A Serious Fraud is Revealed during the Acquisition of a Company

The General Military Investigation Department are investigating allegations of fraud in the sale of stock and property. In 2011, stock in the companies "VitaProdzhekt" and "Sosnovoborelektromontazh" were alleged to have been purchased at an undervalue (approximately 70 and 30% respectively). According to investigations, at the time the first company was controlled by Yevgenia Vasilyeva the former Head of Property Affairs Department in the Ministry of Defence of Russia, while the second was owned by the wife and daughter of Mr Grigory Naginsky, the former Vice Minister of Defence. Both companies have voluntarily returned their shares since the investigation began. Vasilyeva faces charges under Part 4 of Article 159 of the Criminal Code (fraud committed on a large scale). Grigory Naginsky has been interviewed by the authorities as a witness. The criminal case continues.

Board of Directors' Resolution Forged to Dispose of the Company's Assets

Following the investigation of "The Road Exploitation Company No. 77" in relation to its failure to pay wages to more than 100 employees (the amount due exceeding USD 150,000), the investigative authorities commenced criminal proceedings against the company's CEO, his business partner and head of the regional office of the Federal Property Management Agency. The company is a 100% state-owned corporation and is alleged to have suffered substantial losses due to the said persons' actions, who are accused of embezzlement and abuse of office.

Reportedly, the accused are alleged to have disposed of expensive road-building machinery to the benefit of companies controlled by their acquaintances. They are also said to have arranged for the board of directors' approvals of the relevant major transactions to be forged. If the case is proved against them, the defendants face imprisonment of up to 7 or 10 years each.