CORRECTED - Russian prosecutors clash in Storchak case
(Changes billion to million in paragraph 3)
MOSCOW, Dec 6 (Reuters) - Russian prosecutors publicly clashed on Thursday over the high-profile case of jailed Deputy Finance Minister Sergei Storchak, supervisor of reforms to a $144 billion budget stabilisation fund now in its final stage. The Prosecutor General's office refused to press new charges of abuse of office against Storchak, also Russia's chief debt negotiator, arguing the charges sought by its own investigative arm lacked grounds.
Storchak, a close aide to Finance Minister Alexei Kudrin, has already been charged with attempting to embezzle $43 million in relation to a failed attempt by two businessmen to recover a debt owed by Algeria.
"We regard the decision of the Deputy Prosecutor General (not to press charges against Storchak) as illegal," said Vladimir Markin, spokesman for the Investigative Committee.
The prosecutor's office was split into supervisory and investigative units this year and they have already clashed over other high-profile cases, including the murder of investigative journalist Anna Politkovskaya.
Kudrin, who had offered to vouch personally for Storchak's proper conduct if released, said he would be allowed to meet his deputy soon and called the prosecutor's decision "objective".
"I never understood the nature of this second criminal case. I do not understand it now. I (consider) that prosecutors reviewed it objectively," Kudrin said.
The Investigative Committee had said on Monday it would open a new probe into suspected abuse of office against Storchak in relation to a $1.7 billion debt deal with Kuwait in May 2007.
After Thursday's rebuff, the Investigative Committee said it would dispute the supervisors' decision in court and insisted Storchak's arrest on Nov. 15 was justified as part of a wider anti-corruption drive.
"We cannot allow bureaucrats of such a high rank who abuse their office to remain free," Dmitry Dovgy, the committee's chief investigator, told the official Rossiyskaya Gazeta newspaper.
CRUCIAL TIME Dovgy also said investigators had found $1 million in cash in Storchak's apartment. Storchak's lawyers said this was not evidence of any crime, adding that he had saved the money while working as a banker before joining the ministry.
Because judges refused to release Storchak pending his investigation, he is likely to stay in prison until mid-January. That could hamper plans to draft a new investment strategy for the stabilisation fund.
Russia plans to split the rainy-day fund, which gathers windfall oil revenues, on Feb. 1 into a reserve fund, which will act as an insurance policy against a fall in energy prices, and a more growth-oriented $19 billion National Wealth Fund (NWF).
There are signs of disagreement inside the government over how to invest the NWF and how to use the proceeds, with the Finance Ministry proposing to buy foreign stocks and use the proceeds to co-fund voluntary pensions.
The ministry is discussing the investment strategy with other ministries and the central bank, and Storchak's absence is likely to weaken the ministry's position.
Russia has drawn $12.3 billion from the fund this year for infrastructure investment, denting the government's reputation for fiscal prudence, and cabinet calls continue for further withdrawals. (Reporting by Gleb Bryanski; Editing by Caroline Drees)
