Publication: Monitor Volume: 3 Issue: 157

The plot thickened yesterday over last week’s surprise reorganization of Russia’s state-owned arms trade company, Rosvooruzhenie. (See Monitor, August 22) President Boris Yeltsin told journalists yesterday that he had felt compelled to dismiss the company’s general director, Aleksandr Kotelkin, not because Kotelkin "did anything wrong," but because he was "in a job that was just too attractive." Yeltsin’s comment was interpreted as a hint that Kotelkin had been involved in some kind of corruption. "On the whole, he set the business fairly well on its feet, but there were some violations," Yeltsin said. (RTR, August 25; Financial Times, August 26)

Since 1993, Rosvooruzhenie has enjoyed a virtual monopoly over Russia’s arms exports, one of the few industries that has flourished in both the Soviet and the post-Soviet eras. There was therefore considerable surprise last week when Yeltsin dismissed Kotelkin only a day after praising his performance. Economy Minister Yakov Urinson yesterday confirmed Yeltsin’s statement that Kotelkin’s departure was "not a personal matter." Rather, Urinson said, it was a case of "needing to reform Rosvooruzhenie’s entire structure." Urinson hinted that the problem was that the state-owned company had not been bringing enough money into the exchequer. Urinson intimated also that profits had been seeping out of government control as a result of the system of authorized banks which, he said, had ensured that the company’s accounts remained "convoluted and nontransparent." (RTR, August 25)

Problems with Russian Civil Aviation.