Russian Military isn’t Paying Its Bills – and Suppliers are Increasingly Suing
Staunton, August 27 – Last year, suppliers
of the defense ministry went to court almost 3600 times to force it to pay them
what it owes; this year, there have been 3200 such suits already, a number that
suggests there will be more than 5,000 by the end of this year, Yury Lobunov writes.
In the majority of
cases, Lobunov continues, “lengthy court cases do not save the military from
paying its debts. The only significant result of these military actions on the
legal front is delaying payment for several months to several years,” something
that makes the system ever more difficult to function.
But Georgy Fedovo, an advisor to the
Duma security committee, says that this pattern reflects “the ineffective
administration” of the ministry. “The defense ministry was and remains an
enormous system with many branches including non-military infrastructure tasks.”
In Soviet times, the military simply was given all that it wanted. But now
things have changed.
The ministry has been forced to enter
into contracts with firms which provide services to others as well, and that
is not something the ministry has found it easy to cope with.Moreover, there is an enormous problem with
corruption in these firms when they are headed by “’friends of Putin.’” In that
event, the real profits lie elsewhere and the ministry is caught in a trap.
to Lobanov, “military lawyers heroically fight for the financial interests” of
the ministry. Sometimes this generates respect but sometimes only “a smile”
because they adopt tactics that allow the ministry to avoid paying in a timely
fashion. Among these is an unwillingness to sign contracts or to extend them –
or claims the wrong people signed them.
is interesting is this, he continues. The arbitrage courts typically find for
the suppliers, and the appellate courts do the same, even when cases reach the
economic collegium of the Supreme Court.But the delays in payments mean that many suppliers are reluctant to
provide the ministry with what it needs and this is creating serious
bottlenecks in some sectors.