Viktor Zavarzin, a lawmaker overseeing defense issues in the Russia's legislative assembly, said corruption and budget scandals have plagued the country's defense sector for years, state-run news agency RIA Novosti reports.
Russian auditors, he said, found waste and misappropriation may have cost the government as much as $3.9 billion last year. The embezzlement of an estimated $17 million in a scheme dating back more than five years was uncovered last month, he added.
"Unauthorized and ineffective expenditure of budget funds," has cost the military dearly, said Zavarzin.
The United States and Russian are world leaders in terms of military exports. The U.S. military is facing severe budget cuts if lawmakers can't settle differences on spending issues.
Meanwhile, the Russian navy said it tested a coastal missile defense system in the Caspian Sea this week. Each system in the flotilla can launch as many as 32 missiles.
Russia and the United States are at odds over missile defense issues. A European system planned by the United States may upset the regional balance of power, says Moscow.