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Moscow (RIA Novosti) Jun 21, 2013
Former executives of M2M Telematics, a subsidiary of the Russian Systema conglomerate, are under investigation over alleged embezzlement of nearly 400 million rubles ($12.3 million) from the Glonass satellite navigation system program, Kommersant daily reported on Thursday.
The Global Navigation Satellite System (Glonass), officially launched in 1993, is the Russian counterpart to the US-operated GPS.
A criminal case has been opened on charges of "large-scale fraud committed by a group of individuals on the basis of previous collusion," which carries a penalty of up to ten years in prison. No charges have yet been brought against specific M2M Telematics executives, the paper said.
"According to investigators, in 2012, M2M Telematics executives embezzled government funds allocated for a series of IT projects which were part of the GLONASS program," Kommersant reported.
"Investigators believe that the IT company's management signed fake service agreements with eight subcontractors which appeared to have no workers on their payroll, no property, equipment or other resources. These companies only existed on paper. M2M transferred 380.580 million rubles to these subcontractors for work that was never carried out. The money was converted to cash and embezzled, investigators claim," the paper added.
The company rejects the accusations. "This case has been fabricated," Igor Grushelevsky, who was M2M's general director in 2012, told Kommersant. "There is no evidence. It is based on motives other than justice."
Systema told Kommersant it is very concerned over the allegations of financial irregularities in a daughter company, and is assisting the investigation.
M2M telematics is a leading Russian holding company in vehicle telematics and satellite navigation based on Glonass/GPS technologies. Its key projects include navigation and information support for the 2014 Sochi Olympics and the development of intellectual transport systems in Russian regions.
A series of financial scandals have dogged the Glonass program.
On May 16, the Moscow police reported that high-tech company Synertech's management had stolen at least 85 million rubles ($2.7 million) which had been allocated to them for work on a Glonass research project. Synertech is a joint venture of EADS Astrium and Tesat Spacecom with Russian Space Systems.
The Interior Ministry previously initiated criminal proceedings in July 2012 following the embezzlement of over 565 million rubles ($18 million) in federal budget funds allocated for Glonass. The ministry suspected Russian Space Systems' management of concluding research contracts with commercial organizations that had neither the equipment nor the qualified personnel to implement them.
The Glonass program was initiated in the 1970s but underwent a radical revamp in 2001. The 24 satellites comprising the system were put into orbit by 2010 after several costly malfunctions and launch failures by carrier rockets. The program has cost 140 billion rubles ($4.4 billion) to date, and its budget for 2012-2020 stands at a further 326 billion rubles ($10 billion).
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