Defense Ministry Scandal: Other $5 mln Confiscated

21.11.2012 Over $5 mln were confiscated on Nov 20 in the context of large-scale misappropriations in Russian defense ministry, reports Interfax.

As a result of investigative activities, policemen found a safety deposit box with over $5.690 mln and documents "of exceptional interest for investigation". The safety deposit box was registered in the name of A. Kiselev who is a nephew of Alexander Yelkin, director/founder of JSC Security & Communications and director of JSC Slavyanka.

Thus, overall sum confiscated under the defense ministry's fraud case is about $700 mln.

It was reported on Nov 16 about $53 mln misappropriated during implementation of state defense contracts. According to investigators, defense ministry signed two contracts in 2011 to the overall amount of RUR 63 bln with JSC Slavyanka for technical and sanitary maintenance of military camps and other assets. Slavyanka passed its contractual commitments to JSC Security & Communications.

Since 2011 the latter one has been signing fictional acts of completed works and falsifying invoices for payment under veil of servicing and maintaining of military assets (sometimes nonexistent ones. Totally, about RUR 53 mln were misappropriated by this way.

Incorporator and director of JSC Security & Communications is Alexander Yelkin who is believed a confidant of ex-minister of defense Anatoly Serdiukov. Assistant to Yelkin was chief accountant of JSC Slavyanka Yulia Rotanova.

On Nov 16, Yelkin and Rotanova were arrested. Criminal case was initiated against top-managers of the both companies on the basis of Article 159, Russian Criminal Code (fraud committed on especially large scale).

Yelkin challenged his arrest on Nov 19. Defense asks to release him on a RUR 20 mln bail.

As was reported in the press, 99.9 percent of shares of Slavyanka belong to group company Oboronservis that is also under investigation being involved in another headline-making misappropriation affair.