The UN Inspector, National Theatre Olivier, London

In Gogol's great 1836 comedy The Government Inspector, a young wastrel newly arrived from St Petersburg is mistakenly assumed to be the eponymous inspector, operating undercover, by the corrupt mayor and officials of a backwater town

In Gogol's great 1836 comedy The Government Inspector, a young wastrel newly arrived from St Petersburg is mistakenly assumed to be the eponymous inspector, operating undercover, by the corrupt mayor and officials of a backwater town. The play is acutely alert to the way raging paranoia can drive folk to project their fears on to quite the wrong person.

In an inspired twist, the outsider who finds himself on the receiving end of all the VIP treatment and mystifying backhanders just happens to be a weirdo with grandiose fantasies who thinks that at last his true worth has been recognised.

David Farr has written and directed an ingenious update. The UN Inspector is set in a small ex-Soviet republic that is, in theory, remodelling itself as a democracy. The stakes are therefore higher than in Gogol's play. The IMF is liable to cut off the next loan if the supposed inspector gets a whiff of the endemic corruption.

So the old guard who are still in power resort to desperate measures to present an acceptable face to the outsider: for example, by releasing everyone but their political opponents from prison, or by pretending that the glossy medical soap being filmed in the huge, unfinished, internationally funded hospital is a genuine example of health care.

The man mistaken for the inspector is Martin Remington Gammon, a chronically unsuccessful English estate agent who has failed to make a killing in property development in Eastern Europe. Michael Sheen delivers a commanding comic performance, radiating both the abject ordinariness of Gammon and the peculiar charisma generated by his cranky sense of entitlement.

Kitted out in a smart suit like the public-school smoothie he aspires to be, this figure scales ever-greater heights of folie de grandeur in the hilarious scene where, enthroned, he gets sloshed in front of a craven assembly of apparatchiks and starts acting out everything he is in his mind's eye. His boasts are wonderfully indiscriminate. One minute, he's affecting to enjoy intimate contact with President Bush; the next, he's bragging about the day he was "put in charge of the whole Clapham branch of Foxtons". To the country's fleshy, dissolute president (Kenneth Cranham) and first lady (Geraldine James), Gammon is the embodiment of Western promise. The energy of Farr's production fluctuates, but it surges into life whenever Sheen is on stage.

By and large, Farr sticks to Gogol's template, but he introduces a flurry of farce involving the severed tongue of a dissident female journalist, and he uses the scene where the officials take it in turns to bribe Gammon to show how ideological rivals shamelessly brief against each other.

It's occasionally long-winded, but The UN Inspector is a witty, resourceful attempt to relocate Gogol's situation in the moral vacuum left by Communism.

In rep to 5 October (020-7452 3000)