Russia launches fraud case against backers of Putin critic Navalny

MOSCOW Fri May 23, 2014 7:22am EDT

Opposition leader Alexei Navalny talks to the media after leaving a justice court building in Moscow, April 22, 2014. REUTERS/Maxim Shemetov RTR3M89M

Opposition leader Alexei Navalny talks to the media after leaving a justice court building in Moscow, April 22, 2014.

Credit: Reuters/Maxim Shemetov RTR3M89M

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MOSCOW (Reuters) - Russia opened a fraud case into funding of Kremlin critic Alexei Navalny's campaign for Moscow mayor last year, in what he said was an attempt to intimidate opposition candidates ahead of local city elections.

Russia's Investigative Committee said on Friday that police were carrying out searches at addresses in Moscow linked to three men it described as "close acquaintances and fellow fighters" of Navalny, who is held under house arrest.

It said city politician Konstantin Yankauskas and entrepreneurs Nikolai Lyaskin and Vladimir Ashurkov were suspected of election law violations and of embezzling funds from Navalny's mayoral campaign. The men denied the charges, which carry a penalty of up to 10 years in jail.

Yankauskas, who along with Lyaskin is standing for a city parliament seat in September polls, called them "purely political".

"Again strong, independent candidates are coming under pressure," Navalny, whose strong showing in last year's polls was a major upset to Russia's tightly-controlled political system, wrote on his blog. "It's a warning to all others."

The Investigative Committee said 10 million rubles ($290,000) that the three had raised from Navalny supporters via the Internet may not have been used for the advertised purpose of funding his election campaign.

"The investigation has reason to suppose that Yankauskas, Lyaskin and Ashurkov stole the collected funds," it said in a statement, adding that some of the funds had been sent from donors with Internet addresses abroad.

President Vladimir Putin, who was meeting with business leaders at the St Petersburg International Economic Forum on Friday, has often criticized foreign funding of political organizations.

A spokeswoman for Yandex.Money - the digital payment service used by Navalny's campaign team to gather funds - said police were also searching their office for material linked to "several of our clients".

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"It's purely political," Yankauskas told Ekho Moskvy radio, adding the searches were prompted by a desire on the part of the authorities "to create problems for us in the Moscow city parliament election" in September.

Navalny, who rose to prominence as a blogger campaigning against corruption, was a leader of street protests that shook the Kremlin in 2011 and 2012.

Last year he was convicted of embezzling 16 million rubles ($466,000) of timber in an unrelated case and sentenced to five years in prison. The sentence was later suspended, but Navalny is now under house arrest and is barred from seeking office for years due to the conviction.

In a separate case, he is also facing charges of stealing more than 30 million rubles from two companies, one of them an affiliate of French cosmetics firm Yves Rocher.

Despite the charges against him, Navalny was allowed to run for mayor of Moscow in September last year.

Although losing to pro-Kremlin incumbent Sergei Sobyanin, Navalny's 27.3 percent showing was hailed by as a victory in a political system where elections are tightly controlled and anti-establishment candidates are usually marginalized.

Navalny's supporters have hopes of capitalizing on his political success in September's election for the city parliament, which is overwhelmingly dominated by the pro-Putin United Russia party.

(Additional reporting by Steve Gutterman; Editing by Alison Williams, John Stonestreet)

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