As Defence Minister, Grachev gained notoriety because of his military incompetence displayed during the First Chechen War and the persistent allegations of involvement in enormous corruption scandals.

For a period of time, in the early-to-mid-1990s, Grachev was a close friend of the President of Russia Boris Yeltsin,[3] and held the post of the Minister of Defence of the Russian Federation from May 1992 to June 1996.

Accusations were repeatedly made against Grachev in the Russian media in the illegal acquisition of imported Mercedes cars, which were issued with the help of the command of the Western Group of Forces.

[8] As TIME commented in 1995: "Grachev had remarked recently that only an 'incompetent commander' would order tanks into the streets of central Grozny, where they would be vulnerable (...) Yet at the end of December he did it.

[10] In December 1997, Grachev was appointed a senior military adviser to Rosvooruzhenie State Corporation, the Russian arms export monopoly.