Clouds are piling up above Dauria Aerospace

Following the news of forced closure of offices in Europe and the US, Dauria Aerospace has faced criminal investigation of its work with NPO Lavochkin conducted yet in 2013. Is that temporary problems or a sign that no commercial space expected in Russia?

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NPO Lavochkin logo

The Investigative Committee of the Russian Federation has initiated a criminal case against the Federal Space Agency's affiliate NPO Lavochkin and private space company Dauria Aerospace, Izvestia reports. Criminal investigators suspected both entities on deceptive practices when executing a contract on development work under Space platform 'Karat-200'.

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Dauria Aerospace logo

The contract valued at near $35 million was signed in April 2013 between NPO Lavochkin, famous as prime contractor for many scientific satellites, interplanetary spacecraft and Fregat upper stage, and Dauria Aerospace, private space company founded by Russian businessman Mikhail Kokorich. Suspicious in the contract was the fact that, in opinion of investigators, works to be performed by Dauria had already been performed by NPO Lavochkin under financing from the federal space budget. Furthermore, investigators suppose that representatives of NPO Lavochkin turned over the results of the development work under Space platform 'Karat-200' to Dauria.

Dauria executed only the first stages of the work (draft designs), which was paid by NPO Lavochkin in the amount of approximately $350,000. However, according to Russian Criminal Code, this is already a 'large-scale fraud'. After that, the enterprises terminated cooperation of the mentioned project.

It is known that Dauria works with NPO Lavochkin on an adaptor to be used on Fregat upper stage that will allow deployment of CubeSats in orbit. This work is being done for Dauria following near $12 million contract on two MKA-N SmallSats, awarded by Roskosmos in late 2012. These satellites are expected to be launched this year as a secondary payload with the prime one, Meteor-M2 No. 2.

Fregat upper stage
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Izvestia notes that this is not the first time NPO Lavochkin is suspected for such deceptive practices. Investigators already accused some of the company's officials in similar frauds that took place in 2012-2014. Another pro for investigators' suspicion is close ties between NPO Lavochkin and Dauria since many specialists of the latter had experience of work in the Roskosmos' affiliate. As an example, many team-members of Phobos-Grunt program changed to Dauria after the mission failure in late 2012.

One of Dauria senior executives Sergei Ivanov denied accusation, saying that his company 'really does development works in the interests of third parties… but works within the law only.' Later Izvestia published an interview with NPO Lavochkin Chief Viktor Khartov, where he made comments with regards to the criminal case.

Dauria Aerospace has all licenses, manufacturing facilities, qualified team, quality control system. They already launched 2 spacecraft and have real perspectives to launch far more, with involvement of foreign components and under western standards, not used in Russia before. Relations with Dauria were agreed with Roskosmos in a standard procedure beforehand. Viktor Khartov, Acting CEO of NPO Lavochkin

Viktor Khartov assured in his belief that the development work performed by Dauria was made properly and with no violence of law. According to him, Dauria did perform the work on the same Space platform, but within the standard procedure of evaluation of different draft designs; and Dauria's responsibility was to make a design with involvement of foreign (Western) components, whereas Roskosmos' affiliates developed the platform with Russian component parts only. Finally another design was chosen and Dauria was paid only $350,000, instead of $35 million that was indicated in the contract for the full-scale development of 'Karat-200' Space platform.

Co-founders of Dauria Aerospace Mikhail Kokorich and Sergei Ivanov watching DX-1 launch
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It is worth to note that Izvestia does not have a reputation of a news agency that may be absolutely trusted, but more as an agency that raises topical questions. Thus, recently it reported that Gazprom Space Systems may terminate cooperation with Thales Alenia Space France (TASF) on Yamal-601 telecommunications satellite, and its further collaboration with France-based TASF and Airbus Defence and Space is questionable, but Gazprom denied this information. Anyway, amid tensions between Russia and France caused by Mistral helicopter carriers supply contract, that news was coincidently timely.

Whatever the truth about Dauria Aerospace is, we should regard this as a sign that not everybody in Russia likes appearance of a commercial space industry, unless it is just a personal dislike to Dauria or its founders. Both hypotheses are not in favor of the company, which earlier this year admitted existing problems that forced it to close offices in Germany and the US and focus on domestic market.

"Currently, we focus on the Russian part of business and the export potential of space systems manufactured in the Russian subdivision of Dauria Aerospace… The European and US parts are currently gradually scaling down their activity and will practically halt their activity in the near future". Mikhail Kokorich, CEO of Dauria Aerospace

Mikhail Kokorich linked these plans to uneasy political and economic situation in the world, which negatively affects the Russian company and its ability to attract financing. He explained that the financing market for the companies with Russian shareholders has been closed and that is why Dauria cannot compete with foreign startups, many of which have received a large-scale funding, TASS agency reported.

Left to right: Igor Komarov, then-President of URSC; Mikhail Kokorich; Aleksey Belyakov, Vice President of Skolkovo; Sergey Zhukov, advisor to the Chairman of Innovative Development Board of Skolkovo
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Later Alexey Belyakov, Vice-president and Space cluster Executive Director at Skolkovo Innovation Center, which partners with and hosts Dauria Aerospace, said that the decision of Dauria to cut back on its international activity is 'completely expected.'

“In a climate of sharply constricting financial markets, Dauria needs to focus its resources on the more promising and natural areas of business – where it can make a return quickly.” Alexey Belyakov, Vice-president and Space cluster Executive Director at Skolkovo Innovation Center

Dauria Aerospace loudly entered the commercial communications satellite market last year when Aniara SpaceCom LLC of India awarded it $210 million contract on manufacturing of two all-electric Ku-band telecommunications satellites and launching them together on an Indian GSLV rocket in late 2017. As a sequence, SpaceNews included Dauria in its year-review chart of large 2014 Commercial Satellite Contracts.

Later it was announced that Dauria Aerospace was awarded $100 million contract on manufacturing of high-resolution Earth observation spacecraft for Sovzond that is expected to be launched in 2018. Currently the company has a constellation of three SmallSats – DX1, Perseus-M1 and Perseus-M2 – launched in summer 2014.

DX-1 spacecraft of Dauria Aerospace
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