MOSCOW, SEPT 18: Two top industrialists of Russian plane manufacturer Mapo-MiG and a banker have been arrested on charges of embezzling US $237 million worth of public funds meant for supplying 10 MiG-29 fighter aircraft to India in 1995, Itar Tass news agency quoting the prosecutor-general's office said.Alexander Bezrukov, former chairman of military-industrial complex `Mapo' - the manufacturers of MiG aircraft, and financial director of the MiG corporation Maxim Tkachev have been arrested along with the chairman of the Kreditny Soyuz bank, Dmitry Baranov, for embezzlement of $237 million in a fake `India-MiG' deal, Itar Tass said.They are alleged to have received the money from the budget in 1996 to finance the production of 10 MiG-29 fighters under a non-existent contract with India and transferred it to foreign banks, where the trace of 237 million dollars was lost, the agency said.All three may be sentenced to a 5-10 year prison term, it added.According to TV-Centre channel, Bezrukov wasarrested at the airport while trying to leave the country.The Russian press had first reported the MiG scam last year and named erstwhile first deputy finance minister Andrei Vavilov as the official who cleared the allotment of funds to MiG Corporation.In February 1997, MAPO had asked Russian finance ministry for a $ 231 million advance to complete the government contract with India.Andrei Vavilov, then deputy finance minister, granted the money. But he did not give the amount directly to MAPO. Instead, he asked the finance ministry to buy $ 237 million in bonds from MFK, an affiliate of the Uneximbank, owned by Vladimir Potanin, a former deputy prime minister and a powerful ``oligarch.''According to media reports, the bonds were meant to be deposited into the MAPO account in Unikombank. However, the bonds were never deposited and the money disappeared without a trace.India had bought 10 MiG-29 fighters from Russia in 1995 and is believed to have paid in cash since the Indian government foundit cheaper than using multi-million credit-line opened by the Kremlin in 1992 for the purchase of Russian arms.Part of about 800 million dollar Russian credit was used by India in the initial period after the break up of the former Soviet Union for the purchase of military hardware and spares, while rest was carried over beyond the 1994 deadline by separate agreements but was not utilised.The last of such agreements extending the credit-line was signed in 1996 and the Russian budget had special provisions to finance it, but by then, India had already decided to buy 40 SU-30 multirole long range fighters instead of the smaller range MiG-29 fighters.
