The Moscow Lefortovo Court has taken Yevgeny Melnik, the former director general of the Russian Communications Authority, into custody. He will remain in detention until October 2.
According to the court’s August 9 decision, Melnik Yevgeny Nikolaevich faces a preventive measure in the form of detention for 1 month and 23 days, until October 2, as stated by the court spokesperson.
The case centers on suspected misconduct in the execution of a state defense order.
While the charging article framed the issue as the company president using his powers for personal gain, the authorities argue Melnik’s actions harmed the interests of society or the state.
Should Yevgeny Melnik be found guilty, potential penalties include a fine or fines totaling 1 to 3 million rubles, along with a prison term of 4 to 8 years, and the possibility of prohibitions on holding certain positions or engaging in specific activities for up to a decade.
Melnik served as chief executive officer of the company from July 2010 to August 2013. In a 2014 interview, he was described by a major news outlet as the head of the organization.
What does RCSS do?
The private state company Russian Communications Corporation was established in 2007 by a government decision as a joint venture between Rosoboronexport and the Atlantis group. Its mandate is to safeguard state cyber security and to manufacture reliable telecommunications equipment and communication systems for Russia.
Initially, the project expanded Rosoboronexport’s export program to include civil solutions, particularly in the cybersecurity sphere. Later, plans emerged to create a structure focused directly on national cyber defense.
Melnik noted that by 2014 RCSS had collaborations with major Russian institutions, including security forces and civilian agencies.
Among those cited were the Central Bank of the Russian Federation, various ministries and departments, Rosseti, and several other organizations, according to Melnik.
He stated that the company produced modern telecommunications and information technology used primarily to build large systems for government customers.
Industry sources describe RCSS as developing complex automated enterprise security management systems, local network switches, mobile checkpoints, routers, and both software and hardware platforms.
Company challenges
News outlets reported that since early 2019 the company faced lawsuits totaling around 228.45 million rubles, with one contractor later going bankrupt.
In 2019 a court ordered RCSS to pay 10 million rubles to MegaFon for landline services. Melnik attributed the difficulties to broader market conditions, noting that priority was given to import substitution, though not all customers shared that view.
In prior interviews, Melnik asserted that the company produced modern equipment that was competitive with, and in many respects ahead of, rivals.
Financially, the company showed profits in 2016 and 2018, a profit of 5.1 million rubles in 2016, 180 million in 2018, and a loss of 189 million rubles in 2019. By 2021, total debt stood at 2.1 billion rubles.
In August 2021, RCSS faced bankruptcy proceedings, with a bankruptcy trustee appointed. Data from corporate registries also link ZAO RKSS Novye Sistemy to Melnik, and bankruptcy actions continued into January 2022.