Sun, Nov 25, 2007 - Page 6 News List

Top Russian official charged in alleged plot to siphon funds


Russian prosecutors charged a deputy finance minister who was the country's chief sovereign debt negotiator on Friday with conspiring to embezzle US$43.4 million in a politically tinged case seen as undermining the position of liberals in the Russian government.

Until his arrest last week, the official, Sergei Storchak, had helped oversee Russia's US$148 billion oil windfall fund, one of the world's largest sovereign wealth funds, and served as Russia's chief liaison with financial organizations like the IMF and the World Bank.

Storchak was a leading liberal in President Vladimir Putin's government. His departure is seen as a sign of instability in Russian economic policymaking and has led to an open breach between the finance ministry and security agencies.

Over years of high oil prices, Russia has salted away billions in oil money in its Stabilization Fund. In January, Moscow will split it into two funds: the Reserve Fund and the Fund of National Prosperity, the latter intended for state investments. How this money will be invested, and who will make those decisions, is in contention.

Russian media have interpreted Storchak's arrest as an effort by security services to influence decisions by Finance Minister Alexei Kudrin, who is also a deputy prime minister and who has favored a more conservative economic policy. Kudrin is a chief proponent of saving the bulk of the country's oil profits in a sovereign wealth fund to offset inflation and any future downturn in world oil prices.

On Friday, Storchak was formally accused of taking part in a complex embezzlement scheme.

The probe committee of the prosecutor general's office, a new agency that is headed by a Putin loyalist, accused Storchak of forming a group to embezzle funds from a Russian bank.

No money was actually taken.

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