Russia raids Deutsche Bank office in fraud probe

2nd February 2011, Comments 0 comments

Masked Russian crack police forces raided the central Moscow office of Deutsche Bank on Wednesday as part of a broader fraud investigation linked to the lucrative construction of a top hotel.

Investigators said their probe was looking into money that was allegedly stolen from the city during the renovation of the Moscow Hotel -- a vast Stalin-era building located opposite the Kremlin near Red Square.

Deutsche Bank has helped finance the project.

"Today investigators of the Russian Investigative Committee -- backed by operational forces of the interior ministry -- are conducting a search on the premises of Deutsche Bank," investigators said in a statement.

The probe focused on $87.5 million (63 million euros) that were allegedly embezzled by an aide to a lawmaker in Russia's State Duma lower house of parliament who owns several high-profile commercial properties in Moscow.

Investigators said the hotel loan was allegedly initially issued by Deutsche Bank but then embezzled from the Moscow city government in a complicated web of fraudulent financial deals.

A source close to case told AFP that Deutsche Bank itself was not being targeted in the investigation.

Ownership of the Moscow Hotel and the company charged with its renovation has been the subject of a furious battle that involves both the city government and a series of well-connected businessmen.

Wednesday's dramatic raid saw balaclava-clad interior ministry forces armed with automatic machine guns and grenades burst into the gleaming offices of the Frankfurt-based bank and rifle through its financial and other records.

An AFP photographer saw several investigators then walk out of the glass and steel structure with boxes full of documents in hand.

An unnamed source told Interfax that the bank was targeted after allegedly failing to divulge details about the disputed loan.

"The law enforcement authorities have repeatedly asked Deutsche Bank to provide these documents," the source told the Russian news agency. "However, these requests were denied."

Russian reports said investigators suspected that the Duma deputy who initially received the loan -- identified as Ashot Yegiazaryan -- may have decided to flee to the United States.

The unpaid debt left the German bank in a position to win control of the Moscow Hotel.

Press reports said that Moscow officials then quickly intervened and paid off the disputed sum. But Interfax said that investigators suspected that this money ended up somehow being misappropriated.

The complex financial dispute has been one of many to haunt a hotel whose initial design were personally approved by the Soviet dictator Joseph Stalin.

The ageing structure was demolished in 2004 and a modern replica began to be constructed in its place. The city has since unsuccessfully tried to fend off several powerful businessmen from winning control of the project.

The latest probe came only months after the Kremlin sacked Moscow mayor Yury Luzhkov -- one of the country's most powerful regional leaders who had a say in the division of most of the city's top real estate projects.

The head of Russia's Audit Chamber separately told Interfax that his office had found that Moscow authorities had committed "many serious financial violations" violations in 2009 and 2010.

"In these two years alone, we have uncovered violations worth 230 billion rubles ($7.8 billion)," Sergei Stepashin said.

© 2011 AFP

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