MOSCOW - A MYSTERIOUS palatial complex that has appeared on Russia's southern Black Sea has sparked controversy after several documents linked it with a government body that had previously denied any involvement.

The complex of several buildings is dominated by a large Italianate style palace on an extensive seaside plot near the small village of Praskoveyevka in the Krasnodar region which also includes 2014 Winter Olympics host Sochi.

In December whistle-blower businessman Sergei Kolesnikov described the palace and its buildings in a public letter to President Dmitry Medvedev. He alleged that it was being built 'for private use' by Prime Minister Vladimir Putin.

The Office of Presidential Affairs, which manages government property used by senior officials, including existing residences used by the president and prime minister in Moscow region and Sochi, denied any involvement.

The head of the Office of Presidential Affairs Vladimir Kozhin categorically told Interfax earlier this month that his office 'did not, does not, and is not planning to oversee any construction there.' But a decree by the Ministry of Economic Development sanctioned a transfer of a 10-per cent stake in the project to a state enterprise called Tuapse Resort, which belongs to the Office of Presidential Affairs.

The 2008 decree, available through a public database of official documents, lists various properties in the project. These include a section of a publicly built road, a helicopter pad, a 'service building' for 56 people and a 'main building' with an area of 14,598 square metres.