Mr Pavel Borodin, the former head of the Kremlin property administration arrested in New York, was invited to an inauguration night banquet in Washington by a company called Star Capital, a contributor to the election campaign of President-elect George W. Bush, according to Russian sources.
An application for his extradition to Switzerland for offences connected to serious business irregularities was reported to be on its way to a New York court last night.
Amid a storm of protest, efforts were being made last night to send a diplomatic passport to New York in order to obtain Mr Borodin's release. His lawyer, Mr Genrikh Padva, insisted last night in a television interview that his client had received an "official invitation" to the Bush inauguration from a member of the "inauguration committee".
The procedure in Washington is, however, that no foreign officials receive official invitations and that the inauguration is a purely domestic affair. A copy of the invitation shown on Russian TV last night clearly showed that it came from Star Capital.
An international warrant for Mr Borodin's arrest has been in circulation for some time and was issued at the request of the Swiss authorities. Swiss investigators have been looking into allegations of fraud against Mabetex, a construction company which had won major Kremlin contracts. In his position as Kremlin property chief, Mr Borodin controlled a vast property portfolio throughout Russia with an estimated value of $600 billion.
Mr Borodin's name is also understood to appear in a list of Russian officials that US and British officials wish to question concerning a money-laundering operation involving $15 billion. His arrest and his detention in a prison in Brooklyn are understood, however, to have taken place solely at the request of the Swiss authorities. While there is no extradition treaty between the US and Russia, such an agreement exists between the US and Switzerland.
Mabetex, run by the Kosovo Albanian businessman, Mr Behgjet Pacolli, is based in the Italian-speaking canton of Ticino, and has been accused of supplying more than $25 million in kickbacks to Mr Borodin in relation to building contracts. It was also alleged that Mabetex supplied credit cards in the name of the former president, Mr Boris Yeltsin, and his daughters, Tatyana and Yelena. Italian newspapers have reported that large sums of money were smuggled across the border into Italy and then transferred into bank accounts in several countries abroad, including Ireland.
Mr Borodin brought President Putin from the relative obscurity of St Petersburg to serve in the Kremlin administration. In turn, Mr Putin appointed Mr Borodin to the position of secretary of the council which is working towards the reunification of Russian and Belarus.
Reaction in Moscow to Mr Borodin's arrest has been furious. The US ambassador, Mr James Collins, was summoned to the foreign ministry yesterday to take delivery of an official protest from the Foreign Minister, Mr Igor Ivanov. In a statement, the ministry called for the "immediate and unconditional release of Mr Borodin".
There was no immediate reaction to Mr Borodin's arrest from President Putin but the President of Belarus, Mr Vladimir Lukashenko, was bitingly critical of the US, which he accused of provoking a major diplomatic incident.
Mr Lukashenko went on Belarus television and in the course of his address to the nation said: "We view this as a highly unfriendly step taken by the Americans regarding Belarus, Russia and our union."
The extreme right-wing politician, Mr Vladimir Zhir inovsky, called for the imm ediate arrest of American citizens who live in Russia and "may be spies".
Another lawyer for Mr Borodin described the arrest as "absolutely illegal" and an action that could lead to "major international and diplomatic scandal", while the former prime minister, Mr Viktor Chernomyrdin, said the arrest showed a "lack of respect."
