New Moscow mayor vows to fight corruption

The man picked by President Dmitry Medvedev to run Russia's largest city said on Monday he would fight rampant corruption, signalling the Kremlin is looking to overhaul Moscow''s lucrative construction sector.

"In the eyes of the public, Moscow is the leader in this. Corruption is Russia's eternal problem and few believe it can be dealt with. But otherwise Moscow cannot develop," Sergei Sobyanin said in his first public remarks since his nomination.

Sobyanin's predecessor Yuri Luzhkov who ruled the city of 10.5 million for 18 years oversaw Moscow''s transformation from a grim Soviet capital into a bustling metropolis that accounts for a quarter of Russia''s $1.2 trillion economy. 

Luzhkov was sacked by Medvedev amid a public row with the Kremlin upset by reports of wide-scale corruption and a lack of control over the city's finances. He was replaced by Sobyanin, until now chief of staff for Prime Minister Vladimir Putin.

The city council is due to hold a vote on Sobyanin on October 21 but it is widely seen as a formality since the council is dominated by the pro-Kremlin United Russia party, which had already supported his nomination.

Sobyanin said he would also focus on maintaining social stability in the city of 10.5 million and solving Moscow transport woes which are seen as the biggest obstacle to the city's ambitions to become a global financial centre.

Businessmen say corruption is worst in the construction sector which heavily depends on decisions by the city administration. Luzhkov's wife Yelena Baturina owns one of the largest construction firms in the city.

Both Luzhkov and his wife deny any wrongdoing when Luzhkov was mayor.

As part of the Kremlin sponsored campaign to squeeze out allies of former Luzhkov from the city's lucrative real estate business, Russian state television aired a documentary denouncing Luzhkov's construction projects.

The documentary focused on several businessmen seen close to Luzhkov such as Israeli billionaire Lev Leviev, alleging his AFI Development had delayed the completion of a shopping mall at a traffic intersection in the Moscow city centre.

"This information is not true," Stanislav Zhukov, head of investor relations at AFI told Reuters. He said the construction was stopped because the city froze its share of the funding during the crisis.

He said the financing from the city has resumed and the construction was back on track with the project expected to be finished ahead of schedule. Zhukov said a major shakeup of the city'' construction industry was unlikely.

"I think the view that Sobyanin will make trouble for developers is wrong. He will need to show that Moscow is being built," Zhukov said.