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. Last Updated: 07/27/2016

Bankruptcy Director Calls Probe Political

The heads of two key government property agencies offered sharply contrasting responses Wednesday to recent accusations against their departments from a state investigation launched at parliamentary behest.


Speaking at a press conference, Pyotr Mostovoi, general director of the Federal Bankruptcy Agency, blasted a report last week by the State Audit Chamber that accused him for abuse of office as "a purely political action."


But Alexander Kazakov, a deputy prime minister and the head of the State Property Committee, told Interfax he will work to fulfill chamber instructions.


Last Thursday the Audit Chamber, a legislative oversight body, asked the Prosecutor General's Office to investigate the actions of Mostovoi and the former acting State Property Committee head Alfred Kokh, in charge of the controversial loans-for-shares auctions last year.


The Audit Chamber was acting at the request of the State Duma, which has launched a review of the government's privatization program targeting officials responsible for the "negative effects" of last fall's auctions, which included stakes in such valuable Russian blue-chips as the metals giant Norilsk Nickel and oil majors Yukos and Sidanko.


Kazakov, while expressing his belief in Kokh's innocence, said he agreed with much of the criticism of the State Property Committee.


But according to Mostovoi, the auditor in charge of the chamber's investigation, Venyamin Sokolov, is pursuing a political agenda based on his close links to the aerospace industry and a "particular interest" in the case of the Rybinsk Motor Factory.


"The bias of Sokolov is obvious," Mostovoi said. "Already last year Sokolov approached the government on his own with proposals to interfere in the Rybinsk affair."


The management of the Rybinsk engine-maker, one of the largest in Russia, has been bogged down in a protracted struggle with the bankruptcy agency. In spite of moves by the agency to declare the company insolvent and appoint new management, the old director of the enterprise, with the help of the regional authorities and federal lawmakers, has stayed on to fight privatization plans.


Following a battle in and out of Russian arbitration courts, a tender for a 37 percent stake in the engine maker due for March 12 was eventually canceled, as the only prospective investor withdrew. The breakdown of the deal fueled speculations in the Russian press of Mostovoi's imminent removal.


"The uproar over Rybinsk has scared all investors away," Mostovoi said, adding that the company will now likely face bankruptcy as the patience of its bank creditors wears thin. He all but ruled out further state support for the ailing compan.


Mostovoi said there is still a long way to go before the bankruptcy mechanism will revitalize enterprises, as in Western market systems.


Last year Russian courts heard 1,108 bankruptcy cases, up from 250 in 1994 and 10 in 1993, according to agency statistics.











"We need tens of thousands of bankruptcies," Mostovoi said, which would put Russia on par with annual figures in Germany, he said. There are hundreds of thousands of bankruptcies a year in the United States, he said.


However the bankruptcy agency, established just two years ago, is assured of plenty of work in the future, Mostovoi said.


"Financial stabilization has been reached in our country ... and here re-structuring [of enterprises] takes primary importance."