A top government official reaps millions in profits with the help of the nation's wealthiest businessmen. That definitely sounds illegal. So when the international media last week reported such dealings by Russian Deputy Prime Minister Igor Shuvalov, one might have expected a public outcry.

In Russia, however, things are much more complicated. Plenty of commentators, including President-elect Vladimir Putin's spokesman, have defended Shuvalov, and it appears that he truly has not broken any Russian laws, such as they are.

The facts, denied by no one, are as follows. In 2004, a Bahamas company called Sevenkey Ltd. entered into two stock market trades. It invested $17.7 million in the Russian natural gas monopoly Gazprom with the help of billionaire Suleiman Kerimov, and another $49.5 million in European steelmaker Corus via another billionaire, Alisher Usmanov. In 2007 and 2008, Sevenkey exited the trades with a profit of almost $200 million. Shuvalov's wife, Olga, is listed as Sevenkey's beneficiary. Both deals were consummated when Shuvalov was an economic aide to Putin. The profits were reaped when he was Putin's deputy in the Russian government.

The provenance of Sevenkey's initial funds is somewhat murkier. Shuvalov ran a big corporate law firm, ALM, prior to joining the government. ALM advised Russia's oil majors, so Shuvalov could have received large fees from them. According to a representative of yet another Russian billionaire, Roman Abramovich, quoted in Western media, the money could have come from a stock option Shuvalov received back in 1996 for his services to the oil company Sibneft.

The stock-option story didn't convince corruption fighter Alexei Navalny, a leader of the recent mass protests in Moscow. “No one had ever heard of such an option before," Navalny wrote in his blog. He suggested that the money was in fact a bribe paid in 2004 for lobbying the interests of Abramovich and his partners in a high-profile metals deal.

Navalny urged an inquiry: “There is every reason for Deputy Prime Minister Igor Shuvalov to be placed under investigation for receiving enormous bribes. Citizens Abramovich and Usmanov should also be placed under investigation and then in the dock next to Shuvalov.”

No investigation was forthcoming. Putin spokesman Dmitri Peskov said that the president-elect had known all about the Shuvalov family's business deals and that “everything was legal.” Shuvalov's wife had scrupulously declared income from the trades. Shuvalov himself had stressed that, as a lawyer, he had always acted strictly within the law.

Indeed, Russian law requires only that a civil servant's business assets be placed in a trust. There is no rule against the trust benefiting the official's wife. Nor is there any problem, legally speaking, with the trust making deals with the nation's business leaders.

In Shuvalov's case, there is no obvious conflict of interest, since he did not make any major decisions involving Gazprom and had even less influence on the stock price of Corus. Critics would be hard put to find evidence of Shuvalov the bureaucrat doing anything specific to help Abramovich, Kerimov or Usmanov.

In other words, Shuvalov's dealings look fishy because, as a top official, he had better than average access to tycoons who enabled him to ride their successful trades. But there is no formal reason to prosecute or even fire him.

It's no secret to anyone in Russia that government officials are among the wealthiest people in the nation. Their wealth is sometimes ostentatious, as in the case of Shuvalov, who favors flashy cars and owns expensive real estate. That wealth, however, may well be legally obtained because the laws are so lax.

“It is everyone's personal decision whether or not to enrich himself while in office,” a deputy minister in the Russian government told me, commenting on what has come to be known as “Shuvalovgate.”

Indeed, there are those who sympathize with Shuvalov, not least because of the likely source of the Western news outlets' revelations. The documentation, apparently, came from Pavel Ivlev, a former ALM lawyer now living in the United States. Ivlev is sought by the Russian authorities for his role in the notorious Yukos case, involving Russia's best-known prisoner and formerly richest man, Mikhail Khodorkovsky. Ivlev has retained Navalny as his lawyer in Russia for a $10,000 monthly fee.

Ivlev, who at one point administered Sevenkey, Ltd. for Olga Shuvalova, has not denied his role in leaking the documents, stressing instead that he violated no ethical guidelines as a lawyer and that he considered the sources of Sevenkey's capital “questionable.”

The fact that Khodorkovsky, Navalny, a US-based Russian and the Western press are all involved in Shuvalovgate has given rise to some facile conspiracy theories. “First Khodorkovsky... and other heroes of the '90s make a decision whom they are going to undermine next,” wrote popular blogger Oleg “Fritzmorgen” Makarenko. “Then they get their plan approved by the Americans and, after receiving the go-ahead, they place some stories in friendly papers.”

Commentator Maxim Kononenko also took issue with Shuvalov's critics. “We know the Shuvalov documents were leaked by Ivlev,” he wrote on the pro-Kremlin website Vzglyad. “We know that Ivlev is paying Navalny. We know Navalny is publishing documents on Shuvalov. These three facts merge into a fourth: Ivlev is paying Navalny to undermine Shuvalov. So Navalny (at least in this case) is fighting corruption for a $10,000 monthly retainer."

Alexander Voloshin, former chief of staff to presidents Boris Yeltsin and Putin, also spoke out in defense of Shuvalov, suggesting that the “media attack” on him came just as the lineup of Russia's next cabinet was being discussed.

“Shuvalov is a direct, consistent and principled person of progressive views: He has always been for demonopolizing the economy, for privatization and for a leaner government,” Voloshin wrote in his blog. “I believe it is for his principles and also his management abilities that the president and prime minister value him. For the same reasons he has plenty of opponents and ill-wishers. And for the same reasons it is now that he is being attacked.”

Voloshin is right about one thing: Outgoing president Dmitri Medvedev, whom Putin has named as the next prime minister, is now selecting his cabinet, with help from the president-elect. Whatever the source of the revelations about Shuvalov, the president and the prime minister both face a difficult choice. On the one hand, if Shuvalov keeps his government post, Putin and Medvedev will show their supporters that attacks coming from the West mean nothing to them. On the other hand, keeping Shuvalov will be a signal to bureaucrats that personal enrichment is allowed if the letter of the law is strictly observed.

Many keen eyes are on Putin and Medvedev as they ponder their decision.

(Leonid Bershidsky, an editor and novelist, is Moscow and Kiev correspondent for World View. Opinions expressed are his own.)

To contact the writer of this column: bershidsky@gmail.com.

To contact the editor responsible for this column: Mark Whitehouse at mwhitehouse1@bloomberg.net.