Publication: Monitor Volume: 4 Issue: 191

On October 15, the State Duma’s budget committee approved the Central Bank’s report on its 1997 activities, declaring that the bank had not committed any violations of the law. The Audit Chamber, an independent agency set up by the parliament, has long accused the Central Bank of various violations: Last month, for example, the chamber’s deputy chief, Yuri Boldyrev, claimed the bank had used misallocated money to pay the salaries of its employees.

The weekly newspaper “Novaya gazeta” reported last month that during his tenure as Central Bank chairman, Sergei Dubinin’s official yearly salary had reached the equivalent of US$240,000. While not huge by world standards, this sum, as the newspaper then noted, was not only forty times higher (4000 percent) than President Boris Yeltsin’s official salary, but equal to the budget for two departments of the State Tax Service, five Moscow high schools or “an entire district hospital in Dagestan.” In fact, the Russian law governing the Central Bank allows it to determine the salaries of its own board of directors, so there was apparently nothing illegal about Dubinin’s salary. “Novaya gazeta”, however, mentioned other irregularities: It reported that Denis Kiselev, while serving as Dubinin’s deputy, had simultaneously collected a US$6,700-a-month salary for serving as a full-time member of the board of directors of East-West United Bank in Luxembourg.

In any case, the Duma deputies, while giving the Central Bank a clean bill of health for 1997 on October 15, did not let the Central Bank off the hook completely. The Central Bank is legally required to hand over half its profits each year to the federal budget. The Audit Chamber has charged that the bank uses various methods to understate its profits. On October 15, members of the Duma’s budget committee claimed the bank has also been understating the value of its gold/hard currency reserves by various means, such as calculating the value of precious metals in its reserves according to their nominal value, not their market value. The Audit Chamber, thus, has concluded that the Central Bank’s reserves are 24 billion rubles (US$1.6 billion) higher than had been stated.

The Duma wants to pass a law giving it the power both to determine what portion of the Central Bank profits should be repatriated to the budget and to remove the Central Bank’s chairman. Moreover, Prosecutor General Yuri Skuratov said earlier this week that his office and the Audit Chamber are investigating whether Central Bank officials broke the law while engaging in activities connected to the devaluation of the ruble and the freezing of Treasury bills last August. Last month, Skuratov charged that the Central Bank’s handling of the first, US$4.8 billion installment of the International Monetary Fund’s bailout package had not been entirely “clean.” Audit Chamber officials, meanwhile have accused Central Bank officials of misusing World Bank funds (Kommersant daily, October 16).