Military prosecutors are investigating the possible involvement of senior Defense Ministry officials in a complicated chain of money transfers that may have cost the federal budget nearly half a billion dollars.
Investigators at the chief military prosecutor's office are trying to determine whether the transfer of $450 million by the Defense Ministry to the British-based company United Energy International Ltd., or UEI, was "a commercial deal gone wrong or a case of premeditated embezzlement," said prosecutor's office spokesman Sergei Ushakov.
If prosecutors prove the latter, it would be a case of graft "unprecedented" in the history of the Defense Ministry, whose 2000 budget is a mere $5 billion, Ushakov said.
Ushakov said a criminal case was opened in March to probe the transfer, but prosecutors have yet to determine whether it is part of an embezzlement scheme. Consequently, he said, it remains unclear whether charges can be pressed against anyone at the ministry's finance department, including its head, Colonel General Georgy Oleinik, whom press reports have linked to the case.
In a report citing only "well-informed sources," the Nezavisimaya Gazeta daily wrote Friday that the money was wired from the ministry's finance department to UEI in 1995 and 1996 as part of a complicated funds-transfer scheme intended to help the ministry pay an unspecified Ukrainian organization for deliveries of some obscure "material-technical valuables." None of the items was specified in any ministry documents and it remains unclear whether they were delivered at all, the paper reported.
According to the article, the tortuous series of transfers began when natural-gas monopoly Gazprom took two loans totaling $450 million from two commercial banks, Imperial and the National Reserve Bank.
Gazprom used the loans to pay taxes via the Central Bank; the tax money went from the Finance Ministry to the Defense Ministry's finance department, which transferred the funds to UEI, a co-founder and agent of Ukraine's Unified Energy Systems. Finally, UEI transferred the money back to Gazprom to pay off part of Ukraine's debt for gas supplies, according to the newspaper.
Calls to Gazprom's press service went unanswered Friday evening, and UEI's telephone numbers could not be found despite an extensive Internet search.
The paper alleged that Oleinik and three senior officials in his department f Generals Yevgeny Datsko, Leonid Gerasimenko and Anatoly Vorobyov f are the main suspects in the case, but did not disclose precisely how they could have profited from the scheme.
Neither is it clear whether Oleinik could have been involved in the deal at all since he joined the Defense Ministry's finance department in October 1996, while the payments were made in 1995 and 1996.
Alexander Pikayev, a military analyst with the Moscow Carnegie Center, said he believed Oleinik's foes in the ministry had leaked information to the press as part of a campaign to unseat the general.
The Moscow Times on Friday obtained a copy of an anonymous report that was faxed to the editorial offices of several local newspapers this week.
The report, which appears to be the only source of the article in Nezavisimaya Gazeta, does not shed any light on the case, but does name three generals "being considered" in "the top echelons of military power" to replace Oleinik.
Speculation about personnel reshuffles in the military isn't surprising in light of the battle between supporters of Defense Minister Igor Sergeyev and Chief of the General Staff General Anatoly Kvashnin, who are at loggerheads over the fate of the Strategic Missile Force.
President Vladimir Putin fired several of Sergeyev's supporters from the ministry earlier this week and it is possible that Oleinik, too, could lose his post in the reshuffle, which analysts say is likely to continue.