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Insurance Fund Execs Detained in Russia

November 17, 2006

MOSCOW (AP) _ Six senior officials at a federal health insurance fund have been arrested on suspicion of bribery, authorities said Friday, days after Russia’s top prosecutor said that corruption has ``permeated all levels″ of the government.

The director of the Federal Mandatory Medical Insurance Fund, Andrei Taranov, his two deputies and three department heads were under arrest and a seventh official has been detained, Prosecutor General Yuri Chaika’s office said in a statement.

Fund officials are suspected of taking large bribes from officials at its regional branches and from representatives of pharmaceutical companies and other drug and medical supply firms, the statement said.

The daily newspaper Kommersant reported that the arrests followed an investigation into the fund’s activities in 2005. It said prosecutors searched offices and questioned officials from three companies that distribute prescription drugs intended for people eligible for benefits under a federally funded program run by the insurance fund.

Kommersant cited an unidentified Health Ministry official as saying the arrests may be linked to a competition that awarded several companies the right to supply $1.1 billion worth of medicine under the federal program this year.

The paper said the arrests occurred just as the fund is preparing to seek bids from drug companies for participation in the program next year, when its budget will rise to $1.6 billion.

The prosecutor general’s office warned the interim officials who have replaced the arrested fund officers to abide by the law during the bidding process.

Kommersant speculated that the scandal could hurt the reputation of Health and Social Development Minister Mikhail Zurabov, who it said was among those who developed the drug distribution program. The program has faced criticism because the money allotted this year had allegedly run out by July.

Top fund officials were suspected of embezzling state money in addition to bribery, the newspaper reported.

Insurance fund officials could not be reached for comment, and the Health Ministry declined to comment.

In another reported bribery case, the Interfax news agency said the top police official in Moscow’s northwestern district was detained after allegedly being caught accepting a $15,000 bribe. Interfax later said Moscow police denied the report.

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