Russian Audit Committee Finds Mind Boggling Financial Violations at Roscosmos

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

More bad news for Russia’s struggling space program:

Russia’s Audit Chamber has discovered $1.8 billion of financial violations in the Roscosmos space agency. According to Chamber head Tatyana Golikova, this included accounting violations, misuse of budget funds and inefficient spending on construction.

“At first I didn’t believe the inspectors,” Golikova said, Interfax reported.

The Audit Chamber has observed a sharp rise in violations at Roscosmos since last year, she said. “It was an absolute surprise for me. I conducted a budget inspection last year, and now in 2014, the number of violations has grown sharply.”

Earlier, Russia’s Deputy Prime Minister Dmitry Rogozin blamed corruption in the space industry for the recent high accident rate of Russian spacecraft. Speaking in the State Duma on Tuesday, he said Roscosmos’ partner, the state company producing Proton rockets, is facing eight criminal cases.

One of the projects apparently seething with violations is the new Vostochny (Eastern) Cosmodrome. According to Golikova, its construction saw an overspending of about 13 billion rubles ($260 million). She says this resulted from overpricing and use of fraud schemes. The numbers are being looked into by the Russian Investigative Committee.

Meanwhile, Rogozin is blaming “moral decay” for repeated launch failures rather than the failure of the reform efforts he oversees.

“You can compare it to the fall of the Roman Empire,” said space industry analyst Pavel Luzin. “The Russian space industry is collapsing.”

Until 2010, Proton was considered to be the most reliable rocket in the world. Since then, it has crashed an astonishing seven times. Angara has yet to experience a crash, but has only ever flown twice.

Because of this, the problems facing the Russian space industry cannot be attributed to design flaws, but a general decline in how well the rockets are built. The government has fired several industry bosses and launched several major restructuring efforts, but rockets continue to explode.

Shifting the blame away from the government’s failure to fix the state-owned industry, Rogozin pinned the spate of rocket disasters on “the moral decline of space industry managers,” RIA reported Tuesday.

Rogozin warned on Tuesday that unless Russia’s space industry drastically overhauls its production techniques, it risks losing its dominance of the global space industry to the U.S. space industry.

There are reliable reports  that the “moral decay” Rogozin decries is presided over by none other than his boss, Ruler for Life (RFL) Vladimir Putin. The guy’s reportedly worth more than $40 billion. Billion. That’s more than the Google guys. You can’t make that much from your president’s salary.

Watch Frontline’s full documentary, Putin’s Way.

  • ThomasLMatula

    Which, along with the launch failures, gives Mr. Putin all the excuse needed to nationalize it, a step further along the road to the next iteration of “Imperial Russia”. But my first thought, given it is Russia, is how much is real corruption and how much is a frame? I guess I have read too much Russian history 🙂

    Yes, this is a really good time for Western firms to start seeking out the best and the brightest and bring them to the West, just as England and America did with German scientists the 1930’s But I would recommend they move now as the window is closing fast.

  • Chief Galen Tyrol

    In the early days of commercial crew, I used to hear complaints and concerns about transparency from NASA, i.e. if these contractors are left to their own devices to design, build, and operate a vehicle, NASA will not have satisfactory access to design and test documents, etc. and astronaut safety will be compromised.

    I haven’t heard those claims in a while, but with bad news coming out of the Russian space sector every two week, they seem more and more absurd. You get more transparency out of the former Soviet Union? The same institution that installs accelerometers upside down and misuses *1.8 billion* dollars?

  • Snofru Chufu

    “Yes, this is a really good time for Western firms to start seeking out the best and the brightest and bring them to the West ..”

    Do you think that is appropriate policy?

  • Sam Moore

    They’ve already been heading out on their own initiative, either to other countries or just other sectors with better pay.

  • Valerij Gilinskij

    I – Russian, and I live in Russia, so I can not remain silent. It is not just the best, now it is the only correct policy. In Russia there are many talented engineers, many of them have experience, but there is no prospect to realize their potential. Compare the US segment of the ISS and the Russian stub of. That stub of, it performs key functions for the ISS, but to call the Russian segment of the ISS Russian national laboratory in space is impossible. Impotence of Roscosmos is obvious enough to compare the plan with reality to understand it.

    Maybe someday they will then return to Russia and to become engines of its development, but now they need to save. And yet – to prevent what would be their talent was used to create weapons, neither in Russia nor in the rogue states, one of which, to my shame and horror is now becoming Russia.

  • BeanCounterFromDownUnder

    They were absurd claims then, and they are absurd claims now. NASA wrote the contracts which included required milestones, documentation and insight into every aspect of the vehicles. Such claims were merely political posturing by those who wished to maintain the status quo.
    You haven’t heard much lately simply because the so-called Newspace party continues to bring home the bacon. Performing flawless missions to the ISS and for commercial customers while upgrading their existing vehicles, building new pads, developing another launch vehicle and space capsule, developing a new engine, and testing reusability of their first stage. All whilst keeping their launch prices to historically low levels.

  • windbourne

    Why is it, that when Putin is interested in a business, that the owners are shown to be corrupt and will either be ran out of russia, or be thrown in prison? Who was the billionaire that built up the oil industry in Russia and is now serving prison term?

    Oddly, some will still back this and claim that Putin is the good guy.

  • windbourne

    well, not sure that you can say that Newspace brings how the bacon. OSC comes very quickly to mind.
    Their pegasus costs the same as SpaceX’s F9.
    Their trips to ISS were bid JUST UNDER what ULA bid (yeah, no insider knowledge on that one).
    And of course, the many many failures that they have speaks volumes about the company.

    But, SpaceX is the one that keeps newspace alive.
    Hopefully in the next 3-4 years, it will be SpaceX, Bigelow, and Blue Origin that work together to do this.

  • Charles Lurio

    “The fish rots from the head” as they say, and Putin is the Kleptocrat-in-Chief. Along with being completely careless for human life in his drive to power. The Frontline documentary is outstanding and reminds us of both.

  • ‮‮‮

    Putinputinputinputinrogozinrogozinrogozin. I guess that’s enough buzzwords for one post. Now, what really happens under the hood here is an attempt of taking over a piece of pie between several competing cliques of criminals in suits. It’s an established practice since 90s in Russia, and it works for both private and state-owned organizations.

  • Steve Ksiazek

    I have no confidence in Bigelow. They search for funding from NASA, but I doubt they will get much farther than simple projects like BEAM. If they were serious, don’t you think you would see the SpaceX manifest full of crew rotations and cargo runs to that non-existent space station starting in 2018 and beyond ?? I really wonder how much their technology has advanced since they launched the first two Genesis modules.

  • Nickolai

    Mikhail Khodorkovsky is the billionaire you’re thinking of. He built Yukos, which was slammed with bogus taxes and it’s assets ultimately transferred to the state corporation Rosneft in a shady auction. Khodorkovsky was released from prison shortly before Sochi by presidential pardon. Presumably Putin was trying to accumulate some international good will, but then he took Crimea, so… yea…

  • TimR

    Contrary to reason, in the Russian system, some of these Roscosmos managers will be promoted not sent to Siberia. Consider also that no one was prosecuted for the investing scams that put the US on the brink of a great depression.

  • windbourne

    yeah. That was it.

  • windbourne

    Well, they no longer have their forums and the 1 guy that I knew there, was let go at the last round of layoffs, so I no longer have insider information ( which really sux since I am only left with good Boeing, L-Mart, and ULA insider knowledge ).

    Keep in mind that they are going to use external contractors for life support and other items. Basically, their main part is to handle the spine, wiring, plumbing, the wall, and obviously putting it all together.

    Considering that Beam has a berthing port, wall, and wiring they are obviously doing the bulk of what they are supposed to.

    Personally, I am interested in finding out how life support will be done.