Publication: Monitor Volume: 8 Issue: 3

President Vladimir Putin fired Railways Minister Nikolai Aksenenko yesterday (January 3). According to the version of events put out by the government and presidential press services, Putin signed a decree removing Aksenenko as head of the Railways Ministry (MPS) at the urging of Prime Minister Mikhail Kasyanov, who had earlier met with Prosecutor General Vladimir Ustinov to discuss the results of a Prosecutor General’s Office investigation launched late last year into abuses allegedly committed by MPS officials. At some point in these proceedings–it was unclear from the government and presidential press services’ statements exactly when–Aksenenko sent a resignation letter accepting “moral responsibility” for the problems in his ministry (Polit.ru, RBK, January 4).

Aksenenko’s removal was hardly a surprise. Indeed, it had been anticipated since last October, when the Prosecutor General’s Office charged him with abuse of office and asked him not to leave Moscow while he was being investigated. Aksenenko was initially accused of having illegally authorized the expenditure of US$2.3 million. The charge stemmed from an investigation that the Audit Chamber, the independent federal watchdog agency, carried out last year. The Audit Chamber discovered, among other things, that three of Aksenenko’s deputies and the head of the MPS’s finance department had received apartments ranging in price from US$461,200 to US$886,700. The Prosecutor General’s Office later accused Aksenenko of making some 87 million rubles (some US$3 million) in salary payments to persons who were not legally MPS staff members. The Prosecutor General’s Office was also reportedly looking into other, more serious allegations by the Audit Chamber, including a charge that in 1997 the MPS had illegally spent billions of dollars worth of funds from the government’s program to purchase and ship fuel and other necessities to remote regions of Russia’s Far North. Prime Minister Kasyanov was quoted yesterday as saying that special attention was being paid to the MPS’s tax arrears. According to press reports last October, the ministry failed to pay 11 billion rubles (some US$370 million) in taxes it owed in 2000 (Polit.ru, RBK, January 4; NTV.ru, January 3; see also the Monitor, October 23, June 28, 2001).

In addition, the Gazeta.ru website reported yesterday that the Federal Security Service (FSB) has for several years been investigating the activities of TransRail, a Swiss-based company 50-percent owned by the MPS, which reportedly acquired a monopoly in Russia’s freight business, thanks to its close relations with top MPS officials, who granted the company discounts on railway tariffs. Some observers have speculated that MPS officials have used TransRail to redirect cash flows into their own pockets. Gazeta.ru also noted that the MPS has invested at least 21 billion rubles (US$700 million) in TransTeleCom, a private company set up in 1997 to create Russia’s first nationwide fiber optic network, using existing railway infrastructure (Gazeta.ru, January 3).

Given that Russian politics is in its annual post-New Year’s, pre-Orthodox Christmas (January 7) lull, there was scant commentary on Aksenenko’s ouster. Vladimir Zhirinovsky, head of the Liberal Democratic Party of Russia (LDPR) and a deputy State Duma speaker, said Aksenenko had taken “a very wise step” by resigning, adding that the question of whether the criminal case against the former MPS chief’s would be dropped would depend on the level of his cooperation. Were Aksenenko “to hand over… people, information, finances,” the LDPR leader said, “then he’ll be left alone” (Radio Ekho Moskvy, January 3).

Whatever the case, Aksenenko’s removal appears to have been a further step in cleaning Yeltsin-era holdovers out of the corridors of power. Aksenenko was a leading member of former President Boris Yeltsin’s inner circle, known in the press as the “Family,” was at one time considered a protege of Boris Berezovsky and even considered a likely candidate to succeed Yeltsin as president. Aksenenko, therefore, has long been a target of the rival group of top-level officials sometimes called the “Chekists.” This group consists of long-time associates of Putin, who, like the president, are natives of St. Petersburg and/or veterans of Russia’s intelligence services. Among its key members: Defense Minister Sergei Ivanov; Viktor Cherkesov, Putin’s representative to the Northwest federal district; Igor Sechin, head of the presidential secretariat (Gazeta.ru, January 3; Moscow Times, October 24, 2001). State Duma Deputy Nikolai Ryzhkov predicted that “a person from the new team, a person whose loyalty the president can be completely sure of” would soon replace Aksenenko. For his part, Zhirinovsky said it would be “very wise” to replace Aksenenko with “one of the Petersburgers” (Radio Ekho Moskvy, January 3).

The official reports that it was Kasyanov who urged Putin to fire Aksenenko are noteworthy, given that Sergei Stepashin, head of the Audit Chamber, openly accused Kasyanov last November of having ignored the Audit Chamber’s findings concerning MPS misappropriations (see the Monitor, November 15, 2001). What is more, in March 2000, when Kasyanov was doubling as a first deputy prime minister and finance minister, he reportedly gave Felirio Trading Co. Limited, an obscure Cyprus-based company, the right to collect the Railway Ministry’s debt to the Finance Ministry. According to press reports, the company made more than US$13 million off a complex debt-payment scheme (see the Monitor, September 11, 2000). Like Aksenenko, Kasyanov has been linked to the Family and has long been said to be among those targeted by the Chekists for removal.