The Russian Prosecutor General's Office has launched a probe into the misuse of funds allocated by Russia for the restoration of South Ossetia following the August 2008 war with Georgia, Russian business daily Kommersant said on Friday.

"Violations and misuse [of funds] have been revealed during inspections. All materials have been handed over to the [Russian] Interior Ministry and Federal Security Service, which will carry out investigations and initiate criminal cases," a source in the Prosecutor General's Office told Kommersant.

He said the investigation has been launched following an order by Russian President Dmitry Medvedev.

"The South Ossetia issue is supervised by the [Russian] authorities, and those found guilty will be punished," he said.

Russia recognized South Ossetia and another former Georgian republic, Abkhazia, shortly after a five-day war with Georgia in August 2008. Fighting broke out when Georgian forces attacked South Ossetia in a bid to bring it back under central control.

Following the recognition of the republics, Russia signed mutual assistance treaties with South Ossetia and Abkhazia.

A source in the Russian Foreign Ministry told Kommersant that the restoration of South Ossetia was a matter of Russia's political prestige.

"We were defending the republic from [Georgia's] aggression, and we have been in charge [of its prosperity], but some the behaviour of some officials has frustrated all our efforts," he said. "We should restore order; otherwise everybody will say that Russia has turned South Ossetia into a black hole."

MOSCOW, August 20 (RIA Novosti)