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MOSCOW, November 20 (RIA Novosti) – Shares in Russia’s state-controlled telecoms giant Rostelecom plummeted more than 3.5 percent in Tuesday afternoon trade on news that the homes of Rostelecom’s head and a major minority shareholder were raided by police in a $250 million VTB Bank embezzlement case.
As of 12:25 p.m. Moscow time, Rostelecom, Russia's largest intercity fixed-line communications provider, saw its common stock fall 3.68 percent to 118.25 rubles per share compared with a 0.33 percent drop across the MICEX stock index at that time.
Russian business media reported early on Tuesday police were searching the office and residence of Marshall Capital Fund’s owner Konstantin Malofeyev, the largest minority shareholder of Rostelecom, and the house of Rostelecom's chief Alexander Provotorov, a former Marshall Capital general director.
The police, Rotelecom and VTB would not immediately comment on the situation.
The searches are part of a criminal case into embezzlement of over $250 million in loans granted by VTB Capital Plc, the British division of Russia’s second largest bank VTB, to the RusAgroProm firm to purchase dairy plants from Nutritek International Corp. previously controlled by Malofeyev’s Marshall Capital Fund.
As collateral for the loan, VTB received the shares of the dairy plants whose value was overestimated by five times, according to an audit by Deloitte Consulting LLP.
VTB told Kommersant the bank would seek the recovery of funds by all available methods stipulated by Russian and international legislation.
Malofeyev is also known as a major benefactor for Russian Orthodox Church projects. He heads the St. Basil the Great Foundation, which built a prestigious Orthodox Christian school in Zaitsevo west of Moscow, assisted reconstruction of the St. Tatiana Chapel of Moscow State University and contributed to other church projects.