Russia Exports Corruption to UK

21.06.2012 Russian corruption has reached London, say experts questioned by RusNavy.com. By assent of defense ministry, millions of Russian budgetary dollars may go away to a British company which is almost ceased to exist and currently undergoing administration procedures. So far, there were no comments of Russian officials. Even representatives of British side demonstrate Russian-style behavior; they avoid phone talks, dodge straight questions and send runaround emails in reply to the editors' official letters. Meanwhile, the question is not a routine international bargain but a contract of Russian Navy directly affecting warships being under construction or repairs.

Serdiukov failed to become British Queen

As early as November 2011 Russian defense minister Anatoly Serdiukov approved resolution providing that series of new warships would be equipped with metal cabin furniture made by British company Strongbox Marine Furniture Ltd (SMF). That was contrary to the longstanding practice. Before that, Russia had been furnishing not only own ships but some foreign navies like Indian one. Sure, there was nothing reprehensible in the minister's intentions. If quality of Strongbox-produced furniture used in Royal Navy's ships outclasses analogous hardware made in Russia, Serdiukov's resolution is justified and reasoned. Although Russian media grumbled about forgotten domestic manufacturers, Viktor Litovkin (Independent Military Review) in the interview to RusNavy.com expressed the optimistic opinion in the best way saying that "what is good for sailors is the best".

Strange things happened to the furniture of Her Majesty Navy in February 2012 when British newspaper The London Gazette published an obituary to Strongbox Marine Furniture saying that due to deteriorated cash position, the company was taken under receivership by RSM Tenon. That fact remained unnoticed in Moscow. Perhaps, Russian officials do not read London press. However, it may happen that sudden bankruptcy of the British partner made no impression on them because of quite different reason. Authorized dealer of SMF in Russia, St. Petersburg company Marine Complex Systems Ltd (MCS) not only remained safe but keeps on actively promoting the British metal cabin furniture.

Main pusher of Strongbox products to Russian shipyards is Vice Admiral retired and Hero of Russia Mikhail Motsak. In Russia, he is known not only as former assistant of presidential envoy to Northwestern Federal District but as has-been Northern Fleet Deputy Commander. Notorious tragedy happened to nuclear submarine Kursk right when Motsak served in the fleet. By the way, that was he who directed the exercise in which SSN Kursk perished, and then he persisted in the viewpoint that the Russian submarine had sunken after collision with the foreign one.

Nevertheless, now the ex-admiral strongly supports everything foreign. An insider at Severnaya Verf shipyard told RusNavy.com off-the-record that Mikhail Motsak had recently visited the yard and referring to the Serdiukov's resolution aggressively demanded its implementation. Representatives of MCS showed up at Amur Shipyard and other Russian shipbuilding companies. Their enthusiasm is pretty explainable as the minister's resolution has not been annulled despite SMF went bust. Moreover, if one believes Mr. Motsak, there was no bankruptcy at all.

Overburdened with debts, not morals

Questioning functionaries of SMF and MCS with no luck, editorial staff of RusNavy.com has spent a month trying to find out what exactly happened to British company Strongbox Marine Furniture in February 2012. How could Russian defense minister Anatoly Serdiukov, working in furniture companies of St. Petersburg in 90's, make such a mistake in selection of business partner? What happened to his furniture-related experience and intuition?

However, it seems that no mistake was made. According to sources of RusNavy.com in London business community, Strongbox has quite specific reputation. Not once having passed trough bankruptcy procedures, it changed names and directors every time. De facto, each of them belonged to Stephen Edmunds, a British businessman. As long as most of his firms (Strongbox Systems Ltd, Strongbox Broadcast Products Ltd, etc.) were limited-type companies, Edmunds each time managed to escape liabilities for debts. In the same manner he established new company named Strongbox Accommodation Furniture Ltd (SAF) which purchased business and assets of SMF on the day of its insolvency in February 2012 for GBP 250,000. Take note, Strongbox Marine Furniture really entered administration and owes its creditors GBP 500,000.

For Russian side, cooperation with the new Strongbox company made on the ruins of SMF is facilitated by a Russian-speaking director. According to open information about SAF in the Internet, since February 2012 one of the company's directors is a native of Saint Petersburg and ex-manager of MCS Eduard Ivanov. In the phone talk with RusNavy.com, Ivanov confirmed he was engaged in promotion of Strongbox products.

Looks like the "specific" British company and Russian defense budget have finally met each other. As for the experts interviewed by RusNavy.com, that may be indicative of corruption ties being established between the London-headquartered company and Moscow. It is even rumored that one of top managers in Marine Complex Systems Ltd is a relative of a Kremlin's high-ranking official.

So, perhaps the former furniture devil and current defense minister Anatoly Serdiukov was looking for just this kind of a partner, a firm not overburdened with morals and business etiquette?

Russia is still heavily corrupted country. According to Corruption Perception Index 2011, Russia was ranked 143-rd out of 182 countries. Meanwhile, even the 126-th position taken by Russia in 2005 was declared "national shame". In that rating, Russia traditionally neighbors on Syria, Bangladesh, Kenya, etc.

Presently, the state governed by Vladimir Putin is described as the zone of heavy corruption. Connections and family ties are the key elements in Russian business. Corruption penetrates all basic spheres of life in Russia – defense industry, customs, medical care, law enforcement agencies, education. Overall sum settling in shady budgets is comparable to the federal treasury. No wonder though, corruption generally exists due to artificial raising of costs of works and kickbacks received as a result. It is when the difference between actual and declared prices settles in a bureaucrat's wallet. For instance, roadbed in Russia costs almost 10 times as much as in other countries. People say it is not because of ecpensive concrete but because of greed of Russian functionaries.

Remarkable fact is that Russian defense ministry is the most corrupted state agency, writes the oppositional newspaper Novaya Gazeta. That is just why Russian media and blogosphere are so skeptical about urgently required cooperation between Russian shipyards and the British bankrupted company.