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Kremlin Offices Searched as Turmoil Grows

March 24, 1999|RICHARD C. PADDOCK | TIMES STAFF WRITER

MOSCOW — Russia's political turmoil intensified Tuesday as prosecutors searched the offices of a top Kremlin official for evidence of alleged kickbacks and payoffs in a widening corruption probe.

Pavel P. Borodin, the influential head of the Kremlin's administrative department, acknowledged that investigators had removed documents from his office but insisted that he has done nothing wrong and called the search "purely political."

The investigators' examination of Kremlin records marked the first public disclosure that the offices of anyone in President Boris N. Yeltsin's administration have been searched, and it illustrates the widening and often vicious rift among Russia's top officials.

The search was ordered by the office of Prosecutor General Yuri I. Skuratov, who is waging his own battle with Yeltsin and the Kremlin.

Skuratov is investigating a trail of corruption that could lead to the family of Yeltsin. Last month, the president forced Skuratov to submit his resignation, but the prosecutor remains on the job because parliament refused to accept it. Even the broadcast on state-run television last week of a video appearing to show the prosecutor having sex with two prostitutes has not been enough to dislodge him from his post.

"What we see now is a mutually guaranteed annihilation campaign stupidly and naively launched by the presidential staff and vainly picked up by the prosecutor general's office," said political analyst Andrei A. Piontkovsky, director of the Independent Institute for Strategic Studies. "The fast-growing ball of dirt is threatening to engulf the Kremlin and the entire country."

The latest Kremlin intrigue has surfaced over construction contracts awarded to Mabetex, a Swiss firm that has carried out major renovations on a number of government buildings in Moscow. Many of those contracts were arranged through the office of Borodin, who has a vast staff and oversees all Kremlin spending.

Borodin said Tuesday that investigators had been examining documents in his office for 10 days and appeared to be most interested in Mabetex's renovation of part of the Kremlin compound and the government headquarters known as the White House.

In a series of interviews, Borodin dismissed the search as unimportant and said he was ready to answer all questions the prosecutor's office might have about the contracts.

"I do not understand why there is such a stir around this," he said in a television interview. "Today, nothing special has happened, just as nothing extraordinary happened yesterday."

Behgjet Pacolli, the president of Mabetex, held his own news conference in Moscow to deny any wrongdoing. He lamented the attack on his company's name and said it was "an attempt to make Mabetex small change in someone's dirty political game."

He denied widely circulated allegations that his firm helped arrange the purchase of two yachts for Yeltsin or that his company built a house for Yeltsin's daughter Tatyana Dyachenko and put it in the name of a company executive.

Both Pacolli and Borodin denied any role in producing or distributing the videotape that has quickly turned Skuratov into Russia's best-known porn star.

"As far as blackmailing Yuri Skuratov is concerned," Borodin said, "tears well up in my eyes when I know people may think I could do anything like that."

Besides, Borodin added, if he was going to shake anyone down, he would choose auditors from parliament who have been much more aggressive in examining Kremlin records.

In a separate accusation, the ailing Yeltsin came under fire Tuesday from Viktor I. Ilyukhin, a Communist member of parliament who alleged that $235 million from last summer's $4.8-billion International Monetary Fund loan to Russia ended up in a foreign bank account controlled by Dyachenko, who serves as a political advisor to her father.

Ilyukhin, chief of the lower house's security committee, acknowledged that he did not know whether the charge was well founded but said he was making it public so the prosecutor's office would investigate.

"If all that I have said today and all the information we have received from Russian and foreign sources is true, there is direct evidence of mass corruption and misappropriation of state funds by the family of the Russian Federation president," he said.

The allegations were immediately denied by Yeltsin spokesman Dmitri D. Yakushkin.

"Ilyukhin's statements should not be treated as anything but ravings," he said. "They are made in full conformity with the style that dates back to the notorious trials of the 1930s and 1950s: The more absurd the charges are, the better."

*

Alexei V. Kuznetsov of The Times' Moscow Bureau contributed to this report.

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