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Russian Scandal Hints At Larger Political Battle

Dec 11, 2012
Originally published on December 18, 2012 10:33 am

Russia is in the middle of a blazing tabloid-style scandal that features a bejeweled blonde, a luxury love nest, and an alleged scam worth more than $200 million.

But that's not where some Kremlin watchers are putting their attention. They see the scandal as just the visible fallout from a vicious backroom fight among Russia's ruling elite.

The real question is whether the struggle may have forced President Vladimir Putin to sack a loyal ally, his former Defense Minister Anatoly Serdyukov.

Scandal Rocks Elite

The scandal has been brewing since early fall, with leaked reports about an investigation into the sale of some military real estate to private companies.

Officials of a state-controlled company allegedly sold the land to their cronies at rock-bottom prices, then collected big kickbacks when the property was resold to developers.

It was clear from the leaks that the investigation was rapidly climbing to the very top of the Russian Defense Ministry, until at last President Putin felt compelled to act. Early in November, he announced he was firing Serdyukov.

As defense minister, Serdyukov was widely believed to have Putin's support, especially because he was carrying out a controversial plan to modernize Russia's hidebound military.

But it wasn't long before steamy details began to emerge on state-controlled TV. Before dawn one morning, investigators raided the 13-room apartment of Yevgeniya Vasilyeva, the former head of the property department at the Defense Ministry. TV channels gleefully pointed out that Serdyukov was at the apartment with Vasilyeva at the time of the raid.

They also pointed out that Vasilyeva is blonde, 33 and fond of sparkly dresses, while Serdyukov, 50, is portly and married to another woman.

It didn't help their cause that investigators also found hundreds of thousands of dollars worth of cash, jewelry and antiques in the apartment.

Questions Over Motives

While this may have been enough to cost an American official his job, Russians tend to be more blase about such matters.

"Mr. Serdyukov conducted the normal life of Russian top official, and everybody in this country knows for sure that it cannot be a reason for firing," says Alexander Golts, an independent military analyst and editor at the Daily Journal in Moscow.

He says mere personal misconduct would not have cost Serdyukov his job, especially when Putin is known for his loyalty to top allies.

Serdyukov is a former furniture salesman from St. Petersburg, whose fortunes dramatically improved after he married the daughter of a very powerful Putin ally.

His father-in-law, Viktor Zubkov, is a former prime minister and the current chairman of the Russian natural gas company Gazprom.

That raised the possibility that Serdyukov's fall was the revenge of an outraged father-in-law, but experts tend to discount that theory as well.

Pavel Felgenhauer, a military expert and columnist at the Russian newspaper Novaya Gazeta, points to recent revelations that Vasilyeva's apartment had been planted with listening devices during the investigation.

Felgenhauer says the bugging of a defense minister is something that could only be ordered by people at the very top of the government.

"This is all about money and real estate and internal quarrels within the ruling top elite that can order the special services to begin a special operation against the defense minister," Felgenhauer says.

An Unhappy Officer Corps

Serdyukov made himself unpopular with generals in the Russian military when he trimmed a notoriously top-heavy senior officer corps.

He earned the enmity of Russia's entrenched defense industry by refusing to buy obsolete equipment.

But whether the infighting was about real estate or military contracts, Golts says Putin was apparently unable to keep a lid on the quarrel.

In previous years, he says, Putin was able to keep state journalists and government officials from attacking his allies, but this time, Putin's signals were ignored.

"It moves me to the conclusion that, now, these top bureaucrats began to play their own games, and began their fights without [the] permission of Mr. Putin," Golts says.

Putin has since appointed a new defense minister, Sergei Shoigu, who previously served as Moscow's regional governor. Vasilyeva was placed under house arrest, charged with fraud. No charges have yet been brought against Serdyukov.

As the scandal plays out, analysts are asking what will happen to the government's efforts to rebuild Russia's military. It's an issue that has been widely discussed and yet remains unresolved since the Soviet breakup two decades ago.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

DAVID GREENE, HOST:

We're going to spend a couple days looking at the once proud and mighty Russian military. America's Cold War foe, often struggling for relevance on today's world stage, is facing some big decisions about the future of its defense industry. But there's a lot more to this story, and NPR's Moscow bureau chief Corey Flintoff has been looking into it. He's going to give us a window into modern-day Russia: the political power struggles, the corruption and questions about whether Russia's President Vladimir Putin might be losing some of this iron grip.

And we have Corey on the line with us from Moscow. Corey, welcome to the program.

COREY FLINTOFF, BYLINE: Good morning, David.

GREENE: So it really sounds like there's been this internal struggle in Russia over the future of the military, and like so many stories do, it involves scandal.

FLINTOFF: That's right, and it's a big tabloid-style sensation. It features a bejeweled blonde, what the tabloids used to call a love nest, and an alleged scam that, at least so far, is worth more than $200 million. And this is something that really bubbled up in the early fall when news started to leak out about an investigation into the way that some surplus military real estate was being sold off to private companies.

Officials of a state-owned company allegedly would sell this land to their cronies at rock-bottom prices, and then they'd collect big kickbacks when the property was resold to developers. It got juicier when investigators staged a predawn raid. And this was part of the original scandal. They raided a luxury apartment in Moscow, and we're talking about a 13-room apartment here that belonged to a woman by the name of Yevgeniya Vasilyeva. And she was the former head of the property department at the Defense Ministry.

State TV channels pointed out - rather gleefully, I might add - that there was a man in the apartment with Ms. Vasilyeva at the time of the raid, and it was the defense minister, Anatoly Serdyukov - or rather, the former defense minister.

The reports also pointed out that Ms. Vasilyeva is blonde. She's 33. She's fond of wearing sparkly dresses, while Serdyukov is 50. He's a bit on the portly side, and he's married. It also didn't help that investigators also found hundreds of thousands of dollars worth of cash, jewelry, antiques, all kinds of things in this apartment.

GREENE: Sounds like journalists are having fun with that part of the story. But you said former defense minister, Corey. And I guess wonder, was he fired for being in this apartment with this former head of the property department of the defense ministry?

FLINTOFF: Well, he was actually fired shortly before that when the basic outlines of this scandal came out. I mean, this was all going on in his watch as the defense minister, and he was obviously involved in some way with people who were being charged in this crime. But this raid just made juicier. And what was interesting was the way that the state-controlled media were having a field day with this.

Normally, a scandal involving a senior public official is something that would have been downplayed, if it were even covered at all.

GREENE: So it may be a sign of changing times in Russia that this story becomes such a front page story.

FLINTOFF: That's right. And the Kremlin watchers who have been paying attention to this see it as something more than just a scandal or a tabloid sensation. It's more like the visible fallout from a really vicious backroom fight that seems to be going on among Russia's ruling elite. And the real question, then, is whether there's a power struggle that's going on that may have forced President Putin to sack one of his loyal allies.

GREENE: Okay. So we have state-controlled media feeling emboldened enough to cover this scandal. We have President Putin having to sack a loyal ally, which I imagine is certainly not something that he would want to do.

FLINTOFF: Yes, and someone who is actually seen as a fairly effective manager. In fact, he'd made some headway with some pretty controversial efforts to reform the way that Russia's very hidebound defense establishment operates.

GREENE: All right, so not just an ally of Putin, but someone who is actually getting the job done, it sounds like. And I know we're going to hear more of your reporting in just a moment. I guess, though, first, I'm just so curious. We've seen sex scandals cost the jobs of American officials - most recently CIA director David Petraeus. But how does something like this kind of play out in Russia?

FLINTOFF: Well, I talked to some analysts who say that normally, the Russian public would never hear so much about hanky-panky on the part of top officials. But, you know, the behavior itself is not at all out of the ordinary here. Here's what one analyst told me.

ALEXANDER GOLTS: Mr. Serdyukov conducted normal life of Russian top official, and everybody in this country knows for sure that it cannot be a reason for firing.

FLINTOFF: That's Alexander Golts. He's an independent military analyst and editor at the Daily Journal in Moscow. He says that mere misconduct would never have cost Serdyukov his job, especially when President Putin is known for loyalty to his top allies. But Serdyukov made himself unpopular with generals in the Russian military when he trimmed a notoriously top-heavy senior officer corp.

He also earned the enmity of Russia's entrenched defense industry by refusing to buy obsolete equipment. But whether this infighting was about real estate or military contracts, Golt says that Putin was apparently unable to keep a lid on the quarrel. In previous years, he says that Putin would have been able to keep state journalists and government officials from attacking his allies, but this time, Putin's signals were ignored.

GOLTS: It moves me to the conclusion that now these top bureaucrats began to play their own games and began their fights without permission of Mr. Putin.

GREENE: That's reporting from NPR's Corey Flintoff in Moscow. And Corey is still on the line with us. And I want to ask you, Corey, I mean, we have this former defense minister who was unpopular with the generals, you say, unpopular with the defense ministry, but an ally of Vladimir Putin. Putin's hand is forced, things going on without Putin's permission - I mean, that sounds pretty startling for a leader who is seen as so strong.

FLINTOFF: It is. And, of course, everything that goes on at the Kremlin is all about speculation. I mean, we really don't know what's happening. One thing, though, about the way the Kremlin operates, is that it is run by a group of different factions, and they include, you know, people in the business world, KGB people who served with Vladimir Putin, and each of them is competing for power.

It's not clear whether Putin has been able to keep everybody in line or - and that this is something that he really wants to happen, or if this is an entirely new development and things have gotten out of control.

GREENE: You say something he might want to happen. I mean, he might want to have, you know, different factions competing? That could benefit him, in a way?

FLINTOFF: That possibly could. Another problem is that Putin has put a lot of emphasis on the idea that the new defense budget has to be spent wisely and carefully if Russia's defense establishment is going to be reformed. So it may be that he really is anxious to give out the signal that corruption will not be tolerated, at least for now.

GREENE: And we're going to be hearing a lot more about that defense ministry and Vladimir Putin as we talk tomorrow, as I understand it.

FLINTOFF: Right. We'll be hearing about the problems that have hampered what used to be a very powerful Russian military, and also some of the reasons why a militarily weak Russia may not be in America's best interest. And, of course, David, we'll be talking about what all this means for Vladimir Putin.

GREENE: All right, Corey, looking forward to it.

FLINTOFF: Thank you, David. Transcript provided by NPR, Copyright NPR.