Russian Official Arrested in Energomash Extortion Scheme

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  Space News Business

Russian Official Arrested in Energomash Extortion Scheme

By SIMON SARADZHYAN
Space News Correspondent
posted: 12 October 2007
11:48 am ET









MOSCOW — A senior member of




Russia’s




federal Audit Chamber has been arrested on charges of attempting to extort millions of dollars from rocket-engine maker Energomash in a scheme that a spokesman for the state-owned company said temporarily disrupted shipments of RD-180 main engines to the United States for use in the U.S. Air Force’s Atlas 5 rocket.

The episode began with an investigation of Energomash by the Audit Chamber, Russia’s rough equivalent to the U.S. Government Accountability Office, authorities and others involved in the matter said. It culminated with a sting operation in which three alleged conspirators were arrested after one of them accepted 1 million euros ($1.4 million) in cash from a senior Energomash official, they said.

In the midst of the Audit Chamber’s probe, an export license that Energomash needed to ship RD-180 engines to the United States was inexplicably held up, according Yuri Korotkov, a spokesman for the company, which is based in the Moscow suburb of Khimky. Senior Energomash managers believe the license delay was tied to the investigation, he said, adding that millions of dollars in contractual payments to the company were deferred as a result.

“It all looked like extortion,” Korotkov said, adding that license was issued only after Energomash’s management appealed directly to Russian President Vladimir Putin.



Calls made Sept. 28 to Russia’s export control service went unanswered.





The RD-180, designed and built by Energomash, is the main engine on United Launch Alliance‘s Atlas 5, one of two main rockets that the U.S. government uses to launch national security payloads. The engine is provided to Denver-based United Launch Alliance by RD Amross, a joint venture between Energomash and Pratt & Whitney Rocketdyne of Canoga Park, Calif.

Julie Andrews, a spokeswoman for United Launch Alliance, said the company has an inventory of RD-180 engines and continues to receive RD Amross products. “We continue to meet our launch manifest requirements,” she said.

Andrews declined to specifically address whether an engine shipment was delayed due to export control issues in Russia, saying that United Launch Alliance has experienced no disruptions in manufacturing or operations related to such matters. “These are the only disruptions that would be a problem for us,” she said.

Andrews said United Launch Alliance took delivery of two RD-180 engines Oct. 3.



According to Russian authorities, the ringleader of the alleged extortion plot was Yuri Gaidukov, head of inspections at the Audit Chamber and an active military serviceman. He was arrested Sept. 6.



Asked to specify the charges against Gaidukov, Alexander Minchenovsky, a spokesman for the Moscow Military District Court, referred to a section of the Russian Criminal Code that says: “accepting a large bribe that has been extorted by a group of individuals.”

Gaidukov’s lawyers had appealed to that court after his arrest was sanctioned by the Moscow Garrison court, but the appeal was rejected. “The court decided that the evidence presented by the investigators was




sufficient,” Minchenovsky said in a phone interview Sept. 28.



Gaidukov was fired from his post after the arrest, according to a Sept. 28 press release issued by the Audit Chamber.

According to Korotkov, an Audit Chamber team led by Gaidukov began conducting a review of Energomash in December, ostensibly to determine whether the company was “efficiently using federal property.”



The auditors subsequently became interested in Energomash’s finances, including its RD Amross dealings, Korotkov said in a Sept. 28 phone interview. At one point, Korotkov said, Guidukov’s team demanded to see the original documents related to the founding of the joint venture, which is headquartered in the United States. Energomash’s top management had to personally explain to the Audit Chamber’s chairman, Sergei Stepashin, why it could not quickly produce the documents, Korotkov said.



The scheme unraveled after a “special operation” by Russian law enforcement authorities in cooperation with Energomash, Korotkov said. He declined to elaborate.



According to Viktor Badyan, a lawyer for one of Gaidukov’s suspected accomplices in the case, the sting involved agents with Russia’s Federal Security Service, or FSB. Badyan said his client, Nikolai Serykh, was arrested by FSB agents Sept. 6 after accepting 1 million euros from Energomash First Deputy Director Dmitry Pakhomov in a car parked near the company’s headquarters.



Serykh once sat on Energomash’s board of directors, as did Gaidukov, and now is head of the Lord Enterprises consultancy in Moscow. Serykh maintains the payment was for “consulting services,” Badyan said in a Sept. 28 telephone interview.



However, the FSB maintains that the payment was the first installment of 7 million euros in extortion money that Serykh was to pass along to Gaidukov and others involved in the scheme, Badyan said.






Also arrested




Sept. 6




was Alan Gogichayev, who owns a Moscow restaurant frequented by Russian government officials, according to Badyan.

In a Sept. 27 statement, the press service of the Audit Chamber acknowledged that Gaidukov, Serykh and Gogichayev were arrested “when accepting a 1 million euro bribe.” The statement also said head of the Audit Chamber’s legal department, Zarina Farniyeva, was detained Sept. 27 after it was “determined” that she “had been involved in the illegal activities” of the trio.

In the Sept. 28 press release, the Audit Chamber announced the closure of its investigation into the “legality and efficiency of the use of federal property” by Energomash. That press release also said the Audit Chamber leadership “doesn’t doubt actions of the law-enforcement agencies vis-�-vis former employees of the Audit Chamber.”