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Russian Defense Ministry officials suspected of large-scale embezzlement

October 26, 2012, 15:44 UTC+3

Russian newspapers headlines focus on a probe into a 3 billion rouble ($100 million) embezzlement conducted by Oboronservis

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Russian newspapers headlines focus on a probe into a 3 billion rouble ($100 million) embezzlement conducted by Oboronservis commercial company controlled by the Defense Ministry. On Thursday the Investigative Committee and the Interior Ministry conducted searches at Defense Ministry officials’ premises investigating the selling of the Ministry’s real estate for prices below market ones.

A team of investigators searched the apartment of Yevgeniya Vasilyeva – the former head of the Defense Ministry’s property relations department. Investigators were met at the door by Defense Minister Anatoly Serdyukov, the Nezavisimaya Gazeta daily reported. The minister asked to be present during the search as a witness. Soon after the search was completed he left directly for the Oboronservis’ office, where another group of investigators were searching.

Investigators seized from Vasilyeva’s home 3 million rubles, jewelry, antiques and a dozen of paintings (according to experts, only two of them are of artistic value).

Investigative Committee spokesman Vladimir Markin said on Thursday there were no detainees or arrested, the Rossiyskaya Gazeta daily wrote. Investigators suspect Defense Ministry officials heavily investing budget funds into most prestigious real estate, land plots and shares owned by Oboronservis. Then they put all this on sale both in Moscow and regions for its affiliates at the prices much lower those on the market.

Sales of land plots and buildings by Defense Ministry “effective managers” caused distrust from the very beginning, first of all among journalists, the Moskovsky Komsomolets daily wrote. The newspaper has repeatedly written about the selling of the air field in Kubinka near Moscow, residences in Myasnitskaya and Znamenka streets, a sports complex on Vodny Stadion and a residential quarter in St. Petersburg’s centre. The theme of shady sales of the Defense Ministry’s property was actively discussed by war veteran committees, the Public Chamber and the State Duma.

But did anyone listen to those crying “Hold thief!” the daily asked and answered in the negative. But what has happened? Why has law enforcers suddenly opened their eyes and ears? One can only make suggestions. But there are no doubts that these searches are a blow struck against Minister Serdyukov, as all key positions related to property and finances in the Ministry were taken exclusively by his people, mainly former tax officers, whom he had brought with him from the Federal Tax Service.

This blow is directed not so much against Oboronservis, but against Serdyukov himself to exert pressure on him and possibly, even make him resign, an expert at the Centre for Political Trends, Dmitry Abzalov, was quoted by Novye Izvestiya as saying.

“It is not ruled out that Deputy Prime Minister Rogozin who came into tough conflict with the Defense Ministry over arms purchases, in particular as concerns the price, stands behind the attack,” he said. “Moreover, Serdyukov lobbies procurement of foreign military hardware referring to its better characteristics. Dmitry Rogozin, in his turn, lobbies the interests of domestic Defense companies.”

Making reference to the words of an unnamed former Defense Ministry official the Vedomosti business daily believes that the case where Vasilyeva may become a defendant is targeted personally against the minister and cannot be initiated by the Investigative Committee on its own. This can be a signal that the president is dissatisfied with Serdyukov. The daily admits that only Putin can order the further investigation of this case instituted several months ago and its wide coverage in the media.

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