* Blogger and think-tank accuse VTB
* They say recent cases involving VTB illustrate mismanagement
* VTB dismisses allegations as deceitful and biased
By Jason Bush
MOSCOW, Sep 10 (Reuters) - A prominent Russian anti-corruption campaigner and opposition leader on Monday accused Kremlin-controlled banking giant VTB of a "pattern of mismanagement and questionable practices", a charge the bank strongly denied.
The allegations were contained in a report co-published by Alexei Navalny's Foundation for Fighting Corruption and the Henry Jackson Society, a British-based think-tank.
The report's authors said their findings "should raise serious concerns about the viability of the financial institution for investors".
Navalny's critique of VTB is likely to embarrass the Kremlin and help the opposition firebrand keep his own profile high.
He was instrumental in circulating alleged evidence of fraud that benefited President Vladimir Putin's party in a December 2011 parliamentary election and has a track record of trying to expose problems inside government-linked companies.
VTB strongly criticised the report, saying it was "full of deceitful, biased and insubstantial accusations prepared by banking non-professionals."
"The corruption should be searched for directly in the Foundation for Fighting Corruption and the Russia Studies Centre at the Henry Jackson Society," VTB said.
While VTB is 75.5 percent owned by the Russian government, it also has a large base of international shareholders, having done an IPO on the London Stock Exchange in 2007 and a $3.3 billion secondary public offering last year.
The 20-page report cited six episodes in VTB's recent history, which it said raised questions about the bank's risk management practices, as well as its commitment to shareholders.
"First of all, this report ought to raise serious concerns regarding VTB's commitment to prioritising shareholder value," the report said.
"It is also crucial that international banking regulators take a closer look at VTB's activities and judge for themselves whether the bank is fit to continue doing business in their respective markets."
The report cited anonymous "VTB insiders" it said had alleged that VTB exploits looser regulations in Russia "by offloading riskier debts from its European subsidiaries to its Moscow parent company, thereby sidestepping European Union regulations."
The six main episodes highlighted in the report included VTB's high-profile takeover of Bank of Moscow in 2011.
VTB has previously faced criticism from investors and analysts for its decision to acquire the municipal lender, which was revealed to have a gaping hole in its balance sheet caused by allegedly fraudulent lending to companies linked to its former management.
Bank of Moscow ultimately required a $14 billion bail-out from the Russian government, the largest bank rescue in Russian history.
"...It remains unclear how VTB managed to miss such a major accounting discrepancy that almost immediately rendered its multi-billion dollar investment worthless," the report stated.
It also highlighted VTB's litigation in London to try to recover a $225 million loan made in 2007 to finance the purchase of farms owned by dairy company Nutritek, by a company linked to Russian financier Konstantin Malofeev of Marshall Capital Partners, citing London court documents that indicate the farms' value had been inflated more than six times.
Another case, also now the subject of litigation in London, involved VTB's attempts to try to recover $1.5 billion in loans to companies linked to Fyodor Khoroshilov, a former top manager of oil company Sibneft.
"If one accepts VTB's version of events, it simply means that the bank was duped out of hundreds of millions of dollars by failing to ask basic questions," said the report.
"If Khoroshilov's story is true, it would mean that not only did VTB and its subsidiaries squander $1.5 billion, but some managers engaged in potentially criminal activity."
The report also repeated previous allegations made by Navalny, who first rose to public prominence by using his popular blog to expose allegedly dubious practices at major state-owned companies, including VTB.
In 2009, he claimed that in a 2007 deal, a VTB subsidiary overpaid $160 million for drilling equipment imported from a Chinese company.
Earlier this year he also questioned a 2009 deal in which VTB sold shares in one of its Cypriot subsidiaries, Russian Commercial Bank, to a private company owned by key VTB managers, alleging that the shares were sold at an excessively low price.
The report also questioned a buy-back of VTB shares from retail investors in February this year, at double the market price, done on Putin's orders in advance of his election to the presidency in March.
"The buy back made clear that the Kremlin views VTB as an enterprise that can be used to fix political problems," the report stated, which "should give potential institutional investors pause before investing in VTB."
But Navalny himself is also facing accusations.
In July, Navalny was charged with organising a criminal group that stole 10,000 cubic metres of wood worth more than 16 million roubles ($500,000) when he was advising a regional governor.
Navalny has denied these charges, characterising them as political intimidation by the Kremlin.