MAGADAN, Far East -- Inside the sumptuous offices of former Magadan Governor Valentin Tsvetkov, who was brazenly gunned down by unknown hitmen on Novy Arbat last fall, hangs a print of a World War II poster showing a Soviet peasant woman, finger to lips, whispering the warning "Ne Boltai" -- a Russian equivalent of "Loose Lips Sink Ships."

Under the iron grip of Tsvetkov, a rambunctious businessman turned state official nicknamed "The Bulldozer," people took care to heed those words. But since his death, tongues are beginning to wag. Under pressure from Moscow officials who say they want to use investigations into Tsvetkov's murder to purge the Far East region of deeply embedded crime, local law enforcers have opened at least 104 criminal investigations, many of which target illegal transfers of budget funds into enterprises headed by members of Tsvetkov's administration.

With gubernatorial elections in this resource-rich region slated for Sunday and one of Tsvetkov's chief deputies, Nikolai Dudov, a leading candidate in the 12-man race, Magadan big business is split about its former boss. His past dealings have become part of the election campaign.

As administration officials are busy fending off broadsides trickling into the media about alleged insider deals conducted by Tsvetkov's team, supporters say Tsvetkov was a tough man of principle and if budget funds were spent inappropriately, they went toward creating state enterprises that boosted industry and not into his pocket. Critics, however, say he misused the money to create his own business empire and to push out private entrepreneurs. They say Dudov is running to defend that empire of gold, fish and alcohol from the hands of the front-runner, Magadan Mayor Nikolai Karpenko.

The next governor will have to take action to level the playing field between the state and private business.

"Now it is very important that the next governor change his relation to the economy to create conditions equal for all," said Vladimir Butkeyev, Magadan's representative in the State Duma.

"There was no market economy here," he said.

For Magadan residents that's important because much more investment is needed in a region with the highest unemployment, alcoholism and suicide rates in the country. Far from the regional capital, in the freezing north, people are being forced to abandon villages that the local government can no longer afford to provide with electricity, heat and schools.

As gold prices soar, waiting in the wings to see if the new governor is a man they can do business with are powerful financial-industrial groups. A delegation from Vladimir Potanin's Norilsk Nickel recently visited the Natalkinskoye gold deposit, one of Magadan's biggest with almost 250 tons in proven reserves and up for a production-sharing agreement this year. Norilsk Nickel expanded into gold when it bought the Polyus mine in Krasnoyarsk late last year.

Already in the region is St. Petersburg-based metals company Polimetall, which is affiliated with MDM Group. Polimetall owns the Dukat silver mine, which sits atop the world's third-largest silver deposit, after wresting control away from Canadian company Pan American Silver in a controversial legal tussle with the help of Tsvetkov in 2000. Now it is eyeing other gold deposits, but it hasn't made any big moves yet.

Local businessmen say Tsvetkov may have discouraged major investors from coming into the region.

"The trouble is, over the last few years, there's been no major investment," said Mikhail Kotov, the founder of Magadan fishing group Seawolf.

"Tsvetkov was very much afraid that a big finance group would come in and lessen his influence on the economy. He wanted just one business: his own region."

But while no results of the investigation into Tsvetkov's killing have been made public (local law enforcers refused to be interviewed), lines of inquiry associated with his activities are fueling a growing chorus of dissatisfaction with his attempts to monopolize business at the expense of entrepreneurs.

Kotov is a leading voice. He said that out of a total of 12,000 tons in quotas last year to catch pollock, Tsvetkov gave 8,000 tons worth $3.6 million for free to a state-owned enterprise headed by his chief adviser on fishing instead of selling the quota in a tender. The company paid just $100,000 in taxes to the budget, he said.

Law enforcers have opened a criminal investigation into the possible misappropriation of millions of dollars worth of state funds via the company.

Seated squarely behind the desk of his former boss, acting Governor Vyacheslav Moskvichov said revenues from the state company's catch have been earmarked to buy two fishing vessels.

The company was set up to provide needy residents with fish, Moskvichov said.

"People are trying to revise Tsvetkov's record as governor. He was an extraordinary man and did a great deal to improve the region's economy," he said.

"We have no electricity cut-offs, no heating failures here like in Kamchatka and Vladivostok."

Also under attack are moves Tsvetkov made to spend part of a 7.3-ton loan in gold from the federal government aimed at supporting the gold industry on a state-owned vodka monopoly headed by a relative of one of his chief advisers.

Moskvichov said that was not a serious violation. Repayments on that loan worth $87 million have been delayed many times.

A study based on Audit Chamber and Finance Ministry findings and published by Alexander Sechkin, the Union of Right Forces' candidate for governor, shows Tsvetkov misspent almost $6 million of that loan on building the Kolyma gold refinery. A criminal investigation has been opened into the transfer of a 35 percent stake in the factory to Impeksbank in return for a low-interest loan. Moskvichov said the refinery is now an important source of employment for the region.

One of the few major foreign investors to remain in the region, Canada's Kinross Gold Corp., said when it refused to send gold extracted from its Magadan Omolon mining company to that new refinery because it charged twice the market rates, Omolon was suddenly hit with a slew of tax and safety checks.

"We hope the next governor will have a more hands-off approach to businesses," said Kinross vice president John Ivany. Deputy Magadan Mayor Vladimir Pecheny, a close aide to Karpenko, said: "The next governor has to create equal conditions for all businesses and attract more investment."

The trouble is, most Magadan residents are so inured to hardship that no one believes campaign promises anymore.

"The next governor will probably take what he likes for himself. Nothing would surprise me now," said Olga Strelnikova, a street seller setting up her clothing stall in the freezing cold on Magadan's central Ulitsa Lenina.

(The Moscow Times 31.i.03)