MOSCOW, Dec 7: Russian police said on Thursday they had opened a fraud investigation into computer purchases by the state pension fund from a local branch of computer giant IBM and two other companies, a day after police raided the offices of all three.

Speaking of the pension fund, the interior ministry said in a statement: “A number of directors responsible for conducting tenders for equipment purchases in this organisation entered a criminal agreement with representatives of the commercial firms R-Style, Lanit and IBM Eastern Europe/Asia in order to embezzle the said funds.” “The cost of equipment they provided exceeded the market price by several times. The difference in price was split among the parties to the agreement,” the statement said.

The federal budget had designated $26 million for the purchases, the statement said.

Confirmation of the investigation came a day after masked police bearing automatic rifles raided Moscow offices of IBM, R-Style and Lanit, as well the offices and homes of pension fund employees.

Pension fund representative Gennady Batanov said that reports of the investigation “do not completely correspond to reality,” Interfax reported.

“A number of commercial entities and individuals are indeed suspected of not entirely honestly drawing up contracts,” Batanov said. “I don't actually make the purchases myself. There are special services within the pension fund system for that.”

IBM spokeswoman Anastasia Kozhevnikova told AFP: “IBM is cooperating with state authorities,” but declined to comment further.—AFP