In a special interview, the Russian National Guard's sole food supplier addresses corruption allegations by Alexey Navalny
Boris Vaninsky is one of the owners of the “Friendship of the Peoples” company, which earlier this year became the sole supplier of food to Russia’s National Guard. This week, he granted an interview to the television station Dozhd, where he discussed allegations by Alexey Navalny that his business intentionally overcharged the Russian government for its services. Vaninsky fielded questions from Dozhd presenters Ksenia Sobchak and Anton Zhelnov and Novaya Gazeta publisher Dmitry Muratov and investigative desk chief Roman Sheinov. According to Sobchak, the network invited representatives from Navalny’s Anti-Corruption Foundation (FBK) to join the broadcast, but they declined. Meduza summarizes Vaninsky’s main statements. Verbatim quotes are marked “like this.”
The FBK’s claims: After “Friendship of the Peoples” became the National Guard’s supplier, its food prices spiked dramatically. For example, the cost of a kilogram of fresh cabbage rose from 14.96 rubles in the company’s December 2017 contract to 46.78 rubles in its July 2018 contract. The same was true for many food products.
Vaninsky’s response: Vegetable prices in Russia change by the season. In December, after the harvest, they are cheaper. At the beginning of summer, they’re a lot more expensive. When these food prices surge, stores sell imported goods, but Russia’s National Guard is required to buy domestic produce (with rare exceptions) and only goods that comply with All Union State Standards (limiting the supply and raising prices even further). The National Guard has problems, moreover, with procurement planning — it’s irrational to buy potatoes in the early summer.
“The question [is] why they ordered potatoes in May at peak price [...], despite the fact that they still could have relied on the previous year’s potatoes until August. [...] The question isn’t how much the potatoes cost. The potatoes were more expensive, yes, but that’s how much they cost [in May]. Nobody buys early vegetables that start in June.”
The Federal Security Service’s investigation
In December, the magazine RBC reported that Russia’s Federal Antimonopoly Service (FAS) has responded to a request from the Federal Security Service (FSB) and opened an investigation into the supply of food to the National Guard at inflated prices. According to journalists, the FSB discovered that Vaninsky’s company bought sausages and hot dogs through an intermediary from the National Guard’s former supplier and then “illegally sold the products at inflated prices, effectively acting as a reseller.”
Vaninsky’s response: “I don’t know anything about allegations by the FSB.” FAS and the Chief Military Prosecutor’s Office have been inspecting the company constantly since January 2018, because someone files a report [against Friendship of the Peoples] every month. This year, FAS has opened two administrative cases for inflated prices, but they have no idea where to set the base price.
Ties to Zolotov and Medvedev
The FBK’s claims: The Friendship of the Peoples company’s legal owner is a man named Boris Kantemirov, who previously served in the Interior Ministry’s militarized police, which later became the institutional basis for the National Guard, meaning he was one of director Viktor Zolotov’s subordinates. Boris Vaninsky, meanwhile, has ties to Prime Minister Dmitry Medvedev’s circle of associates. (It was Vaninsky’s firm that sold the Kushelev-Bezborodko Mansion in St. Petersburg to the “Dar” foundation mentioned in Navalny’s “Don’t Call Him ‘Dimon’” investigative report.)
Vaninsky’s response: Boris Kantemirov left the Interior Ministry a decade before Zolotov became its chief commander. He’s also just a partner at Friendship of the Peoples — not the legal owner. I’ve known Zolotov since the 1990s, when he was head of security for Anatoly Sobchak, but we’re not friends. I’m not personally acquainted with Medvedev, and I have no ties to the “Dar” foundation. We gradually acquired the premises at the Kushelev-Bezborodko Mansion, starting in 2006, when it was condemned. In 2009, because of the financial crisis, we put it up for auction and sold it to the only bidder.
Contracting a single supplier
The FBK’s claims: Previously, the National Guard bought food products “from different suppliers, depending on the region,” but then the management “put two and two together” and decided to make money on the supplies. “It’s our impression that the beneficiary of this scheme for focusing all the National Guard’s food provisions onto the Friendship of the Peoples meat processing plant is Medvedev himself, or people from his inner circle.”
Vaninsky’s response: Between 2016 and 2017, the National Guard was “overwhelmed with falsifications,” and procurement deals went to companies that had been created only to submit bids. We wrote a letter to Zolotov, proposing to become the agency’s supplier in Crimea, but in the end we were offered a contract supplying the National Guard. “[When you work] with one supplier, you have someone whom you can ask questions and who can provide information.”
Friendship of the Peoples doesn’t transport all its products from Crimea; it buys many goods in the regions where the National Guard has facilities. “Shipping 20 kilograms [44 pounds] of sausage 400 kilometers [250 miles] to Irkutsk twice a week — can you imagine the logistical costs?” In 2018, we signed more than 400 contracts with the National Guard, and a third of them had “negative profitability.”
“I don’t exclude the fact that [Zolotov] knowing us played a role in the selection of a single supplier.” Our competitive advantage was trust. “I can't offer any advice” to people Zolotov doesn’t already know.
Expropriated assets in Crimea
The FBK’s claims: The Friendship of the Peoples meat processing plant, where food products are purchased at unthinkable prices, was wrestled away from the Ukrainian oligarch Yuriy Kosiuk in early 2017. In interviews, he's said directly that the factory was “expropriated” from him.
Vaninsky’s response: “And what was he supposed to tell [Ukrainian journalists]? ‘Now I’m set for life? They bought everything at market value and it was only that Mr. Petro Poroshenko who couldn’t sort out his chocolate factory?’”
Kosiuk’s assets in Crimea were purchased at market value, which was verified by his company “Myronivskyi Khliboprodukt” and the London Stock Exchange. He has a public company that works with foreign investors. He simply couldn’t have sold his assets at an unfair price.
Translation by Kevin Rothrock