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Book scandal costs Chubais finance ministry post

November 20, 1997
Web posted at: 12:00 p.m. EST (1700 GMT)

MOSCOW (CNN) -- President Boris Yeltsin formally dismissed Anatoly Chubais as Russia's finance minister Thursday, in a bid to appease opponents and end a political scandal. However, Chubais, the top economic policymaker, will retain his much more influential post of deputy prime minister.

His removal from the ministerial post had been expected, because of a scandal over a high fee he and three other government officials had received for an as-yet-unpublished book on Russian privatization. Chubais had offered to resign.

Chubais and the others deny any wrongdoing over the advances from a publisher affiliated with a top bank that won recent privatization auctions of state property.

His dismissal has been portrayed as a shakeup aimed at reforming the government. A new policy prohibits the practice of allowing deputy prime ministers to head ministries.

Yeltsin named parliamentary budget committee chief Mikhail Zadornov to replace Chabais, the presidential press service said.

Zadornov, a liberal economist, is part of the Yabloko party; his party voted Wednesday night not to accept posts in an expected cabinet reshuffle. Sources said Zadornov would probably leave the party.

Kremlin spokesman Sergei Yastrzhembsky told the RIA news agency on Wednesday that Yeltsin's decision "concerned not only Chubais," indicating that another young reformer -- Boris Nemtsov -- could lose either his post as first deputy prime minister or as fuel and energy minister.

Chubais' government acumen still needed

the Duma

The shakeup resulting in Chubais' ouster, was precipitated by criticism over the $90,000 book advance paid to Chubais and his three allies -- all, like him, former privatization ministers.

Yeltsin already had fired Privatization Minister Maxim Boiko, bankruptcy agency head Pyotr Mostovoi and Kremlin Deputy Chief of Staff Alexander Kazakov.

"It was probably wrong on our part to agree to the size of the honorarium that we were offered," Chubais said in an interview published Wednesday. "Yet, despite all the hue and cry, let us not forget that 95 percent of the honorarium was really transferred for charity purposes."

Chubais was able to retain the more influential of his two posts for a variety of reasons. The move would appear to assuage some worries among international investors about the Russian government's commitment to free-market reforms.

His presence also is needed to help push the draft 1998 budget and other economic laws through the hostile legislature.

The communists, who form the biggest faction in the State Duma's lower house, earlier refused to debate the draft budget unless Chubais was sacked, but later softened their position. The bill has been put on the chamber's agenda for Friday.

Correspondent Betsy Aaron and Reuters contributed to this report.


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