Investigators revealed new details Monday in the arrest of a deputy finance minister who allegedly tried to embezzle $43 million in budget funds - a case that has shocked many of Russia's top bankers.
The detention of Sergei Storchak, one of the country's top authorities on international financial relations, prompted fevered speculation in the Russian media that the inquiry could have a political element amid growing uncertainty about President Vladimir Putin's future.
It has also raised new questions among many investors about corruption in Russia and what the government was doing to fight it.
Storchak was detained Thursday, one day before he was supposed to accompany Finance Minister Alexei Kudrin on a trip to South America. Vladimir Markin, a spokesman for the Prosecutor General's Investigative Committee, said the arrest was related to the settlement of Soviet-era debt to a commercial firm called Sodexim.
That company's general director and the president of a Moscow-based bank have also been detained, prosecutors said.
Markin said the men are suspected of setting up an organized group plotting a large-scale fraud of budget funds and could face between five and 10 years in prison.
"The evidence in the case suggests that if left free, Storchak could have fled prosecution, intimidated witnesses or other participants in this criminal enterprise and destroyed documents or other evidence," Markin said.
"The sum we're talking about here is $43.4 million," he said in televised comments.
Storchak, one of three deputy finance ministers, has specialized in international financial relations and been a prominent figure in negotiations on paying off tens of billions of dollars in Soviet-era debt. Russia paid a $1 billion penalty for early repayment under the deal, but overall saved the country $7.7 billion in interest payments.
The deal was also a public relations coup, underlining Russia's booming oil-fueled economy and buffing up its image just eight years after the ignominy of defaulting on debts in the 1998 financial crisis.
Kudrin, meanwhile, repeated his surprise at Storchak's arrest.
"I don't understand the measure taken regarding this man, who for many years worked and every day fought for every kopeck, for every cent, asserting Russia's interests in every debt negotiation," he said.
Anderi Kostin, who heads state-controlled bank VTB, one of the country's largest banks, called for a fair investigation.
"I know him as a professional. I very much hope there will be an objective investigation. And as before, I hope that this has happened due to some sort of misunderstanding," he said in televised comments. "What I mean is that if something illegal happened, then his role was likely insignificant."
The detention came with just two weeks remaining before crucial parliamentary elections and with uncertainty growing about Putin's intentions after his second, consecutive term ends following March elections. Kremlin observers say rival political clans are jockeying for influence and position trying to anticipate where Putin will end up.
Several influential newspapers speculated that the Storchak's detention was political shot-across-the bow for Kudrin, who was elevated to a new post of vice premier in the government shake-up Putin engineered earlier this fall.
"In this situation, it is not so important what the pretext is for the 'Storchak Case.' It will no doubt be used in the great political game (being played) by the near-Kremlin structures on the eve of elections as a pretext for new steps," the daily Kommersant said.
Although foreign investors have largely regained confidence in Russia in recent years, concerns about official corruption persist, and Storchak's detention could amplify the worries. The international corruption watchdog Transparency International lists Russia as 143rd out of 179 countries on its corruption-perception index, on the same level as Togo and Gambia.
Mikhail Grishankov, who sits on one of parliament's financial committees, said government officials should take note that "a position or title is not a barrier for bringing a bureaucrat to criminal account for corrupt acts." ( AP )