World Crisis Online

Russian police armed with machine guns have raided the Moscow offices of Inteko, the vast construction business built by Yelena Baturina, the wife of a former Moscow mayor.

Russia’s interior ministry said the raid was being conducted as part of a criminal investigation into the alleged embezzlement of 13bn roubles ($443.7m) from the Bank of Moscow, which is being targeted for takeover by VTB, the state-controlled bank.

Pressure has been mounting on businesses linked to Yury Luzhkov, the former mayor, since he was fired by the Kremlin last year following a series of corruption allegations.

During Mr Luzhkov’s 18-year tenure at the helm of the city, his wife rose to become Russia’s richest woman with a vast construction and property business. Mr Luzhkov has denied abusing his position to help boost his wife’s business, claiming he is the victim of a political witch-hunt.

Finans magazine this week estimated Ms Baturina’s wealth had almost halved since last year to $1.1bn.

The criminal probe is linked to a 2009 deal in which the Bank of Moscow lent Rbs12.76bn to a real estate company that then bought land from Ms Baturina’s Inteko at what market participants believe was several times higher than the market price. Ms Baturina used the funds to help pay down debts at the height of the economic crisis.

Questions were raised about the transaction because it took place the same day as the Moscow city parliament approved the transfer of Rbs15bn of city budget funds to the Bank of Moscow to boost the bank’s capital.

The Financial Times has reported that Russia’s interior ministry was investigating whether the city budget funds were in fact transferred to help Ms Baturina settle her debts.

Ms Baturina and Bank of Moscow have denied any wrong doing. On Thursday Ms Baturina told Interfax, the Russian news agency, that the raids amounted to no more than an attempt to exert pressure on her.

“I know for absolute certain that these raids have nothing to do with us or with the Bank of Moscow. This is just an ordered attack to pressure us,” she said.

An Inteko employee told Interfax: “All workers were gathered in one room and locked inside … They’re not explaining to us what is happening.”

The raids come as VTB, the state-controlled bank, is attempting to speed up attempts to take over Bank of Moscow, Russia’s fifth biggest by assets. Andrei Kostin, VTB president, told the Financial Times this week that he hoped to complete the acquisition by the end of March.