘Slavyanka’s’ repair department.  All of them are under arrest.”

“The largest part of criminal cases in ‘Oboronservis’ concerns the disposition of several pieces of property.  They are the complex of buildings ‘31st State Planning Institute of Special Construction’ and the ‘Main Directorate of Troop Installations,’ the hotel ‘Soyuz’ and the premises of OAO ‘Mosvoyentorg’ on the Arbat, buildings in the working-class village Bolshiye Vyazemy in Moscow Oblast, land plots in St. Petersburg.  Part of the matters arose over the facts of theft of money upon the conclusion of contracts with ‘Expert’ Smetanova, for example, in the sale of shares in Moscow-based ‘Central Experimental Production Combine’ and stakes in ООО ‘436th Non-Metallic Minerals Combine’ in Leningrad Oblast.”

“‘Thanks to timely intervention we succeeded in preventing the illegal, in our view, disposition of the building of the directorate of trade of the Moscow Military District on Bolshaya Serpukhovskaya Street in Moscow, and also the oil transshipping complex in the village of Roslyakovo-1 in Murmansk Oblast,’ – GVSU Chief Sorochkin boasted to ‘Rossiyskaya gazeta.’  He also recalled that today the general amount of losses, suffered by the state in the ‘Oboronservis’ affair, exceeded four billion rubles.”

“Serdyukov’s Brother-in-Law Could be Called for Questioning”

“So, investigators tactfully sidestep the question of whether the appearance of new figures and still more accused in the ‘Oboronservis’ affair is expected.  There are already a number of candidates to populate the list.  For example, there’s Marina Lopatina, ex-chief of OAO ‘Voyentorg’ and the ‘Red Star’ subholding.  But also head of ‘Oboronstroy’ Larisa Yegorina.  Both ladies are thought to be former classmates of Vasilyeva and at present are alleged to be on the run.”

“There are suspicions that Serdyukov’s brother-in-law is also on the run, still, it’s true, investigators are not confirming this information.  ‘I don’t have unambiguous information about this.  I confirm that we have questions for him, therefore he could be interrogated,’ – Sorochkin said.”

“Petersburg’s ‘Fontanka’ relays interesting facts from Puzikov’s life.  ‘No stranger to the family furniture business, Puzikov managed to achieve notable commercial successes also in the automobile business and in construction, and the amount of property he’s acquired is striking,’ – the article’s author notes.”

“According to the publication’s information, the Kuban native Puzikov built an expensive development where his neighbor found a space for Serdyukov’s OAO ‘Furniture-Market’ (the former ‘Lenmebeltorg’).  At the same address nine companies, fully or partly controlled by Puzikov, appeared, for example, OOO ‘Avtotsentr Soyuz 021.’  The auto business generally attracted Puzikov’s attention, ‘Fontanka’ notes.  So, he owns 15% of OOO ‘Aksel Group’ – a large dealer of BMW, Volkswagen and Toyota automobiles, one of the showrooms of which is located in the very same expensive development.  Incidentally, also located there is OOO ‘Avtoservis-MM,’ where Viktor Zubkov, father of Serdyukov’s wife Yuliya Zubkova bought a Toyota Land Cruiser, ‘Fontanka’ writes.”

“The publication also reports that Puzikov together with Aleksandr and Petr Usov and Artur Pozov was involved in construction, and also bought up property in Leningrad Oblast.  According to YEGRYUL [Unified State Register of Juridical Persons] data, today limited liability companies ‘Alyans’ (until 2012 – ‘Furniture-Market’), ‘Petersburg Agricultural Corporation,’ ‘Contemporary Food Technologies,’ ‘Investproyekt,’ ‘KRIOS’ fully belong to Puzikov, he has shares in OOO ‘Novyy Megapolis,’ ‘TrestStroyKomplekt’ and ‘InterVal.’  An OOO with the classic name ‘Vektor-SPb,’ in which Puzikov was the only participant, no longer belongs to him, but the firm remained in the larger family [?!] of the ex-defense minister — now its owner is Yevgeniya Vasilyeva, ‘Fontanka’ concludes.”

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Happy Defender’s Day

It's Not a Search (photo: Polit.ru)

It’s Not a Search (photo: Polit.ru)

Nervous times for some in the Defense Ministry.

The mail delivery woman knocks on the Defense Ministry’s door and says, “Open up, don’t be afraid!  It’s not a search.  It’s a postcard for 23 February.”

It’s a Defender’s Day greeting with a tank and red star, reading “I congratulate you on 23 February . . . .”

Cartoonist Sergey Yelkin (Yolkin, Elkin, Ёлкин, Елкин) is a Russian national treasure however you spell his name.

To this English speaker’s fingers, reaching for and finding the Ё key is akin to a holy fool wandering from Moscow to Anadyr.

Yes, if one had a category for Cheap Posts, this would be filed there.

It’s All Relative (Part I)

Serdyukov in More Ebullient Times (photo: Russianlook.com)

Serdyukov in More Ebullient Times (photo: Russianlook.com)

The SK tried again Tuesday to question former Defense Minister Serdyukov about the disposition of military property near the resort town of Anapa.  But, as Interfaks reported, Mr. Serdyukov once more invoked his 51st article right against incriminating himself or close relatives.  And RF Prosecutor General Yuriy Chayka told the Duma the entire Defense Ministry corruption affair now adds up to 25 criminal cases and more than 5 billion rubles in losses to the state.

Newsru.com nicely wraps the state of play in the Defense Ministry scandal.  It’s entitled “Relatives Saving Serdyukov:  Investigators Address the Affair’s Outlook, Journalists — His Family Business Ties.”

“The inquest has brought preliminary investigative results in the ‘Oboronservis’ corruption affair, whose episodes and figures have grown so strongly for several months it’s no wonder people are confused.  The results are as yet inauspicious — the figures are silent, shielding themselves with the Constitution, or they are fleeing the country.  But, investigators note, it’s premature to say the affair will begin to subside and the former defense minister will remain in his previous status [witness].  And journalists meanwhile are trying to unscramble the great tangle of family ties enmeshing the corruption affair.”

“‘Serdyukov is going through this affair as a (‘landscaping’) witness.  To make any supposition concerning his procedural status in the future is incorrect, at a minimum.  I can assure readers of only one thing — professionals who will sort out this affair perfectly and will precisely name everyone who is guilty in what has happened work in the SKR’s Main Military Investigative Directorate [GVSU],’ director of the SKR’s Main Military Investigative Directorate Aleksandr Sorochkin told ‘Rossiyskaya gazeta’.”

“The business about improving recreation facility ‘Zhitnoye’ which belongs to Anatoliy Serdyukov’s brother-in-law Valeriy Puzikov, as is known, is not the only one on which the inquest has concrete questions for the ex-minister. But they still haven’t managed to get his statements on this episode or on others.  As is known, on 19 February Serdyukov, together with his girlfriend and ex-chief of the Defense Ministry’s property department Yevgeniya Vasilyeva, was called for questioning on episodes involving land near Anapa and the activity of the St. Petersburg engineering-technical center, which the already earlier mentioned Puzikov directed.  But both refused to talk, citing the 51st article of the Constitution on the right not to bear witness against oneself and relatives.”

“If all three figures weren’t relatives [sic?], then investigators could make them criminally responsible according to art. 308 UK RF (‘Refusal of witness or victim to give statements’), levy a fine and even arrest them for a term up to three months, ‘Kommersant’ notes.  In this way, family ties have saved the ex-minister from potentially dangerous outcomes.”

“In a conversation with ‘RG’ the main military investigator presented the results by the number of episodes and figures well-known at present in the ‘Oboronservis’ affair.  As concerns Serdyukov, for him, the witness, there are immediate questions on the three ‘dacha’ episodes.”

“Serdyukov’s Three ‘Dachas'”

“The first is the ‘Zhitnoye’ recreation facility in Mouth of the Volga, owned by his brother-in-law, but managed by the mother of the CEO of OOO ‘Chkalov Avia’ Yelena Tretyakova, whom they earlier suspected of transporting facility guests and soldiers involved in its landscaping (‘ the aviation episode’) at Defense Ministry expense.”

“The second ‘recreational episode’ concerns a plot in Temryuk Rayon of Krasnodar Kray, where, it’s alleged, an elite vacation home was built on land illegally transferred from the Defense Ministry.  They’ve dubbed the facility with its grand buildings, pool, park, quay and helicopter pad served by locals ‘Serdyukov’s dacha’.  Considered instrumental in the acquisition of this former military land is the ex-chief of Moscow Air Forces District depot Maksim Zakutaylo — common law husband of Yekaterina Smetanova, ex-director of OOO ‘Expert’ Legal Support Center’ and accused in a number of other episodes.”

“And finally, there are questions for Serdyukov about the allegedly illegal disposition of military land in the village of Bolshoy Utrish near Anapa.  In 2009 the Defense Ministry wrung this territory out of itself for the construction of a radar station for Black Sea Fleet ships rebasing from Sevastopol, however built it up with cottages, ‘Kommersant’ writes.  According to some information, the personal signature of Serdyukov is on documents about the land’s transfer.  And the very same brother-in-law Puzikov worked on developing the property.”

Still A Witness

Serdyukov on His Way to the SKR (photo: Kommersant / Dmitriy Dukhanin)

Serdyukov on His Way to the SKR (photo: Kommersant / Dmitriy Dukhanin)

For now.

On Friday, the Investigative Committee of Russia (SKR) subjected Anatoliy Serdyukov to a couple hours of questioning about the Oboronservis corruption scandal.  This session was scheduled when the former defense minister refused to answer questions on December 28 because his attorney was ill and not present.

Nothing much changed this time. 

Media accounts claim Serdyukov again effectively refused to answer SKR questions, taking the Russian version of the 5th (the 51st Article of the RF Constitution against self-incrimination).  He presented some written material to investigators describing the process of selling excess Defense Ministry property during his tenure.  But, according to Vedomosti, Serdyukov denied any wrongdoing, and placed blame for the sale of significantly undervalued and underpriced military real estate squarely and completely on his former subordinates (currently under indictment).

SKR patience with Serdyukov is wearing thin.  In fact, spokesman Vladimir Markin basically warned that he could become a suspect:

“In this situation, the former defense minister’s position might be regarded as an attempt to obstruct the investigation.  If the former defense minister believes he did not participate in those events which have become the subject of the investigation, then it would be fully logical to answer specific questions of interest to investigators.  But Mr. Serdyukov and his attorney believe it simpler to lay out a free form version of events in a light favorable to himself, and not to answer uncomfortable questions of substance for the investigators.  But in the investigation there is a large number of questions for Serdyukov about how decisions on the sale of Defense Ministry property were made, why deals were made at certain prices.”

“The position Mr. Serdyukov has taken does not guarantee that he will remain just a witness in the case.  It is fully probable his status could change.”

Kommersant and Interfax.ru reported Serdyukov claimed he signed off on paperwork for Defense Ministry property deals without looking into their “commercial aspects.”

A Kommersant source in the SKR admitted problems connecting Serdyukov to property sales or kickbacks.  However, he said investigators are looking at why Defense Ministry personnel and equipment built an 8-kilometer, 20-million-ruble road for a VIP resort in Astrakhan Oblast partly owned by the ex-defense minister’s brother-in-law, Valeriy Puzikov.  They’re also looking into high-priced Black Sea vacation homes built by Puzikov on Defense Ministry land.  

The SKR is apparently warming up charges against Serdyukov for exceeding and misusing his official authority. 

Investigators are clearly turning up the heat on Anatoliy Eduardovich.

Okryg.ru wrapped it succinctly:

“Serdyukov has a lot to be silent about.  Because if they’ve already decided to put him in jail, then helping the investigation is unrewarding.  Besides, it seems, the ex-minister still has a glimmer of hope that they will protect him.  Or, if you like, fight them off.”

“Judging by the reaction of official SK representative Vladimir Markin to the result of the second questioning, the Investigative Committee’s intention to put Serdyukov behind bars is practically unyielding.”

The blog calls Serdyukov a Putin creature who became “untouchable” but then got out of Putin’s control.  It concludes:

“The status of Anatoliy Serdyukov (witness or accused) depends not on what he said or was silent about, and not on how the investigator evaluated his answers or silence.  The fate of an official at such a level, at which Anatoliy Serdyukov dwelled, is decided exclusively in the Kremlin, that is, at the highest level.”

So will Putin see any reason to save Serdyukov, or will Putin leave him to the wolves?  Or can Putin control the wolves at this point?

Stories of the Year

RIA Novosti has its list of the main military events of 2012.

No surprise number 1 is the Oboronservis scandal, the fall of former Defense Minister Serdyukov, and appointment of successor Sergey Shoygu.

The rest:

  • 16 accidents in munition destruction leaving 12 dead and 23 injured.
  • Retirement of the CO of the Strizhi flight demonstration group who allegedly demanded money from subordinates for the freedom to show up for duty or not.  Remember Senior Lieutenant Sulim at Lipetsk?
  • Vityazi flight group doesn’t participate in Farnborough.
  • Ex-Gorshkov carrier still not delivered to India due to power plant problems.
  • Rearmament of RVSN with Yars and Topol-M ICBMs.  See Karakayev’s remarks the other day.
  • Acceptance of Dolgorukiy, Nevskiy, Bulava, and Severodvinsk all put off until 2013.
  • Delayed space vehicle launches, but fewer failures than in 2011.
  • The death of Ruslan Ayderkhanov.  A surprise pick.  Remember the army and medical examiners say he killed himself even though he was beaten and abused before he died.
  • The contract for five Borey SSBNs, and Prime Minister / President Putin’s role in getting the Defense Ministry and industry to agree on a price.
  • The collapse of Moscow’s $4.2 billion arms deal with Iraq amid talk of corruption.
  • Losing another Indian helicopter tender to the U.S.
  • Russia’s conference on EuroMD.

Can He Possibly Avoid Prosecution?

Anatoliy Serdyukov (photo: ITAR-TASS / Aleksandr Mudrats)

Probably not.

It seems likely President Vladimir Putin, at some point, will turn Anatoliy Serdyukov over to the law, such as it is in Russia.  Despite assertions to the contrary, Putin will bow to evidence his former defense minister knew about,  condoned, or even participated in corruption schemes.

What’s Putin’s calculus?

Putin stands to look like a corruption fighter, perhaps for the first time.  Most of that corruption occurred on his protege-predecessor’s watch.  Serdyukov’s lost his tie to Putin’s closest associates through his estranged father-in-law Viktor Zubkov, so it’s free fire.  Putin can even save money by not pouring all 19 trillion rubles into new arms procurement by 2020 while investigators and prosecutors take at least 2-3 years unraveling the mess.

Few will recall Putin appointed Serdyukov to straighten out the Defense Ministry’s financial flows.  That didn’t work out too well.  Not many will remember Serdyukov was brought in because of the meager results of Putin’s stewardship of defense between 2000 and 2007.  Essentially, 12 years of Putin’s control and direction of the armed forces (de jure, de facto, or both) have come to little.  None of this will loom large politically for Putin.

On balance, it’s an easy decision to turn Anatoliy Eduardovich over to his fate.

Compared with nine months ago, clouds completely surround Serdyukov now.

Izvestiya wrote about his sister’s wealth right after the scandal broke.  A FGUP her husband ran won a lucrative one-bidder Defense Ministry vehicle leasing contract in 2010.  It’s not clear he was in charge of the firm when it got the deal.  But there can’t be any doubt the family connection was the reason for getting it.  The story appeared here, but the role of Serdyukov’s brother-in-law was unknown at the time.

This week the media reported Oboronservis affiliates responsible for paying energy suppliers for heating military installations are suddenly 4 billion rubles in the red.

The Investigative Committee (SK) searched Serdyukov’s cottage, along with those of other defense officials.

One-time Serdyukov deputy, apparent girlfriend, and central scandal figure, Yevgeniya Vasilyeva was denied bail and is under home detention.

Law enforcement sources are talking anonymously about much higher-profile and wider investigations.  There’s nibbling at other edges.  The SK is looking into alleged GOZ misappropriations.  The Main Military Prosecutor is reviewing old accusations about the poor design and quality of the army’s new uniforms.

Can Serdyukov avoid prosecutorial sharks with this much blood in the water?  Probably not.  Is he responsible for all Defense Ministry corruption?  Yes, by virtue of his former position. 

Could he become a sympathetic figure if he goes to prison?  Maybe.  Serdyukov might be seen as someone unwilling or unable to fix a broken system.  Perhaps guilty, but no more than Putin . . . a scapegoat or symbol of Russian problems larger than one man or one department of government.

Defense News

Some Russian defense news from August 6, 7, and 8, 2012 . . .

Sukhorukov’s Press Conference (photo: Mil.ru)

Mil.ru provided a wrap on the First Deputy Defense Minister’s press-conference on GPV-2020.

Sukhorukov “particularly turned attention” to media reports that the program’s funding will be cut.  He told journalists such a step isn’t foreseen, and the government is talking only about “optimizing” the budget load between years by using good old state-guaranteed credits for the OPK.

Sukhorukov claims 95 percent of GOZ-2012 has been contracted, and 82 percent of funds disbursed.

Arms-expo.ru also covered this story.  It emphasized Sukhorukov’s statement that the rate of defective arms delivered by producers isn’t declining.

According to RIAN, Sukhorukov said Russia won’t buy more Israeli UAVs beyond its current contract.  He reiterated the Defense Ministry believes the BMD-4M doesn’t meet its requirements, and won’t buy it.

Sukhoy reports it’s now testing the new Tikhomirov phased array radar on PAK FA, T-50-3 to be exact.  See RIAN’s story.

Sukhoy also announced that its Su-35S is in “combat employment” testing within the process of state acceptance testing at GLITs.  The company says it meets all established requirements, and has flown more than 650 times.

New Navy CINC, Vice-Admiral Chirkov made an interesting visit to the State Missile Center named for Academic V. P. Makeyev on Monday.  The Makeyev design bureau is home, of course, to liquid-fueled SLBM development.  Could not find the last time this happened.  Might be prior to 2007.

Main Military Prosecutor Sergey Fridinskiy told the GenProk collegium yesterday that abuse or dedovshchina in the ranks is down a third this year.  But, according to ITAR-TASS, Fridinskiy noted that general crimes exceed purely military offenses by a factor of two.  Specifically, he said murders are up by half, bribery has almost doubled, and drug offenses have increased 27 percent.

Fridinskiy also said nearly 3,000 GOZ corruption cases and losses worth 400 million rubles were investigated in the first half of this year.  He said, for example, Dagdizel received 3 billion rubles in defense orders, but hasn’t sent a single product to the military, and bought farm equipment and building materials with the money.  He cited losses in purchasing apartments for military men at inflated prices as well as the problem of unfinished housing projects.

Izvestiya claims a large number of young pilots are leaving the Air Forces because the lion’s share of increased flight hours and promised higher pay are going to their commanders and older officers.  Could this be a continuation of Igor Sulim’s travails at Lipetsk?  The paper also reports a number of cleaning companies say the Defense Ministry owes them 5 billion rubles for housekeeping work outsourced over the last year.