Behgjet Pacolli, president of Mabetex Project Engineering, has a ready example of what he calls the absurdity of allegations that he bribed top Kremlin officials in exchange for hundreds of millions of dollars in construction contracts.

He finds it in a document that he thrusts at a reporter in his ornate office in this sun-drenched Alpine resort. In the document, Russian prosecutors allege that in June 1995, in a government office in Moscow and in front of several witnesses, Pacolli delivered a briefcase stuffed with U.S. currency, a Cartier watch and a diamond-studded brooch to Pavel Borodin, President Yeltsin's chief of administrative affairs.

The source of the allegation is a Russian businessman who acknowledges he was not in the room but says he heard about the incident from someone who was, according to the prosecutor's documents.

"I ask you: Is this ridiculous? In the presence of these people, open a briefcase and give this to Borodin?" said Pacolli. "It is absolutely absurd!"

The briefcase story is just one of many now swirling around Pacolli, whose success in obtaining Russian government contracts over the past six years boosted his fledgling construction firm here into a far-flung enterprise, with branches in 18 countries and reported gross income in 1997 of $90 million. A Swiss investigation has uncovered evidence that Pacolli paid roughly $10 million in bribes to high-ranking officials in Moscow, law enforcement sources have said.

The most prominent recipients of his largess, authorities suggest, were Yeltsin and his two daughters. Pacolli paid tens of thousands of dollars of credit card bills in their names and transferred $1 million to a Budapest bank account for the president's benefit, according to the law enforcement sources.

Pacolli said in two interviews here last week that he never paid credit card bills for the Yeltsins, although he acknowledged he did pay such bills in Switzerland for other Russian officials. He said those payments covered expenses incurred by the Russians during trips to Switzerland for business with Mabetex.

Pacolli also said that the $1 million sent to the Hungarian bank went to a firm that handled advertising and public relations for Mabetex. He was vague about who headed the firm or where it was located--saying Swiss prosecutors took most of his documents--although he suggested it might be based in the Caribbean.

The Kremlin has denied the Yeltsins have foreign bank accounts; otherwise, it has left the defense largely to Borodin, who says the allegations are ludicrous.

No one is sure if the Russian prosecutors are pursuing the case or not. Suspended Russian chief prosecutor Yuri Skuratov said investigators searched his home Thursday in an effort to find and suppress any incriminating documents he might have taken with him when Yeltsin took him off the case.

Carla del Ponte, the hard-charging Swiss general prosecutor who personally interviewed witnesses and supervised searches to assist Skuratov, said in an interview last week that she has "not lost hope that the investigation will be carried out in Moscow."

She also confirmed the Kremlin's statement that neither Yeltsin nor his daughters have Swiss bank accounts in their names. She repeated that it is not a crime in Switzerland to corrupt a foreign official, although the Swiss parliament may soon change that.

Still, the Swiss have opened an inquiry on the assumption that the Russians may prove the payments from Mabetex were the result of corruption--in which case the use of Swiss accounts would constitute money laundering.

For Pacolli, 48, who once eagerly sought publicity, the inquiry has brought more public attention than he could ever have imagined. But it also has hurt his business. He has laid off about 40 percent of his staff in Lugano and says he has not won a single contract since January.

Born in Kosovo to a family of 11 children, Pacolli founded Mabetex in 1990, counting mainly on business from Russia. Residents of this city of 51,000 noted the signs of his growing success: the pink marble office building in Lugano's high-rent Paradiso region; the two black Mercedes that sit out in front; the corporate jet in which he ferries clients; his new villa.

Pacolli's most important contact in the Russian government was Borodin, who joined Yeltsin's staff six years ago. The two men got to know each other in the Russian city of Yakutsk, when Borodin was mayor and Pacolli was a little-known contractor working there.

Mabetex picked up a half-dozen Russian government contracts, including a prestigious $90 million job to restore the presidential residence in the Kremlin. That work brought Pacolli into contact with Yeltsin. In all, according to Borodin, Mabetex won $300 million in contracts, including jobs to restore the main offices of the Russian government and the legislature.

In a confidential document outlining his inquiry, Skuratov alleged that Mabetex was awarded contracts despite the fact its prices were 30 percent to 50 percent higher than those of competing bidders. Borodin told the Russian media that Mabetex won its contracts fair and square and that other firms captured more work.

According to Pacolli, the Russian government required that Mabetex pay for Russian officials to travel abroad to inspect the progress of Mabetex's work. That was no minor expense: Franco Fenini, a former Mabetex executive, said delegations of 20 or 30 officials would land in Lugano, stay a week or more, than head for Italy to inspect the work of Mabetex's marble and furniture subcontractors.

"You know the Russian mentality," said Fenini, who faces charges of extortion in a separate case. "I am in charge of hanging the pictures. I am in charge of laying the carpets. . . . But you cannot consider that bribery. Because it is stipulated in the contract."

Mabetex put up higher ranking officials at Lugano's five-star Hotel Eden. So many guests came that the hotel initiated a special Mabetex rate--$120 a night instead of $200.

To avoid the need to ask for receipts, Pacolli said, he took out credit cards in the names of the higher-ranking officials at Banca del Gottardo in Lugano. To get the credit cards, he had to open bank accounts for them and deposit enough money to cover the credit card charges.

Skuratov has said dozens of Russian officials were given Banca del Gottardo accounts. But Pacolli said that in four years he spent no more than $32,000 for all of Mabetex's guests--Russian and otherwise. That includes about $4,000 in expenses for Borodin's three trips.

According to law enforcement sources, Pacolli handled the credit cards for the Yeltsin family differently. To avoid suspicion, the sources said, he had the bills routed to a small clothing store owned by Fenini outside Lugano. Fenini refused to comment on whether his store was used as a mailing address, saying only: "I've never seen the credit cards."

Pacolli said the whole idea that he would pay Yeltsin's credit card expenses is "really fantastic."

"Yeltsin doesn't need to be paid for expenses. He is the government. I can only laugh about it."

The same goes for allegations that he allowed Borodin access to a Banca del Gottardo account called "Dean," into which Pacolli deposited $1.8 million. "That was a Mabetex account," he said. He said he withdrew hundreds of dollars in cash at a time to pay his workers in Kosovo, who had no bank accounts.

He said he transferred $1 million in December 1995 to the Central European Bank in Budapest, not for Yeltsin's benefit, but to pay the firm handling Mabetex's advertising and public relations.

"Carla del Ponte asked me, 'And this $1 million was for Mr. Yeltsin?' But it was only for that, only for" the advertising firm, he said.