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. Last Updated: 07/27/2016

Statistics Chief Held In Embezzling Case

In the latest corruption scandal to rock the Russian government, the head of the State Statistics Committee and several of his senior deputies have been arrested on suspicion of selling confidential information and helping major companies evade taxation.

They led a ring of more than 20 people that likely embezzled "tens of millions of dollars" since 1994, a spokesman for the Federal Security Service said Tuesday.

Yury Yurkov, chairman of the federal body, was detained in his Moscow office Monday evening by a joint team from the General Prosecutor's Office and the Federal Security Service, or FSB.

They also detained Yurkov's first deputy, Valery Dalin, and the head of the committee's data-processing center, Boris Saakyan. Later that evening, the officers searched the apartments of all three men and found a large amount of jewelry and a total of $1.5 million in cash, the prosecutor's office said Tuesday.

Several other high-ranking officials from the statistics committee also have been detained and more arrests were expected soon, the prosecutor's office said. No additional suspects have been identified.

"Most of them are senior officials of the committee, tied together in a corporate cover-up," a statement released Tuesday by the prosecutor's office said. The ring comprised more than 20 people who engaged in a "gross embezzling of money," it said.

Prosecutors said they had evidence that Yurkov and his alleged accomplices took bribes to understate the output of major companies in the official reports that the committee supplied to the State Tax Service and other federal agencies.

The allegedly rigged statistics allowed these companies to pay less tax, government spokesman Alexei Volin said.

He said Prime Minister Sergei Kiriyenko was informed of Monday's arrests in advance and sanctioned them.

The crackdown highlights the "determination of the federal government to fight crimes in the economic sphere," the spokesman said. The government, which is in the midst of a financial crisis, has been particularly anxious to raise desperately low tax revenues.

Prosecutors also accused Yurkov, Dalin and Saakyan of selling valuable confidential information on major companies to their rivals. The names of the companies were not given.

The three men remain in custody and will be charged within the next eight days, said NatalyaVeshnyakova, spokeswoman for the General Prosecutor's Office. She said Yurkov and Saakyan have written statements admitting their guilt.

Saakyan's son Aram spoke out in his father's defense, saying he knew nothing about "any confessions" and insisted that his father committed no crimes.

"My father is a decent man. ... I hope it all ends well for him," Aram Saakyan said Tuesday in a telephone interview.

The Izvestia newspaper said in its Wednesday edition that investigators found documents that they say are evidence of the three men's guilt.

At the same time, the paper cast some doubt on the alleged embezzlement scheme. It said no major rigging of statistics is possible because the State Tax Service has its own statistical department, which would have revealed any inconsistencies in reports by Yurkov's committee.

However, if Yurkov, Dalin and Saakyan had sold confidential information on major companies, such information could have been used by stock brokers for insider trading, Izvestia said.

The new head of the tax service, Boris Fyodorov, who has repeatedly vowed to crack down on major tax evaders, told reporters Tuesday that he knew nothing about the arrests.

Fyodorov noted, however, that he intends to fire senior officials in the tax service who are suspected of corruption.

The FSB's economic counterintelligence directorate started to investigate the State Statistics Committee officials about nine months ago. The directorate's officers started hidden surveillance of Yurkov in April and collected evidence on crimes committed by the veteran of state statistics, the prosecutor's office said.

Yurkov had worked in the Soviet government's Central Statistics Directorate, then as deputy head of the Russian government's economic policy center.

He was appointed to run the State Statistics Committee in 1993.

Sokolin is said to be running the committee while the government mulls over whom to appoint as acting head.