The European Bank for Reconstruction and Development dropped plans to create a Russian venture capital fund after a shareholder in the fund’s management company claimed he was leading a “velvet reprivatisation” drive for the state.

The EBRD and the Israeli Tamir Fishman group, which was also to be a major shareholder in the fund, made the announcement just three days after Russian daily Kommersant published an interview with fund manager Oleg Shvartsman in which he claimed he was managing industrial assets on behalf of members of the Kremlin administration.