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. Last Updated: 07/27/2016

Corruption Cost Set at $60 Million

A military corruption scandal under investigation since last year has cost the Russian government at least $60 million, according to Russia's former top anti-corruption official.

Public Prosecutor Valentin Stepankov now says that Defense Minister Pavel Grachev is involved in the alleged misdeeds in the former East Germany.

Between 1991 and 1992, Russian forces stationed in eastern Germany sold off large quantities of military property for personal profit, Yury Boldarev, who was the chief state inspector, said in a secret November report to President Boris Yeltsin four months before being fired.

Copies of the report have been leaked to the press recently and Rossiiskaya Gazeta, the newspaper of the anti-Yeltsin parliament, published excerpts of the text this month.

That report, however, did not mention Grachev as being part of the operation, Alexei Ilyushenko, Boldarev's successor, said Friday. Ilyushenko said the documents published in Rossiiskaya Gazeta were authentic.

The documents also say officers used military vehicles in Germany to import large quantities of consumer products, such as perfume and salami, into Russia without paying taxes.

"During 1991 and 1992 blatant violations of government and financial discipline took place as well as squandering of military property", one document prepared by Boldarev said. "Also certain officers took part in illegal dealings with commercial enterprises".

Boldarev's investigation found that by thievery, and by avoiding taxes by hiding commercial goods in military vehicles, these officers deprived the Russian state of over $60 million.

On Thursday, Stepankov, announced he had obtained new information which for the first time linked Grachev personally to the year-old, yet still unresolved, investigation into these abuses.

Grachev denied involvement in the scandal Friday, and said the accusations were politically motivated, citing Sunday's referendum on President Boris Yeltsin's rule.

The accusations linking the decorated Defense Minister come during a campaign in which Yeltsin opponents have repeatedly accused top Yeltsin lieutenants of corruption.

A week ago, Vice President Alexander Rutskoi, chairman of the state anti-corruption commission, accused former Prime Minister Yegor Gaidar, Yeltsin adviser Gennady Burbulis and others of illicit activities without presenting any concrete evidence.

Yeltsin spokesman Anatoly Krasikov said that Rutskoi was the source of the new accusations against Grachev, although both the public prosecutor and the vice president's office denied the charge.

East Germany was the Soviet Union's main European ally during the Cold War, and before the opening of the Berlin Wall in 1989, it hosted 390, 000 of the 560, 000 Soviet soldiers in Eastern Europe.

With estimated assets of $6. 6 billion, according to Boldarev, the Soviet facilities there represented unprecedented opportunities for self-enrichment.

When Boldarev presented his corruption findings to Yeltsin in November, he asked the president sign a draft decree that would have fired five generals involved in corruption and take other measures, according to the documents published in Rossiiskaya Gazeta. He also suggested that he carry on further investigations in 1993.

However Yeltsin declined to sign the decree, and Boldarev was fired in March.