MOSCOW _ Russia's president has asked prosecutors to form a government department to oversee spending on Olympic facilities for the 2014 Winter Games in Sochi, in an effort to prevent embezzlement, he said Monday, according to Russian news agencies.

Vladimir Putin's government has pledged US$12 billion (euro9.2 billion) to transform Sochi from a worn-out Black Sea resort of traffic jams and ramshackle Soviet-era hotels into a world-class winter sports complex. The funding will include US$5 billion (euro3.7 billion) from private investors.

Most of the facilities will be built from scratch.

Putin said the new department was needed "so that money is spent rationally and to prevent embezzlement of government resources," according to the ITAR-Tass news agency.

Putin said the money spent on the games should benefit all of southern Russia _ a vast and impoverished region that includes the troubled North Caucasus where Chechnya is located.

"We have a good pretext to develop southern Russia," Putin was quoted as saying.

Corruption has flourished in Russia since czarist times, but has markedly increased in recent years under Putin, watchdogs say.

The global anti-corruption group Transparency International estimates that the level of graft has jumped as much as sevenfold since 2001.

Russia is near the top of Transparency International's scale of corruption, at No. 121 out of 163 in 2006, along with such countries as Rwanda and Burundi. Five years ago, it had been rated 71.