Moscow : Russia's largest airline Aeroflot misspent 13.9 billion rubles (over $443 million) in 2010-2011 and the first nine months of 2012, according to an Audit Chamber report.
Auditor Sergei Ryabukhin said at a meeting of the Federation Council's Rules Committee that Aeroflot misspent 8.5 billion rubles on the purchase of commodities and services, around 4 billion rubles in loans and investment in its subsidiary Aeroflot Finance, and more than 1.5 billion rubles in selling and buying back trademarks.
He said the Audit Chamber also believes the airline's board of directors made poor decisions regarding borrowing.
Lacking its own capital, Aeroflot borrowed from state-owned lender Sberbank in order to lend money to its subsidiaries.
A 12 billion ruble loan to Aeroflot Finance for replenishing its working capital cost the airline some 3.8 billion rubles, the auditor said.
Although Aeroflot invested 7 to 10 billion rubles in subsidiary and affiliated companies each year, its dividends from them only amounted to 1.5-2 percent of the total investment, the Audit Chamber said.
Aeroflot, which received the Audit Chamber's report April 23, said the auditors' conclusions were contrary to industry and international experts' assessments.
It also dismissed the auditors' complaint that it had signed contracts worth more than 10 million rubles without holding tenders, saying these claims were groundless.
In a statement on its website, the airline also pointed out with regard to investing in loss-making regional subsidiaries, that it had "a major social responsibility as the national airline," and could not simply make mass redundancies without considering "the social consequences for the regions and the nation as a whole".
Aeroflot, a member of the SkyTeam global alliance, is based at Moscow Sheremetyevo Airport. In 2011, Aeroflot flew over 14 million passengers.
The Federal Agency for State Property Management is Aeroflot's main shareholder with a 51.17 percent stake. Around 15 percent of the airline is held by companies belonging to businessman Alexander Lebedev.