The Deputy Finance Minister in charge of handling Russia's foreign debt negotiations has been arrested and charged with embezzling $43-million, in a corruption case that could rock the Kremlin.
Sergei Storchak, one of the liberal Finance Minister Alexei Kudrin's three deputies, is accused of "forming an organised group" with two Russian businessmen with the aim of siphoning-off state funds as part of a scheme to reschedule Algeria's debt to Russia.
"He absolutely does not admit his guilt," Storchak's defence lawyer Alexander Petrov told journalists.
"His actions were fully in line with his official duties, resolving those tasks that were in the interest of the state," he said.
But the high-profile case, which comes amid parliamentary elections and political uncertainty about President Vladimir Putin's future plans, has shaken public confidence in a Kremlin administration that has claimed to be clean and above corruption.
Experts say the accusations against Storchak could be part of an inner-Kremlin factional battle.