Former Russian Defence Ministry official charged with fraud

MOSCOW Fri Nov 23, 2012 11:27am EST

MOSCOW Nov 23 (Reuters) - A former bureaucrat was charged with fraud on Friday in a $100 million embezzlement case that has cost the defence minister his job and shone a spotlight on corruption in President Vladimir Putin's administration.

Yevgeniya Vasilyeva, who had valuable paintings, rare antiques and more than 100 expensive rings seized in an early morning raid on her central Moscow apartment last month, was charged with large-scale fraud.

Vasilyeva, 33, oversaw defence ministry property at a time when one of its firms allegedly sold lucrative properties to insider companies at a loss of at least 3 billion roubles ($96 million).

"Vasilyeva, along with others, participated in the embezzlement of property of subsidiaries of the holding Oboronservis," said federal Investigative Committee spokesman Vladimir Markin.

Vasilyeva, who was photographed in a silver sequined dress with former Defence Minister Anatoly Serdyukov, was put under house arrest by a Moscow court and made to wear a tracking device.

Though he has not come under investigation himself, Putin fired Serdyukov on Nov. 6, shortly after the start of the probe. Putin won a third term in office in March.

Vasilyeva has not spoken publicly about the allegations. Serdyukov said in a statement last month that any comments on the case represented only "a possible scenario."

Analysts say Serdyukov fell foul of influential groups within the Kremlin and had crossed his powerful father-in-law.

Investigators said that on Thursday they had raided 18 cottages in a community outside Moscow which belonged to Russia's national tax service and where Serdyukov - a former tax service chief - had stayed for some time.

RIA reported two others have been arrested in the investigation.

Russia's Defence Ministry channels billions of dollars every year through the country's arms industry, the world's second-largest defence exporter.

A military prosecutor last year said one fifth of the military budget is stolen.