Putin fires Russia defense minister amid fraud inquiry

MOSCOW — Russian President Vladimir Putin fired his defense minister Tuesday amid a criminal investigation of suspected fraud and embezzlement involving military assets.

Putin announced his decision to dismiss Anatoly Serdyukov two weeks after the federal Investigative Committee said it was looking into the possible “fraudulent sale of real estate, land plots and stocks” belonging to the military. The investigation apparently already found the equivalent of more than $100 million in losses to the government, the committee said.

The case involves Oboronservice, a company affiliated with the Defense Ministry, and Yevgeniya Vasilyeva, a close associate of Serdyukov who once headed the ministry’s property department. Investigators say military assets, including real estate, were sold at significantly reduced prices to “business structures affiliated with Oboronservice” and that “many real estate objects were bought with money stolen from the same” company.

Putin said Serdyukov would be replaced by Sergei Shoigu, who was appointed Moscow regional governor six months ago after serving nearly 20 years as the country’s emergency situations minister.

“You know about the recent circumstances unfortunately surrounding the Defense Ministry,” Putin said in televised remarks. “In order to create the necessary conditions for an objective investigation … I have decided to dismiss … Serdyukov and appoint another person to this job.”

Serdyukov was appointed by Putin in 2007 to oversee military reforms. Those included dismissing several hundred generals and 200,000 officers and securing billions of dollars from the state budget to restructure the armed forces.

Putin, who appeared on television with Shoigu, commended the reforms overseen by Serdyukov and expressed hope that the new minister “can continue everything positive accomplished in recent years and … carry out the grand plans for modifying the army’s weaponry.”

Analysts varied in their views of whether Serdyukov effectively reformed the military. Some said Serdyukov, a former furniture salesman and tax collector, faced an uphill battle from the day he was appointed defense minister because he allegedly landed his job thanks to his father-in-law, Viktor Zubkov, who was then prime minister in Putin’s government and now is chairman of Gazprom, the giant state-controlled natural gas monopoly.

“He has successfully overseen a massive restructuring of the armed forces management, making a brigade as the main combat unit and creating a united strategic command controlling the land, air and sea forces,” said Igor Korotchenko, head of the Defense Ministry’s Public Council and editor in chief of the National Defense monthly journal.

“He radically increased by 2 1/2 to 3 times the servicemen’s wages and he secured 20 trillion rubles [about $630 billion] in state funds to qualitatively upgrade the army’s weaponry and equipment,” Korotchenko said in an interview.

Retired Col. Viktor Baranets, a former advisor to the chief of general staff and now a defense analyst with the popular daily Komsomolskaya Pravda, said Serdyukov’s reforms may have been well-intentioned but they included numerous mistakes.

“Serdyukov bought unpiloted planes from Israel but they turned out to be quite useless in our harsh climate, especially in winter,” Baranets said in an interview. “He ordered new uniforms for the army that looked good but lacked a proper lining and sent whole companies of soldiers to hospitals with pneumonia.”

Baranets also said Serdyukov scrapped too many military training establishments and that his relationship with Vasilyeva and the revelation of her enormous wealth and lavish apartment didn’t play well with the thousands of officers who have to wait for years to get apartments for their families.

Investigators who searched Vasilyeva’s home, a $10-million apartment in a downtown Moscow building that allegedly used to be Defense Ministry property, last week reportedly found thousands of dollars worth of precious antiques, paintings and jewelry. Russian news reports allege that she was romantically involved with Serdyukov.

Retired Maj. Gen. Vladimir Dvorkin, a former senior Defense Ministry official and now a senior researcher at the Institute of World Economy and International Relations, denounced the reforms Serdyukov carried out “with an ax.”

Shoigu should “stop the further destruction of the Russian military school and defense research institutes” and dismiss the many unqualified workers Serdyukov hired to top Defense Ministry jobs, Dvorkin said.

“Shoigu will not make things worse,” Dvorkin said, “because they simply can’t be worse.”

sergei.loiko@latimes.com