Russian official suspected of $43 mln fraud

Russian Deputy Finance Minister Sergei Storchak, detained by police last week, is suspected of attempting to embezzle more than $43 million in state funds, prosecutors said on Monday.Police detained Storchak, Russia’s top Paris Club debt negotiator, on Thursday along with Viktor Zakharov, head of the firm Sodexim, and the chairman of Moscow’s Interregional Investment Bank (MIB), Vadim Volkov.

They have not been formally charged with any crime.

But the investigation committee at the Prosecutor General’s Office said in a statement the three men were suspected of “having created an organized group to embezzle budget funds under the pretext of covering expenses for Sodexim”.

“The sum in question is $43.4 million.”

Finance Minister Alexei Kudrin, a close associate of Storchak, said on Sunday he did not understand the arrest of his deputy, who oversees a $148 billion oil stabilization fund that collects revenues from Russia’s booming oil exports.

But the investigation committee said Storchak had been detained to prevent the destruction of evidence.

“The investigation possesses evidence that if Storchak had been left a free man, he could escape the investigation and the trial, engage in criminal activities, threaten witnesses… and destroy evidence,” the committee said.

Storchak was not available for comment and it was not clear if he had retained legal representation. 

Kudrin said he struggled to understand the accusations against Storchak, who he said had “fought for years for every kopeck, every cent defending Russia’s interests in all debt talks.”

Various sources have suggested the detention of Storchak could be part of a campaign against his influential boss Kudrin ahead of next month’s parliamentary election.

Kudrin, Russia’s top economic policy maker, has close ties with President Vladimir Putin and is described by analysts as a strong figure in the liberal wing of the president’s entourage, which is engaged in on-and-off feuds with the conservative camp.

Storchak, 53, negotiated Russia’s repayment of its $22.5 billon debt to the Paris Club of creditor nations last year.

He was also closely involved in negotiations over other countries’ debts to the Soviet Union, which often involved barter deals or a possibility for Russian companies to take part in lucrative projects.