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. Last Updated: 07/27/2016

Olympic Stars' Cash Prizes Stuck In the Bank

When Russia's athletes won a bagful of medals at last year's Winter Olympics, they and their support staff looked forward to cashing in on the just under $1 million in bonuses they were entitled to under the government's extremely generous incentive scheme.

Now, last February's feelings of triumph are turning to rage as $500,000 of the prize money languishes in one of the country's ailing banks. Adding insult to injury, the State Tax Service is trying to collect income taxes on winnings that now exist only on paper.

Russian Olympic Committee officials and coaches expressed concern that the situation will damage the Russian team's future performance.

"Keeping our champions in Russia will be incredibly hard for us now that they've been virtually punished for winning at the Olympics and have lucrative contracts with foreign teams pending," Valentin Piseyev, president of the Russian Figure Skating Federation, said Thursday in a telephone interview. The skating team won three gold medals at the 1998 Games in Nagano, Japan.

In the lead-up to Nagano, Russia offered its athletes $50,000 for winning a gold medal, $20,000 for a silver medal and $10,000 for a bronze. Support staff were also promised a percentage of their charges' winnings.

Spurred perhaps by these generous rewards, Russia's Olympic team was hugely successful, bringing back nine gold, six silver and three bronze medals. In addition to the $600,000 due the medal winners themselves, 25 coaches and technical staff were also entitled to financial rewards.

Both athletes and support personnel received 10 percent of their prizes in Japan immediately after February's Games and the ruble equivalent of the rest was transferred to the Russian Bank for Reconstruction and Development, or RBRD, where the Russian Olympic Committee's accounts are kept.

Some, such as gold medal-winning skier Yelena Vyalbe, prudently withdrew the money. Others took a portion of cash, leaving the rest in RBRD or transferring it to other Russian banks. When Russia's banking system disintegrated after the Aug. 17 default on government treasury bills, that money got stuck or just plain lost.

The money is unlikely to be paid out anytime soon, according to an RBRD spokeswoman, who declined to be identified.

The bank is unable to pay its debts unless it wins a court case against Vneshtorgbank over $10 million that RBRD claims the other bank owes it.

But while the banks bicker, the medalists and the Olympic coaching staff are being told they must pay income tax on their portion of the bonuses, according to Tatyana Ionova, the Russian Olympic Committee's chief economist.

The athletes' bonuses are theoretically tax-exempt, but Russian tax legislation is so vague that it can be interpreted to the athletes' disadvantage, she said. The same logic applies to coaching staff.

"I would go to court to sue the bank and delay tax payments," Ionova said. "Otherwise the [prize recipients'] conversation with the tax inspection will be on the marketplace level."

Nina Gavrylyuk, who won the gold in a relay skiing race in Nagano, told Kommersant she transferred part of her winnings from RBRD to Inkombank. "But then the crisis hit and all the money disappeared. I couldn't retrieve it from either Inkombank or RBRD," she said.