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. Last Updated: 07/27/2016

Official Accused of Passing State Secrets

A senior Finance Ministry official has been detained on suspicion of accepting a Mercedes worth $116,000 in exchange for passing state secrets to two businessmen, one of whom has a U.S. passport, the Prosecutor General's Office said Wednesday.

Prosecutors identified the official as Denis Mikhailov, deputy head of Finance Ministry's department for international financial relations, state debt and state financial assets, and the businessmen as Alexei Kirzhnev and Teimuraz Karchala.

Kirzhnev has U.S. and Russian passports, while Karchala has Russian, Greek and Georgian passports, Interfax reported, citing a source close to the investigation. The two men, who have been detained, are co-owners of a network of casinos, clubs and airlines and also act as intermediaries, Interfax said.

"The investigation has information that D. Mikhailov passed to businessmen Alexei Kirzhnev and Teimuraz Karchala a restricted-access document containing information that constitutes a state secret," the Prosecutor General's Office said in a statement. "The businessmen intended to use this document in their commercial activities."

No charges have been filed and prosecutors Wednesday were debating whether to seek a court ruling extending their custody or whether to release them on condition that they not leave Moscow, the statement said. They seized the Mercedes.

A Prosecutor General's Office spokeswoman declined further comment when reached by telephone.

The nature of the information believed to have been handed over was unclear Wednesday.

The Finance Ministry said in a statement that "the accusations ... against Denis Mikhailov are cause of deep concern," and that it will "assist to the maximum degree in a full and objective investigation."

But it said it would not comment further because the case concerns state secrets and that "any details about it are classified."

The Federal Security Service is also investigating the case, it said.

Prosecutors believe that the suspects have caused considerable economic damage to the state as a result of their activities, Interfax reported.

Mikhailov might have passed over sensitive information from the Federal Financial Monitoring Service, an intelligence agency that reports to the Finance Ministry, said Kirill Kabanov, acting chairman of the National Anticorruption Committee, a nongovernmental organization. Some of the agency's files could have contained compromising information about the two businessmen or their competitors, he speculated.

Alternatively, the information might have been connected to Finance Ministry recommendations to the Central Bank about which commercial banks should be restricted in their operations or lose their licenses, Kabanov said.

Or the information might be connected to the settlement of debt owed to or by Russia, he said. "These are bits of information that the market pays for," he said.

Mikhailov's detention, however, will do little to help clean up the government, Kabanov said. "Just one clerk that sold information has been detained," he said. "But corruption in Russia is a system."

One of the detained businessmen, Kirzhnev, may have handled Soviet-era foreign debt settlements as an official at New Alliance Corp. in the 1990s. A man named Alexei Kirzhnev was listed in a 1997 report by BISNIS, or the Business Information Service for the Newly Independent States, the U.S. government's primary market information center for U.S. companies exploring business opportunities in Russia and other former Soviet republics.

Corruption is rife in government circles. Russia ranked 90th among 145 countries surveyed in the Corruption Perceptions Index released by Transparency International in October. The ranking put it on a par with Tanzania, Gambia, India, Malawi, Mozambique and Nepal.

The index also suggested that countries rich in natural resources, such as Russia, are more prone to corruption.