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. Last Updated: 07/27/2016

Investigators Hunt for City's $1.3M

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The Interior Ministry said Thursday that it is conducting an investigation into whether $1.3 million earmarked for pie-making equipment was embezzled from the Moscow city budget.

Vladimir Martynov, spokesman for the ministry’s investigative committee, said the probe was launched in December after the ministry seized from city officials a file regarding the 1996 purchase of the equipment for the Russkoye Bistro fast food chain.

No suspects have been named in connection with the alleged embezzlement, but prosecutors are planning to question deputy mayors Oleg Tolkachyov, Iosif Ordzhonikidze and Vladimir Malyshkov.

"We plan to question those who may be connected to the case under investigation," Martynov said.

Moscow Mayor Yury Luzhkov furiously denounced the probe, calling it a tactic to smear City Hall.

"I view the action as political," Luzhkov told reporters. "We will fight against such moves aimed at smearing the city government’s reputation."

Tolkachyov hastily called a news conference Thursday after hearing about the investigation on television and said he would sue.

He called the investigators’ allegations irresponsible and damaging to the city’s reputation in the eyes of the business community.

"We receive a lot of investment, and such actions damage the image of the city government," Tolkachyov told reporters.

He said that he had not been called in for questioning.

Martynov said the Interior Ministry is trying to follow the trail of what happened to $1.5 million earmarked in the city budget in 1996 to buy the equipment for the city-controlled restaurants.

Investigators have learned that the money was transferred to a U.S.-Latvian joint venture, Mara, the company charged with buying the equipment.

But $1.3 million ended up at the Chase Manhattan accounts of the Austrian-based Voloskov Pirozhok company.

Investigators then asked the Austrian makers of the pie production line how much a standard set would go for.

The manufacturer replied $200,000.

Russian media reported that the remaining $1.3 million was used by Malyshkov’s son, Igor, who resides in Austria, to buy the shares in Voloskov Pirozhok.

Martynov, saying he would ask for an independent evaluation of the cost, said the line had not been used until the ministry started looking into the case in December.

"Your cannot use the equipment if its components aren’t connected to each other or plugged in," he said.

City Hall angrily retorted that the line was in fact in use and invited reporters to visit the bakery Thursday. About 20 correspondents were taken to a four-story building near the Taganskaya metro station and ushered in a backdoor with the sign "Alazanya Edem."

A handful of workers were milling around a single production line.

One of the workers told reporters that the bakery was not connected to Russkoye Bistro and was making pies for schoolchildren’s lunches.

"What a circus and a waste of time," one reporter said as he left the bakery.

"City Hall should have thought twice before inviting us over here," whispered another.