USA Today on IMF/Russia (fwd)

[Robert Weissman <rob@essential.org>]

09/01/99- Updated 09:22 AM ET
USA TODAY
EDITORIAL                  

                   Suspicions rise as aid scandal touches leaders 

                   U.S. taxpayers have bankrolled billions of dollars in
loans to Russia in
                   recent years, assured by the economists at the
International Monetary
                   Fund that the aid would get the ravaged nation of 147
million back on its
                   feet. 

                   It's beginning to look as if the IMF, led by the Clinton
administration, not
                   only botched the repair job on Russia's economy but
managed to get its --
                   our -- wallets stolen as well. 

                   USA TODAY reported last week that
                   Russian mobsters, directed by the
                   highest offices of the Kremlin, may have
                   laundered as much as half of the
                   country's IMF loans -- $10 billion --
                   through accounts at the Bank of New
                   York and Republic National Bank. 

                   The sum is but the tip of the iceberg.
                   Law enforcement officials told USA
                   TODAY another $5 billion in non-IMF
                   Russian money came through the two
                   U.S. banks. 

                   In addition, the Swiss and British
                   governments are investigating laundering
                   through Swiss banks and a Channel
                   Islands firm. Yet the $10 billion is
                   already twice the average annual profits of Microsoft
and 100 times the
                   documented plundering of Haiti's Jean-Claude "Baby Doc"
Duvalier. 

                   Among Russian political figures suspected to have had
access to the IMF
                   money are Boris Yeltsin's daughter and adviser Tatyana
Dyachenko and
                   Washington's favorite reformer, ex-finance minister
Anatoly Chubais,
                   British investigators told USA TODAY. 

                   What's worse, the massive robbery leaves the average,
poor Russian
                   thinking cynically not only about his thieving political
overlords in Moscow,
                   but about American capitalism as well. 

                   This much of the sordid tale is known so far: Against a
backdrop of
                   economic decline and mounting allegations of official
corruption, Russia's
                   Central Bank allowed the ruble to fall, and Russia
defaulted on foreign
                   debt last August. The move shook global stock markets
and cost millions
                   in losses to those who didn't know the ruble's fall was
coming. 

                   Before the Central Bank's move, money began pouring from
Russia to the
                   New York banks through accounts under the name of Benex
Worldwide,
                   founded by Semion Mogilevich, a leader of Solntsevo,
Russia's largest
                   organized crime group. 

                   At the same time, the New York banks began cooperating
with an FBI
                   investigation of the five Russian accounts. 

                   A year later, investigators are telling USA TODAY that
much of this
                   money may have been IMF loans to Russia's Central Bank. 

                   The IMF has lent Russia $22 billion since the country
joined the
                   multinational lending organization in 1992. The fund has
periodically scaled
                   back lending to its biggest client -- to nudge Russia
back on the wagon of
                   reform. But then has followed up by promising more, as
it did in July,
                   offering Russia's central bankers $4.5 billion while
simultaneously
                   investigating whether those bankers had diverted earlier
funds to the
                   Channel Islands. 

                   The IMF happy hour has been pushed by the U.S., which
has taken a
                   hear-no-evil, see-no-evil approach to backing President
Yeltsin's
                   government of Potemkin reforms. 

                   Treasury Secretary Lawrence Summers, for example, has
supported IMF
                   loans to Russia since their inception. 

                   Now the tune is changing slightly. Summers told USA TODAY on
                   Tuesday that the Clinton administration will not support
giving Russia its
                   next, $640-million slice of the $4.5 billion promised by
the IMF in July
                   until the laundering is fully investigated. 

                   That's a start. Clearly, when half of the IMF's
assistance appears to have
                   been stolen, Western aid cannot continue in its current
form. First, a full
                   investigation of the crimes is required so future
scandals can be avoided.
                   As importantly, Russia's current leaders, as well as
presidential hopefuls
                   with their own elaborate networks of financial support,
must admit to and
                   change their suspiciously criminal ways. 

                   To be sure, blaming Washington and the IMF for the
corruption of
                   Russia's political leadership is a little like blaming a
bartender for a patron's
                   drunkenness: Russia's ex-communists, with decades of
experience in
                   raping their nation for personal gain, are responsible
for their own abuses. 

                   But at some point, a reckless party becomes the host's
responsibility. That
                   deadline passed some time ago. 

                   If Russia is ever to become a well-governed, productive
state, the White
                   House and the IMF have to end their enabling.