DATE=8/26/1999
TYPE=CORRESPONDENT REPORT
TITLE=RUSSIA SCANDAL (L-ONLY)
NUMBER=2-253153
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW
CONTENT=

VOICED AT:

INTRO:  Russia's top prosecutor is accusing President 
Boris Yeltsin of blocking a probe into allegations of 
high-level Kremlin corruption.  Moscow correspondent 
Peter Heinlein reports the first shots (initial round) 
in what promises to be a nasty war of compromising 
materials (Russian: kompromat) involving many of 
Russia's top political figures.
TEXT:  In an interview published (Thursday) in an 
Italian newspaper, Russia's chief prosecutor Yuri 
Skuratov said Kremlin officials first tried to 
obstruct his work, then suspended him this year for 
investigating corruption at the highest levels.
The same paper, "Corrierre della Serra", reported 
Wednesday that Swiss magistrates had seized documents 
linking President Yeltsin and his family to suspected 
kickbacks in return for construction contracts.
The allegations -- and a flurry of denials -- have 
rapidly replaced the conflict in Dagestan as the lead 
story in Russian news.  It has also fueled a fierce 
competition between pro-and anti-Yeltsin media 
conglomerates.  The suspended prosecutor, Mr. Skuratov 
was quoted by "Corrierre della Serra" as saying the 
majority of Russian media support him, with the 
exception of those controlled by the state, or by 
Kremlin insiders.
The paper's allegations center on Mabetex, a Swiss-
based construction firm that won lucrative contracts 
to refurbish government facilities, including the 
parliament building shelled by Russian tanks in 1993.  
Wednesday's article said Mabetex's chief executive 
admitted placing more than one-million-dollars in a 
Hungarian bank account to cover personal expenses of 
President Yeltsin and his two daughters during a 1994 
trip to Hungary.
The Kremlin's information machine swung into high gear 
to refute the allegations. 
A state-run television channel broadcast a taped 
interview with the Mabetex chief describing the 
newspaper report as -- a fairy tale.  And a Kremlin 
spokesman denied that President Yeltsin or his 
daughters had ever had a foreign bank account.
The corruption allegations come at an awkward time for 
the Kremlin's inner circle.  With parliamentary and 
presidential elections taking place in the coming 
months, the charges provide ammunition for political 
opponents -- especially the alliance of Moscow's 
powerful Mayor Yuri Luzhkov and the popular former 
prime minister Yevgeny Primakov. 
They enjoy the backing of powerful media magnate 
Vladimir Gusinsky, whose chain of newspapers, radio, 
and television stations have featured the allegations 
prominently.
The Kremlin can counter with the competing empire of 
Yeltsin confidant Boris Berezovsky and the still 
influential state-run media. 
Observers say the "Corrierre della Serra" articles are 
just the beginning of what promises to be an 
especially nasty political campaign.  The Kremlin has 
hinted it has its own ammunition, in particular about 
Mayor Luzhkov's business dealings, but is withholding 
details until closer to election day.   (SIGNED)
NEB/PFH/PCF/RAE



26-Aug-1999 13:47 PM LOC (26-Aug-1999 1747 UTC)
NNNN

Source: Voice of America
.