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Sergei Storchak to undergo new criminal probe

Russian authorities started a new criminal probe into a deputy finance minister who has already been charged with large-scale fraud.

The Moscow City Court, meanwhile, refused requests to release Sergei Storchak from pretrial detention, despite public appeals from Finance Minister Alexei Kudrin, who personally vouched for him.

The arrest of Storchak, a prominent authority on international financial relations, shocked many of the country's top bankers and prompted media speculation that the investigation has a political element amid an increasingly public struggle among Kremlin clans for influence in anticipation of President Vladimir Putin's departure from office next year.

Storchak was charged late last month with trying to embezzle US$43 million (29 million EUR) in government funds. He was detained by investigators, one day before he was supposed to accompany Kudrin on a trip to South Africa.

On Monday, prosecutors said they were investigating Storchak for allegedly exceeding his professional authority. Vladimir Markin, spokesman for the Prosecutor General's Investigative Committee, said in televised comments that the allegations stem from his role in January 2005 negotiations with Kuwait over the Soviet-era debts owed to the Gulf state.

Under the agreement, which was signed in May 2006, Russia paid Kuwait US$600 million (409 million EUR) of the debt in goods, and the remaining US$1 billion (680 million EUR) in cash, according to Russian news reports.

Two other people have also been charged in the case - the general director of a company called Sodexim and the president of a Moscow-based bank.

In a video linkup with Moscow City Court, he again insisted on his innocence and pleaded with the court to release him from pretrial detention, saying that detention was harming his health.

The court, however, refused, saying he was at risk of fleeing the country.

Storchak, one of three deputy finance ministers, was a prominent figure in negotiations on paying off tens of billions of dollars in Soviet-era debts under the Paris Club umbrella of debt negotiations. Russia paid a US$1 billion (680 million EUR) penalty for early repayment under the deal, but saved US$7.7 billion (5.26 billion EUR) in interest.

The deal was a public-relations coup, highlighting Russia's booming oil-fueled economy and burnishing the country's image just eight years after the ignominy of defaulting on debts in the 1998 financial crisis.

Storchak's detention came during the campaign leading up to Sunday's parliamentary elections, and came with uncertainty growing about Putin's intentions after his second term ends next year. Kremlin observers say rival political clans are jockeying for influence, trying to anticipate where Putin will end up.

Several influential newspapers have speculated that the Storchak's detention was a political shot across the bow of Kudrin, who was elevated to a new post of vice premier in the government shake-up engineered by Putin earlier this year.

Other media reports have tied the investigation to Putin's influential deputy chief-of-staff Igor Sechin, who allegedly has sought to pressure Kudrin into releasing hundreds of millions of dollars from the oil-revenue-funded Stabilization Fund to help state-owned oil giant OAO Rosneft pay down massive debts. Sechin is chairman of Rosneft's board.

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