The Telegraph reports:

A former aide to Vladimir Putin has accused the Russian president's circle of lining their pockets from state funds. Andrey Illarionov, a market reformer and Putin's economic advisor until his resignation two years ago, alleged that the Russian government's £75 billion Stabilisation Fund, created in 2004 to cushion the budget from a fall in oil prices, was being exploited by members of the ruling elite for their personal benefit. He gave no details of how this allegedly occurred.

"The Stabilisation Fund, in the form in which it was created in which monies were accumulated, has ceased to exist. It has died. This is now a fund for increasing the personal wealth of specific individuals," he claimed in a radio interview. "In the current conditions, the creation of organisations or funds like this simply increases the personal wealth of persons who have chanced to find themselves at the top of the Russian power structure."

Illarionov, president of the Moscow-based Institute of Economic Analysis and a fellow of the Washington-based Cato Institute, claimed that the circle around Putin and his chosen successor Dmitry Medvedev, were increasingly adopting "the aggression of the street rabble" to stay in power. He cited flawed elections and alleged "velvet re-privatisation" - or forcing down the value of ex-state assets before putting them into the hands of loyalists - as examples of this "aggression" linked to a "moral decline" among the ruling elite. The state's institutions have become the tools of Putin's circle, he claimed. "At the moment for many of the people who are in power, there is almost no other means left to them but to escalate violence and aggression in order to remain in power. "They are not stupid people and they understand that the peak of their popularity has passed and that they will have to resort to the kind of violence seen in the past few weeks.

"The country has entered one of the most dangerous phases in its history, when almost all the institutions of a modern state have been destroyed and there is nothing that can be used as a support in a crisis."

He insisted, though, that Russia's present direction was a "deviation".

"This option is a dead end - and will come to an end. It will end much more quickly that many people think," he said.

The allegations come weeks after a controversial political scientist separately claimed Mr Putin had acquired control of £20 billion in energy assets during his eight years in power - enough to make him Europe's richest man. Stanislav Belkovsky claimed that Mr Putin had made a multi-billion pound fortune by controlling stakes in three Russian energy companies through a network of front-men. "Russia under Putin is not a version of modern democracy," said Mr Belkovsky. Mr Belkovsky claimed his information had come from credible sources in the Kremlin but admitted he had no documentary evidence. Mr Putin's spokesman, Dmitry Peskov, denounced the claims as "nothing but trash".

"Certainly it has nothing to do with seriousness; it has nothing to do with professionalism. It's just trash." According to Mr Belkovsky, Mr Putin controls a 37 per cent stake in Surgutneftegaz, an oil exploration company, 4.5 per cent of Gazprom, the state energy giant, and at least 50 per cent of Gunvor, a Swiss-based oil trading company that has won a series of state contracts. The chief executive of Gunvor released a statement saying that Mr Putin owned no part of the company and was not "a beneficiary of its activities". Observers were sceptical about Mr Belkovsky's claims. "It would be strange if Putin was not rich," said Leonid Radzikhovsky, a political analyst. "But the information about this treasure island seems a little exaggerated." Mr Radzikhovsky added: "It is difficult to understand Belkovsky. He is known as a source of confusing information and it is hard to treat it seriously. He is an adventurer." Mr Radzikhovsky said Mr Belkovsky "really knows a lot of people in high places but who is he to know the secrets" of Mr Putin.