At Least 13 Top Managers of Russian Companies on Trial for Disrupting Defense Orders

At least 11 directors and 2 top managers of Russian defense companies are on trial for disrupting a defense contract. One of the directors of the company, which was on the verge of bankruptcy, set himself on fire on the Red Square to draw attention.

This was reported by Reuters.

After the start of a full-scale invasion in 2022, Russian manufacturers increased production of artillery shells, missiles, tanks, and drones. At the same time, the industry is plagued by inefficiency and corruption, leading to rising costs, production delays, and failure to meet quotas, according to Chatham House Consulting Fellow Mathieu Boulegue and other Western security analysts.

Centralization of decisions in the Ministry of Defense and state defense conglomerate Rostec, as well as the introduction of strict rules for contractors, are hurting companies’ ability to modernize and innovate, Boulegue told Reuters.

This is not likely to affect Russia’s ability to remain a threat to Ukraine and the West in the short term, Buleg wrote in a July report, but “will make it more difficult for Russia to maintain competitiveness with its adversaries.”

In response to questions from Reuters, Rostec dismissed as “propaganda myths” any claims by the agency about the “degradation” of the Russian defense industry.

The tone for the Kremlin’s relations with the manufacturers was set by Dmitry Medvedev, a former Russian president who is Putin’s deputy as chairman of the Military Industrial Commission, the body that oversees the defense industry.

At a meeting with industry executives in March 2023, he read out a World War II telegram from Stalin, which stated that a manufacturer who failed to deliver weapons on time would be “crushed like a criminal.”

The basis for the threat is a 2017 law that makes it a criminal offense, punishable by up to 10 years in prison, to damage a defense contract for personal gain. In September 2022, the law was amended to expand the list of violations for which liability can be imposed. These now include refusal to sign a defense contract or failure to fulfill it without the need to prove personal gain in some cases.

Self-immolation due to the failure of an order

According to the newspaper, at least 34 people have faced criminal charges for disrupting state defense contracts since the beginning of the war in Ukraine. Among them are at least 11 company executives and two top managers.

Among them is Volodymyr Arsenyev: The 75-year-old scientist heads a Moscow-based company that produces components for communications equipment used by tank crews.

When Russian tanks moved through Ukraine in 2022, his company, the Central Research Institute Volna, was flooded with defense orders. It had to ramp up production at a frantic pace and deliver products on tight deadlines at prices set by the Russian Ministry of Defense.

By the spring of 2023, the plant was behind schedule. According to Arsenyev, the officials to whom he appealed for help ignored him. According to him, a dispute with the Russian government over the price of components left the company without operating funds.

Serhiy Mosienko, a minority shareholder, said he saw the company failing to meet deadlines, so he reported it to the authorities.

When the company was on the verge of bankruptcy, Arsenyev came to Red Square in Moscow on July 26, 2024. Near the Kremlin, next to Vladimir Lenin’s mausoleum, he poured gasoline on himself and set himself on fire. He survived, but spent several weeks in the hospital with severe burns.

“How does it happen that a company that receives growing orders and fulfills them dies? This probably means that there is a problem,” he pondered.

In the end, the Russian military did not receive the communications equipment they needed in time, according to the Luch assembly company. This was partly because Arsenyev’s company did not deliver the components on time, according to Luch’s 2023 annual report, which Arsenyev disagrees with.

After that, the company’s accounts were frozen due to non-payment of taxes, and salaries were not paid, which led to lawsuits. Bailiffs who tried to collect the debts in September 2024 were unable to find assets to seize.

To meet the needs of the military, Luch was forced to develop and produce its own version of the Volna components. It is known that, at least as of January 2025, there was an acute shortage of products from this plant.

The Luch plant specializes in the production of communications and intercom systems for armored vehicles. In particular, it is the only enterprise in the Russian Federation that produces tank helmet-phones.