Crimea: Corruption Fueling Feud Between Local And Federal Elites

Bank of Russia Ponomaryov

Crimea: Corruption Fueling Feud Between Local And Federal Elites by EurasiaNet

It appears that a power struggle is intensifying in Russia-annexed Crimea revolving around graft. The infighting pits local officials against Russian federal agencies, including the powerful Federal Security Service.

The conflict remains unresolved, and given the players involved, the outcome remains unpredictable. The first signs of trouble began in late June with a wave of high-profile arrests and statements about corruption in Crimea. The FSB, the successor to the Soviet-era KGB, has opened criminal cases against three prominent Crimean officials: Andrei Skrynnik, the peninsula’s minister of industrial policies; Nikolai Kochanov, the region’s tax inspection chief; and Dmitri Petrov, the port chief of Yalta. According to Russian media reports, additional criminal cases against other high-profile local officials were likely.

Meanwhile, the deputy head of Russia’s Federal Road Agency (FRA), Igor Astakhov, has claimed that when his agency audited Crimea’s Ministry of Construction in June, the latter “could not produce proper documentation for 368 million rubles out of the 582 million rubles ($10.2 million) [of federal funds] allocated” in 2014 for rebuilding Crimean roads. In other words, roughly two-thirds of the money seems to have disappeared, according to Moscow.

Crimean officials quickly fired back. The head of the local government, Sergei Aksenov, characterized state security agents as “provocateurs” – a label in Russia that is usually reserved for Kremlin foes. Aksenov went on to defend the accused Crimean officials as “honest,” and asserted the FSB was “interested in destabilizing the situation in Crimea.”

Aksenov specifically mentioned the case of Skrynnik, saying the investigation into his suspected misdeeds is “fabricated” and based on “absolutely fictitious material.”

The Crimean leader added that he had raised this matter with Russian President Vladimir Putin, whom he intended to keep updated on the developments. He also claimed that he would not comply with the FSB’s proceedings, and protect local bureaucrats from the FSB too. “Our officials are citizens too and no one will victimize them. I guarantee you that,” he told his ministers at a meeting last week. He also issued orders on July 9 to set up a Crimea-based special committee that would “prevent illegal actions against [Crimean] government officials” and have a final say on any criminal proceedings against them.

To reinforce his point, he further told his subordinates, “Some characters from the mainland [i.e. Russia proper] came here and claim that Crimeans are useless idiots, while they [federal authorities] are the heroes who want to change things. I guarantee you, this will not happen.”

He also defied the FSB’s criminal proceedings against Skrynnik and told the latter to continue his work as a minister.

In addition, Aksenov asserted that he did not believe that Crimea’s tax inspection chief, Nikolai Kochanov, was guilty either. The FSB had accused the tax chief of offering a bribe to FSB officers. “It must be the first time ever in Russia that a tax inspection chief offered rather than took a bribe. Doesn’t it seem suspicious to you?” Aksenov said.

Other members of the Crimean government rallied round Aksenov and joined the attack on Moscow. A member of Crimea’s State Council (local parliament), Sergei Shuvaynik, hinted at separatism, claiming that “we did not reunite with Russia to be subjected to the same horrors we had experienced during the Ukrainian period.”

The chairman of the State Council, Vladimir Konstantinov, speaking about the arrests, claimed that “Crimea came under a serious attack… [inspired by] our enemies.”

Crimean government officials cite “minor mistakes” and “differences in the Ukrainian and Russian laws” as an explanation for any actions that federal prosecutors might find questionable. They also asserted that it was the federal officials and structures that were corrupt.

For instance, the chairman of the Crimean State Council on Economic, Budgetary and Taxation Policies, Vitaly Nakhlupin, argued that the claims by FRA’s Igor Astakhov about missing funds were completely false. “Out of the 582.7 million rubles allocated for municipal roads we only received 277.2 million. How could we possibly produce documents for 368 million in spending if we only received 277 million?” Nakhlupin stated.

“Mr. Astakhov simply did not read the reports closely,” Nakhlupin added, according to a press release on the State Council’s website.

Nakhlupin further charged that it is Russia’s federal agencies that steal money. He offered an example where Astakhov’s agency awarded 61 million rubles worth of contracts for repairing Crimea’s roads to two shady federal intermediaries that did not do any work, but kept more than half of the money.

He also claimed that it was Moscow that owed Crimea. “As of today, we have not received a penny. Federal agencies owe the Republic of Crimea a total of 1.4 billion rubles,” he said.

There are indications that Putin personally has intervened in the power struggle. On July 13, less than a week after ruling to establish the committee, Aksenov had to close it down. Political experts suspect that the closure followed a phone call from Putin to Aksenov.

In addition, Aksenov had to comply this week with the Putin-sanctioned idea of assigning federal deputy ministers as “representatives” (read, “overseers”) of local ministries in Crimea.

Yet, also this week, Aksenov called a news conference during which he reiterated that “claims that someone [from the outside] will fire [local Crimean officials] and that I will be a puppet are an illusion. It will never happen.”

“No one, except the president [Putin], will tell me what to do,” he added. “I will not be pushed around and no services [likely a reference to the Federal Security Service, the FSB] can force me to change my position on anything.”

He later said in an interview with the pro-Kremlin LifeNews website that behind the campaign against Crimean officials are major outside “players who regularly steal money from the [federal] budget” and who now want to establish themselves in Crimea.”

For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)



About the Author

EurasiaNet
EurasiaNet.org provides information and analysis about political, economic, environmental and social developments in the countries of Central Asia and the Caucasus, as well as in Russia, Turkey, and Southwest Asia.

13 Comments on "Crimea: Corruption Fueling Feud Between Local And Federal Elites"

  1. Well you showed up, so we’ve got the fascist troll part covered

  2. Before vomiting nonsense, try to educate yourself. Russia builds nuclear power stations for many nations, also some parts of Boeing planes. That’s just off the top of my head. Speaking of which, America doesn’t build much either, as it imports everything from China. Even subway cars in NYC start their life in Brazil. Pathetic… Just as a nazi shill that you are

  3. Yes, you are absolutely right, because Russians were supposed to build all the roads in Crimea in one year. Oh, and if you want to talk about stealing funds and no one fixing anything for years – come to New York some time. Not very bright, are we?

  4. Wrong. It is FSS who is trying to sort things out out there. The local mafia is always the worst. Why? Because in most todays states worldwide they are effectively “state within the state” while at the same time they are far less exposed on thei level of corruption than those doing business on a national level. Also local governments have tjheir own sources of revenues which are sometimes really astonishingly high and they like doing business even more through family and friends connections rather than conducting real tender because most of their projects are kept often low profile. Local autonomy is really source of this evil. FSS has no reason to act in there for anything else than to make life better for uninformed citizens who are swallowing locals fairy tale with a spoon. Putin is well aware of the fact that in these times more than ever it would be very important to bring more honesty among peoples lives instead of allowing corruption to take stand. It would be the end of normal state and the beginning of Yeltsin 2.0 era. Unlike him Putin is the one who controls oligarchs and local mafia. Not the other way around. Putin has only reputation to gain if he allows more justice in every corner of Russia. Otherwise his image will diminish because of few thiefs and I do not believe that he is the type of man that would ever allow this to happen.

  5. I know this has nothing to do with this thread, per say, but I just go out of a Skype conversation with one of my last remaining friends in Russia that has not gotten out of Russia but is making plans to do so soon. She told me the economy is so bad in her city that her paycheck has been cut in half, a lot of businesses can’t stay open, inflation is higher than she’s ever known it to be and the people are getting anxious. She said everyone is getting to the point where they’re doubting Putin’s every move and are having thoughts that he’s been lying to them about the economy, Ukraine, Crimea and his military buildup especially the way the economy is. They’re beginning to realize that their economy started falling apart when he annexed Crimea and the war started in Ukraine and not only the price of oil is causing them to be in the mess they’re in now. She told me she believed me now when I told her what was actually going on and they hear nothing like that on their news. Me originally being from Russia I personally hope the people as a whole will find out the truth about Putin and will do something to stop him.

  6. Well, well, well, finally an article made just for me. I drive , or should I say I attempt to drive in Crimea on these ” Trails” and they are by far the #1 worst roads in the World. No one is fixing anything and it has been this way for years. Took the bus over to Sochi area and the roads were fine compared to here – I remember hearing that Medvedev had allocated monies for the roads – now I understand the outcome – these officials are soooo used to stealing Federal funds – they never quit stealing. Almost sounds too much like Washington, when they can’t seem to find 1/2 billion bucks in Afghanistan or Iraq. Spasibo Bolshoi

  7. Why this is outrageous! Offer a bribe? Ridiculous! Take a bribe, well of course, but offer one…how dare you accuse me of such a thing!

  8. simple…both liars and cheats and very corrupt….

  9. Take your pick. A. These leaders in Crimea are not totally onboard with Putin, thus the typical corruption charges and banishment to Siberia. or…..B. Crimean leaders tried to lead Putin style (Through corruption and theft), but forgot to compensate Putin. Same, banishment to Siberia. Moral to this exercise? Siberia has fastest growing population in Russia.

  10. They’re just now waking up in Moscow and St.Pete right now trying to get over last nights drunk. They’ll be here soon enough lol.

  11. This is Russia, this is how Russia operates. Greedy, power hungry, thieving, aggressive, oppressive, controlling, the most corrupt country in the world, leader of arms sales to all the terrorist organizations and terrorist countries, has always tried to take from the world and never given back.Never done anything good for the world. Russia builds nothing the world wants. Putin will become the new Czar of Russia and return the people back to being serfs but that’s ok because they have no one to blame but themselves for worshiping Putin’s every lie. So come on your worthless Russian trolls and tell me how wrong I am but…I’m originally from Russia so your bs is all that will be to me is bs. You/re nothing but wanna be think you are’s but you’re actually losers and society rejects.

  12. Any lies from ruSSian fascist trolls about this article?

  13. Ellis Baumgarner | Jul 16, 2015, 7:34 pm at 7:34 pm |

    This is what happens when the Kremlin’s mafia moves in. No wonder Ukraine is fighting so hard to keep them out of Ukraine.

Leave a comment

Your email address will not be published.