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. Last Updated: 07/27/2016

Storchak Charged, Says He Is Not Guilty

Prosecutors charged Deputy Finance Minister Sergei Storchak on Friday with attempting to embezzle $43 million, in a case that may damage his boss, Finance Minister Alexei Kudrin.

Storchak is the country's foreign debt negotiator and oversees a $148 billion budget Stabilization Fund, making him a key player in managing the windfall reaped from the global boom in oil and commodities prices.

"Storchak was questioned for over four hours. He gave testimony but did not admit any guilt," defense lawyer Alexander Petrov said after a hearing at Moscow's Lefortovo jail. Petrov said he would probably appeal the charges.

Kudrin leapt to the defense of Storchak, 53, a trusted aide who was also charged with forming an "organized group" with two businessmen in a bid to embezzle budget funds after failing to collect a debt owed by Algeria.

"Finance Minister Alexei Kudrin will file a petition seeking the release of Sergei Storchak from detention under his personal guarantee," a ministry official said. "With this the Finance Minister will guarantee appropriate conduct and prompt attendance when the accused is summoned by investigating prosecutors."

Kudrin's gambit amounts to an attempt to bail out Storchak by vouching for his good conduct, rather than pledging money as would be typical in many countries.

Under the charges, Storchak can be held in custody for at least two months. Prosecutors could not be reached to react to Kudrin's request, but may turn it down if they fear any attempt to flee or influence witnesses.

Prosecutors earlier confirmed that the charges had been presented to Storchak. If convicted, he faces up to 10 years in jail.

The high-profile corruption case comes as the country prepares to hold State Duma elections on Dec. 2, which the dominant United Russia party is poised to win by a landslide. President Vladimir Putin is leading the United Russia ticket as he seeks to create a platform to retain political influence after voters elect his successor next March.

Putin has yet to name a preferred candidate, but Kudrin had been named as one possible contender after he was promoted to the rank of deputy prime minister in a Cabinet reshuffle.

Kudrin was out of the country when Storchak was detained Nov. 15. The two other men charged are Vadim Volkov, president of Interregional Investment Bank and Viktor Zakharov, head of a company called Sodexim.

According to the Finance Ministry, Sodexim was selected in 1996 as an agent to collect a $26 million debt owed by Algeria through a barter trade deal.

Algeria failed to deliver the promised goods, however, and Sodexim turned to the government in 2006 to seek repayment of the debt, plus interest, under a $4.7 billion debt-forgiveness deal between Russia and Algeria, the ministry has said.

Storchak served as a Finance Ministry official in the 1990s before a spell at Vneshekonombank. He later returned to the ministry and was appointed deputy minister in 2005.

Storchak negotiated the early repayment of $22.5 billion in debts to the Paris Club of creditor nations last year and several write-offs of debts owed to Russia.