Transparency International - Russia Report
CORRUPTION RISKS AT THE RUSSIAN MINISTRY OF DEFENCE. CONFLICTS OF INTEREST
It is not only official government authorities in Russia that are not transparent, but also Russian companies working in the defence sector. In the same year, Transparency International Defence & Security experts assessed the 163 largest global defence companies in terms of the availability of information about their anti-corruption and ethical regulations. Of the Russian companies, only two private ones (RTI Systems and GAZ OJSC) fell into Band E, which means that both companies have «strong limitations on the availability of information». The rest, which are all state companies, such as
UralVagonZavod (Panzer)
, Almaz-Antey (S-300, S-400)
, KB Priborostroenie, MiG, Sukhoi, etc. fell into Band F, signifying an «almost complete lack of information».
2 In 2016 official assessments of anti-corruption compliance in the companies associated with the Russian Ministry of Defence revealed 260 deficiencies and violations.
3 Three main factors form fertile ground for corruption risks at the Russian Ministry of Defence and its subordinate institutions: secrecy, restricted competition and unresolved conflicts of interest.
CONFLICTS OF INTEREST AT THE MINISTRY OF DEFENCE
CASE STUDY: MINISTRY OF DEFENCE AND SUKHOI CIVIL AIRCRAFT JSC
ВIn January 2017, Russian Defence Minister Sergei Shoigu authorized a study on replacing Tu-154, Tu-134 and Il-62 M passenger aircraft with the new Russian models. This was reported by the Kommersant newspaper with reference to unidentified sources close to top Russian military officials, as well as several top managers in the aircraft industry. The Sukhoi Superjet 100 (SSJ-100), a 100 seater, new generation aircraft, was named among the prospective models. It was developed, and is manufactured and sold by Sukhoi Civil Aircraft JSC (SCAC), which also provides post-sale technical support. The Ministry of Defence is expected to order at least 20–25 aircraft. In addition to profits and increased utilization at the aircraft factory in Komsomolsk-on-Amur, this order will allow SCAC to promote the SSJ-100 model more actively on international markets.
The decision on this purchase is still pending, but even now, there are two detectable potential conflicts of interest.
1.
Ruslan Hadzhismelovich Tsalikov holds the position of First Deputy Minister of Defence of the Russian Federation. His responsibilities include judicial issues, legal work and financial control.
His son Daniel Ruslanovich Tsalikov is Head of the Sales Support Department at SCAC. The potential conflict of interest lies in Tsalikov’s ability to lobby on behalf of a company at which his close relative is a paid employee.
2.
Sergey Dmitrievich Baynetov is Acting Chief of Aviation Safety of the Russian Armed Forces. This office is subordinate to the Chief of General Staff and is in charge of inter-institutional control over the activities of state aviation safety personnel. In accordance with the procedure for interaction between the state aviation safety authorities in the Russian Federation, the head of the service is expected to submit annual proposals to reduce the accident rate of state aircraft.
3. His daughter,
Tatiana Sergeevna Baynetova, is the contracts director at SCAC.
Thus, if Mr. Baynetov proposes to replace the existing fleet of the armed forces because of safety concerns, a conflict of interest arises in relation to him performing certain functions of public administration Ruslan Hadzhismelovich Tsalikov, First Deputy Minister of Defence of the RF with the company at which his daughter is employed. The SSJ-100 is already being operated by the Ministry of the Interior and the Ministry of Emergency Situations.
4. Mr.
Baynetov is responsible for control over these agencies as regards aviation safety. This means he has a conflict of interest: his daughter works for a company that provides paid services to agencies at which he has authorities. Thus, right away we see that two high-ranking officials of the Ministry of Defence — First Deputy Minister Ruslan Tsalikov and Head of Air Safety Sergei Bajnetov — may have a personal interest in the Ministry purchasing SSJ-100 aircraft.
https://transparency.org.ru/special/defence/docs/TI_Defence_Press_Eng.pdf