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    Putin's aide calls loans for state companies "fraud"

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    MOSCOW, December 21 (RIA Novosti) - Substantial loans provided to state-owned companies have been a major source of fraud during the year, an economic advisor to the Russian president said Wednesday.

    Andrei Illarionov, speaking at a news conference on the economic results of 2005 said, "Loans [to state companies] have exceeded $20 billion," Andrei Illarionov said. "This nullifies government moves to cut its external debt."

    Illarionov also denounced "mergers of state-run companies and private companies," including state-owned oil company Rosneft's purchase of a majority stake in its core production unit Yuganskneftegaz, and the acquisition of Russia's leading heavy machinery manufacturer Silovye Mashiny by United Energy System, the country's electricity monopoly.

    Summing up 2005, Illarionov also labeled "the triumph of state corporations" as the year's key result. "The situation in companies is evolving toward the emergence of new owners, or corporations, that distance themselves from the original owners, the Russian people."

    Illarionov noted "the accentuated discrimination when different economic entities have unequal rights" as a result of such changes.

    "Some companies face tax claims, while others get subsidies," he said. "Some are denied loans, while every effort is being made to secure a credit for others."

    "Inequality in business is becoming an absolute," he said, stressing that corporations' loyalty was a key criterion for favorable treatment.

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