Saturday, February 26, 2011

Russian fighter jets sold for $5 in fraud scheme

February 25, 2011 (Reuters). A Russian court on Friday, Feb. 25, jailed a former official for 11 years over the sale of four fighter jets for just 5 dollars each. The military corruption scandal, that cost the government about 55 million dollars, underscored endemic fraud in Russia's armed forces. Andrei Silyakov, a former employee of the state Federal Reserve Agency, illegally included the warplanes on a list of state assets to be sold, the Nizhny Novgorod regional court said in a statement on its website. The four MIG-31 supersonic long-range fighter jets, known as Foxhounds, were sold for 153 roubles (5 dollars) each from state-owned Sokol aviation plant in Nizhny Novgorod, 400 km (250 miles) east of Moscow. Although the jets were sold stripped of engines and weapons, each was in fact worth about $4 million. The planes were appraised as scrap metal and sold to a shell company that had no authority to trade weapons or military hardware, the statement said. Silyakov was also accused of embezzling 30,000 tons of oil and handed an 11-year jail sentence for fraud, costing the Russian state a total of almost $69 million, the court said. A combination of lack of funding, negligence and corruption have damaged attempts to supplement and maintain the huge arms stockpiles Russia inherited at the breakup of the Soviet Union in 1991. Corruption in the armed forces cost Russia 6.5 billion roubles ($222.8 million) worth of state funds in 2010, Russia's Chief Military Prosecutor Sergei Fridinsky said on Thursday. Sokol is part of the state-owned United Aircraft Corporation.