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Russia Releases Deputy Minister From Jail Pending Trial

Storchak in a Moscow court in April

Storchak in a Moscow court in April

MOSCOW (Reuters) -- Russian prosecutors have released a deputy finance minister pending his trial for embezzlement, a move that may show Finance Minister Aleksei Kudrin has checked attempts to undermine his position.

Kudrin, who has become the darling of investors by seeking to shield Russia's oil reserves from being squandered, hailed the decision, saying it showed justice had finally prevailed.

Sergei Storchak, who oversaw Russia's debt and its $163 billion oil wealth fund, was arrested last November and accused of attempting to embezzle $43 million in a complex deal with foreign debts owed to Russia.

The 54-year-old Storchak walked out of the Lefortovo high-security prison in Moscow to applause and flowers from supporters. He thanked his family, lawyers and Kudrin for their support, but said he was surprised by the decision to release him.

"We tried to lobby for this decision, to push it through, but nevertheless it is very surprising," Storchak told reporters. "We have a great feeling of thanks for the Finance Ministry headed by Alexei Leonidovich Kudrin who in different ways supported me through all this."

Storchak said he had no idea why he had been taken into custody and has repeatedly denied the charges against him. Supporters say the case was a direct attack on Kudrin, who has kept Storchak on as a deputy minister, amid a Kremlin power struggle between those seeking to gain control of Russia's giant reserves.

Investors have been closely watching the case, though markets did not move on the news he was to be released.

Kudrin has faced massive pressure from opponents over his fiscal conservatism and attempts to protect Russia's financial reserves -- built up during a decade of growth and high oil prices -- from being squandered.

"I consider the accusations [against Storchak] to be unjust and without foundation. I think justice has prevailed," Kudrin told reporters.

Analysts say attempts to undermine Kudrin intensified during the run-up to a handover of presidential powers to Dmitry Medvedev from Vladimir Putin.

Kudrin's influence has grown under Medvedev and he now is a member of a close-knit team of presidential aides who are carrying out emergency measures aimed at protecting the Russian economy in the global financial crisis.

Under Russian rules, Storchak was freed in exchange for a formal pledge not to leave Moscow until the trial. The official date of the trial has not been set yet.

Kudrin has kept Storchak in his position of deputy finance minister during the investigation. Kudrin said he had not yet spoken with Storchak to ask him whether he may resume his duties in the ministry.