PM ALLEGEDLY GAVE RAILROAD MINISTRY DEBT TO A CYPRUS FIRM.

A new bit of “kompromat” (compromising material) against Prime Minister Mikhail Kasyanov has appeared in the Russian press. Segodnya, the daily newspaper belonging to Vladimir Gusinsky, reported today that in March of this year, Kasyanov, who was then both a first deputy prime minister and finance minister, signed an agreement that essentially gave Felirio Trading Co. Limited, an obscure Cyprus-based company, the right to collect the Railway Ministry’s debt to the Finance Ministry. According to the paper, Andrei Kostin, the head of Vneshekonombank, the Russian state foreign trade bank, also signed the agreement. The Railway Ministry’s debt to the Finance Ministry, according to Segodnya, came to 77.7 million German marks, in exchange for which Felirio Trading gave the Finance Ministry PRINS, or Principal Notes, which are dollar-denominated Russian Finance Ministry bonds representing the principal on the Soviet-era debt. According to Segodnya, the value of the PRINS were worth US$26 million when Kasyanov and Kostin signed the agreement, while the 77.7 million German marks that Felirio Trading received equaled US$38.4 million, meaning that Cyprus-based company made US$13 million on the deal–courtesy of the Russian taxpayer. The paper also claimed that the Cyprus-based company made an additional US$800,000 because the agreement used the mark-dollar exchange rate in effect on February 15, even though the deal was actually signed on March 31, more than a month later. Segodnya cited two other strange details: First, the deal was not authorized by the Russian Central Bank, as was required; second, that US$38.9 million in Railways Ministry debt was transferred through MDM-Bank–where the banker, Kremlin insider and reputed close Kasyanov associate Aleksandr Mamut once worked–to an account in Business Mediterranean Bank Ltd., which is located on the Pacific Island of Nauru (Segodnya, September 11). Viktor Melnikov, deputy chairman of Russia’s Central Bank, said last year that US$70 billion was transferred in 1998 from Russian banks to banks chartered on Nauru (see the Monitor, October 29, 1999).

For nearly a year, Kasyanov has been the target of a number of corruption allegations. Last October, the weekly newspaper Versiya alleged that Kasyanov, who was then still heading the Finance Ministry, conspired with Mamut and Sibneft oil chief Roman Abramovich to manipulate Russia’s debt market and thereby reap profits for MDM-Bank and Sobinbank, another institution connected to Mamut. The paper alleged that Kasyanov received a 2 percent commission from such operations–allegedly earning him the moniker “Misha 2-Percent”–and that he, Mamut and Abramovich deposited their profits from these operations in MDM-Bank’s and Sobinbank’s correspondent accounts in the Bank of New York (see the Monitor, October 5, 1999). In July of this year, the Italian newspaper La Repubblica claimed that Kasyanov was involved in the alleged diversion of a US$4.8 billion credit from the International Monetary Fund to Russia. The IMF has publicly denied both that the diversion took place and that Kasyanov could have been involved in such an operation (see the Monitor, July 17, 21).

In addition, Viktor Gitin, former deputy head of the State Duma’s budget committee, has alleged that people in Kasyanov’s inner circle offered him US$500,000 bribe to halt his investigation into the circumstances surrounding the collapse of Russia’s banking system and currency in August 1998. Versiya claimed last month that supporters of Security Council Secretary Sergei Ivanov, a close ally of President Vladimir Putin and identified as a member of the “Chekist” faction of KGB veterans inside the Kremlin apparatus, are behind the spate of kompromat against Kasyanov, and that Ivanov could soon replace Kasyanov as prime minister (see the Monitor, August 11). Kasyanov has denied being close to leading oligarchs and members of the Yeltsin-era Kremlin inner circle known as the “Family,” including Mamut, Abramovich and Boris Berezovsky.

MOLDOVA

PRIMAKOV PROPOSES PERMANENT STATIONING OF RUSSIAN TROOPS IN MOLDOVA.