Publication: Monitor Volume: 5 Issue: 58

Yesterday Viktor Ilyukhin, the radical communist who heads the State Duma’s security committee, claimed that he has evidence that part of the US$4.8 billion credit extended to Russia by the International Monetary Fund (IMF) last summer was “distributed, with the participation of the president, among Yeltsin’s nearest top associates and most trusted officials.” In a statement distributed to the media, Ilyukhin said that US$235 million from the credit went to an Australian company in which Tatyana Dyachenko, Yeltsin’s daughter and image adviser, has a 25 percent stake. Ilyukhin offered no proof for his charges.

Russian media have also given attention to a recent article in “Newsweek” concerning the scandal surrounding FIMACO, the Isle of Jersey-based company which reportedly managed billions of dollars of Russia’s hard currency reserves. The U.S. magazine moved the controversy forward somewhat by quoting an unnamed former Russian Central Bank official as saying that in 1993, US$500 million of the first US$800 million installment of the IMF’s first loan to Russia was sent to FIMACO. The official said the money was returned after six months. The magazine also reported that Russian officials, including top Central Bank officials, made profits by investing hard currency reserves in Russia’s treasury bill markets, and that part of these profits in 1996 were then used in Yeltsin’s presidential campaign (Newsweek, March 29).

Meanwhile, Andrei Illarionov, a leading liberal economist, charged that former Central Bank chief Sergei Dubinin, during his tenure, carried out a premeditated policy to bankrupt the government of then Prime Minister Sergei Kirienko. Illarionov noted that hard currency reserves sent to FIMACO were used to buy Russian government securities. To make such purchases, the reserves had to be converted into rubles, which, Illarionov said, meant they were no longer reserves, by definition. Illarionov charged that the Central Bank’s policy was reminiscent of pyramid schemes such as MMM (the most notorious of those which proliferated in Russia from 1992-1995) and would fall under the criminal statute against fraud (Nezavisimaya gazeta, March 24).

Ilyukhin’s charges and those by “Newsweek” were made just about the time that Prime Minister Yevgeny Primakov was heading toward Washington, where he was scheduled to meet with U.S. Vice President Albert Gore and IMF Managing Director Michel Camdessus. Camdessus was quoted today as saying that he wanted to meet Primakov “as soon as possible,” while an unnamed Fund official was quoted as saying that Russia and the IMF had achieved “progress” in their negotiations (Russian agencies, March 24). Primakov reversed course in mid-flight yesterday due to the impending NATO action in the former Yugoslavia. The “Newsweek” article also said that FIMACO was originally set up in 1990 as a conduit for Soviet Communist Party money which was being funneled out of the country, and cited a former KGB officer as saying he had briefed Primakov, then a Politburo member, and Viktor Gerashchenko–then, as now, the country’s top banker–about such operations (Newsweek, March 29).