The agency called upon to wean generals off the budget enters the third year of its existence.
In 2010, the state defence order will hit a record 1.17 trillion roubles. However, for the money to be spent effectively, corruption in the Army has to be defeated first. The Federal Agency Rosoboronpostavka was set up in 2007 to control spending on the state defence order. That would have left the generals with little more than an application order by type and quantity of weapons and equipment. But more than two years on, the agency has still not pulled its act together.
Generals without money
Decree No.119 on the creation of the Federal Agency for the Supply of Weapons, Military, Special Technology and Material Means (Rosoboronpostavka) was signed by Vladimir Putin on February 5, 2007. The agency's objectives are to develop and approve tender documentation, make decisions on methods of placing orders for delivery of goods, organize and hold tenders and auctions, sign state contracts with executors of the state defense order, monitor compliance with the contracts, and pursue a uniform price policy related to the implementation of state orders.
At the time Rosoboronpostavka was created, the then President Vladimir Putin declared that the new agency would dispose of the massive funding allocated for the development of the Armed Forces. At the time, Deputy Prime Minister Sergey Ivanov said that the new agency would help to fight corruption: "It will be an entirely civilian agency that relieves the military of the task of distributing huge financial resources."
The military and security agencies, it was assumed, would themselves determine what weapons and equipment they needed and in what quantities. The agency would finance and place these orders with contractors.
Alexander Denisov was appointed head of the agency. But in May 2008, after Dmitry Medvedev was elected President, Vladimir Putin, leaving his post, appointed Viktor Cherkesov, former head of the drug control agency Gosnarkokontrol and his long-time co-worker, as the head of Rosoboronpostavka. It became clear that the new agency would not be able to start work as scheduled.
Deadlines and the military
Initially, the agency was to start work on January 1, 2008. The deadline was then postponed until March 1. In the summer of last year, chief of the Defence Ministry's General Staff, Nikolai Makarov, assured that Rosoboronpostavka would assume its duties before the end of the year. The schedule for the handover of orders and cash flows from the Defence Ministry to the new agency has already been developed, he said. Nevertheless, in 2009, the authorities showed no interest in the agency, allowing it to exist only on paper.
It was then brought back to light by the Audit Chamber, which discovered that during the first half of 2009, Rosoboronpostavka had used just 0.1% of the approved annual spending. Federal Budget money, the auditors said, was not being effectively used by the agency. Interestingly, this did not prevent Mr Cherkesov from being paid a bonus "for fulfilling very important and complicated assignments" based on the results of the Agency's work in the third quarter of 2009. Prime Minister Vladimir Putin signed an executive order to the effect in November.
There is nothing to suggest that the situation will change by January 1, 2010. "The agency is not working, so our CEO does not want to give any interviews," RBC Daily was told by an official of Rosoboronpostavka over the agency's only telephone. Rosoboronpostavka still has no website, no press service, and no staff. Viktor Cherkesov has been kindly offered an office at Rosoboronexport in its building on Ozerkovskaya Naberezhnaya.
"What prevents the agency from starting its work is stiff opposition from the military and security agencies, which do not want to lose a juicy piece," a member of the citizen's council at the Defence Ministry, Igor Korotchenko explains. "The Interior Ministry, FSB, the Defence Ministry and other military and security structures use all sorts of pretexts to sabotage the new agency," says deputy chairman of the Duma Defence Committee, Mikhail Babich.
Kickbacks
Defence Ministry officials admit that 50% of the money allocated for the procurement of weapons and military equipment is stolen, Mr Korotchenko goes on. He mentioned several schemes that are used to do so: fiddling with prices, front companies set up by defence enterprises and collusion between the heads of enterprises and generals. "As a result, the money for the state armament programme, which increases year in and year out, only makes a difference to the size of the kickbacks. While previously they accounted for 10-15%, today they account for 35-40% of all the money allocated," the military expert says.
"The initial plan was to create two government instruments totally controlling the implementation of the state defence order," Mr Babich continued. Rosoboronpostavka will organize tenders irrespective of who the customer is. And Rosoboronzakaz will control all the proceedings related to state defence orders. But in reality, Rosoboronpostavka still does not work, and Rosoboronzakaz became part of the Defence Ministry structure.
"Experts believe that only the President can prevent the massive boycott of Rosoboronpostavka on the part of the generals. However, Dmitry Medvedev has so far chosen not to step in. "The fate of the agency will be decided after the Defence Ministry recovers from the crisis," a source at the Russian Government's Military-Industrial Commission told RBC Daily. "It is risky to redistribute cash flows at this moment, and the reform may be stalled. But as far as I know nobody intends to bury Rosoboronpostakva or integrate it with the Defence Ministry."
Ivan Petrov