Russian Authorities Allege Massive GLONASS Embezzlement Scheme

Deputy Prime Minister Dmitry Rogozin. (Credit: A. Savin)

When Prime Minister Vladimir Putin appointed Dmitry Rogozin as a special czar to oversee the space and defense sectors last year, he wanted his deputy prime minister to not only find solutions to a series of embarrassing and costly launch failures, he wanted him to ferret out widespread corruption in these sectors.

Well, it looks like the cossacks are coming home to roost. There are allegations that that the company that oversees Russia’s global satellite navigation system has engaged in a massive embezzlement scheme:

The Russian government is supporting a transparent investigation of an alleged embezzlement of 6.5 billion rubles [$204.68 million] allocated for the development of the Glonass global navigation satellite system, Deputy Prime Minister Vladislav Surkov said on Friday.

“We are interested in ensuring complete transparency of financing for the implementation of space programs as well as for commercial application of Glonass technologies,” Surkov, who oversees the development and implementation of the Glonass project, told reporters in Moscow.

The Russian Interior Ministry announced earlier on Friday that a criminal case had been opened against several senior officials at the Russian Space Systems company who are suspected of involvement in a number of fraudulent schemes during the development of the Glonass system.

The Interior Ministry said a probe into this “complicated case” started more than two years ago and lead to the discovery of a subcontractor firm that is believed to be the main conduit of embezzled funds. The scheme also involved a number of fly-by-night firms….

Russian Space Systems repeatedly denied the accusations and on Friday even attempted to ridicule the investigation, but the Kremlin was quick to issue a stern warning saying the company should not question the professionalism, competence, and decency of police officials working on this investigation.”

Meanwhile, heads are beginning to roll:

The chief designer or Russia’s scandal-hit Glonass satellite navigation system, Yury Urlichich, was fired from his job, a spokeswoman for Deputy Prime Minister Dmitry Rogozin said on Sunday.

The decision was made by the government’s military-industrial commission, which is headed by Rogozin, the spokeswoman said….

The crackdown on Glonass was backed on Sunday by head of the Kremlin administration, Sergei Ivanov, an ex-Defense Minister and alleged Rogozin ally who said that the investigation into the Glonass fraud was ongoing since 2010….

The case comes hot on the heels of a reshuffle at the Defense Ministry, whose head Anatoly Serdyukov was sacked last week. The official reason for dismissal was a fraud case against his subordinates, but most analysts attributed it to his defeat in a turf war against Rogozin.