Black Holes, Vanishing Rubles and Corruption in the Russian Military

Komsomolskaya Pravda has highlighted a paradoxical and endemic problem facing military reform: large-scale corruption in the officer corps represent black holes into which billions of rubles disappear. Despite the reform, officers continue to rip off state funds. The corruption is rampant and figures offered in the article indicate the scale of the problem and the powerlessness of the state to curb it. The corruption factor is a key driver behind the silent opposition among the officer corps towards the “new look” initiated by Defense Minister, Anatoliy Serdyukov: it would misrepresent Russian officers to suggest any reservations they may have over the reforms are principally based either upon integrity, ideological or intellectual grounds. Many officers simply want to preserve the culture of corruption from which they have benefitted and recognize that Serdyukov is attempting to break this criminal mindset (Komsomolskaya Pravda, October 28).

Serdyukov has “noticed” that despite more money being allocated to the military, insufficient weapons and new equipment reach the armed forces. The figures are damning: more than 130 illegal orders have been rescinded, 745 cases of criminal proceedings have been initiated and over 4,000 officials have been charged with disciplinary and administrative offenses. However, investigators in the Russian comptroller’s office cannot locate billions of evaporated rubles from the state defense order (Gosudarstvennyi Oboronnyi Zakaz –GOZ), consequently the main military procuracy (Glavnaya Voennaya Prokuratura –GVP) has sounded the alarm. Recently, senior officials in the defense ministry and other power ministries met in Moscow to discuss the extent of the problem. Colonel-General Sergey Fridinskiy, the chief military prosecutor, acknowledged that corruption might damage military reform and slow the pace of modernization.  Fridinskiy commented, “This year alone the prosecutors, both independently and in interaction with the audit and law-enforcement authorities, have uncovered approximately 30,000 violations of the law, which resulted (or could have resulted) in a considerable squandering of the funds for the GOZ.” Moreover, Fridinskiy confirmed that the number of criminal cases involving public funds or property has shown no sign of decreasing. Large pay arrears persist in the 529th construction directorate, and figure-inflating in relation to disbursement vouchers and payment statements has accounted for an estimated loss of 37 million rubles ($1.2 million), while damages claims have been compensated at around 1 billion rubles ($32.4 million) (Komsomolskaya Pravda, October 28).

The GVP press office indicated that military prosecutors will “significantly step up” the supervision of the use of funds for the GOZ. Commanding officers and officers in charge caught misappropriating funds will face criminal prosecution and must compensate the damage caused to the state. Of course, it is not the first time during the reform process that alarming figures have been released to highlight the extent of corruption among Russian officers, but the signals are becoming clear that the defense ministry wants to somehow mitigate the damage. As Serdyukov told journalists, “When I came to the defense ministry, speaking plainly, I was surrounded by large amounts of thievery. Financial licentiousness, the impunity of people whom no one had checked out was so deeply ingrained that it had already become a way of thinking” (Vedomosti, November 1).

In August, Major-General of Justice, Oleg Morozov, in an interview with the official defense ministry publication, Krasnaya Zvezda, revealed that corruption had escalated in 2010. Morozoz summarized the work of the investigative bodies in Moscow Military District in the first half of 2010: criminal proceedings were initiated against 694 people as a result of investigating 760 cases. Morozov said the number of crimes linked to corruption had doubled year-on-year. In a total of 17 criminal cases, resulting in 22 people being charged, fraud was the specific type of crime involved. An additional 12 cases related to embezzling military resources, 15 for abusing or exceeding official powers, 22 resulted from either giving or receiving a bribe and three were negligence cases. Morozov explained that the number of officers against whom proceedings were instigated rose by 45 percent by mid-2010 year-on-year (Krasnaya Zvezda, August 9).

The same article, highlighted among other senior officers, Major-General S.A. Lukashov, sentenced to four years in prison after authorizing the payment of 8 billion rubles ($259.45 million) to the Dankor Company, which carried out contracted work for a “significantly smaller sum,” the damage to the state was estimated at 6 billion rubles ($194.6 million). A military court likewise sentenced Lieutenant-General V.L. Dvurechenskiy, a former deputy commander of special-purpose forces, to four years in a colony also on corruption-related charges. Morozov added that more was being done to combat this type of crime, since in 2009 around 16 percent of the total “estimated” loss was recovered, and by June 2010 the figure on recovery of such losses had risen to 38.7 percent. In addition to the GVP, the Federal Security Service (FSB) “organs in the troops” and local interior ministry structures collaborate in efforts to tackle corruption in the armed forces (Krasnaya Zvezda, August 9). This suggests that FSB counter-intelligence in the military units is snowed under trying to mitigate the flow of state funds falling victim to the rising tide of officer corruption.

In March, 2010, Fridinskiy estimated the loss to the GOZ in 2009 at around 3 billion rubles ($97.3 million). During 2009, fraud cases rose by a factor of 1.5, while embezzlement grew by 71 percent, a 62 percent increase in charges of malfeasance occurred, accompanied by a 39 percent growth in abuse of office relating to bribery. One in every four crimes was committed by officers, among whom the growth sector was junior officers. High profile cases against senior officers witnessed the conviction of eight generals. The GVP considers that areas where cash circulates are the most corrupt in the armed forces: procurement, provisions of material assets for the military, disbursement of pay and allowances, among others (Nasha Versiya, March 17).

Corruption has impacted on the construction of apartments for officers and for those being discharged from service, as the ministry has discovered cases of non-existent housing. Money allocated for construction has “vanished” and inspections revealed that the apartments were not built. Malfeasance in the distribution of bonuses has also become increasingly widespread. Since there is secrecy involved in the allocation of bonus payments, this has been susceptible to corruption. Put simply, to receive a bonus it must be shared with the commanding officer. Kickbacks have appeared where a subordinate arranges with a commanding officer or superior the apparently random allocation of bonuses with the return of some of them (Nasha Versiya, March 17).

Serdyukov sensibly wants to remove cash flows from the officer corps, yet despite their apparently dwindling access to these resources paradoxically more money is vanishing. The black holes into which so many rubles disappear are powerful forces, and not only Serdyukov but the ruling duumvirate seem powerless to separate the lucrative business of corruption from the officers.