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Russia Intensifies Focus On Misuse Of Funds In South Ossetia

Will Security Council chief Nikolai Patrushev's visit lead to a conclusion of the ongoing drama?
Will Security Council chief Nikolai Patrushev's visit lead to a conclusion of the ongoing drama?
No less a figure than Russian Security Council Secretary Nikolai Patrushev arrived in Tskhinvali on September 1 on a two-day working visit linked to the ongoing investigation into the embezzlement of funds Moscow provided for postconflict reconstruction in the breakaway Georgian region of South Ossetia in the wake of the Russian-Georgian war of August 2008.

Two weeks ago, the Russian Prosecutor-General's Office announced that on the basis of investigations in several Russian government agencies it had opened 11 criminal investigations into possible misuse of those funds.

The embezzlement allegations are at the heart of an ongoing standoff between de facto South Ossetian President Eduard Kokoity and Vadim Brovtsev, the Russian businessman he named 13 months ago as prime minister. In mid-April, following a fact-finding trip to Tskhinvali by officials from Russia's Audit Chamber, the pro-Kokoity media launched a barrage of vilification of Brovtsev and of several Russians from his native Chelyabinsk whom Brovtsev appointed to senior government posts. They were accused of incompetence, lack of professionalism, and embezzling funds intended for reconstruction.

In late May, Russian Prime Minister Vladimir Putin summoned both Kokoity and Brovtsev to Moscow and reportedly ordered the former to abandon his efforts to undermine the latter.

Two months later, Putin dispatched one of his first deputies, Igor Shuvalov, to Tskhinvali in response to complaints by Kokoity about the performance of the Yuzhnyaya Direktsia (Southern Board), a special agency established in April within the Ministry for Regional Development to oversee tenders for reconstruction work in South Ossetia. The Southern Board reportedly awarded four contracts to companies from Moscow, and two to companies from Chelyabinsk, the home of both Brovtsev and Regional Development Minister Viktor Basargin, but none to local firms. Shuvalov said after his talks with Kokoity that a new intergovernmental commission will be created to monitor the reconstruction process. That commission, according to Shuvalov, will be headed by Basargin.

That decision may be revised, however, in light of the prosecutor-general's subsequent revelation that the Southern Board, which is subordinate to Basargin, violated federal budget legislation and legislation on state procurements. Basargin for his part told journalists in Moscow on August 20 that the accusations against the Southern Board were unfounded.

Meanwhile, two Russian businessmen whose companies were active in postconflict reconstruction in South Ossetia convened a press conference in Moscow on August 18 at which they accused the South Ossetian authorities of harassment, dragging out the process of rebuilding Tskhinvali, and embezzling budget funds. They have reportedly submitted to the Prosecutor-General's Office documentation implicating Kokoity personally.

But South Ossetian deputy prosecutor Eldar Kokoyev told a week later that the Russian Prosecutor-General's Office passed the documentation in question to the South Ossetian representation in Moscow, which forwarded it to his office in Tskhinvali.

Whether Patrushev's visit presages the final act in the ongoing drama remains unclear. As he had done in April, Brovtsev has responded to the renewed pressure on him by posting to a Russian website the purported findings of an opinion poll in which respondents unequivocally praise the work of his government.

Regardless of the fate of the key protagonists in the dispute, Russia's intervention serves to underscore yet again South Ossetia's financial -- and by extension political -- dependence on Moscow, which Brovtsev recently claimed provides 98 percent of its budget.

About This Blog

This blog presents analyst Liz Fuller's personal take on events in the region, following on from her work in the "RFE/RL Caucasus Report." It also aims, to borrow a metaphor from Tom de Waal, to act as a smoke detector, focusing attention on potential conflict situations and crises throughout the region. The views are the author's own and do not represent those of RFE/RL.


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