1/ Two nearly identical cases provide a good illustration of how procurement corruption works in Russia. Corrupt contractors working for the Russian government falsely claimed that work had been done and pocketed the unused money without actually doing the contracted work. ⬇️ 
2/ The VChK-OGPU Telegram channel reports on an embezzlement case from military camp No. 67 in Baltiysk, Kaliningrad Oblast, where a contractor working for the Russian Ministry of Defence's Main Directorate of Troop Accommodation (GUOV) was employed.
3/ The GUOV assigned RUR 38,875,396.27 ($568,894.39) for construction and installation work. It contracted the job to Innovatsiya LLC, which charged the GUOV RUR 27,611,717.98 ($404,064.08) for the work.
4/ The remaining RUR 11,263,678 ($164,830.30) has not been returned to the Russian MOD and the work has not been completed.
The second case involved an Interior Ministry contract for a new police station in the city of Yaluturovsk, Tyumen region.
The second case involved an Interior Ministry contract for a new police station in the city of Yaluturovsk, Tyumen region.
5/ The Baza Telegram channel reports that the work required the groundwater level to be lowered and the foundations to be waterproofed at a cost of 16.6 million rubles ($242,917). The work was paid for and certified as having been completed to a high standard.
6/ However, the new police station soon flooded. Baza reports that the head of the Interior Ministry's logistics division and four colleagues had "signed acceptance certificates for work that had not been carried out at all or had been done in a substandard manner."
7/ The logistics head lacked contracting authority in the first place, and now faces charges of abuse of authority. The contractors are also facing charges of abuse and negligence. What happened to the money isn't clear.
8/ This kind of "full payment for incomplete work" scam is commonplace. Unspent money typically gets paid into the personal bank accounts of corrupt contractors and officials via so-called 'one-day firms’ (Фирма-однодневка). Millions of such firms have been registered in Russia.
9/ Here's how a one-day firm works:
🔺 The company is registered for a very short period of time, possibly only existing for a few hours. This prevents the tax authority finding out about it and charging taxes.
🔺 The company is registered for a very short period of time, possibly only existing for a few hours. This prevents the tax authority finding out about it and charging taxes.
10/ 🔺 The perpetrator transfers payment to the one-day firm for fictitious goods and services. They receive documentation which they can use to reduce their taxable income, and also become entitled to a VAT deduction.
11/ 🔺 The money sent to the one-day firm is cashed out immediately, often to foreign bank accounts, following which the firm is shut down. It only exists long enough for the money to be transferred elsewhere.
12/ In 2013, half of all registered Russian companies – nearly 2 million firms – were reported to be one-day firms. Crackdowns reduced this number by the end of the 2010s, but one-day firms are still quite widespread.
13/ Procurement fraud has been a problem in the Russian government, and especially in the military, for years (see the thread below). It has real and sometimes deadly consequences.
https://twitter.com/ChrisO_wiki/status/1540428503308541952
14/ In July 2015, for instance, a barracks in Omsk collapsed due to poor construction, lack of maintenance and corruption by the contractors responsible for repairing it two years earlier – again, work had been paid for but not done. 24 soldiers died.
15/ Most of the time the consequences aren't quite as dramatic as that, but this kind of corruption has been a big factor in the hollowing out of the Russian military. It's not just "this is why Russia doesn't have nice things" – it has a direct impact on the battlefield. /end
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