Russian New Year: Kremlin luxuries gobble up cash

Millions of dollars intended for Russian industry was instead spent revamping Boris Yeltsin's presidential jet, refurbishing the Kremlin and his official residence near Moscow, and on imported tableware and luxury cars, according to an auditor's inquiry.

The report, details of which have been published by the Moscow News, found that $142m (pounds 89m) intended for the crisis-stricken Russian gold mining industry was spent elsewhere by the Yeltsin administration. Some of it also went on a residence for parliamentarians and Moscow's Bolshoi Theatre.

It is another embarrassment for the Yeltsin administration, which has long been widely blamed for the disastrous underfunding of the military, education, and health services and for failing to pay pensions and wages. The report, by the government's audit chamber, cites several major abuses, including the squandering of $500,000 on foreign travel by officials from the finance ministry. The sum is small when compared with the fortunes that have been stolen, or withheld in tax, during the carve-up of former state assets, but it has a powerful significance: the ministry is supposed to be introducing order into Russia's chaotic and corrupt economy.

Intriguingly, the newspaper says that the Russian Orthodox Church, the beneficiary of major tax breaks, received $1.37m from the federal budget for its offices abroad.

The revelations will deepen concern over spending by the Russian government, which is dependent on foreign loans. It comes as the government struggles to fulfil a promise to pay all back wages by the end of the year. This weekend, Anatoly Chubais, the first deputy prime minister, said that the federal government had transferred $1.9bn to pay wage arrears in the last four months. However, he said several regional bodies were still behind, and Moscow was trying to find extra money to pay these debts before the new year.