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. Last Updated: 07/27/2016

Privatization Inquiry at Alrosa

Uncut diamond mining monopoly Alrosa is under investigation for its acquisition of shares in a state-owned company that has served as its representative in London.

The Prosecutor General's Office on Aug. 18 began a criminal probe of state-controlled Alrosa over possible fraud in the purchase of shares in Arcos Ltd., the Audit Chamber said on its web site, citing a letter from the office.

The chamber in January and February examined Alrosa's diamond exports and its work with Almazyuvelirexport, the country's state-owned gems and precious metals export monopoly. The probe found that Alrosa "is illegitimately holding" shares in Arcos, the statement said.

Coming on the heels of the arrest of Yukos shareholder Platon Lebedev and talk of an inquiry into Norilsk Nickel's privatization, the case is the latest in a series of investigations that have raised investor concerns about the security of holdings in Russia's top companies as the country prepares for parliamentary elections in December.

Valery Novikov, an Alrosa spokesman, said it isn't yet clear who is under investigation or which agency is conducting the probe. He declined to comment further.

The government owns 77 percent of Alrosa, a firm that produces a quarter of the world's uncut diamonds, and its employees hold the rest.