Russian President Vladimir Putin and his government is facing a potentially long-term battle between some of the wealthiest industrialists and a state-owned bank over a whopping USD48 billion in investments in preparation for the 2014 Winter Olympics, Bloomberg said in its report.

To comply with the demand by local investors regarding the constructions of venues and apartments in the Caucasus Mountains and along the seacoast of Sochi, state-owned Vnesheconombank (VEB) had loaned an aggregate amount of USD7.4 billion to some of the Russian elite. Included in the recipients of the state loan were the companies controlled by OAO GMK Norilsk Nickel Chief Executive Officer Vladimir Potanin, United Co. Rusal Chief Executive Officer Oleg Deripaska, state-controlled gas provider OAO Gazprom chief executive Alexey Miller, and state-controlled OAO Sberbank CEO German Gref. The moguls insisted financial assistance from the Russian government as restrictions and astronomical costs on commercial activities will expose them to investment losses. Moreover, the moguls also wanted to extend their tax breaks and interest payment subsidies they owe VEB for the assets in Sochi.

Putin is reportedly flying to Sochi to oversee his pet Olympics project on November 27 and will be there to attend to three days on meeting regarding the construction projects.

Moscow-based DLA Piper LLC partner Scott Antel said, "This was a deal with the devil. You will do your civic duty and build facilities in Sochi so we can have this coming-out party for the new Russian state. This is your indirect taxation to be allowed to continue with your main business activity."

Russian Deputy Prime Minister Dmitry Kozak, who is the top official for the Olympics, refuted suggestions about coercion by the government of Russia. According to Kozak, investors were able to get good deals out of their participation in the Olympics projects.

In October, Kozak said, "All investors were invited to the project voluntarily. If they (companies who are building the Olympic projects) default, then they will lose their equity and lose their business. The shares will be sold at auction."