Russia's Putin fires defense minister in wake of scandal

May 30, 2012: Russian President Vladimir Putin speaks at a meeting marking the 20th anniversary of the Russian Security Council in the Kremlin in Moscow. (AP)

MOSCOW – Russian President Vladimir Putin fired the country's defense minister on Tuesday, two weeks after a criminal probe was opened into alleged fraud in the sell-off of military assets.

Putin made the announcement of Anatoly Serdyukov's dismissal in a meeting with Moscow regional governor Sergei Shoigu, whom he appointed as the new minister.

Putin's comments appeared to connect the decision to a probe announced by the country's top investigative agency last month into the sale of assets, including real estate, at prices far below market value.

The Investigative Committee says the state suffered damages of 3 billion rubles ($95 million).

Putin did not give specifics in his televised remarks, but said he made the decision "in order to create terms for the objective investigation of all questions" involving the ministry.

Russia's military establishment has been haunted by corruption accusations for years and several top military officials have been convicted of embezzlement.

The case announced in October involves Oboronservice, a state-controlled company whose activities include servicing military aircraft and arms and constructing military facilities.

Investigators have searched Oboronservice's offices and the apartment of a senior company official who formerly headed the Defense Ministry's property department.

Investigative Committee spokesman Vladimir Markin told the Interfax news agency on Tuesday that Serdyukov would be questioned in the probe "if there is a basis" for doing so.

Serdyukov was a furniture store executive and head of the Russian tax service before being appointed defense minister in 2007. He became unpopular among the top brass for reforms to downsize the bloated Russian military; under Serdyukov, as many as 200,000 officers lost their jobs and many units were disbanded.

Speculation about his dismissal had floated around for years, but he had received Putin's staunch backing.

It was not immediately clear if his dismissal would change the reform course.

But Shoigu is a former general and head of the Emergencies Ministry, a background that appeared likely to win him initial respect in the military.