BMB Russia: Russia’s National Guard Sets its Sights on the Country’s Private Security Business

Published by BMB Russia on January 31st, 2019.

The last months of 2018 were not easy for state security company “Okhrana.” In October, Roman Egorov, the former head of a special department inside the company, was arrested for corruption. According to the investigation, Egorov had been providing off-the-books protection for several Russian businessmen and, more specifically, had been illegally paid 250,000 rubles (about $3,700) a month to provide security for the co-founder of M.Video, a consumer electronics retail chain listed at the Moscow exchange.

Then, in December, outlet Kommersant revealed that several major oil companies (Lukoi, Gazprom Neft, Tatneft and Sibur) complained in a letter to Nikolay Patrushev, secretary of the National Security Council, that Rosgvardiya (National Guard), the state agency which controls Okhrana, was increasingly trying to monopolize the market for security services.

The complaints have all the marks of a backlash to a process that started in 2016 with Rosgvardiya’s creation. The state security agency took over most of the country’s interior troops, riot units and special forces of the Interior Ministry (MVD) and became practically overnight one of the country’s biggest security agency. An additional blow to the Interior Ministry’s influence was the transfer of “Okhrana” to Rosgvardiya, who was also tasked with overseeing private security companies in the country.

FGUP (short for “Federal State Unitary Enterprise”) “Okhrana” is a significant player in the Russian private security business, itself a huge market estimated at 420 billion rubles (about $6b) in 2015. With more than 50,000 employees in 80 branches across Russia, it was, according to specialist Mark Galeotti, “a source of revenue that was useful in filling all kinds of gaps,” from spending money for strategic needs to embezzlement. And, as the Egorov case showed, it is an excellent vehicle for backhand deals.

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