Russian military prosecutors open investigation into multimillion-dollar Defense Ministry auction

Russia’s Chief Military Prosecutor’s Office has opened an investigation into the cancellation of a Defense Ministry auction worth at least 607.5 million rubles ($10.6 million), according to the news agency RBC.

The auction of Defense Ministry property, which included ferrous and non-ferrous scrap metal and defective vehicles, was planned for June 1, after it was already rescheduled from April 27, when officials postponed the event for “additional verification” of the property. One of the two initial bidders, a company called RegionResource, then filed a complaint with Russia’s Federal Antimonopoly Service, which recognized the claim.

The deadline for bids was then extended to May 30, by which time TranslLom, a former Russian Railways subsidiary, joined RegionResource and another company, DeltaMet, in the competition for the Defense Ministry’s goods. According to RBC, the government proposed making TransLom its priority buyer of scrap metal, which would have meant accepting the company’s bid without considering the other offers.

But RegionResource ultimately won the purchase with an offer of 630 million rubles ($11 million) — 20 million rubles more than TransLom and 22 million rubles more than DeltaMet — and the government then issued the companies a notice recording the results of the auction. 

Days later, on June 2, the sale was invalidated, following a complaint submitted by TransLom to Deputy Defense Minister Timur Ivanov. According to the complaint, an inspection of the ministry’s property revealed “discrepancies between the inventory and the quantities of property put up for sale.” RBC says TransLom also complained that it wasn’t able to examine the property itself, having entered the auction after the inspection period expired. 

RegionResource then responded with its own complaint, this one addressed to state prosecutors, alleging that Oleg Mushegyan, the deputy head of the Russian Defense Ministry’s Property Relations Department, acted “in the interests of a small circle of commercial organizations,” with the goal of facilitating “their exclusive victory” in the auction. RBC says Mushegyan has been summoned to appear before prosecutors.

The auction in question is the second largest in the history of the Defense Ministry’s Property Relations Department, according to Dmitry Dobroshtan, who heads a social organization called “State Procurement Civil Control.”