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. Last Updated: 07/27/2016

A Catalog Of Graft: 'Biznes' in The Ranks

One general allegedly gave two companies the exclusive rights to sell the leftover gas after the Russian Army pulled out of Germany.


Another general allegedly gave away 17 million Deutsche marks ($11.3 million) in false money orders and 48 million marks in faulty bank guarantees.


And a third general is said to have sold cars and refrigerated trucks while also trying his hand as a fireworks importer. What's more, he made a profit selling defective consumer goods bought with a pool of military money.


The officers of the Russian Army's Western Group were quite an entrepreneurial lot, according to a report gathered by Yury Boldyrev, the former chief inspector of the Russian Federation.


Their alleged activities during 1991 and 1992, of which the above list is only a small part, encompassed 19 separate commercial enterprises covering everything from illegal arms, food and real estate deals.


In his report -- presented two years ago to President Boris Yeltsin and then ignored -- Boldyrev recommended that a total of five generals should be stripped of their ranks. But that never happened. Of them, four have retired: Lieutenant General Vladimir Blokhin, Lieutenant General Nikolai Sadovnikov, Colonel General Gennady Stefanovsky and Major General Yevgeny Kruglov.


Criminal charges were brought against Lieutenant General Grigory Karakozov, but were dropped for lack of evidence. Karakozov, once the head of the Defense Ministry's Trade Administration, now works in the Air Force's maintenance division.


But the murder of Dmitry Kholodov, 27, a journalist investigating illegal activities in the Western Group, has brought the accusations back to the top of the news. On Tuesday, howls from the Russian media toppled the Western Group's last commander, First Deputy Defense Minister Matvei Burlakov.


Yeltsin's dismissal of Burlakov culminated an investigation that Boldyrev began as long as three years ago, following widespread reports in the Western press that demoralized Soviet troops stationed in East Germany had begun a fire sale of equipment and resources after the fall of the Berlin Wall in December 1989.


But Boldyrev's buried investigation became a political football in the battle between Yeltsin and the former Supreme Soviet. Former Public Prosecutor Valentin Stepankov told the legislature he had documentary evidence directly implicating Defense Minister Pavel Grachev in the scandal. But apart from Boldyrev's report, none of the supposed evidence was ever made public.


Since then, the ball has been picked up primarily by journalists such as Kholodov. In a series of articles, he went on to allege that there was a mafia operating within the armed forces.


"Our Russian Army is sliding into the world of organized crime," he wrote in August. "A well-organized, disciplined and strictly hierarchical mafia structure is coming to us from the (Western Group)."


In the meantime, the Public Prosecutor's Office has been conducting a series of minor investigations into illegal activity in the Western Group, but no evidence of widespread corruption has been found, according to spokesman Alexander Zvyagentsev.


Sergei Ushakov, a spokesman for the Military Prosecutor's Office, said his office was investigating four cases of "abuse of military power" in the Western Group, but that these did not involve top level officers.


Sergei Yushenkov, chairman of the State Duma's defense committee, intends to hold hearings on the same matter in about two weeks. In preparation, Yushenkov has asked the Federal Counterintelligence Service, the Defense Ministry and the Customs Control Committee to turn over any relevant information they had. On Thursday he got his first answer, from the counterintelligence service. "The documents are secret, but I can say this: They confirm that there is corruption in the Western Group," Yushenkov said.


An examination of illegal arms sales is not the only investigation touching on the military's highest echelons. A team of investigators led by the Public Prosecutor's Office is now pouring over the Kholodov's murder.


Fyodor Ladygin, head of military intelligence, claims "foreign espionage services" are to blame for Kholodov's death, but he may have a tough time convincing the public of that.


"The investigation is headed by one of the office's senior prosecutors," Zvyagentsev said. Acting Public Prosecutor Alexei Ilyushenko, Federal Counterintelligence Service Director Sergei Stepashin and First Deputy Interior Minister Mikhail Yegorov met Tuesday to discuss strategy.


On Thursday, Stepashin announced that the murder was "definitely political," aimed at destabilizing Russia's armed forces, Itar-Tass reported.