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.

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Russian Duma Unanimously Rubber Stamps Government Takeover of Space Industry

Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)
Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)

MOSCOW (RSC Energia PR) — Russian Federation Federal Assembly State Duma deputies gave the bill “On Public Space Corporation Roscosmos” its first reading and approved it unanimously. On May 19, 2015 the parliamentarians from all groups raised their voices for setting up a new public corporation: altogether 442 affirmative voices as said in the message published on site of Federal Space Agency Roscosmos.

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Putin, Skolkovo and the Fate of Russia’s Space Program

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I recent found a couple of interesting analytical pieces about the state of Russia’s struggling high tech sector and space program. Together, they paint a rather dismal picture of the prospects that Russia will be able to revive its once-proud space effort and break free of its economic reliance upon oil, gas, minerals and heavy metals.

In “The Short Life and Speedy Death of Russia’s Silicon Valley,” James Appell looks at the declining fortunes of Skolkovo, the Russian government’s $4 billion incubator outside Moscow that was designed to be the nation’s answer to America’s famous tech center. Then-President Dmitry Medvedev launched the ambitious effort in 2009 after visiting California as a way to diversify the Russian economy.

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Russia Roundup: Vostochny, Consolidation & Lunar Base

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

As another Russian space mission went haywire this week, there was plenty of other news about that nation’s struggle space program. Here’s a summary of major news from the past week.

VOSTOCHNY

  • Deputy Prime Minister Dmitry Rogozin said that 58 million rubles (about $1 million) in back wages owed to Vostochny workers will be paid by April 30. Unhappy workers have gone on hunger strikes and appealed to President Vladimir Putin with a message written on the roofs of their dorms.

INDUSTRY CONSOLIDATION

  • Efforts to consolidate the Russian space industry under Roscomos continued. Putin submitted a draft law to the State Duma that would establish a space corporation on the basis of Roscosmos and the United Rocket and Space Corporation.

LONG RANGE PLANS

  • In a meeting with Chinese officials, Rogozin proposed that the two countries work together on a permanently crewed base on the moon. Russian is aiming to establish a lunar facility around 2030.

Vostochny Project Becoming Increasingly Farcical

Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)
Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)

Russia’s multi-billion dollar Vostochny spaceport project has now gone from absurd to farcical.

On the heels of a hunger strike by unpaid workers comes word of another group of more than 500 people who say they haven’t been paid for four months.

The workers have sent a personal appeal to Russian President Vladimir Putin. In very large letters. On the roofs of their workers barracks.

No, I’m not kidding. This comes directly from the you can’t make s— like this up file. Click the link and take a look at the photos.

I think they sent the appeal to the right place. Putin presides over a mafia state where theft and corruption runs rampant. He and his cronies have greatly benefited from it. But, when he actually needs to get something done, his ambitions are hamstrung by the very system he has put into place.

This latest embarrassment will undoubtedly be followed by more firings of those responsible by Putin’s military industrial complex czar, Dmitry Rogozin, who has direct control over the Vostochny project. The question is whether or not Rogozin should be fired for presiding over this sorry mess.

Vostochny Workers Go on Hunger Strike Over Back Wages

Vladimir Putin reviews a map showing the plan for the Vostochny spaceport. (Credit: Presidential Press and Information Office)
Vladimir Putin reviews a map showing the plan for the Vostochny spaceport. (Credit: Presidential Press and Information Office)

Pity the poor workers at Vostochny.

They’re out there in the Russian Far East, in the middle of nowhere, trying to construct a massive new spaceport and an entire city to support it. There’s not enough people to do the work, the winter weather is horrible, and their employers have allegedly embezzled money while falling months behind on wage payments.

Meanwhile, President Vladimir Putin has decreed the first launch will take place from the new spaceport in December no matter. Deputy Deputy Prime Minister Dmitry Rogozin — a great admirer of Josef Stalin — monitors the work via webcam in between regular visits. He recently threatened the rip the heads off anyone who steals funds or slows the project down.

Pressure? Oh, no pressure. What makes you say that?

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Rogozin Fires Another Vostochny Construction Head

Russian Deputy Prime Minister Dmitry Rogozin was back at the Vostochny spaceport last week to see how well his latest motivational tactic was working. Apparently, not very well.

A week and a half prior to his latest inspection tour, Rogozin had promised to rip the heads off anybody who was slowing down work on the cosmodrome. President Vladimir Putin had decreed the new spaceport will be ready for its first launch in December.

That approach apparently didn’t have the desired effect. During his visit last Tuesday, Rogozin fired Dmitry Savin, head of the main contractor, Dalspetsstroi. He reportedly left with his head intact and will continue to work for Dalspetsstroi.

This was the second firing of a Dalspetsstroi head in less than six months. Savin’s predecessor, Yury Khrizman, was arrested last October for allegedly embezzling 1.8 billion rubles ($30 million).

Roscosmos Linked Bank Placed in Bankruptcy

Vladimir_Putin
Vladimir Putin

While the body count of prominent critics of Leader-for-Life Vladimir Putin rose again last week, the re-nationalization of Russia’s space industry continued to gather steam with a financial move that shows the benefits of being a friend of the Russian president.

The move involved FundServisBank, which was placed in administration (bankruptcy) under the Deposit Insurance Agency. The move was portrayed as an urgent response to a banking crisis caused by western sanctions over Russia’s aggression in Ukraine and the fall in value of the ruble.

Or was it?

“From a purely economic point of view the bank has no problems … you start to wonder who is behind this,” spokesman Grigory Belkin told The Moscow Times.

Yes, who indeed might be behind it? And why?

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Lucky Russian Students Spend Winter in Balmy Vostochny

Vladimir Putin reviews a map showing the plan for the Vostochny spaceport. (Credit: Presidential Press and Information Office)
Vladimir Putin reviews a map showing the plan for the Vostochny spaceport. (Credit: Presidential Press and Information Office)

RussianSpaceWeb.com says 200 lucky students had a chance to spend their winter break in Russia’s frigid Far East, where they are taking a course in Screwed Up Construction Projects 101.

In an unusual step, the Russian government organized 200-strong “winter student brigade” to provide low-skilled labor in Vostochny beginning on February 1, even though normally such groups would only be available during summer. Official press releases did not elaborate whether members of the brigade would have to skip a semester. As many as 1,200 students were promised in Vostochny during the summer of 2015, Roskosmos said.

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Is Russian Space Industry Consolidation Creating a Black Hole?

Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)
Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)

A couple of stories in The Moscow Times provide some insight into the re-nationalization of Russia’s space industry.  One story claims the changes will create a giant black hole that will suck in billions of rubles while producing little of value. The other spotlights the firing of a prominent space analyst who dared oppose the changes.

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Year in Review: Launch Industry Disrupted in 2014

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SpaceX Founder Elon Musk has long talked about disrupting the launch industry with low prices and technological innovations. In 2014, the impacts of those efforts were felt far and wide as competitors responded to the threat the California company posed to their livelihoods.

ULA Pivots. With SpaceX reeling off one successful launch after another, ULA pivoted on several fronts. One was to announce efforts to significantly reduce costs on its highly reliable but pricey Atlas V and Delta IV boosters. But, even that proved to be insufficient as SpaceX threatened ULA on several fronts.

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Bold Russian Space Plans Endangered by Plunging Ruble

Vladimir Putin inside of a full-size mockup of Russia's six-passenger "Rus" spacecraft. (Credit: RSC Energia)
Vladimir Putin inside of a full-size mockup of Russia’s six-passenger “Rus” spacecraft. (Credit: RSC Energia)

Russia’s growing economic problems — the result of falling oil prices and Western sanctions over Ukraine — are beginning to threaten the nation’s efforts to resurrect its decayed space program:

Russia’s federal space exploration agency Roscosmos could be forced to close down or indefinitely delay whole projects due to the worsening economic situation in the country. The plummeting Russian rouble has rendered the agency incapable of planning their spending ahead of time, national daily newspaper Izvestia reported on Monday.

According to Izvestia, Russia’s Gonets satellite system, launched by the Ministry of Defence and intended to restore Russia’s status as a major aerospace power, may not meet its upcoming deadline for government funding from 2016 to 2025.

“Due to the complete unpredictability of prices in November the scientific engineering council was not able to reconcile anything concerning the orbital system of communication Gonets,” the anonymous source from the central strategic planning of Roscosmos told Izvestia.

Roscosmos’s dependence on EU imports for its satellites and other aerospace projects has made it very sensitive to the exchange rate of roubles to the euro.

Read the full story.

Putin Takes Direct Control of Russian Military Industrial Complex

Vladimir Putin inspects construction at Vostochny. (Credit:  Presidential Press and Information Office)
Vladimir Putin inspects construction at Vostochny. (Credit: Presidential Press and Information Office)

Russian Leader-for-Life Vladimir Putin has tightened his already tight control over Russia’s military industrial complex, taking personal control of the commission responsible for carrying 0ut Russia’s defense orders and demoting Dmitry “Trampoline Rocket” Rogozin in the process.

The Moscow Times reports that Putin warned of burgeoning security threats facing Russia as he took personal control of the Military-Industrial Commission. Under Rogozin, the commission has been unable to break a cycle of “widespread corruption, inefficiency and incompetence” that have made it difficult for contractors to deliver as promised.

“I hope the commission’s new status [under the presidential administration] and its broad powers will allow it to better coordinate the interaction between the Defense Ministry and other departments and enterprises of the military-industrial complex,” Putin said Wednesday.

Deputy Prime Minister Dmitry Rogozin, the commission’s previous chief, has been dumped down to the position of deputy following the reshuffle.

The new arrangement “will increase the efficiency of state policy in the military-industrial sphere and the … security of the country,” Putin said during a meeting of the commission, according to a transcript on the Kremlin’s website.

Rogozin’s role had been to oversee the defense and space sectors. Despite his demotion, he will continue to have a major role in the space industry, which is being consolidated under a single government-run corporation. Last week, Putin gave him the responsibility for overseeing the completion of the new Vostochny spaceport, which had been managed by Roscosmos.

Putin’s move was made amid a major effort to modernize Russia’s military forces and capabilities. Russia also wants to reduce its dependence on foreign suppliers at a time when it’s facing sanctions over its annexation of Crimea and hostile actions in eastern Ukraine.

Report: Russia Won’t Meet 2018 Launch Date From Vostochny

OKA-T spacecraft (Credit: RSC Energia)
OKA-T spacecraft (Credit: RSC Energia)

A Russian plan to launch cosmonauts into orbit from the new Vostochny spaceport in 2018 appears to have been abandoned, but officials have come up with a way to sort of meet that deadline.

‘RussianSpaceWeb.com reports the current plan is to launch a human-tended microgravity laboratory called Oka-T into space in 2018. The free-flying laboratory will conduct material sciences experiments and would be periodically serviced by cosmonauts aboard the International Space Station.

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