* Putin appoints ally after dismissing minister
* Ministry had been drawn into fraud investigation
By Thomas Grove
MOSCOW, Nov 6 President Vladimir Putin fired
Russia's defence minister over corruption allegations on
Tuesday, the latest twist in an unfolding saga of power, money
and suspected adultery at the heart of the Kremlin.
Putin announced on television that he had fired Anatoly
Serdyukov, once seen as one of the president's most loyal
courtiers but lately a liability amid allegations that the
military sold off assets cheaply to insiders.
"Taking into consideration the situation around the Defence
Ministry, in order to create conditions for an objective
investigation into all matters, I have decided to remove Defence
Minister Serdyukov from his post," Putin said.
Serdyukov's replacement will be Sergei Shoigu, recently
named governor of the Moscow region and known as a popular and
loyal Putin ally during nearly two decades as head of the
The defence minister wields immense power in Russia,
channelling billions of dollars every year through the country's
powerful defence industry, the second largest arms exporter in
the world. Putin has promised to spend 23 trillion roubles
($726.30 billion) on the military by the end of the decade.
Corruption has been endemic at the defence ministry for
decades. The country's top military prosecutor said last year
that a fifth of the budget was stolen or embezzled.
Putin said at the televised meeting with Shoigu that he must
continue "grandiose plans for the reform of the army".
Russian investigators raided the offices of Defence Ministry
firm Oboronservis last month and opened an investigation into
the company on suspicion that it had sold assets to commercial
firms at a loss of nearly $100 million.
Russian media have been speculating for days that Serdyukov
had lost Putin's support after having an extra-marital affair
that infuriated Serdyukov's powerful father-in-law and patron,
Viktor Zubkov, chairman of oil monopoly Gazprom.
When police raided the apartment of Serdyukov's neighbour,
33-year-old female military bureaucrat Yevgeniya Vasilieva, they
found valuable paintings, rare antiques and more than 100
A Russian tabloid newspaper with connections with security
personnel reported that Serdyukov was in the apartment as well
when the raid began. Vasilieva was reported on Tuesday to have
left the country, Interfax news agency reported.
ENEMIES IN HIGH PLACES
A one-time furniture salesman, Serdyukov owed much of his
career to Zubkov, a confidante of Putin from their days in St
Petersburg, who served as prime minister in 2007-08.
Serdyukov's control over Russia's arms budget had earned him
enemies among ambitious Kremlin figures, including Deputy Prime
Minister Dmitry Rogozin who oversees the country's defence
industry, government sources say.
"Mr. Serdyukov controlled at least a quarter of our budget
and of course there are a lot of people who wanted a share of
that pie," said independent defence analyst Thomas Golts.
Serdyukov's military reforms, which reorganised troops, cut
the number of officers by more than 100,000 and exposed high
level corruption, also made him disliked in the ranks.
He headed the tax ministry from 2004-07 when a tax case
dismantled the assets of jailed former oil tycoon Mikhail
Khodorkovsky, a role that had led many analysts to believe
Serdyukov was untouchable and would weather the scandal.
Shoigu, 57, an army general, was emergencies minister from
1994 until this year, earning a reputation for personally
intervening in natural disasters and other calamities that
plagued Russia in the years since the Soviet Union collapsed.
He gained the trust of the Kremlin and average Russians
after his effective reorganisation of the civilian defence
troops, a paramilitary body he inherited from the Soviet Union.
In April of this year, when he took office as Moscow
regional governor, he was considered Russia's third most trusted
politician in a survey by independent pollster Levada.
That popularity may leave him room to travel higher in the
government run by prime minister Dmitry Medvedev, a former
president whose star, some analysts speculate, is falling.
"Shoigu is unknown in our country as a great strategist or
as a powerful military officer, but that is not needed in the
post of the minister of defence," said Alexei Arbatov, a
military analyst at the Russian Academy of Sciences.
"If the defence minister is largely an administrative post,
then Shoigu has very great merits ... As an administrator he is
already regarded very highly and moreover, he is popular in
Russia and in social opinion," he said.