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. Last Updated: 07/27/2016

Army Offers Bargain Basement Bonanza

Every Tuesday, Wednesday and Thursday discreet buyers assemble at an auction room in north Moscow for a sale that is now the only legal way to take part in one of the great bonanzas of the end of the Soviet Union.


The auction in Sokolniki is the main outlet for millions of dollars of Russian army surplus goods, ranging from trucks to Geiger counters to helicopters, which the depleted Russian Army no longer needs.


Bidders at Tuesday's auction were asked to pay 75, 000 rubles ($75) for a box of 1, 000 Soviet Army epaulettes or 5. 5 million rubles for a Bailey Bridge, a self-propelled caterpillar-tracked assault bridge.


While the trade at the auctions is all legal, controlling the rush to sell the huge store of army equipment has developed into a major political scandal.


Last week a special commission on corruption confirmed allegations by Vice President Alexander Rutskoi that top commanders in Russia's Western Army Group had illegally plotted to sell military property. But the commission found that the deals had not gone through because they broke German law.


Petty pilfering from army stores always existed in the Soviet Union but the situation got out of control shortly after Perestroika when Soviet army divisional commanders were given the right to sell any property except weapons as compensation for cuts in centralized financing.


Despite the limitations on weapons sales, modern arms were sold as easily as surplus boots. Russian police complain that gangs are now using army guns, radio transmitters and bullet-proof vests.


Last year, when this corruption started to become evident, President Boris Yeltsin issued a decree imposing a monopoly on sales of army property to stop illegal trading and dumping by army commanders.


Vladimir Lovtakov, advertising director for the Sales Department of the Defense Ministry, which has been given exclusive rights to sell army property, heads the marketing drive for the legal sale of military hardware within Russia.


He places advertisements for the auctions in newspapers and on Mayak radio station. He said that official auctions were expected to earn 8 billion rubles ($8 million) in 1993 from its sales. Most of revenues, he said, would be used to build houses for the army.


Lovtakov said that local army commanders must now submit applications to sell equipment with the Defense Ministry. If accepted, the goods are sold at the auctions his department organizes at the Moscow Chamber of Commerce. After the deal is concluded, buyers are sent to local commanders to collect their chemical weapons detectors or army-issue brassieres.


Lovtakov admits that before the new centralized regime, corruption was rife in the sale of army property. "Officers began selling to the right and to the left, no matter what it was", said Lovtakov. "And there were individuals, not army divisions who benefited from the sales". He said, however, that control was becoming much more efficient thanks to the new system, even though isolated examples of fraud still occurred.


But a broker at the exchange, who asked not to be named, said that both local army commanders and brokers still tend to go outside the official channels and strike illegal deals.


"We usually close one deal through the exchange, stay in touch and next time a local commander just asks me to search for a buyer rather than taking a slow and less profitable official path through the ministry", he said.


He said he had just brokered an off-market deal for the purchase of a military armored car, not normally sold at auction, which will be remodeled for use by a commercial security company.


Lovtakov disagreed, saying that such off-market deals were very rare.


One of the buyers at a recent auction, who also asked not to be named, said he was buying army gas tankers that he needed for a chain of gas stations he plans to set up in Moscow by the end of the year. "Tankers at the exchange are twice as cheap as the cheapest ones at the market", he said.


Lovtakov said that prices at the auctions were much lower than elsewhere, adding that this attracted buyers from all walks of life.


"It could be a firm buying 60, 000 pairs of boots to resell to Mongolia or a private farmer, who obtained a loan and wants to invest in a powerful and inexpensive army truck", said Lovtakov.