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Corruption scandals dominate Russian headlines

Allegations have involved Russia's defense and agriculture ministries and even the space program. Some wonder whether the regime is cracking down or fracturing.

December 02, 2012|By Sergei L. Loiko, Los Angeles Times
  • Feofan Bondarenko, 83, is a pioneering businessman who applauds President Vladimir Putin's anti-corruption crusade. He's caught up in a nightmarish corruption case of his own.
Feofan Bondarenko, 83, is a pioneering businessman who applauds President… (Sergei L. Loiko / Los Angeles…)

MOSCOW — More than 200 years ago, the renowned Russian historian Nikolai Karamzin summed up the situation in his country in two words: "They steal."

They still do, and the news in Russia lately has been dominated by one high-profile corruption scandal after another. Allegations of wrongdoing have reached high into the defense and agriculture ministries and the Russian space program, among other institutions. Nearly nine in 10 Russians say corruption is the nation's biggest problem.

The spate of corruption cases has led to a cynical argument among politicians, analysts and people on the street: Has President Vladimir Putin, who has long talked about combating corruption, finally turned from words to deeds? Or is the apparent crackdown a mere public relations gambit or, worse, a sign of behind-the-scenes warfare among powerful interests close to the Kremlin?

It may not matter much to Feofan Bondarenko, a pioneering businessman who applauds Putin's apparent campaign against corruption as it plays out almost daily in newspaper headlines about leading Kremlin figures. Closer to home, corruption remains a fact of everyday life.

Bondarenko, 83, fought the Nazis as an adolescent during World War II and helped stave off a national food crisis by importing commodities with U.S. credits in 1991. Today, he finds himself caught up in a nightmarish corruption case.

"I could never imagine," he said, "that I would live to be charged with fraud."

Bondarenko's case reflects not just the depth of corruption but also the shifting nature of its winners and losers.

Sitting in his cozy office in a downtown mansion protected by hired police, Bondarenko described how, for more than two decades, his company, Soyuz, successfully invested in an array of products, from chicken to vodka to airplanes. (Soyuz, which means "union," was also the name of the longtime Soviet and Russian manned space rocket.)

In 2007, his company invested about $8.3 million in a private bank. To guarantee the deal, he said, the bank put up as collateral a two-story house in central Moscow. In 2009, police raided the bank and discovered that its vaults were empty. The banker was arrested on charges of illegal banking activities and money laundering.

With his investment in the bank now worthless, Bondarenko sank more than $2 million into the reconstruction of the house in an effort, he said, to enhance its value. But when charges against the banker were dropped 14 months later and he emerged from custody, he said he had never agreed to the house deal and that his signature on the document was forged.

The tables turned, Bondarenko was charged with fraud in 2011. He now risks losing real estate valued at more than $23 million and could go to jail for up to 10 years, assuming he lives that long.

"I have no doubt we are dealing with a huge corruption factor here," he said. On that, everyone would agree.

Bondarenko's case is just one drop in a sea of corruption that Russians experience on a daily basis. Recent polls conducted by Levada polling agency show that less than one-third of the people trust Russian law enforcement and only about 20% trust Russian courts. Eighty-eight percent consider corruption to be the country's main problem.

Transparency International, which conducts annual surveys of international corruption, ranked Russia 143rd out of 183 nations on its most recent Corruption Perceptions Index.

The cases getting the most attention, of course, are those at the top. Consider these recent examples:

•Early in November, Russian Defense Minister Anatoly Serdyukov was fired over a corruption scandal involving a group of his subordinates and associates who allegedly embezzled more than $200 million. Serdyukov has not yet been questioned in the case. But his alleged mistress, the former property chief of the Defense Ministry, was put under house arrest in her $10-million, 13-room Moscow apartment — which formerly belonged to the ministry.

•Also in November, the head of the Russian Space Systems company was fired amid the exposure of an embezzlement of about $217 million, roughly a third of the funds allocated for the construction of the GLONASS system, a Russian analogue of GPS.

Kremlin Chief of Staff Sergei Ivanov called this a betrayal and said in televised remarks that corruption "is a direct threat to national security."

•Early last week, the Russia 1 television network carried an expose in which former Agriculture Minister Yelena Skrynnik was alleged to be associated with corruption that cost the budget about $1.3 billion. The network said Skrynnik, who quit the government in May, now lives in France and has refused to return to Russia for questioning.

•Earlier in November, the Interior Ministry reported that more than $3 million was stolen in the course of preparations for the APEC summit held in Vladivostok in September. A top official in the Ministry of Regional Development was detained.

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