DID RUSSIA’S CENTRAL BANK PLACE US$50 BILLION WITH AN OFFSHORE FIRM?

One piece of fallout from Prosecutor General Yuri Skuratov’s “resignation” last week has received surprisingly little attention. On February 4 a letter which Skuratov wrote on February 1, the day before he stepped down, was leaked to the press. In it, Skuratov charged that in the course of his office’s investigation into the Central Bank’s role in last August’s financial collapse, it was discovered that the bank had, over five years, placed nearly US$50 billion from Russia’s hard currency reserves with FIMACO, an obscure asset management company registered in the Isle of Jersey, with a start-up capital of US$1,000. The Central Bank’s relationship with FIMACO began in 1993 and extended over the reign of two central bank chiefs–Viktor Gerashchenko and Sergei Dubinin.

Some observers have questioned Skuratov’s cited US$50 billion figure, because Russia never had more than US$24 billion in hard currency reserves at any time. For his part, Gerashchenko told the Duma on February 5 that the Central Bank had founded FIMACO and allowed it to manage and invest in Russian assets and receive commissions. He also admitted that, in 1994, Russia had used the company to prevent foreign creditors from possibly seizing US$1.4 billion. In a February 5 television interview, Gerashchenko claimed that FIMACO was a reputable firm which had managed assets for other leading European banks (ORT, February 5). Peter Aikman–a professor of finance with the American Institute of Business and Economics, a non-profit educational institution based in Moscow–was quoted by “The Moscow Times” today as saying Gerashchenko’s admission about the US$1.4 billion was “astounding.” “If this had been done in a commercial deal it would have been criminal,” he told the newspaper. “It’s saying to the [International Monetary Fund], among others, that we are not going to tell you the truth. Be prepared for all sorts of lies” (Moscow Times, February 9).

The story has received scant attention in the Russian-language press, and raised few eyebrows in the Duma. The reason, perhaps, is that Skuratov’s story implicates both the “left”–Gerashchenko–and the “right”–Dubinin.

“RED LINE” REJECTED BY THOSE EYED FOR ENCLOSURE.