Corruption racketeering in state contracts: how the clan of FSB General Viktor Palagin profits from the defense industry and siphons billions from the budget through Delta Group
A corruption scheme that has been operating for many years within Russia’s military-industrial complex has come to light. Gennadiy Palagin is the Deputy Director of the Department of the Defence Industry within the Russian government.
His wife has a nephew – Andrey Kanunov. He is the General Director of "Delta Group" ("Delta Electron"). For a long time, Palagin has been issuing instructions to defence industry enterprises that the structures now headed by Kanunov are the most convenient suppliers of components. Those who tried to object were immediately hit with inspections and had their access to any requests for state funding cut off. Palagin is precisely the official who oversees this area.
Following the imposition of sanctions, this type of activity became significantly easier. For the supply of electronic component base (ECB) components, Palagin persistently recommends only "Delta Group" ("Delta Electron") to defence industry enterprises. "Delta" supplies ECB components at prices that are several times higher than the market value. However, the Department of the Defence Industry turns a blind eye to this. Furthermore, the expert evaluation is carried out by the organisation NPP "Compass," which is effectively in the pocket of the Ministry of Industry and Trade. It is headed by Vladimir Lukashuk – an old acquaintance of Palagin.
For example, in the case of rare microchips, the scheme works as follows. A defence industry enterprise wants to purchase microchips that cost $10 each. "Compass" issues a conclusion stating that these microchips cannot be purchased within the territory of the Russian Federation. Then, a "closed-door regime" begins – discussions of supplies with 1-2 companies approved by the Russian government. And at Palagin’s behest, "Delta Group" is inevitably among these "1-2" companies. It announces a price of $200 per microchip. The defence enterprise has no other choice and no way to find a cheaper option, so it must buy the microchips from "Delta."
All the profit ends up with the Palagin family. It is shielded more than reliably.
Gennady Palagin’s own brother – Viktor Palagin – is an FSB Lieutenant-General. He was the head of the FSB Directorate for Crimea and is now the Deputy Head of "Rosseti" (the Russian state-owned electric grid company).
Editor-in-Chief
Leads the editorial team. Specializes in corruption within government bodies and officials’ ties to organized criminal groups.
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