In 2010, the Russian military experienced acute delays with procurement. The official response to the affair was outlined last month: three officers were to be sacked and several company directors punished. Basic research shows the government's position to be nothing more than a smoke screen, writes Alexander Volk.
At the end of last month, President Medvedev signed an order dismissing a number of military officers for their supposed role in causing delays in government defence procurement, and the resulting shortage of military equipment for the troops. Drawn up by the Ministry of Defence, it is unlikely that the President knew the officers named in the order, or their duties. More probable is the President simply signed off on the order, taking the Ministry of Defence on their word.
The officers relieved of their duties were: Major-General Nikolai Vaganov, deputy head of the main administration of the Russian armed forces; Vice-Admiral Nikolai Borisov, deputy chief commissioner of the navy for weapons; and Colonel Igor Krylov, head of the department for development and organisation of aviation equipment and weapons procurement of the Russian Ministry of Defence.
A little bit of research into the history of these officers reveals some surprising details.
Dismissing the already dismissed
First, that Major-General Nikolai Vaganov had, in fact, already been dismissed from the army by presidential order on 26 October 2010 (and the Kremlin press service issued press releases to this effect). At that time the order was formulated differently: “in connection with the latest staff reshuffle in the Russian Ministry of Defence”. On his own initiative, however, General Vaganov applied for a discharge and was suspended from duty on the day the order was signed.
Are we to assume that he had somehow managed to jeopardise government defence procurement before the order of October 26? Not exactly. According to his duties at the time, the general was not even responsible for issues relating to defence procurement or monitoring. Granted, there was a time when Vaganov — then a colonel and deputy head of the 11th Department of the Russian Ministry of Defence — was involved with government defence procurement. But this was many years ago and Vaganov couldn’t possibly have influenced government defence procurement in 2010. Moreover, in the days when he could, Vaganov was only given awards for his work...
"An internal matter"
The second point of interest is that Vice-Admiral Nikolai Borisov had resigned before the order was issued, on 19 March 2011. The resignation wasn’t provoked by the disruption in government defence procurement either, but by the purchase of weapons abroad. More exactly, by the scandal surrounding press leaks that suggested Russia was planning to buy Mistral helicopter carriers in France for 170 million euros more than their price. The Russian defence export body Rosoboroneksport, together with the Ministry of Defence, immediately disowned their role in the deal, and saddled Vice-Admiral Borisov with all the blame. Apparently, so their version went, Borisov had acted alone, naming the price and signing the contract without permission from his superiors.
It is clearly impossible to buy this argument. No matter who was in the vice-admiral’s place, they would never have taken the responsibility upon themselves to sign the contract, and certainly wouldn’t have undertaken independent action. The military are sworn to obey their superiors, not least in a case as important and expensive as this.
The statements that came later adopted a different approach: contrary to the earlier information, the vice-admiral was not actually responsible for concluding the deal. Any misunderstanding about the price came about because the quoted figure included additional training and manufacturing technology, and that, well, the deal hadn’t even been finalised yet. None of which stopped the authorities from informing Vice-Admiral Borisov that it was advisable that he got as far away as possible from the business. Borisov tendered his resignation with indignation. And the top leadership kept their jobs. The excuse they fobbed to the media was that the resignation of the vice-admiral was associated not with the purchase of weapons, but “exclusively with an internal navy matter”. No one tried to explain what matter this was.
In January, the Duma Parliamentary Defence Committee were presented with two confidential reports. The first was from the General Military Prosecutor’s Office, who had carried out an internal investigation of the Ministry of Defence in the second half of 2010. The report identified some 2.19 billion roubles stolen from the budget in the first ten months of 2010 (in a period where the overall number of bureaucrats actually reduced by more than half); and an annual increase in detected corruption of some 16.1% (in the previous year the figure was 9%).
The second report, prepared by the Ministry of Defence, included a list of the largest embezzlers. Colonel Igor Krylov was on that list, incriminated in the theft of 3.6 million roubles from the 2008 state budget. The text of the report suggested that the colonel had independently made a contract with a company called Kulon-2, and simply pocketed the money allocated for it. What isn’t quite clear, however, is how Colonel Krylov could have done all this by himself. Approving a contract such as this requires a minimum of 20 signatures (and from people a little bit further up the food chain than colonels). Moreover, no one could find the money on him. Neither is it clear how a story from three years ago might have influenced the problems of government defence supplies in 2010.
Let me instead suggest that when Igor Krylov tendered his resignation in December 2010, it was simply because he’d had enough of military service and officer solidarity. According to a source in the Ministry of Defence, Krylov “was probably ordered to sign. He’ll have signed because we don’t debate orders from our commanders. The funny thing is that he probably didn’t even get a cent from those millions.”
Which brings us to the question of why the Minister of Defence gave his commander-in-chief an order to fire officers who were no longer in the army? Why, indeed, was it necessary to create this circus for the whole world? And what was the presidential administration thinking when it allowed him to sign this document?
Shifting the blame
The three officers were not the only ones to be made scapegoats for the 2010 procurement problems. Deputy Prime Minister Sergei Ivanov also placed much of the blame on individual directors of supplier companies. His decision to transfer responsibility from ministers to the defence complex might be understandable if these companies worked in a vacuum, never gave reports or feedback on problems and requirements, never had meetings with ministers, and basically did just as they pleased. That is obviously not the case.
"Contracts for 2010 only began to be concluded in June-July, and the process continued through the to October. This was through no fault of the companies concerned"
Here we do not have the space to go into list the directors who were punished, but suffice to say there were problems that individual directors faced were shared with many others, and were certainly not all of their own making.
In the first instance, contracts for 2010 only began to be concluded in June-July, and the process continued through the to October. This was through no fault of the companies concerned. Second, as every manager understands, having a contract is a good thing, but it isn’t enough: you need an advance too. Out of all the heads of state companies asked, only Sergei Chemezov, who runs Rostekhnologii, confirmed that he had received an advance for the current year (and this only 18% of the total amount). As there are six months left to do the work, we can state with some certainty that deadlines will be missed this year too. It’s a shame that Mr. Chemezov didn’t disclose whether he had the same problem last year.
It might be an idea if instead of punishing directors, Deputy Prime Minister Ivanov would explain how companies can fulfill contracts for the half year (or the quarter) without financing. The time when ministers can start shifting the blame to such companies is when defence procurement for the following year is approved by the government in November of the previous year; when contracts start being signed in December; and when advances start being forwarded in January (at no less than 40-50% of the contracted amount). And that point is still some way off.
As for the President’s question — who is being made responsible for the disruption of government defence procurement? – this remains unanswered. What is clear is that, for now, the innocent have been punished. And perhaps the undeserving will soon be rewarded.