By Olga Sichkar
MOSCOW (Reuters) - Russian police on Thursday raided a property company owned by the wife of Moscow's former mayor as part of a probe into suspected embezzlement and misuse of city funds linked to a $440 million land deal.
The raid on the offices of property developer Inteko opens one of the first cracks in a multi-billion dollar business empire run by Yelena Baturina, the wife of ousted Moscow mayor Yuri Luzhkov.
"OMON riot police and people in civilian clothes came to the office and left with the management," an Inteko employee, who asked not to be named, told Reuters.
Police also raided Bank of Moscow and the homes of its directors of the bank as part of an embezzlement investigation, the Interior Ministry's investigative department said in a statement.
Investigators said they suspect unidentified employees at Bank of Moscow and real estate developer Premiere Estate of using a 13 billion roubles (£274.5 million) loan to embezzle funds which finally ended up on Baturina's personal account.
Luzhkov's removal last autumn and the appointment of Mayor Sergei Sobyanin, an ally of Prime Minister Vladimir Putin, triggered a bout of capital outflows from Russia and weakness in the rouble currency.
It also heralded ownership changes in assets controlled by the city, including Bank of Moscow, which state-controlled VTB, Russia's No.2 bank, is seeking to acquire.
Baturina is the president of Inteko and has a controlling stake in Inteko.
BATTLE FOR MOSCOW
A probe was launched last December into a complex deal under which a 13 billion rouble loan was used to buy land from Baturina's debt-ridden Inteko.
Neither Inteko nor Baturina were named as suspects by the investigators and there was no implication of wrongdoing by either as Baturina received the money through a land deal.
Baturina criticised the raid: "It has just been ordered to put pressure on us," she told Interfax news agency.
"There are no criminal cases in relation to Inteko or against the employees or leadership and there is no basis for any cases," said Inteko spokesman Gennady Terebkov.
Baturina, whose fortune was valued by Russia's Finans magazine at about $1.1 billion this year, and Luzhkov have been assailed by accusations of corruption, though both have denied the allegations.
Businessmen say corruption is worst in the construction sector which relies on decisions taken in the mayor's office, but Luzhkov has denied that his wife received preferential access to projects during his 18-year tenure as Moscow's boss.
Sending riot police armed with automatic weapons to search Baturina's company is a signal her empire is under attack from powerful groups within the elite after Luzhkov openly challenged Kremlin chief Dmitry Medvedev.
Falling foul of the Kremlin is the most dangerous move for any tycoon in Russia and those who dare to challenge the leadership often lose their assets, face prosecution and eventually flee abroad.
President Medvedev has promised to improve the business climate and ensure property rights, though investors say one of the biggest barriers for business in Russia is the lack of a consistent rule of law.
(Additional reporting by Alissa de Carbonnel and Thomas Grove; writing by Guy Faulconbridge)
