Publication: Monitor Volume: 5 Issue: 173

The U.S. House of Representatives Banking and Financial Services Committee, chaired by Representative James Leach, opens hearings today into alleged Russian money laundering and corruption. The first witness will be U.S. Secretary of the Treasury Lawrence Summers, who will undoubtedly be questioned about allegations that International Monetary Fund credits to Russia were among the billions of dollars allegedly laundered through the Bank of New York. While Summers has promised that further IMF funding of Russia will be contingent on a thorough accounting of how previous credits were used, other Clinton administration officials have denied that IMF or U.S. funds were misused. Over the weekend, National Security Adviser Sandy Berger said that the U.S. Justice Department had so far found no evidence that such funds had been misused (NBC, September 19).

Yesterday, Russian Prime Minister Vladimir Putin acquitted Russia even more categorically. Putin, after meeting with President Boris Yeltsin, said that a delegation of Russian law enforcement officials which had traveled to the United States on September 13 to look into the alleged money laundering had found no information confirming the charges. According to Putin, the Russian delegation, which returned to Moscow this past weekend, included representatives of the Prosecutor General’s Office, the Interior Ministry, the tax police and the Federal Security Service (FSB), who discussed the allegations and exchanged information with their U.S. counterparts. Putin added that “It is clear that such a problem as capital flight exists, and not only in Russia,” and announced that U.S. intelligence officials will soon come to Moscow “for the continuation of this joint work” (Russian agencies, September 20).

On the other hand, Viktor Ivanov, deputy director of the FSB, said that U.S. investigators have material indicating that Russian businesses and banks did indeed launder money in the U.S (Russian agencies, September 20).

While top Russian officials were contradicting one another, an investigative magistrate in Geneva, Switzerland, said yesterday that investigators had uncovered links between the Bank of New York case and Swiss bank accounts frozen in an investigation into kickbacks allegedly paid by the Swiss construction firm Mabetex to Kremlin officials. Meanwhile, Swiss banks reportedly froze a dozen accounts possibly linked to the Bank of New York case (Reuters, September 20).

Yuri Skuratov, Russia’s suspended prosecutor general, was quoted over the weekend as saying that oil-export revenues may have been used to cover some of the estimated US$823 million spent on renovating Kremlin residences, offices and churches, and that some of this money may have been diverted into private hands (The Globe and Mail (Canada), September 18).

Skuratov said yesterday that he had refused an invitation from Congressman Leach to testify at the House Banking Committee hearings this week. Skuratov said he had sent a letter to the committee chairman thanking him for the invitation, but noting that “the legal status of the prosecutor general of Russia excludes the possibility of participating in hearings carried out by the parliament of another country” (Russian agencies, September 20). While Yeltsin suspended Skuratov earlier this year, the Federation Council, the upper house of Russia’s parliament, on several occasions voted against confirming Yeltsin’s decision to fire him. According to Russia’s constitution, the president can remove a prosecutor general only with the Federation Council’s consent.