The past week has seen surprising developments on several fronts in Russia’s war on corruption. Taken together, they remind us of the magnitude of the corruption that has such deep roots. But these events also demonstrate that the Russian state is sporadic and selective in combating illegal activity.
On June 3, police in Italy issued a warrant for the arrest of Yevgeny Ananaev, who from 1997 to 1998 headed Rosvooruzhenie, the state agency that had a near-monopoly on Russian arms exports. Italian authorities detained Olga Beltsova, Ananaev’s girlfriend, while Ananaev is still at large, reportedly in Russia. Authorities responded to information from Peru concerning a 1998 deal in which Peru bought three MiG jets for US$117 million. Montesinos Torres, Peru’s former intelligence chief, is now in jail for reportedly receiving a US$18 million kickback from the deal. Of that amount, US$7 million was deposited into Swiss and Italian bank accounts controlled by Ananaev. Ananaev was a lieutenant colonel in the Foreign Intelligence Service before joining MAPO bank, an institution established by the aircraft industry in 1992 (Kommersant, June 4). In 2000, Swiss investigators reportedly included Beltsova’s name on a list of persons suspected of money laundering. That list, which prominently featured Kremlin property chief Pavel Borodin, was forwarded to Russian authorities. It will be interesting to see how Russian authorities respond if Italian authorities issue a request for Ananaev’s arrest through Interpol (Izvestia, June 5).
On the domestic front, on June 4, Credittrust, Russia’s 70th-largest bank with US$300 million in assets, went into voluntary liquidation after a run by depositors, reacting to reports that the bank was being investigated for money-laundering. In April, the Central Bank had withdrawn the license of Sodbiznesbank, accused of handling a US$10 million ransom payment for two kidnapped auto industry executives who were never released by their captors. The ownership structure of these banks is murky. The beneficial owner of both banks is thought to be Aleksander Slesar. Both banks are suspected of money-laundering. According to the Interior Ministry, in 2003 non-residents withdrew US$389 million from Sodbiznesbank and US$414 million was withdrawn from Credittrust (Interfax, June 7).
Closure of the two banks has triggered fears of a bank crisis similar to that of August 1995. Bankers expressed concern whether other institutions would be targeted for investigation, and became wary of inter-bank lending. By June 4, interest rates on short-term inter-bank loans had ballooned to 20 percent from two percent. Central Bank Deputy Chairman Andrei Kozlov attempted to reassure the banking community, stating that there is no black list of banks to be targeted in the near future. Since the spring of 2003 the Central Bank has been conducting routine reviews of bank conformity with registration requirements, stemming from a new law that will introduce depositor insurance beginning in 2005. So far, the Central Bank has reviewed 634 banking institutions, representing about half the total number of banks. Violations were found in 137 banks although most of these violators should be able to become compliant (Kommersant, June 7).