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Ex-Moscow Mayor, Wife Under Pressure From Russian Investigators

  • RFE/RL

Former Moscow Mayor Yury Luzhkov and his wife, Yelena Baturina, have found themselves in investigators' sights.

Former Moscow Mayor Yury Luzhkov and his wife, Yelena Baturina, have found themselves in investigators' sights.

It has been a hard few months for the richest woman in Russia and her husband, the former mayor of Moscow.

When "Finans" magazine published its annual list of Russian billionaires, Yelena Baturina -- wife of fired former Moscow Mayor Yury Luzhkov -- found she had tumbled 47 spots down the list to 94th place.

The magazine estimated her fortune at just $1.1 billion, half of what it was a year earlier. "Forbes" magazine last year put her wealth at $2.9 billion.

Last week, investigators searched the Moscow offices of Baturina's flagship firm, the Inteko construction company, while probing charges that the Bank of Moscow paid the company an exorbitant price for a parcel of land outside Moscow in 2009 and that the money ended up in Baturina's personal account. The case involves some $440 million.

The city of Moscow owns 46.5 percent of the Bank of Moscow, with another 20.3 percent controlled by two longtime Luzhkov allies, bank CEO Andrei Borodin and senior manager Lev Alaluyev. To make matters worse, the bank paid for Inteko's land by issuing new shares, almost all of which were bought up by the city government.

Earlier this month, the Audit Chamber reported $7.3 billion in "spending violations" in the transportation sector during Luzhkov's 18-year tenure running the capital. Current Mayor Sergei Sobyanin is reportedly looking into more than 100,000 Luzhkov-era contracts and the Audit Chamber has launched a probe of its own into the Bank of Moscow and its dealings with a number of companies, including Inteko.

Baturina's real estate firm Inteko in Moscow
Baturina and Luzhkov's whereabouts are unknown. Both are believed to have left Russia and are reportedly in Austria.

Not A 'Real' Investigation?

Although the investigations are being described by the authorities as a crackdown on corruption, many observers are not convinced.

Vladimir Milov is an opposition politician and -- with former Deputy Prime Minister Boris Nemtsov -- co-author of two reports on alleged malfeasance in the Moscow city government under Luzhkov. He says the case is less about rooting out corruption than it is about seizing control of lucrative assets.

"Unfortunately, looking at how events are unfolding, I suppose that we aren't really talking about a real investigation into this incredible corruption -- enormous sums of money were simply stolen from the Moscow budget," Milov says. "I see that they are trying to blame scapegoats -- bank employees who supposedly deceived the leadership."

Milov says he is "sure" that Luzhkov, other Moscow officials, Bank of Moscow CEO Borodin, "and even the leadership of the Central Bank of Russia knew about this deal and its corrupt roots. But now they want to blame scapegoats. To me, this means they are not really investigating the corruption or seriously trying to find the guilty parties at the highest level."

Leonid Gozman, a leader of the Right Cause party, agrees that the purpose of the high-profile attacks on Luzhkov and Baturina is to convince them and their allies to relinquish their assets.

"It can't be excluded that this [the investigations] is connected with something else, that he [Luzhkov] doesn't want to give something up or only for a good price. But they want to take it from him for cheap or for nothing at all," Gozman says. "They are explaining to him and his team: either you give it up or you will go to prison. And if you don't go to prison, then your friends will."

Fighting Over Juicy Morsels

The situation is an awkward one for Russia's leaders, which may explain why the investigation is being handled so selectively. Before his disgrace and dismissal last September, Luzhkov was a top leader of Vladimir Putin's ruling United Russia party. He managed local elections in such a way as to ensure that United Russia controlled the Moscow City Duma.

Since the allegations against Luzhkov were widely publicized for years before his dismissal, most notably in the Nemtsov-Milov report, but never investigated, it is hard for the ruling party now to duck all responsibility for any charges that stick.

But, on the other hand, the business empire the former first couple of Moscow controlled is undoubtedly hard to resist.

The juiciest morsel is the Bank of Moscow itself, and it has been in the sights of Russia's second-largest bank, VTB, ever since Luzhkov was ousted. "Vedomosti" has reported that Sobyanin is ready to sell the city's stake, together with those of most of the minority owners -- including managers Borodin and Alaluyev. Analysts speculate the hubbub around the bank now is designed to keep Luzhkov's allies from holding out for too much money.

Despite the downturn in real estate following the global economic crisis, Baturina's Inteko is also attracting attention. Political analyst Stanislav Belkovsky told "The Moscow Times" that Kremlin-connected oligarchs Oleg Deripaska and Vasily Anisimov are both interested in acquiring Inteko.

Dmitry Katayev is a former opposition member of the Moscow City Duma. He tells RFE/RL that he will only believe in the sincerity of the anticorruption probe when investigators declare that one-third of the city budget was stolen during Luzhkov's later years. He has a hard time feeling bad for either the former mayor or his wife.

"It's interesting that just days after Luzhkov's dismissal, his so-called allies turned away from him, and now we are seeing the next phase of this, the next lesson. The courts, which for a long time were molded by Luzhkov and Baturina, have also turned against them now," Katayev says.

"I don't take joy in others' misfortunes, but this is very positive. Any politician who is illegitimate, who is not elected, particularly if they are corrupt, must understand that only a legitimately elected government is stable. Everything else is very unreliable."

written by Robert Coalson, with reporting by RFE/RL's Russian Service from Moscow