MOSCOW: Millions of dollars funnelled through offshore companies owned by one of Vladimir Putin's closest friends was used to buy rare musical instruments, including a cello once owned by Frederick the Great, the Russian president has said.
In his most detailed comments on the Panama Papers scandal to date, Mr Putin said recent revelations about the business interests of the cellist Sergei Roldugin, who is godfather to his eldest daughter, are "accurate", but do not reveal any wrongdoing by either the musician or himself.
"They are simply trying to muddy the waters. Someone out there from among my friends is engaged in some business. The question is - does this money from these offshore accounts reach officials, including the president?" he said.
"Who does it, these provocations? We know that there are some staff from official American institutions," he said, apparently accusing the United States of using the leaks to destabilise Russia.
Mr Roldugin, a concert cellist and close friend of Mr Putin since the 1970s, was linked to three offshore companies with cash flows of up to $2 billion (pounds 1.6 billion) in a massive leak of documents from the Panama-based law firm Mossack Fonseca last week.
The companies were in turn linked to Bank of Russia, which often acts for Mr Putin's close associates, sparking speculation that Mr Roldugin was actually handling cash flows to conceal the personal wealth of Mr Putin. The Kremlin vigorously denies the claims.
In an apparent effort explain the massive cash flows, Mr Putin said that Mr Roldugin had been spending millions of dollars on antique instruments that he was going to donate to the state, including a $12?million, 1732 cello by Stradivarius that once belonged to Frederick the Great.
Last week Mr Roldugin said the money came from donations to help buy instruments for Russian music students.
Mr Putin made the comments during his annual television phone-in show. This year's show attracted more than three million calls from across Russia, according to state media. Besides a question about the Panama Papers, Mr Putin fielded queries about the conflicts in Ukraine and Syria, the prospect of Donald Trump winning the US presidential election, and even his love life.
He struck a relatively conciliatory note on foreign policy compared to recent years, saying that Russia retains the ability to help Syrian government forces take the offensive, but will push for a peaceful settlement.
"It is necessary to accept - for all to agree and sit down at the negotiating table - to accept the constitution and on the basis of the constitution to hold elections. That is the way to get out of the crisis," he said. He said he did not expect a return to all out fighting in Eastern Ukraine, but reiterated the Russian position that Petro Poroshenko, the Ukrainian president, is to blame for failing to fulfil key elements of the Minsk peace agreement.
Turning to relations with the West, he reiterated his long-held view that many geopolitical crisis are due to the United States failing to "act respectfully with all partners, including with Russia," but rebuffed suggestions that Russia is "encircled by enemies."
After several callers complained about inflation, rising utility bills, and unpaid wages, Mr Putin said he had received hundreds of such complaints. "I share your concerns in nearly 100 percent of cases," Putin said. "We'll work together so that your problems are relieved," he said.
In one case he dispensed instant justice, saying after a worker at a fish processing plant in the Russian Far East complained about months of unpaid wages: "I hope the general prosecutor sees this part of our conversation and takes action."
Within an hour, it was announced that a criminal case had been launched against the owner of the factory in question.