DE RUEHMO #5703 3381541
ZNY CCCCC ZZH
P 041541Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5675
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L MOSCOW 005703
STATE FOR EUR/RUS, EEB/IFD TREASURY FOR MEYER, TORGERSON NSC FOR WARLICK
Classified By: Ambassador William J. Burns, Reasons 1.4 (b/d).
1. (C) Deputy Finance Minister Sergey Storchak remains incarcerated after a Moscow City Court denied a defense appeal to have his November 15 arrest overturned. Neither Deputy Prime Minister Aleksey Kudrin's petition requesting Storchak's release from custody (Ref A) nor the defense team's plea for his release on medical grounds proved successful. Following these proceedings, an Investigations Committee representative announced that a new charge of exceeding authority, under Article 286 of the Criminal Code, would be brought against Storchak in connection with the latter's involvement in Soviet-era debt relief negotiations with Kuwait. Finance Minister Kudrin signed this debt relief deal in May 2005. End Summary.
2. (U) Deputy Finance Minister Sergey Storchak's defense team appealed to a Moscow City Court to overturn the Moscow Basmanny Court's sanction of Storchak's November 15 arrest (Ref B). According to accounts of the hearing, the defense team focused on the importance of Storchak's achievements on behalf of the broader GOR, namely in paying down much of Russia's foreign debt early and saving billions in interest payments. The defense also argued that Storchak suffered from a longstanding heart condition that his current detention facility would not be able to treat.
3. (U) Prosecutors observed that the defense did not argue the legal merits of the Basmanny Court's decision and that Storchak should, therefore, remain in custody. Prosecutors used the same line of reasoning regarding Deputy Prime Minister Kudrin's late-November petition requesting Storchak's release. Kudrin's letter guaranteeing Storchak's cooperation with the investigation was reported to have emphasized "the significance of Storchak's work in the development of Russia's economy." The three-judge panel ruled in the prosecution's favor, dismissing the medical grounds and Kudrin's personal plea for Storchak's release from custody. The defense team announced its intention to appeal the Moscow City Court's decision.
Charge of Exceeding Authority
4. (U) Following the conclusion of the Moscow City Court's ruling, Investigations Committee representative Vladimir Markin announced that an additional criminal charge was being brought against Storchak. Without offering details, Markin said that Storchak would be charged under the Criminal Code's Article 286, part 1 for exceeding his authority in connection with Soviet-era debt relief negotiations with Kuwait. According to Markin, prosecutors had already prepared to combine this charge with the charges of attempted large scale fraud which had been formally presented on November 23. (Note: Finance Minister Kudrin signed the Soviet-era debt relief agreement with Kuwait's Energy Minister Ahmed Fahad al-Ahmad as-Sabah on May 30, 2005. Under the USD 1.6 billion negotiated settlement, which Storchak had led, Russia agreed to pay USD 1 billion in cash and the USD 600 million in interest accumulated since 1991 on that amount in the form of machine-building technology. End Note.)
5. (C) Storchak's on-going incarceration continues to fuel rumors of rifts within the ruling elite. The real target of the arrest is clearly Kudrin, whom many see as the most senior "liberal" left in the government. Despite his recent promotion and close ties to Putin, Kudrin's position appears to have been weakened by the Storchak affair. All the more so because, having made it personal, Kudrin has so far failed to secure his deputy's release. BURNS