The capital’s police say 50 million rubles from City Hall’s coffers have been misappropriated.
The money was meant to be used to renovate a tunnel on the Garden Ring.
Both the city firm that ordered the works and the construction company are under suspicion.
According to investigators, they have been forging building plans and progress reports, though hardly any work has been carried out.
The renovation started back in 2006 and was due to be completed in 2008.
Like father like son
Meanwhile, Dmitry Medvedev is worrying that too many young Russians aspire to become bureaucrats.
Speaking at a meeting with entrepreneurs in Central Russia, the president said being a bureaucrat is not prestigious and is badly-paid.
He also pointed out that people are attracted to the profession because they think they can make a lot of money from corruption.
Medvedev added there are too many bankers, economists and lawyers in Russia, but not enough skilled workers. Thus, the media should make an effort to portray skilled workers in a more positive light.