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. Last Updated: 07/27/2016

New Storchak Investigation Opened

Itar-TassStorchak speaking to the court via video link-up on Monday. The court refused to release him while he awaits trial.
Prosecutors have opened a new criminal investigation into the activities of Deputy Finance Minister Sergei Storchak, who has already been charged with large-scale fraud and trying to embezzle millions of dollars in government funds.

"In connection with Storchak, another criminal case has been opened," prosecutor Viktoria Zhukova told an appeal hearing at the court.

The Moscow City Court, meanwhile, refused requests to release Storchak, despite public appeals from Finance Minister Alexei Kudrin, who personally vouched for him.

The arrest of Storchak, a prominent authority on international finance, shocked many top bankers and prompted media speculation that the investigation had a political element amid an increasingly public struggle among Kremlin clans for influence in anticipation of President Vladimir Putin's departure from office next year.

Storchak was charged late last month with trying to embezzle $43 million in government funds. He was detained by investigators one day before he was supposed to accompany Kudrin on a trip to South Africa.

On Monday, prosecutors said they were investigating Storchak for alleged abuse of office. Vladimir Markin, spokesman for the Investigative Committee, under the auspices of the Prosecutor General's Office, said in televised comments that the allegations stemmed from his role in January 2005 negotiations with Kuwait over the Soviet-era debts owed to the Gulf state.

Two other people have also been charged in the case -- the general director of a company called Sodexim and the president of a Moscow-based bank.

In a video linkup with Moscow City Court, he again insisted on his innocence and pleaded with the court to release him from pretrial detention, saying detention was harming his health.

Storchak told the court that his pretrial detention was "excessive." If convicted, he could face up to 10 years in jail. "I am prepared to cooperate with investigators at any time and at any place," he said.

"In my function I did not have the competence to take either positive or negative decisions on such matters. The final decision is taken by the government," Storchak said,

The court refused, however, saying there was a risk of him fleeing the country.

Storchak, one of three deputy finance ministers, was a prominent figure in negotiations on paying off tens of billions of dollars in Soviet-era debts under the Paris Club umbrella of debt negotiations. Russia paid a $1 billion penalty for early repayment under the deal, but saved $7.7 billion in interest.

Several newspapers have speculated that Storchak's detention was a political shot across the bow of Kudrin, who was elevated to a new post of deputy prime minister in a government shake-up engineered by Putin earlier this year.

Other media reports have tied the investigation to an influential deputy head of the presidential administration, Igor Sechin, who allegedly has sought to pressure Kudrin into releasing hundreds of millions of dollars from the oil-revenue-funded stabilization fund to help state-owned oil giant Rosneft pay down massive debts. Sechin is chairman of Rosneft's board.

AP, Reuters