* Putin appoints ally after dismissing minister
* Ministry had been drawn into fraud investigation
Russian President Vladimir Putin dismissed Defence Minister Anatoly Serdyukov on Tuesday and replaced him with a loyal ally after the ministry was drawn into a corruption scandal.
Putin was shown on television meeting Sergei Shoigu, a former emergencies minister who had briefly been governor of the Moscow region, and discussing his new role as defence chief, in which he will oversee reforms to modernise the armed forces.
"Taking into consideration the situation around the Defence Ministry, in order to create conditions for an objective investigation into all matters, I have decided to free Defence Minister Serdyukov of his post," Putin said.
Russian investigators raided the offices of a Defence Ministry firm last month and opened an investigation into the company on suspicion that it had sold assets to commercial firms at a loss of nearly $100 million.
The investigation also raised questions about Serdyukov's relationship with a former top military bureaucrat.
Serdyukov, a former tax collector, was brought into the ministry in 2007 to oversee military reforms that have reduced the size of the country's fighting forces and attempted to crack down on widespread corruption.
Shoigu, 57, was emergencies minister from 1994 until this year, when he became governor of the Moscow region. He has long been loyal to Putin.