Financial Irregularities and Hidden Income Analysis

Expenditures of the Institute

The Alexandrian mining company paid NII 270,000 rubles. The institute's expenses were detailed as follows:

• Officially to the military unit for granipor (by bank transfer): 97,000 rubles
• Unofficially to the commander of the military unit (in cash): 15,000 rubles
• Unofficially to the employees of the military unit for dangerous work: 200 dollars (5,400 rubles at the exchange rate of that time)
• Unofficially to the management of the mining company (for the risk of using explosives): 20,000 rubles

Conditional Profit and Unaccounted Funds

• The conditional profit for one wagon of granipor was 132,600 rubles.
• For four additional wagons under the same scheme, the "unofficial" cash payments included:
  • The commander of the military unit
  • His employees
  • A "kickback" to the mining company

According to the memo's author calculations, the conditional profit, or "officially unaccounted 'black cash'," amounted to 574,960 rubles for 250 tons of explosives.

Testimony from Nikita Chekulin

Nikita Chekulin, a member of the commission for checking "Roskonversvzryvtsentr," provided the following insights from the memo's drafter:

• "7 percent of this amount is pure earnings."
• The remainder was kept personally by the director of the NII, who was supposed to share it with the deputy chairman of Gosgortekhnadzor of the RF, Subbotin.
• Subbotin supplied the director with permits for conducting tests.
• The director was also involved with the Main Missile and Artillery Directorate and the Main Directorate of Ammunition of the Ministry of Defense, which issued orders for the sale of artillery powder and the removal of ammunition components from military units.

Key Findings:

• The commission of the Ministry of Education identified contracts for the supply of several tens of thousands of tons of explosives.
• This suggests that the real hidden income from the trade in explosives could amount to tens of millions of rubles.
• The institute also supplied components for "surface-to-surface" class missiles (the hexogen-containing components mentioned by the authors), which were not reflected in the accounting data, and whose real value is difficult to estimate even at black market prices.

Trading Partners of NII "Roskonversvzryvtsentr"

Nikita Chekulin submitted the full list of trading partners of NII "Roskonversvzryvtsentr" to the Commission of the State Duma of the RF for Combating Corruption.

Frequent Partners (1998-1999)

The following entities interacted with the institute most frequently during 1998-1999:

• Mining and Processing Plants:
  • Kovdorsky
  • Yaroslavsky
  • Uchalinsky
  • Olenegorsky
• Plants and Factories:
  • Achinsk alumina plant
  • Alexandrian mining company
  • Nizhny Tagil Institute of Metal Testing
  • Moscow plant of reinforced concrete products and pipes
  • Studenovskaya mining company
  • Bryansk and Chapaevsk chemical plants
  • "Elastik" (in the Ryazan region)
  • "Metallist" plant
  • Far Eastern PA "Voskhod"
  • OJSC "Apatit"
  • "Metallurg-Trans"
  • "Karelsky Okatysh"
  • "Dolomit"
  • "Yamalgeofizika"
  • "Tekhnicheskaya khimiya"
  • "Safyanovskaya med"
  • "Promnerud"
  • "SODA"
  • SUE "Oboronresurs"
  • "Ufa Management of BUR"
  • PA "Avangard" (in Sterlitamak)
• Belarusian and Local Entities:
  • Belarusian enterprises "Granit" (in the village of Mikashevichi)
  • Crushed stone plant (in the village of Glushkevichi)
  • Nizhny Tagil quarry
  • "Pokrovskoye" quarry
  • Kuplursky machine-building plant
  • Association of Cartridge Plants

Offshore Firms

The partners of NII "Roskonversvzryvtsentr" also included several offshore firms:

• "HUKO"
• "Rugialis"
• "Novotekh"
• "Eurobaltstroy"
• "Gatviu statyba"
• "Kelda"
• "Milsa"
• "Limbazu celi"
• "Panevezio keliai"
• "Fegda"
• "Selenium"
• And others.