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. Last Updated: 07/27/2016

Police: Federal Insulin Funds Stolen

Six top managers of a Russian company that was set up to pioneer production of high-quality insulin will soon go on trial for alleged embezzlement of millions of dollars in federal loans, police said.

Russky Insulin received at least 26 million rubles from 1994 to 1998 and "most of this sum" was embezzled by company head Nikolai Anistratenko, executive director Alexander Nartov and four other managers, said Vladimir Martynov, spokesman for the Interior Ministry's investigative committee.

During the period when the company was receiving federal money, which fell prior to the 1998 ruble devaluation, the exchange rate ranged from 2 rubles to 6 rubles to the dollar.

The money was never recovered and the company, registered in the southern Russian city of Maikop, never produced the insulin, Martynov said by telephone.

No high-quality insulin is produced in Russia, and the country spends $90 million a year to import it and distribute it to diabetics, according to the Russian Diabetes Association.

The Prosecutor General's Office endorsed the Interior Ministry committee's report earlier this month and agreed to take the case to court, Martynov said.

Anistratenko and Nartov were arrested in October 1999, and they remain in a Moscow detention facility pending trial. The other four men were allowed to remain free on the condition they not leave the city. All six have been charged with embezzlement and face up to 10 years in prison if convicted.

Anistratenko is accused of signing several fake imports contracts with foreign companies that allowed him to convert the ruble loans into dollars. He then transferred the money to foreign companies for purchases of technology and equipment, but the goods were never delivered, Martynov said.

Martynov said at least two such deals were signed with the Monaco-registered SAM Setex, which he said is run by Italian citizen Ennio Pasquino. In one 1995 deal, Pasquino allegedly took $415,000 that was sent by Russky Insulin to Setex SAM's account in Credit Foncier de Monaco and split the sum with Anistratenko and others, Martynov said.

In another deal, Russky Insulin in 1998 transferred $2.6 million to a bank account that a certain General Precision AG company had in the Swiss Bank Corp. General Precision then purchased $150,000 worth of packaging equipment from Swiss company AMRP Handels AG, while the rest of the money again was pocketed, Martynov said.

Contact information for Setex and General Precision could not be found. Calls to the offices of AMRP Handels in Basel, Switzerland, went unanswered.

The insulin business in Russia has been full of scandal, much of it centered on pharmaceuticals tycoon Vladimir Bryntsalov. Last year, he lost a court case to the Health Ministry, which claimed that he sold the government animal insulin instead of the more expensive human gene-engineered insulin called for in the contract.

The alleged embezzlement at Russky Insulin came to government attention in 1997 when the Audit Chamber and the southern branch of the Interior Ministry's anti-organized crime force looked at the company's books, Martynov said.

Vladimir Ignatkov of the Russian Diabetes Association said he helped the Audit Chamber investigate Russky Insulin in 1997 and tried to warn the Health Ministry and Economics Ministry about the company. "We repeatedly raised the alarm," Ignatkov said.

Still, federal funds continued to flow. In 1998, Anistratenko convinced the Economics Ministry to arrange government credits of more than 15 million rubles by submitting a business plan that provided for Russky Insulin to manufacture at least 26 million dozes of high-quality insulin, Martynov said.

More than 2 million people in Russia suffer from diabetes and at least 300,000 to 400,000 of them need daily injections of insulin, according to Ignatkov.

The case is expected to come before Moscow's Presnensky court sometime this summer, Martynov said. In addition to Anistratenko and Nartov, financial director Nikolai Petelin and technical director Vladimir Shmelev also are charged with embezzlement.

Martynov said his agency is investigating a second, larger case involving alleged embezzlement at Russky Insulin. He would not elaborate.