Russia probes bank formed by deposed Moscow mayor

22nd December 2010, Comments 0 comments

A top Russian bank formed by the deposed mayor of Moscow was under investigation Wednesday for issuing a suspect loan that allegedly helped rescue the firm of the city boss's wife from collapse.

The probe into the Bank of Moscow -- which has been owned by the city since its foundation under the once-powerful mayor Yury Luzhkov in 1995 -- is linked to a 12.76-billion-ruble (415-million-dollar) loan the bank issued to a little known firm in 2009.

Various media reports said that company then went on to purchase a plot of land at what investigators believe was an inflated price from mayor's debt-riddled wife Yelena Baturina.

Baturina has risen to become Russia's richest woman according to Forbes magazine on the back of Moscow real estate contracts awarded to her Inteko construction firm.

But Inteko has been burdened with massive debts since the 2009 financial crisis.

Press reports said that investigators were now zeroing in on the link between Luzhkov and his wife's financial dealings.

The Vedomosti business daily said the company that acted as the intermediary in the transaction was partially owned by Bank of Moscow executives and had been set up only three months prior to the disputed land deal.

The Financial Times for its part reported that the transaction took place on the same day as the Moscow city parliament approved a 15-billion-ruble transfer to the Bank of Moscow.

It added that Russia's interior ministry was now checking to see whether the funds were transferred to help Baturina settle her debts.

A spokesman for Baturina's company told the Interfax news agency Wednesday that the land deal was "completely legal" but provided no further details.

Luzhkov became mayor of Moscow in 1992 and eventually established himself as one of Russia's most powerful regional bosses.

But he lost a political tug of war with the Kremlin and was fired by President Dmitry Medvedev in September.

The bank is also being probed by the country's audit chamber -- with both investigations launched since Luzhkov's ouster.

"The Bank of Moscow financed all of Moscow's major economic projects, which is why is why we are checking all the funds that flowed from the bank to the city," audit chamber chief Sergei Stepashin was quoted as saying by Interfax.

He said the initial results of the audit chamber's investigation would be made public this month.

The Russian media reported this month that Baturina has been negotiating to sell her company. Inteko officials have refused to publicly comment on the reports.

The investigation surfaced amid attempts by Russia's VTB bank to acquire the Moscow lender.

The Bank of Moscow has accused VTB of making a series of false allegation about the bank that are meant to help reduce its eventual acquisition price.

VTB executives this month said they had questions about the Bank of Moscow's ownership structure and whether some of its city assets were in fact privately held.

The Bank of Moscow reports on its website that it is Russia's fifth-largest bank in terms of assets and capital.

It also says that the Moscow city government owns 46.48 percent of the bank directly and 17.32 percent indirectly through another city-controlled firm.

© 2010 AFP

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