STATE PENSION FUND MAY BE YET ANOTHER RUSSIAN FINANCIAL SCANDAL.

FIMACO is by no means the only financial scandal brewing in Russia at the moment. The Audit Chamber, an independent state watchdog agency set up by the parliament, reported last week that the country’s State Pension Fund had lost more than US$1 billion from 1995 to 1997 as a result of misappropriations carried out through a variety of financial schemes, including the purchase of government securities and the use of “veksels,” or promissory notes issued by commercial banks. The agency charged, among other things, that the pension fund had invested in commercial banks for below-market-value interest rates. An example of one scheme used by pension fund officials: Some pensioners were paid not in cash, but in “talons” which they could use to purchase items in a special section in some stores and shops. The items which could be purchased with talons, however, were more expensive than the same items on sale for cash, meaning that Pension Fund officials were essentially “saving” money for themselves at the pensioners’ expense. (Russian agencies, February 11; Vlast, February 16). Meanwhile, Finance Minister Mikhail Zadornov said in an interview that the government had guaranteed some US$7 billion in credits to enterprises and other institutions from 1992 to 1997, but that only a quarter of those credits had been paid back by 1998. Zadornov said his ministry had created a special office which will work exclusively on getting back this money (Profil, February 15).

HORBULIN OVERRULES RAZUMKOV ON NATO.