Published by Global Banking and Finance Review
Posted on January 28, 2025
3 min readLast updated: February 27, 2025
By Lucy Papachristou
LONDON (Reuters) - Russian prosecutors are seeking to recover nearly $33 million of funds that they say were allocated for the defence of the western Kursk region, invaded by Ukraine last year, but stolen instead by corrupt officials.
Ukrainian troops stormed across the border in a surprise attack on Aug. 6 and seized a chunk of Russian territory, some of which they still hold - a valuable bargaining chip for Kyiv in any peace talks with Moscow.
A lawsuit filed by the office of Russia's Prosecutor General orders the head of the Kursk Regional Development Corporation, his deputies and a number of businessmen to repay more than 3.2 billion roubles ($32.7 million) allegedly embezzled from the regional defence budget, state news agency RIA reported.
In the two years prior to Ukraine's attack, the governor in charge of Kursk at the time had repeatedly told the public that Russia had boosted its fortifications along the region's 150-mile (240 km) border with Ukraine.
"Right now the risk of an armed invasion of the territory of Kursk region from Ukraine is not high," Roman Starovoit assured residents in November 2022. "However, we are constantly working to strengthen the region's defence capabilities."
The next month, he posed in a snowy field beside a row of pyramid-shaped anti-tank defences known as "dragon's teeth".
But in the autumn of 2023, Ukraine's National Resistance Center, created by the special operations forces, said in an online post that reconnaissance showed "almost all the strongholds are deserted of personnel and equipment" along the border with Kursk. Corruption was a factor, it said.
Vidео published by Ukrainian paratroopers during the early days of the August incursion showed columns of armoured vehicles pouring into Kursk through the rows of dragon's teeth.
'ILLEGAL ENRICHMENT'
Between 2022 and 2023, some 19.4 billion roubles were pumped from Russia's federal budget to Kursk, according to RIA, to build defences such as ditches and dragon's teeth.
The lawsuit alleges that officials instead funnelled that money into contracts with over a half-dozen companies controlled by several business people. The companies created "the appearance of performing work on the construction of protective structures and put in place a false scheme of expenses", it says.
The head of the regional development fund and two of his deputies "used their official position for personal purposes...(and) for their illegal enrichment through the wrongful seizure of budget funds allocated for the protection and strengthening of the country's defence capabilities against enemy invasion".
The trio was arrested and sent to pre-trial detention on corruption charges in December and January, Russian media reported. They face up to 10 years in prison if found guilty. One of the businessmen named in the suit, whose firm carried out construction work in Kursk, was placed in pre-trial detention last week.
Reuters was unable to locate lawyers for the detained individuals for comment.
"Everyone who has broken the law should know that there will be no leniency or indulgence for him," Kursk's acting regional governor Alexander Khinshtein posted on Telegram on Tuesday.
"Especially when it concerns such a vital topic for all Kurskites as the construction of fortifications!" ($1 = 97.8500 roubles)
(Reporting and writing by Lucy Papachristou; Editing by Mark Trevelyan and Sharon Singleton)
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