Russian full-scale invasion of Ukraine initially appeared to offer a major business opportunity for Vladimir Arsenyev, a 75-year-old scientist who runs a Moscow-based company supplying components for military communication equipment used by tank crews.
As Russian forces advanced into Ukraine in 2022, demand for defence equipment surged, and Arsenyev’s firm, Volna Central Scientific Research Institute, was flooded with government orders. However, what seemed like a commercial breakthrough quickly turned into a severe burden.
In interviews with Reuters—his first public comments on the matter—Arsenyev said the contracts forced his company to dramatically increase production while meeting strict deadlines and prices set by the defence ministry. Failure to comply, he said, carried the risk of criminal prosecution, as Russian authorities warned defence manufacturers of jail time for failing to meet state contracts.
By early 2023, Volna had fallen behind schedule. Internal disputes escalated, and a minority shareholder reported concerns to authorities, fearing legal consequences if deadlines were missed. Arsenyev said his appeals for official assistance went unanswered as the company’s financial situation deteriorated.
Facing mounting pressure, Arsenyev staged a dramatic protest in Moscow’s Red Square in July 2024, near the Kremlin. He survived and spent weeks in hospital recovering. From there, he denied claims that his company had failed to meet contractual obligations, saying complaints against him were politically or commercially motivated.
Russian authorities declined to comment on his case.
Defence Industry Under Strain
Arsenyev’s situation highlights broader pressures within Russia’s defence sector. A review of court records shows that dozens of individuals have faced criminal charges since the start of the Ukraine war for allegedly disrupting state defence contracts, including senior executives and company heads.
While Russia has significantly increased weapons production since 2022, analysts say the sector remains plagued by inefficiency, corruption, rising costs, and rigid state controls. Decision-making has been increasingly centralised within the defence ministry and state-owned conglomerate Rostec, a move critics argue stifles innovation.
Rostec has rejected such criticism, insisting the defence industry is growing rapidly and functioning effectively.
Contract Disputes and Financial Fallout
Volna’s difficulties affected its partner, Luch Factory, which assembles military communication devices. Luch claimed delayed component deliveries contributed to shortages, an accusation Arsenyev disputes. A pricing dispute with the defence ministry left Volna short of funds, leading to frozen accounts, unpaid wages, and legal action from creditors.
In 2023, the defence ministry sharply reduced payments under Volna’s contracts, citing lower production costs. Volna challenged the decision in court, and a judge later ruled that the price cut had harmed military supply chains. Despite winning one case, several related lawsuits remain unresolved.
Today, Arsenyev continues to fight legal battles while keeping his company afloat at a reduced scale. The only official response to his protest was a fine for staging an unauthorised demonstration in a restricted area.