Moscow. A former chief executive of a Russian drone company has been arrested in a major defence-sector fraud case involving the alleged diversion of state funds meant for drone production. Yury Kozarenko, who had earlier briefed President Vladimir Putin during a January 2025 visit to the company’s facility, has been placed in pre-trial detention by the Tverskoy District Court in Moscow after his bail appeal was rejected.
Defence Funds Under Scrutiny
According to investigators, the case involves the alleged embezzlement of about $8 million, approximately ₹66 crore, linked to a state defence order for drone manufacturing. Authorities claim that funds meant for production were diverted through shell companies and affiliated entities instead of being used for their intended purpose.
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The company had earlier received a government subsidy of around $55 million, approximately ₹460 crore, to manufacture 750 vertical take-off and landing drones. Investigators found that a subcontractor completed only about 80 per cent of the contracted work, raising concerns over irregularities in both funding and delivery.
Putin Visit and Drone Production Claims
Kozarenko came into public focus after accompanying President Putin during a visit to the company’s drone production facility in January 2025. During the visit, he presented production lines and outlined the company’s technological capacity.
He had claimed that the facility could eventually scale up to producing 300,000 drones a year, including systems based on Iran’s “Shahed”-style design, locally referred to as “Geran” drones. The claims were linked to Russia’s wider effort to expand domestic military drone production.
Investigators are now examining whether the company’s production claims, subcontracting arrangements and financial flows matched the scale of public funding received under defence contracts.
Wider Probe Into Drone Supply Chain
The arrest forms part of a broader investigation into alleged corruption in Russia’s defence manufacturing sector, particularly within the drone supply chain. Authorities are looking into procurement contracts, production delays, inflated billing and incomplete deliveries linked to state-funded projects.
In a related case, pro-war media manager Ilya Kostylev was previously detained over a separate drone procurement fraud investigation. He is accused of involvement in the alleged misappropriation of about $13 million, approximately ₹108 crore, earmarked for drone supplies.
Russian authorities are also examining whether layered corporate structures were used to reroute defence funds through intermediaries. The case has raised concerns over financial oversight in a strategically important sector, as investigators continue to assess the scale of alleged misuse across related drone projects.
