Prosecution Upsets Applecart
// Prosecutor General’s Office hampered RAC MiG director general’s appointment
Prosecutor General’s Office of Russia charged Sergei Tsivilev, first deputy director general of Russian Aircraft Corporation (RAC) MiG, with fraud of large extent. Investigators suspect him of an attempt to sell to Poland a batch of counterfeit spare parts for MiG-29 fighter jets. RAC MiG thinks the criminal case is linked to preventing Tsivilev from getting appointed as the corporation’s director general.
Moscow Subway Prosecutor’s Office said the investigation of the criminal case against Sergei Tsivilev, first deputy director general of RAC MiG, ended a few days ago. Tsivilev and Aviaremsnab director general Musail Ismailov are charged with “Fraud of specially large extent committed while being part of organized group” (Part 4, Article 159 of the Criminal Code, from 5 to 10 years of imprisonment), and “Document forgery” (Part 3, Article 327 of the Criminal Code, up to 2 years of correctional labor).
According to investigators, RAC MiG signed contract with Polish company Polit-Elektronik in August 2005 for supplying new spare parts for Poland’s MiG-29 fighter jets. After that, in September 2005, Tsivilev signed agreement with Ismailov, according to which Aviaremsnab was to supply control computers, transducer units of linear acceleration and rotational velocity, and some other units, worth 18 million rubles ($637,000) total, to RAC MiG for further supplying them to the Polish company.
However, the deal broke up when it attracted FSB’s attention. On May 12, 2006, investigators of FSB and Moscow’s Special Prosecutor’s Office (it watches over defense-industry enterprises) confiscated the spare parts which Aviaremsnab had supplied to RAC MiG to further send them to Poland. So, a criminal case was initiated on the charges that MiG and Aviaremsnab CEOs had forged documents. Prosecution claims that some spare parts for Poland were produced in 1992-1995, and some came from supplier companies without license for making aircraft spares. Investigators state that counterfeit passports and certificates accompanied the spares, saying they were new.
The probe got dragged out in the Special Prosecutor’s Office. Thus, Moscow Prosecutor’s Office passed the case to Moscow Subway Prosecutor’s Office. On December 8, the latter brought charges of fraud and document forgery, and obtained an arrest warrant for Musail Ismailov. According to the Office, Sergei Tsivilev was repeatedly called in for questioning as witness, but he ignored the subpoenas. So, a reconduction order was issued on December 6. Two days later, Tsivilev’s company car was stopped by MiG corporation’s gates, where subway policemen armed with machine-guns made Tsivilev learn about the order, and put him inside their car. That same day, Tsivilev received charges and had to sign pledge not to live Moscow. Prosecutor General’s Office gave approval for confirming indictment in the final formulation.
RAC MiG said the prosecutor’s office’s claims are groundless. “Before getting to Sergei Tsivilev, documents are vised by several heads of corresponding departments in RAC MiG, including the security service. MiG has over 2,000 of supplier companies of various products, and Tsivilev is simply unable to be responsible for each of them,” said Elena Fedorova, MiG’s PR department head. Tsivilev’s lawyer Tatyana Protsenko believes “this criminal case has no judicial future, it was initiated illegally, and the charges were brought to Tsivilev illegally as well, because the prosecution story does not disclose what is the precise fault of my client”. Protsenko thinks that many violations were made during preliminary investigation, thus she appealed against the Prosecutor Office’s actions judicially (hearing of the lawyer’s complaint is scheduled for December 28). “We have directed our opinion to the Prosecutor General’s Office as well, and we hope they correct their minor colleagues,” said Protsenko.
RAC MiG thinks the criminal case appeared because of the upcoming reshufflement in the company. “The case was initiated only a few weeks after MiG’s current director general Alexei Fedorov was nominated for the head of the United Aircraft-Building Corporation,” said Elena Fedorova. “Alexei Fedorov did not conceal that he would like to be succeeded in MiG by First Deputy Sergei Tsivilev. We hope that the Prosecutor’s Office will go into every detail of this criminal case.”
Alexei Fedorov and Sergei Tsivilev have been working together since late 1990s. In 1998, Tsivilev became vice president of FTK company which controlled Irkutsk Aircraft-building Society. Fedorov was the Society’s director general. Later, Irkut corporation was created on the base of the Society. Fedorov became its president, and Tsivilev – its vice-president for corporate economy and finance. According to 2003 data, Irkut president owned 26.77 percent of the corporation’s shares, and finance vice-president owned 11.13 percent.
In 2004, after Alexei Fedorov was appointed RAC MiG’s director general, he brought Tsivilev in as his first deputy. According to Elena Fedorova, the president’s order on transforming RAC MiG into a joint-stock company is expected soon. In late January, Russian Federal Agency of Property is to appoint new director general for RAC MiG. By April 1, 2007, all shares of the company are to be brought into the registered capital of United Aircraft-building Corporation. However, MiG will remain an independent legal body, and will lead business activities. Meanwhile, United Aircraft Corporation does not have a budget of its own so far, and will exist on the dues from companies that have joined it. Thus, it is extremely important for Fedorov to keep control over MiG’s financial flows.
MiG’s stock of orders is expected to grow from $3.4 billion to $6 billion in 2007, and to become the largest in Russian aircraft-building sector (current leader is Irkut with $5.5 billion). Large contracts are to be signed for supplying aircrafts to Yemen, Egypt, and, perhaps, Syria. Besides, with RosOboronExport’s mediation, MiG-29M/M2 fighter jets will give RAC MiG a chance to win India’s tender for supplying 126 light destroyers for $6.5 billion.
RAC MiG does not want to guess who might be interested in preventing Tsivilev from becoming the company’s director general. “Many clans in aircraft industry are now trying to stop the expansion of Alexei Fedorov’s group which includes Tsivilev and others, said Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies.
Yuri Senatorov, Alexandra Gritskova
All the Article in Russian as of Dec. 20, 2006
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