IMF $ stolen in Russia

[Robert Weissman <rob@essential.org>]

U.S. Republicans Say Russian Theft Report a Blow to IMF Funding

   Washington, Sept. 22 (Bloomberg) ... Republican leaders in the U.S. House 
of Representatives said a news report that Russian authorities stole money 
lent by the International Monetary Fund could hurt the Clinton 
administration's bid to convince Congress to provide $17.9 billion to the 
IMF.

   ""I am sure (House Majority Leader Richard Armey) will use this (report) 
as further evidence that we need a reformed international monetary system,'' 
said Michelle Davis, a spokeswoman for the Texas Republican, who's leading 
the opposition to Clinton's request for IMF funds.

   Russia's chief auditor said in an interview with the British Broadcasting 
Corp. Sunday night that billions of dollars supplied by the IMF to support 
the economy were missing through incompetence or corruption.

   The BBC report may also harden the resolve of key Republicans like 
Appropriations Committee Chairman Robert Livingston against the 
administration. Livingston said last week he hoped to work for a compromise 
in coming weeks that will allow the funding to go forward.

   Now, ""I'm sure this has strengthened his resolve that we not throw good 
money after bad,'' said Elizabeth Morra, a spokeswoman for the Louisiana 
Republican.

   Former Russian central bank chairman Sergei Dubinin said most of a $4.8 
billion loan installment Russia received from the IMF in July is still in 
the country's foreign reserves at the central bank, according to an 
interview published in the Russian daily, Vremya. About $1 billion of the 
amount was transferred to the Finance Ministry to cover redemption of 
treasury bills in August, he said.

   Botched Bailout

   The $4.8 billion was part of a $22.6 billion international bailout of 
Russia that Armey and other Republicans claim the IMF botched, along with 
its rescues of three Asian countries. They want the Fund to overhaul its 
operations and be more open about how it makes decisions, conditions the 
Clinton administration says it can't impose on the IMF.

   That opposition is a key stumbling block for Clinton in his push to help 
the IMF replenish its capital, which has been drained from bailouts of 
Thailand, Indonesia and South Korea in the past year, as well as Russia.

   Postponement of a vote last week on the $17.9 billion is a setback to the 
IMF and the U.S. Treasury, which is struggling to shore up investor 
confidence in Latin America.

   The IMF has said it's ready to lend money to Latin America if necessary. 
Trouble is, the Fund has only about $5 billion to $9 billion available to 
lend after agreeing to bail out Russia, IMF officials said.

   To stitch together a bailout in Latin America, the IMF would need to tap 
on a line of credit with the major industrial nations. As it stands, the IMF 
had to draw on that reserve tank for most of the $15.1 billion in new money 
pledged to Russia, leaving only $15 billion to spare.

   The Clinton administration's push for extra funding dates back a year to 
the last annual meetings of the IMF and World Bank in Hong Kong. The IMF 
members agreed there to inject $88 billion into the agency. Other nations 
have already provided their portions or are in the process of doing so. The 
lender is also waiting on a new line of credit with 25 nations.

   The Senate has twice voted for full funding. In the House, whose entire 
435 seats are up for election in November, Clinton has run aground. Last 
week, House leaders sidestepped a showdown vote and approved just $3.4 
billion, giving negotiators several more weeks to work out a compromise.

   No Comment

   The IMF wouldn't comment directly on the BBC report, which cited an 
interview with Russia's chief auditor, Vanyamin Sokolov. Sokolov, the 
director of Russia's Chamber of Accountants, cited as an example of graft 
that the finance ministry received as much as 100 million pounds ($168 
million) to fund an export program for MiG jet aircraft, but the agreement 
didn't exist and the money vanished. That was only a fraction of the cash 
that has gone missing, the BBC reported.

   ""We don't have complete information on the allegations and whether, in 
fact, they have been withdrawn,'' said a spokeswoman at the IMF's Washington 
headquarters.

   Russia's new finance minister, Mikhail Zadornov, shed no light on the 
situation either. ""I can't comment on something I don't understand,'' 
Zadornov said. ""I'm afraid Sokolov himself doesn't know what it's all 
about.''

   Sokolov, a prominent member of the Communist party, is an official with 
the Audit Chamber, an oversight agency set up by Russia's parliament. The 
Chamber has declared illegal every state asset sale made by the last few 
Russian governments. ...Daniel Moss in Washington (202) 624-1820 with 
reporting by Natalia Olynec in Moscow (7501) 937-6770