Prosecutor Asks Minister to Dismiss Defense Company Boss

MOSCOW, May 13 (RIA Novosti) – Russia’s chief military prosecutor has asked Defense Minister Sergei Shoigu to dismiss a senior defense industry boss over allegations he interfered with a contract to buy foreign military vehicles in order to avoid paying import duties, a source in the Chief Military Prosecutor’s Office said on Monday.

Kommersant newspaper reported earlier on Monday that Sergei Khursevich, the head of the Oboronservis defense property services company, altered a contract to buy 57 armored vehicles from Italian company Iveco by ordering additional medical equipment for them including stretchers, flashing lights and Red Cross stickers, so they could be reclassified as “special medical equipment” and thus dodge import duties.

The losses to the state “caused by Khursevich’s actions” were estimated at 145 million rubles ($4.6 million), Kommersant said, citing Sergei Fridinsky, Russia’s chief military prosecutor.

Fridinsky wrote to Defense Minister Sergei Shoigu on March 29 asking him to dismiss Khursevich, who “failed to ensure compliance with the rule of law” at the company and “settled into a routine of breaking the law,” Kommersant said.

“The notice [of dismissal] has actually been sent. It was prepared by the legal compliance department, and Fridinsky initialed this document,” a source familiar with the document told RIA Novosti.

Shoigu is expected to respond within a month, the source said. If the Defense Minister refuses to dismiss Khursevich, his response should be “clearly justified,” the source added.

Kommersant, citing Defense Ministry sources, said Shoigu supports the proposal and a decision on Khursevich’s dismissal is expected to be announced at a forthcoming meeting of the company’s board of directors.

Oboronservis has been at the center of a high-profile scandal since late last year, after several of its managers were arrested on suspicion of fraud involving the illegal sale of ministry property. The then Defense Minister Anatoly Serdyukov resigned shortly after the scandal broke, and was replaced by Shoigu, who was previously the Emergencies Situations Minister.

Serdyukov was subsequently questioned twice by investigators about various instances of fraud within the ministry, but has not yet been charged.

The chief military prosecutor said checks carried out by prosecutors found that the total losses to the budget caused by the Oboronservis company’s management is estimated at over 5 billion rubles ($155 million). More than 25 separate criminal cases have been opened into fraud at the company.

The Russian Defense Ministry as a whole suffered losses of 13 billion rubles ($430 million) from mismanagement and fraud in 2012, Investigative Committee head Alexander Bastrykin said previously. The ministry lost 7.5 billion ($240 million) from corruption alone, with crimes involving Oboronservis management costing 4 billion rubles ($130 million), he said.

It was not immediately clear why that figure differed from the sum of $155 million quoted by Fridinsky.

The Russian government announced a major crackdown on corruption in the defense sector late last year, with Deputy Prime Minister Dmitry Rogozin, who has responsibility for the industry, saying in November a “clean-out is inevitable.”


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