The theft of artefacts from Russia's Hermitage Museum may be just the tip of a priceless iceberg, reports Chris Stephen in Moscow

It began with a tragedy. In October last year, as the first snows fell on St Petersburg, Larisa Zavadskaya, curator of the Russian art section of the great Hermitage museum, collapsed at her desk and died.

In her 50s, Zavadskaya had worked for more than a decade in one of the most sacred parts of the immense museum, the part dedicated to preserving the nation's heritage. Her death came shortly after she was told that an inventory was to be carried out on her collection of icons and artefacts in the museum which was, until 1917, the Tsar's opulent Winter Palace. Now the inventory would have to take place without her.

As the months went by and winter turned to spring, staff began to find discrepancies. At first it was nothing to worry about. Even though the Hermitage is the world's biggest museum, with more than 1,000 rooms, there is space to display just a tenth of its 2.8 million works of art and most remain tucked away out of sight.

Finding discrepancies for items tucked away in the basement storage areas is nothing unusual. "Usually if an item is missing we eventually find it in another department," joked museum director, Mikhail Piotrovsky.

He wasn't joking last week, however. Eight months of work had revealed a huge missing list. No fewer than 221 items - far more than could be accounted for by carelessness - were gone, with a value in excess of $5 million (€3.88 million). Among those missing were a rare gold and silver Christian icon encrusted with pearls. Facts had to be faced. They had been stolen, and it was an inside job.

A theft was the last thing Piotrovsky needed. Ever since state support dried up in 1991, a cash-starved Hermitage had faced charges of lax security. In 1995 customs officials at the city airport arrested a Russian tourist bound for New York with three suitcases of priceless books and documents signed by Peter the Great, stolen from the museum.

In 2000, a Chechen stopped at an army roadblock was found to have hidden 14 paintings in his car, three of which were from the Hermitage. Each time there had been calls for tighter security and each time lack of cash got in the way.

In 1999, spurred by the need to modernise, the museum finally began to assemble an electronic inventory of its works. By last year, however, that inventory had catalogued just 153,000 items. It was a process, curators noted, that would take 70 years to complete - plenty of time before thefts would be discovered.

Only fortune decreed that the Russian collection was catalogued when it was. Police told the directors that the thefts did not happen overnight: they were reckoned to have been over the space of six years.

Last week Piotrovsky went public, admitting that the theft was an inside job which he said amounted to a "stab in the back".

The news sent a shockwave through Russia, and for predictable reasons. The Hermitage is the country's cultural bedrock, home not just to Russian treasures but to fabulous collections of Italian Renaissance painting, works by Dutch and Flemish artists and the Impressionists.

These collections were started by Catherine the Great in 1764 and successive tsars spent lavishly to add more works. The museum itself has been witness to the great events of Russian history: its storming, in 1917, was the trigger for the Bolshevik revolution. Irina Antonova, director of the Pushkin Museum of Fine Arts, summed up the national mood: "This is a tragedy for the country." Once the news was out, events moved fast. On August 3rd an anonymous caller directed police to a garbage can outside their St Petersburg headquarters where they found a silver icon.

The following day another item was handed in, this time by an art dealer who had bought it in good faith. And he brought with him information on the seller. From this information police made two arrests - of the husband and son of Larisa Zavadskaya. A search of their home produced more than 100 pawn shop receipts - the two men had apparently been handing prized artefacts to pawn shops across the city for a fraction of their true value.

Meanwhile, a heartbroken Piotrovsky tried to make amends. First, he put a list of the stolen items on the museum's website, hermitagemuseum.org, appealing for people around the world to keep a lookout. Next, he posted an emotional mea culpa on the same site. "Unfortunately, there is also a seamy side in our midst," he admitted. "There can be no doubt that museum employees were involved. This indicates there are serious moral problems, dereliction of duty and lack of responsibility."

But any chance that the story could be contained evaporated this week when a second stolen art scandal broke. This time the museum is the State Literature and Art Archive, which has admitted the theft of 274 drawings by Constructivist architect Yukov Chernikov.

The drawings were found only by extraordinary good luck - nine were put up for auction at Christie's in London and a dealer contacted the late Chernikov's grandson to provide authentication. He confirmed the drawings were from the architect, then demanded to know why they were not sitting in the museum.

This double scandal was too much for the government. Audit chamber boss Sergei Stepashin has now demanded "a complete inventory of all state museums in our country". The results may not be encouraging. Russia has an estimated 50 million registered works of art, but only a fraction have actually been catalogued. Just how many have been pinched by light-fingered custodians may take years of searching to discover.

For Russians, these scandals seem to show yet more evidence of the fumbling inefficiency of their government. Under the iron rule of Vladimir Putin, Russia has become more stable, and the rich have got richer on the oil boom, but much of the country remains in poverty.

Ordinary people are conditioned to pay bribes to the police, to state officials, even for university entrance, hospital beds or draft exemption. The idea that even their museum curators are corrupt is a bitter pill.

In St Petersburg, meanwhile, more works continued to show up. Two icons were dumped in bags outside the headquarters of the FSB, successor to the KGB, and dozens more are expected to turn up in antique shops. For ordinary Russians, the news is an uncomfortable reminder of the 1990s, when hundreds of works of art were shipped out of the country, along with thousands of icons stolen from ill-protected country churches.

Along with a search of museums, officials have called for a search of the soul: "This is the betrayal by the elite of the museum community - the curators," thundered Boris Boyarskov, head of the culture ministry's heritage agency.

Piotrovsky acknowledged as much, but blamed the inequalities of modern Russia, and the low pay of his curators, for putting temptation in their way.

"The new economic reality has affected how people think," he said. "Money has begun to play a greater role."

His contrition has been noted by the authorities, but it may not be enough to save him. Mikhail Shrydkoi, chief of the State Cultural Agency, this week announced a top-level inquiry into the museum, promising, "we shall impose all the necessary penalties on the Hermitage administration."

With the prospect of high-level heads rolling as a result of this scandal, good news is in short supply, but Boyarskov offered some solace this week, reaching into Russia's box of proverbs: "Often it happens that to recognise a problem you have to live through a tragedy."