Moscow's ousted mayor questioned in fraud case

15th November 2011, Comments 0 comments

Moscow's toppled mayor Yury Luzhkov on Tuesday testified as a witness in an investigation into a city bank that he founded and that allegedly gave his wife a fraudulent loan.

"Yury Mikhailovich answered all the questions he was asked. He did not dodge a single question," the ex-mayor's lawyer Genri Reznik told journalists, using Luzhkov's patronymic, cited by the RIA Novosti news agency.

Meanwhile Luzhkov slipped in and out unnoticed through a back entrance to avoid the press as he attended the appointment.

The questioning lasted around four hours, but investigators did not change Luzhkov's status from witness to suspect in the probe, as is widely expected, his lawyer said.

"His official status according to the materials that I was familiar with, has not changed," Reznik said.

President Dmitry Medvedev humiliatingly sacked the long-reigning mayor in September 2010 after a televised campaign highlighting alleged corruption and favours to Luzhkov's wife, construction magnate Yelena Baturina.

The 75-year-old had ruled as mayor from 1992, with massive public support when re-elected in contested polls. Now the post is directly appointed, and he was replaced by a taciturn Kremlin loyalist, Sergei Sobyanin.

The Bank of Moscow finance house that Luzhkov founded and used as the heart of the city's real estate and other business operations was raided within months of the mayor's replacement.

Its executives now stand accused of using city budget money in 2009 to issue a 13 billion ruble ($420 million) loan to a shell company that ended up buying a property at an inflated price from Baturina's construction business.

Luzhkov and Baturina have spent most of their time abroad since the mayor was ousted, with Baturina fleeing to Austria after crack police forces raided the offices of her Inteko firm in February.

Baturina admits that Inteko used the proceeds from the property sale to cover immediate debts and stay afloat for several more months. But she argues that the loan was legal and the intermediary company legitimate.

Baturina in September agreed to sell Inteko for around $1.2 billion to Sberbank, the country's largest banking chain, and Mikail Shishkhanov, who controls B&BN Bank.

Before her husband's ouster, Baturina was ranked the world's third richest self-made woman by Forbes magazine in 2010 with a fortune of $2.9 billion.

She has been called for questioning several times in the fraud investigation but has declined because she has been abroad, the interior ministry said in a statement last month, warning that it would use Interpol to summon her.

Luzhkov, who presided over the regular breaking up of opposition rallies by riot police while in office, has given interviews accusing the Kremlin of Stalinist-style repression against him.

© 2011 AFP

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