The State Duma on Thursday passed the second reading of a mass media law that Russian journalists have condemned as an attempt to establish government control over the media.


If the bill passes a nominal third reading in the Duma and gets the approval of the upper chamber of parliament and of President Boris Yeltsin, an independent federal foundation will be set up to pass on budget funds to selected media.


The foundation would be governed by a Supervisory Council, giving equal representation to the State Duma, the Federation Council, parliament upper house, the president's staff and the government.


While a non-profit organization, the foundation would have the right to set up businesses. It would also manage the state shares in publishing houses, which have monopoly control over printing prices in Russia.


The government-owned Rossiyskiye Vesti in a recent article accused the drafters of the bill of trying to "grab hold of the entire production base" that keeps the Russian papers in print.


In a situation when many publications and two major national television channels rely on government funding, the new organ could manipulate a power of censorship that the current funds distributor, the State Press Committee, lacks because of its high profile, newspapers have claimed.


"Any unbiased reader of the bill will understand that it gives independence not to the press, but to the foundation's leadership which will get monopoly power unheard of even in the old totalitarian system," wrote Rossiyskiye Vesti.


"It's a law that most newspapers, pro-government or pro-opposition, oppose," reformist deputy Mikhail Zadornov told the Duma, urging deputies to vote down the bill.


Despite the warning, 249 legislators voted to approve the bill and only two voted against it.


Yeltsin, meanwhile, vetoed on Thursday an earlier Duma legislative effort to ban government organs from setting up their own newspapers in another move toward maintaining state control over the press.


As if to reinforce Yeltsin's current mood of confidence, the State Duma failed to offer any alternative to the anti-crime decree the president signed in May and the legislature promptly declared unconstitutional.


The Duma considered the first reading of a hardline bill "On fighting organized crime" and an alternative draft supported by a group of liberals, but failed to approve either, sending the bills back into committees for reworking.


However, the conservative version of the bill came within 25 votes of the 226 necessary for approval.


The bill envisages setting up special courts of three professional judges to rule on matters involving organized crime, requiring that banks report on any suspicious activity by their clients and giving law enforcers the power to provoke suspects into criminal actions.


Liberals argued that the special courts would barely differ from the notorious troikas set up by Joseph Stalin to persecute political opponents without a proper trial.