Tag Archives: Rosoboronzakaz

Serdyukov’s New First Deputy

Aleksandr Sukhorukov

As rumored in mid-summer, President Medvedev announced today former KGB and FSB officer Aleksandr Sukhorukov, most recently Director of the Federal Service for the Defense Order (Rosoboronzakaz), will be First Deputy Minister of Defense.

According to ITAR-TASS, Defense Minister Serdyukov introduced the 55-year-old Sukhorukov during a working meeting with Medvedev in Stavropol.

Medvedev and Serdyukov noted Sukhorukov will be responsible for arms procurement and the beleaguered state defense order.

He’ll be sitting in the hot seat right away.  Medvedev told him:

“. . . this is a very delicate process:  on one side, you need to understand the realm of the Armed Forces, the field of modern military technology, on the other, you need to build relationships with suppliers correctly.  But it’s not always simple to do, the current history of concluding contracts shows this.” 

RIA Novosti elaborated:

“Last night, RF Prime Minister Vladimir Putin’s deadline for concluding all Gosoboronzakaz-2011 contracts expired.  On Thursday, the media reported that this task was not completed.”

Sukhorukov takes the post vacated by Vladimir Popovkin, who took over the Russian space agency Roskosmos.

Sukhorukov was with Serdyukov at the Federal Tax Service.  He followed the Serdyukov team to the Defense Ministry, becoming Deputy Director of Rosoboronzakaz in mid-2008, and Director a year later.  But he kept a low public profile at that agency.

He was born November 11, 1955 in Kasli, Chelyabinsk Oblast.  He graduated from the Chelyabinsk Higher Tank Command School in 1977, and later a KGB Higher School.  He apparently worked for the KGB in the Armed Forces, retiring as an FSB lieutenant colonel in 1996.   

From 1996 to 2004, he was deputy director, then director for the Finance Ministry’s northwest regional center for hard currency and export control.  He was a deputy director and director of a territorial directorate (probably northwest again) of the Federal Service for Finance-Budget Oversight in 2004-2006. 

In 2006-2007, he worked for then-Federal Tax Service Director Anatoliy Serdyukov as Chief of the Organizational-Inspectors Directorate.

In 2007, Sukhorukov followed Serdyukov to the Defense Ministry as an advisor.  He became Chief (not surprisingly) of its Organizational-Inspectors Directorate.  Serdyukov made reference to this directorate in his 2010 year-ender when he described how he checks on implementation of his policies. 

But, in late 2007, Sukhorukov jumped ship to the government, becoming assistant to then-Prime Minister (and Serdyukov’s father-in-law) Viktor Zubkov, and then Director, Department for Control and Verification of Fulfillment of RF Government Decisions.

In mid-2008, he arrived at Rosoboronzakaz.

You can find bio data here, here, and here.

In the Russian context, Sukhorukov seems like someone who knows how to find out if people are getting things done, and presumably what to do to them if they’re not (shoot them, send them to work in the fresh air, or fire them).  He seems very much a Putin man, an archetypal silovik.

He doesn’t, however, seem like someone who can help people figure out how to get things done.  Perhaps the Defense Ministry could have used someone with not just investigative, accounting, or legal experience, but maybe with an engineering, industrial, scientific, or technical background in the OPK.

It’d be interesting to know what Sukhorukov did in the army / KGB / FSB . . . he might have been a run-of-the-mill osobist, a “special section” guy monitoring some unit’s reliability and loyalty, or helping secure its secrets.  But he might have served in a defense plant, or been detailed to work in anti-corruption efforts.

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For Most Corrupt . . .

The winner is . . . the Ministry of Defense.  Novaya gazeta assembled respected independent experts to judge which of the Russian government’s 35 ministries and departments is most corrupt.

The Defense Ministry edged out the Transportation and Economic Development Ministries.  The experts said the five most corrupt (Health and Social Development is fourth and Finance fifth) have the opportunity to “saw off” 100 million to 1 trillion rubles per year (including budget money, and money that doesn’t reach the budget).

A little context.  Recall Defense Minister Anatoliy Serdyukov arrived four plus years ago promising to bring the Armed Forces’ notorious “financial flows” under strict control.  But corruption scandals have only continued to flare around the Arbat Military District.  Just a casual recent look:  the Main Military Prosecutor says 20 percent of GOZ money is being stolen, Lipetsk highlights widespread premium pay extortion, the Chief of the Main Military-Medical Directorate is arrested for corruption.  The list could go on.

Look at the Novaya story in the vernacular for links to its original sources.  Its experts focused on the closed nature of the defense budget, the impossibility of accounting for money allegedly spent on military R&D, the inability to confirm that work was actually performed, inflated prices, and a high rate of kickbacks.

But they also focused on the simple fact that no one is officially in charge of significant amounts of defense money in the federal budget.  Just by looking at budget lines, it’s clear to them that 600 billion rubles in defense spending (and perhaps much more) are simply unaccounted for.

They also focused on Defense Ministry FGUPs that haul in enormous profits but remit little into the budget.  And lastly they noted that fake health deferments from Voyenkomaty amount to an illicit 150-billion-ruble business every year. 

This is how they summarize the corruption situation in the Defense Ministry (below распил or saw cut, a share or cut of illegally obtained money, is translated as sawed off): 

“1.  Anatoliy Serdyukov’s Defense Ministry is the richest and also the most closed of Russian ministries and departments.  This is precisely why the experts considered it the ‘goldmine of the corrupt,’ that is absolute leader in the volume of money which it’s possible to write off  without supervision as ‘expenses,’ the reality of which society doesn’t have the slightest chance of verifying.  The first corruption scandal in the new (Yeltsin-Putin) Russia is directly connected with the Defense Ministry – the plunder of Western Group of Forces property which broke out in 1992-93.”

“In the opinion of experts polled, ‘today’s army purchases and especially ‘development,’ ‘research and development work’ for the army is that sphere where it’s possible to put up to 90% or more of state financing in your own pocket peacefully and where there’s no kind of limit at all.  Not even comparable is civilian construction done at state budget expense, where it would seem there should be the greatest percentage of corruption, but there is a limit there:  in construction it’s necessary to present a final result – a finished facility, therefore here it’s possible to put a maximum of 70% of state resources in your pocket without punishment.  In army ‘development’ there’s no accounting, everything’s classified, and this means it’s impossible to check, therefore in the Defense Ministry they ‘lose’ fantastic sums.  This comes to light only rarely, when military journalists make note of ‘new developments’ at Defense Ministry exhibitions which they already saw several years before.  Meanwhile, the Defense Ministry objects to this:  no, this isn’t old, it’s new, but meticulous military journalists show photos from previous years in which even the serial numbers are the very same as in the new exhibition.”

“Such expert evaluations are largely supported by the not numerous checks of the Main Military Prosecutor when they conduct them.  So, not long ago, the results of checks into the Defense Ministry’s 13th GNII and the Main Military-Medical Directorate, where ‘large-scale thefts of financial resources’ were revealed, were substantiated.  ‘Just in several instances of criminal activity by officials of the 13th GNII and ZAO ‘Kulon’ the theft of more than 40 million rubles was revealed – this is the amount of work which was never fulfilled.  A criminal case in relation to a group of Defense Ministry Main Military-Medical Directorate and State Order Directorate personnel was launched:  they concluded a state contract with a commercial firm to supply medical equipment for more than 26 million rubles, the cost of the equipment purchased from the businessmen was inflated more than 3 times, and the state took a loss of more than 17 million,’ acknowledged the Chief of the Second Directorate of the Main Military Procuracy General-Major of Justice Aleksandr Nikitin.”

“In Kirill Kabanov’s estimation, ‘the figure of 1 trillion rubles which the budget loses in purchases could be understated.  Kickbacks in our state procurement system are 30-40%, in open areas kickbacks are 20%, but in closed, monopolistic ones they go up to 60% — in the Defense Ministry, for example.’

“‘The Defense Ministry, of course, is the kingdom of the fearlessly corrupt.  The ability to classify everything in the world powerfully helps in ‘sawing off’ activity,’ – states Aleksey Navalnyy.”

“The potential corruption of ‘defense expenditures’ lies not just on the fact that society can’t concretely check the designation of every billion of military spending, but it doesn’t even have chances to find out precisely which ministry or department exactly bears responsibility for a good half of ‘defense’ expenditures.  For example, in 2010, the expenditures of the RF federal budget were 10.116 trillion rubles – both the Finance Ministry official site and the Rostat official site attest to this.  But of these only 9.052 was officially distributed among ministries and departments, and more than 1.06 trillion rubles was used by someone unknown, meanwhile more than half of them (0.6 trillion) went to ‘defense expenditures!’  An even more outrageous situation was planned in the RF budget laws for the following years:  in 2011, expenditures are 10.65 trillion, only 9.35 of which are signed off to a departmental structure, in 2012 — 11.3 trillion and 9.4 trillion, in 2013 — 12.2 trillion and 9.5 trillion accordingly, that is with every year the share of ‘no one’s’ expenditures will grow even larger . . .”

“In 2010, budget expenditures ‘on defense’ were 1.28 trillion (!) rubles.  Meanwhile, the Defense Ministry spent 0.98 trillion, of which 0.64 trillion were ‘on defense,’ but the remaining 0.34 trillion — on communal services, education, health, film, TV and pensions.  Spending of the remaining departments ‘on defense’ was in the amount of 0.041 trillion (Minpromtorg –32.4 billion, Rosatom –3.7 billion, Roskosmos — 0.9 billion, Rosaviatsiya — 0.6 billion, etc.; the Defense Ministry’s departments:  Spetsstroy — 1.8 billion, Rosoboronpostavka — 0.5 billion, Rosoboronzakaz — 0.3 billion, FSVTS — 0.3 billion, FSTEK — 0.0 [sic] billion rubles), the total expenditures of all departments ‘on defense’ — 0.68 trillion rubles.  But it’s unknown who — unknown even which ministry or department spent all of 0.6 trillion rubles ‘on defense!!’  It’s understandable that they were spent on the Defense Ministry’s business, but why hide this (no ‘military secret’ really suffers, if the Defense Ministry acknowledges that it spent not 1 trillion, but an entire 1.6 trillion in a year), isn’t it because it’s so much easier to steal ‘no one’s’ 600 billion in defense money?”

“It’s not known which departments spend not just 0.6 trillion in expenditures ‘on defense,’ but also 0.46 trillion of other spending — a number of experts believe they are almost all under the Defense Ministry’s control, the real budget of which is twice as much as the official one and amounts to 2 trillion a year.  So half of this (or even more), in experts’ opinions, gets ‘sawed off.'”

“However, the ‘fat’ life of the Defense Ministry leadership doesn’t end with this.  It turns out to be unknown how and why 15 thousand pieces of property belong to the Defense Ministry.  Where and to whom the proceeds from the use of them go – God only knows.  But on the other hand it is known that they are still also gathering up money for housing construction on these Defense Ministry lands from simple people who then turn into deceived investors.”

“Moreover, the Defense Ministry directs 352 FGUPs (Federal State Unitary Enterprises), from which even in the crisis year 2008, the Defense Ministry received 39.3 billion rubles in proceeds, but there are problems with remitting the profits into the federal budget:  it remitted only 0.092 billion of them.  Another 126 FGUPs are directed by Defense Ministry subordinate Spetsstroy and there’s the same situation with it:  proceeds in 2008 were 62.4 billion, and only 0.017 billion in profits remitted to the federal budget.  Defense Ministry subordinates FSTEK and Rosoboronzakaz direct 4 and 3 FGUPs respectively, their proceeds are 0.8 and 0.2 billion respectively, profits remitted to the budget are 0.001 and 0.0002 billion respectively.”

“The Defense Ministry and its subordinate Rosoboronpostavka glorified themselves with outrageous expenditures of dozens of budget millions to buy furniture for their leadership – certainly made of gold, beautiful wood and natural buffalo hide.  The main defender of the Motherland wouldn’t sit or work on any other furniture . . .  Just three such orders for the leadership cost the budget 60 million rubles, and at the same time 7 million was spent for furniture for average Defense Ministry and Rosoboronpostavka personnel. The Defense Ministry made it known that it also wrote off 45 million on ‘media monitoring’ in 2010(!).”

“The Defense Ministry’s subordinate Spetsstroy has been highlighted in corruption scandals:  in 2010, just one of its FGUPs tried to ‘con’ four banks out of more than 500 million rubles, by not returning credits taken from them and attempting to organize the ‘bankruptcy’ of Spetsstroy FGUPs . . .”

“Besides, in the experts’ opinion, ‘the main preoccupation of voyenkomaty in the last two decades has become the collection of bribes from conscripts,’ since ‘from 80% to 90% of deferments for health are given by voyenkomaty for bribes – exactly for this reason the Defense Ministry is demanding the lifting of student deferments, lifting deferments for the fathers of newborns, but never demands lifting deferments for health.’  Every year nearly 600 thousand deferments ‘for health’ are issued, almost all are for bribes which run in various RF regions from 200 to 400 thousand rubles, so, the overall trade in voyenkomat bribes is nearly 150 billion rubles a year, the experts believe.”

Emblem of Procurement Problems

On Friday, amidst Krasnaya zvezda’s usual fare, there was interesting coverage of a high-level meeting to review the military’s UAV (BPLA or БПЛА) procurement program.

Technically, it was a session of the collegium of the Federal Service for the Defense Order (Rosoboronzakaz or Рособоронзаказ) with the agenda item “Results of Inspecting the Placement and Fulfillment of the State Defense Order (GOZ) in the Area of Development and Supply of Unmanned Aerial Vehicles.”

Rosoboronzakaz Director Aleksandr Sukhorukov, a former Serdyukov tax service deputy, conducted the session.  Also participating were newly-minted Deputy Defense Minister Tatyana Shevtsova, also a former Serdyukov tax service deputy, and Director of the Federal Agency for Supplies of Armaments, Military and Special Equipment, and Material Resources (Rosoboronpostavka), Nadezhda Sinikova, another of the Defense Minister’s long-time proteges.

The military paper noted that representatives of the government, ministries, and other federal executive organs, state customers from the Defense Ministry, FSB, FSO, MVD, and MChS, representatives of the Main Military Prosecutor, and OPK officials also attended.

One Yu. Stolyarov gave the main report.  He’s Chief of the Directorate of Oversight of the State Defense Order in the Area of General Armaments and Military Equipment, Aviation Equipment, Aerospace Defense Means and Armaments, Ships, and Naval Armaments and Military Equipment.  Quite a broad portfolio.  Krasnaya zvezda didn’t elaborate on what Mr. Stolyarov said, however.

Ground Troops CINC, General-Colonel Aleksandr Postnikov, VDV Chief of Staff and First Deputy Commander, General-Lieutenant Nikolay Ignatov, an OAO Tupolev deputy chief designer, and OAO ‘Vega’ Radiobuilding Concern General Director, V. Verba also spoke at the session.  Their remarks weren’t reported either.

Krasnaya zvezda reported that all presentations were thorough and constructive, and the collegium adopted some draft directive, but we don’t know what it said.  The paper, however, says the main theme of all presentations was the same:

“. . . in their TTKh (ТТХ – tactical-technical characteristics) domestic UAVs must not lag behind foreign ones and it’s essential to do everything to achieve this.  State money has to be spent with maximum effectiveness.  Troops and power structures need to be supplied with those UAVs that will be most effective on the battlefield, and in conducting special operations.”

What should we conclude from this?  Firstly, the meeting highlighted Shevtsova’s new oversight and auditing role in procurement.

Secondly, the Defense Ministry’s leaving the door open for domestic UAV producers, and so this seems to amount to just another warning to them.  It doesn’t seem to be anything like a decision to include Russian firms or exclude foreign ones, or vice versa.

It’s not surprising the Defense Ministry highlighted this particular program review.  Few procurement issues have caused Russia as much angst recently as UAVs. 

Georgia’s Israeli-supplied UAV capabilities, and Russia’s relative lack of them, highlighted this issue in 2008.  Moscow had to risk manned aircraft instead of employing unmanned ones on reconnaissance missions.  What’s worse, two years after the five-day war, there’s still no fix to the UAV problem.  And it will become more acute should unmanned aircraft become the backbone of future air power for the world’s leading militaries.  Russia’s clearly behind on UAVs, and questions remain about whether it should catch up, and whether it can.

The Russian defense establishment has spent months debating buying from foreign manufacturers, purchasing sample quantities abroad, or producing jointly to jumpstart or pressure domestic producers.  In late 2009, Air Forces CINC, General-Colonel Zelin flatly stated it would be ‘criminal’ to accept inferior Russian UAVs into the arms inventory.  The FSB reportedly said it would buy Israeli UAVs.  In March, Defense Minister Serdyukov admitted domestic UAVs ‘seriously lag’ behind world standards, and, in April, then Armaments Chief, now First Deputy Defense Minister Popovkin reported that Russia had spent 5 billion rubles on UAVs without result.

So UAVs joined the list of other systems – helicopter carriers, soldier systems, light armored vehicles, etc. – that could be bought abroad, but it doesn’t look like Moscow is ready to rely, at least entirely, on foreign producers for any of them.