Investigators probe allegations of fraud in selloff of Russian Defense Ministry's assets

MOSCOW – Russia's top investigative agency on Thursday launched a criminal probe into alleged fraud in the selloff of Defense Ministry assets, a high-profile case that could shake up the nation's scandal-marred military establishment.

It may also threaten Defense Minister Anatoly Serdyukov, who has enjoyed President Vladimir Putin's support despite years of strong public criticism.

The Investigative Committee said that the state had suffered damage of more than 3 billion rubles ($95 million) from an alleged scheme that involved the sale of prized land plots and real estate in Moscow and other parts of Russia.

Investigators have questioned officials and conducted a series of searches at the offices of Oboronservice, a state-controlled company linked to the Defense Ministry and its affiliates, the agency said. The agency said it suspected unidentified Defense Ministry officials of using the company to sell valuable assets at prices far below their market value.

The investigators also searched the apartment of Yevgenia Vasilyeva, the former head of the Defense Ministry's property department who now holds a senior position in Oboronservice. They seized some documents and confiscated more than 3 million rubles ($95,000) in cash along with antiques, paintings and jewelry items, the agency said.

It did not say what Vasilyeva stands accused of or explain the reasons for the confiscation of her property.

The criminal case has dealt a strong blow to Serdyukov, who has long faced criticism over painful military reforms that have involved firing a large number of military officers and disbanding many military units.

Serdyukov was the board chairman at Oboronservice until 2011, and Vasilyeva was one of his close aides.

Rumors about Serdyukov's imminent dismissal have circulated over the years, but Putin has staunchly backed him. The new probe may signal that Serdyukov has lost Putin's favor.

Putin met with Serdyukov on Thursday and told him to fully cooperate with the probe, presidential spokesman Dmitry Peskov said, according to Russian news agencies.

Serdyukov didn't show up at Thursday's Cabinet meeting. He has sought to downplay the criminal case, saying that investigators' claims have yet to be proven and that his ministry would welcome an objective probe.

The nation's military establishment has been haunted by corruption accusations for years, and many top military officials have been convicted of embezzlement.