The Interior Ministry said RusHydro's plant developer Gidrostroy hired companies that had little staff or equipment. It was also said to have signed false contracts with subsidiaries.
"The general contractor Gidrostroy signed fake subcontracting agreements with subsidiary organizations during the construction of the hydroelectric pumped storage power plant," a ministry statement from state-run news agency RIA Novosti read. "The funds sent to their accounts were later cashed and embezzled."
The preliminary damage was around $33.2 million in state funds. The ministry said it's been examining RusHydro's conduct for more than four years.
Russian President Vladimir Putin pressed Interior Minister Vladimir Kolokoltsev over the issue earlier this week. Putin said RusHydro's top management "should be fighting with (their) teeth to recover these funds."
RusHydro said it would decide on an appropriate response by Wednesday. It said it was preparing to file a lawsuit against Gidrostroy over the embezzlement charges.