Publication: Monitor Volume: 5 Issue: 32

The controversy surrounding the Central Bank’s use of an obscure offshore asset management company to hide hard currency reserves has taken a new twist. Russian media reported today that what has “ruffled the feathers” of the International Monetary Fund (IMF) is not former Prosecutor General Yuri Skuratov’s original revelation concerning FIMACO, but the open letter from former Central Bank chief Sergei Dubinin and Sergei Aleksashenko, his former deputy, published on February 11 (Segodnya, February 16). Dubinin and Aleksashenko admitted that the Central Bank had used FIMACO to hide more than US$1 billion of Russia’s hard currency reserves from potential seizure by foreign creditors (see the Monitor, February 9, 12). Viktor Gerashchenko, who headed the Central Bank from 1992-1994 and is again at the bank’s helm, has confirmed that the bank used FIMACO as a safe haven. Dubinin, Aleksashenko and Gerashchenko have defended the use of FIMACO, though all three deny Skuratov’s claim that nearly US$50 billion of Russia’s hard currency reserves were placed with the company.

According to “Segodnya,” FIMACO was founded in 1990 on the Isle of Jersey, with a charter capital of US$1,000. “Initially, judging by available information, the company was controlled by the Soviet government–either Party money was transferred abroad through it, or it was used for something else, only known to God,” the newspaper wrote today. Around 1992, Eurobank, a Paris-based bank owned by the Russian government, took “control” of FIMACO, “Segodnya” reported. The newspaper quoted one “highly placed source in the Central Bank” as saying that it is quite possible that the Central Bank used FIMACO for “games” on the market of GKOs–Russia’s now-defunct short-term treasury notes. GKOs were at one point earning in the neighborhood of 100 percent interest. “Segodnya” stressed, however, that this was only one possible “version.”

The newspaper quoted sources close the IMF as saying the fund might demand that Russia open “all channels for the movement of funds from the IMF and, possibly, from other creditors” up for inspection. “Segodnya” and other media have noted that the FIMACO issue will likely further complicate Russia’s negotiations with the IMF (Segodnya, February 16).