Did billionaire use investors' $40m to buy Faberge eggs?

By Andrew Osborn in Moscow

Nine gem-encrusted Faberge eggs bought for more than $100m (Ј60m) are at the centre of a bizarre legal row between Russia's third-richest man and disgruntled bank depositors.

The eggs, which had belonged to Russia's Romanov dynasty, were bought this year by Viktor Vekselberg, an oil and metals tycoon said to be worth $5.2bn, from the Malcolm Forbes foundation. In a patriotic flourish, Mr Vekselberg decided to bring them back to the motherland for the first time since the 1917 revolution. They are on display in the Kremlin.

He won praise at the time for his generosity although he retains ownership of the eggs and has not given them to the state. But a group of angry bank depositors said yesterday that Mr Vekselberg owes them $40m and said they suspected he helped pay for the eggs with money which belonged to them.

The allegations threaten to tarnish Mr Vekselberg's seemingly impeccable credentials. The investors, who had their money in the now-bankrupt First City Bank, have launched legal proceedings against Mr Vekselberg. They have asked a Moscow court to seize the egg collection as a "guarantee" until they get their money back.

Armen Rushtuni, the main complainant, says $40m was illegally siphoned off from First City Bank before it went bankrupt in April. That money, he claims, was transferred to a bank called Alba Alliance, 51 per cent owned by Mr Vekselberg.

An investigation has confirmed the money was transferred by First City Bank's now disgraced chief executive Maksim Listovsky. "Mr Vekselberg has owned 51 per cent of the bank [Alba Alliance] since the summer of 2002," Mr Rushtuni said. "He doesn't hide that fact."

Disgruntled investors held up placards yesterday at a press conference which read, "Don't be tight-fisted, Vekselberg, share your eggs with us". Some of the investors say the eggs should be sold to the state to ensure they remain in Russia and the proceeds should be shared by the complainants.

But Mr Vekselberg and the non-profit foundation which he set up to buy the eggs is in no mood to surrender. "All this is a dirty 1990s-style business scandal which is simply annoying," Andrei Shtork, a spokes-man for the Vekselberg foundation, said.

"If this was a dispute with the government then they [the investors] could demand the tsar cannon or bell [both in the Kremlin] with the same success. These are just ravings." Mikhail Shvoidky, a government official, was also supportive of Mr Vekselberg.

"From what I know of Mr Vekselberg he is a very cautious man who would not have made such a mistake. The idea of transferring the Fabergй eggs to the investors is simply absurd."

Faberge eggs were commissioned in 1885 by Tsar Alexander III for his wife. Nicholas II, the last tsar, carried on the tradition and commissioned eggs for his wife at Easter. Some 50 eggs were produced but only 42 have been found.