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. Last Updated: 07/27/2016

State Firm Accused of Frivolous Spending

Prosecutors on Thursday accused a state-owned leasing company of doing its business poorly and squandering government money on parties and bonuses over the past three years, including time when Agriculture Minister Yelena Skrynnik led it.

In announcing the violations at Rosagroleasing, the Prosecutor General’s Office did not name Skrynnik or any other executives, but it cast a shadow on her tenure as chief executive of the company, potentially staining her reputation as an efficient minister unafraid of facing off with lobby groups.

“The task to support farmers, which was set before the company, is not being executed to the full extent,” prosecutors said in a statement.

The findings appeared to come out of the blue. President Dmitry Medvedev appointed Skrynnik as agriculture minister in March, lauding her “successful” efforts to help develop farming. He most recently praised the government’s work to improve the sector in his state-of-the-nation address last week.

A telephone call and a faxed request for comment to the Agriculture Ministry went unanswered Thursday. A secretary for Rosagroleasing chief Leonid Orsik said he would not comment.

Orsik was an Agriculture Ministry official before Skrynnik’s appointment.

Prosecutors said Rosagroleasing, which leases cattle and equipment to farmers, committed violations in 2007 through 2009 that showed it sometimes abused the interests of the state. But the improper spending that they named was relatively minor and the prosecutors said they were not seeking criminal or administrative charges.

When buying equipment, the company in several cases paid advances worth hundreds of millions of rubles as long as a year before the equipment arrived, prosecutors said. That provided extra benefit to suppliers, the statement said.

In another flaw, Rosagroleasing operated through a web of go-betweens that subleased equipment to end customers, charging a commission of 2.5 percent to 4 percent, or more than 1 billion rubles ($34.6 million) every year, prosecutors said. The pattern made equipment more expensive for the farmers, prosecutors said.

Prosecutors also blamed the company for spending tens of millions of rubles on donations and parties and sports events for its employees and workers of partner companies. In addition, bonuses were too generous — amounting to 55 million rubles over the three years, prosecutors stated.

The Prosecutor General’s Office requested that the company’s board chairman, First Deputy Prime Minister Viktor Zubkov, rectify the situation.

The board is preparing to hold a special meeting to consider the violations, a Cabinet source said. Board directors had pointed out some of the shortcomings that prosecutors mentioned, the source said, asking to be unidentified because of the issue’s sensitivity.

He declined to say whether the findings would hurt Skrynnik’s standing among her Cabinet colleagues.

Skrynnik may have fallen prey to an attack from lobby groups that have suffered from her activity as minister, said Kirill Kabanov, chairman of the National Anti-Corruption Committee, a nongovernmental organization. They probably tipped off prosecutors about the inefficiencies at Rosagroleasing, which were regrettable but relatively minor in the world of Russian state companies, he said.

A Prosecutor General’s Office spokesman said the inspection was routine and declined further comment.

Some of Skrynnik’s tough moves as minister included cancellation of sanitary inspections for imported used cars, Kabanov said.

“According to our estimates, it was a big breeding place for corruption,” he said.

She is also “progressive” about state purchases of grain from farmers as a market intervention measure, he said.

Alexei Mukhin, director of the Center for Political Information, agreed that the bad publicity might be part of a ploy by Skrynnik’s foes.

“Most likely, the minister stepped on the toes of some lobby groups,” he said. “This may serve as a hint for the minister that she offended someone.”