Russian central banker killed in contract "hit"

MOSCOW (Reuters) - A Russian central banker who fought to clean up his country's murky banking system died early on Thursday from gunshot wounds after being ambushed by assassins in what police said was a contract 'hit'.

The killing of Andrei Kozlov, 41, a respected first deputy chairman of the Central Bank, was the highest-profile assassination in Moscow during the six years President Vladimir Putin has been in power.

Kozlov had led a fearless campaign to close banks suspected of involvement in money laundering. Gunmen fired on him as he left a football match between bank employees on Wednesday night.

Kozlov fell to the ground bleeding from the head and chest and was rushed to hospital, where he died a few hours later after emergency surgery. His driver was killed on the spot.

"Andrei Kozlov died early this morning," Inna Sigeyeva, a deputy chief doctor at Moscow's Hospital No. 33, told Reuters.

His murder plunged Russia's financial establishment into shock. With his department closing banks at the rate of two or three a week, Kozlov had no shortage of enemies and his colleagues said he had paid the ultimate price for his zeal.

"He was at the cutting edge of the battle against financial crime. He was a very brave and honest man and through his activity he repeatedly encroached on the interests of unprincipled financiers," Finance Minister Alexei Kudrin said in a tribute.

Prime Minister Mikhail Fradkov, leading a minute's silence at a cabinet meeting, said Kozlov's death was a great loss.

Anatoly Chubais, chief executive of Russia's electricity monopoly, described the murder as an "impudent challenge" to Russia's political class. "The response of the authorities must be tough, prompt and pitiless," he said.

Only last week, Kozlov had called at a banking forum in the southern city of Sochi for much tougher penalties against bankers found guilty of money laundering.

Russia's financial markets are used to unpleasant surprises. The RTS stock index rallied by 1.4 percent and state-controlled Sberbank, Russia's biggest bank, gained 2 percent in early trading.

Kozlov's killing, with its grim echo of the often violent years of Boris Yeltsin's rule, was uncomfortable news for Putin who has consistently trumpeted the stability he has brought to Russia in the year Moscow heads the G8 group of economic powers.

After overseeing years of rapid economic growth, Putin now wants a trouble-free political climate in which to prepare an orderly presidential succession in 2008.

Al Breach, chief economist at Swiss bank UBS, said the murder could unsettle investors, though it was unlikely to change the overall investment climate.

"It will remind people of political risk before the presidential elections," he told Reuters.

The Kremlin declined immediate comment on Kozlov's killing.

Russia has about 1,200 banks. Many of them are tiny outfits with little capital and banking experts say allegations of malpractice are common.

"They assassinated Kozlov because he withdrew bank licenses. It is horrible that these attacks still happen in Russia. The government must find the killers," Vladislav Reznik, chairman of the State Duma (parliament)'s financial committee, told Reuters.

HIGH PROFILE ATTACK

Russia's banking system grew out of chaos after the collapse of the Soviet Union when violence was a part of doing business. One analyst said the attack showed the sector had still not shaken off its past.

Contract-style killings of wealthy businessmen and bankers were common in the 1990s but they tapered off after Putin came to power in 2000.

Kozlov's killing is the highest profile attack in the capital since Chubais escaped unscathed from an assassination attempt in March 2005 when his motorcade was attacked.

In the only other attacks on top state banking officials, shots were fired through a window in 1997 at the then Central Bank chief Sergei Dubinin.

Kozlov, who was married with three children, started at what was then the Soviet central bank at the age of 24. He rose quickly through the ranks to become first deputy chairman in 1997. He left two years later for a spell in the private sector, rejoining the central bank in April 2002.