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. Last Updated: 07/27/2016

Former Minister Visits Prosecutors, Hospital

After two days of conflicting media reports, prosecutors on Wednesday finally shed light on their recent meeting with a former government official and prominent oil executive, who was hospitalized Monday after a visit to the Prosecutor General's Office.

Andrei Vavilov, board chairman at Severnaya Neft, a tiny oil operator in northwestern Russia, came to the Prosecutor General's Office to discuss his company's legal wrangle over a contested oil tender, according to both prosecutors and Vavilov's spokeswoman.

But during his visit, Vavilov was summoned for questioning by military prosecutors investigating a case of large-scale embezzlement in the Defense Ministry, said Leonid Troshin, spokesman for the Prosecutor General's Office, in a telephone interview Wednesday. At the time of the alleged embezzlement, 1995 to 1996, Vavilov served as deputy finance minister. Troshin declined to say whether investigators managed to question Vavilov before his hospitalization.

A Severnaya Neft spokeswoman denied that Vavilov was "summoned" or "questioned" by military prosecutors, saying he had been feeling unwell before his visit to prosecutors and had planned to go to the hospital Monday anyway. "Andrei Petrovich [Vavilov] was not summoned and there was no questioning," spokeswoman Yelena Prorokova said, adding that Vavilov was taken to the hospital from the Prosecutor General's Office and not from the military prosecutors' headquarters.

Troshin said Vavilov had come to Deputy Prosecutor General Yury Biryukov to complain about the battle over a recent tender for the right to explore the coveted Gamburtsev Val oil fields in the Nenets autonomous district.

Severnaya Neft was awarded rights to the fields in March, but rival companies cried foul and LUKoil, one of Vavilov's most bitter enemies, challenged the tender's legitimacy in court.

According to a report in Wednesday's Vedomosti, the court prohibited the issuance of an exploration license to Severnaya Neft while the case was pending. But the Natural Resources Ministry and the Nenets regional administration issued the license, nonetheless. The court then ruled the tender results invalid and ordered the ministry to hold a new tender. The ministry will appeal the court decision, although one attempt to appeal to a higher court was denied May 17.

The graft case prosecutors say Vavilov was to be questioned about Monday was opened last August, when military prosecutors decided to probe the misappropriation of $450 million in federal funds allocated to the Defense Ministry. The case resulted in corruption charges against the ministry's finance chief, Colonel General Georgy Oleinik.

After Vavilov's hospitalization, some media speculated that his meeting with prosecutors could have been linked to oil major Sibneft, which recently came back under investigation in an all but forgotten tax evasion case.

Kommersant quoted an unidentified source at Severnaya Neft as saying that investigators were interested in allegations that Vavilov helped rig the privatization of Sibneft by funneling large sums of federal money to commercial banks backing the tender winners, companies linked to tycoons Boris Berezovsky and Roman Abramovich.

Vavilov's latest run-in with prosecutors was far from the first. Since his dismissal from the Finance Ministry in a government reshuffle in April 1997, Vavilov has been questioned in connection with several embezzlement cases.

In June 1997, then-Central Bank head Sergei Dubinin accused Vavilov of overseeing a deal in which Unikombank misappropriated $231 million in state funds intended to produce MiG fighter planes for India. In a separate case, Dubinin claimed Vavilov had signed off on a similar deal in which $275 million allocated to pay public-sector wages were also misappropriated by Unikombank.

In both cases, the Finance Ministry, with Vavilov's approval, was said to have issued bonds and transferred them to Unikombank for resale, but the bank sold the bonds and kept the proceeds.

Vavilov denied any wrongdoing in those cases, saying his superiors were fully aware of the deals and they were in conformance with ministry regulations. Prosecutors failed to find sufficient evidence against him.