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. Last Updated: 07/27/2016

Yeltsin: Plant Bosses Living Like 'Sheiks'

resident Boris Yeltsin, stepping up a campaign against financial abuse by the heads of state enterprises, has accused factory directors of misusing government funds and of living "like Russian sheiks" while not paying their workers for months.

Yeltsin, in an interview published Thursday in the Izvestia daily newspaper, urged the government to tighten control over how enterprises spend state money and called for "severe" measures to be taken against directors illegally using state money for luxury goods and setting up new firms.

"Some factory managers have turned into Russian sheiks at the state's expense," Yeltsin said, adding that state money "is being spent on unthinkable luxuries for managers, the most expensive cars." He said that some managers were paying themselves monthly salaries of up to 11 million rubles ($5,400).

He also said directors held millions of dollars in hard-currency accounts and invested the money in "dubious enterprises and commercial structures."

Yeltsin's comments came only few days after Prime Minister Viktor Chernomyrdin lashed out at local factory directors who held hard-currency accounts with as many as seven banks. Chernomyrdin told an extended government meeting last week that the country's inter-enterprise debt crisis was in part caused by "dishonest" management.

Sergei Pavlenko, acting director of the government Center for Economic Reform, said in an interview Thursday that Yeltsin's statement could be a reaction to numerous reports that directors use state firms as sources of cheap capital for their own ventures.

"Directors set up small daughter enterprises and manage to transfer the best equipment and the best workers to these new firms from a parent company," he said.

An official with the State Tax Police, who asked not to be named, said that concealment of profits and tax evasion were the most widespread violations by factory directors. The official referred to a recent scandal at the Krasnoyarsk aluminum factory as a classic example of infringement by factory directors.

"Officially they were broke, but then an audit showed that they held several hard-currency accounts to conceal export profits," the official said. He declined, however, to give further details, saying that an investigation was still ongoing.

Yeltsin recently signed a string of economic decrees that included efforts to tighten state control over semi-private companies and fight tax evasion. The new regulations called on state representatives at semi-private firms to watch company directors more closely. The tax decree ordered tax officials to impose strict control over company bank accounts.

Another presidential decree, issued last week, stated that enterprises may receive short-term aid from the federal budget only if they seek to restructure production or introduce new technology.

However, in the Thursday interview, Yeltsin acknowledged that the decrees have never been fully implemented. "Why are these decrees not being enforced and why are these directors not being fired?" he asked