Turin's La Stampa 8 October 1999 [translation for personal use only]
Report on interview with Russian Duma Budgetary Affairs Committee member Nikolay Gonchar by Giulietto Chiesa in Moscow; date not given: "The IMF Knew About Moscow's Fraud -- the auditors informed the IMF of it in 1995"
Moscow -- "Why did the Clinton administration say nothing about all this, which is perhaps the ultimate instance of human rights violation?" This was said not by Li Peng but by Steve Forbes. And the silence in question concerns the minor detail that "tens of millions of Russians, some 40 percent of the labor force," are again being subjected to a new -- de facto -- system of serfdom." That is, they are not being paid for the work they do, while the Clinton-Gore administration and the IMF are funding this shameful situation by paying billions of dollars to the corrupt Russian Government."
The line of defense used by Clinton and Gore, and by the architect of the US Administration's Russian policy, Strobe Talbott, focused until very recently on such arguments as: not everything has gone so badly, after all; or: we knew that there was corruption, but it was inevitable; or: it was a calculated risk. However, the line of defense used by top IMF officials -- Michel Camdessus, Stanley Fisher, and their colleagues -- was: we knew nothing about it.
I recall a major article in Izvestiya on 4 March this year headlined, "IMF: the United States' Ultimate Weapon," which stated that "the White House is playing a geostrategic game with Russia in which the IMF's stubbornness is merely for show, while the big business is conducted on the sidelines." What business?
Political business. The ratification of START-2, the acceptance of NATO's line on Kosovo, tolerance of the bombardments of Iraq, the termination of cooperation programs with Iran, and the reduction of plans for the sale of arms and military technology to China and India. Then -- Mrs Albright gave then Prime Minister Primakov to understand -- the United States may knock on the IMF's door on Russia's behalf.
This is indeed what has happened throughout these years: hard cash has bought political concessions. And after every such "contract" of this sort, it was up to the IMF to explain to the world that everything in Russia was fine, that the market was on the verge of a spectacular blossoming, and that the loans were being granted precisely in order to help the reforms underway. In the meantime Russia was falling apart -- perhaps an undesirable effect, but an inevitable one.
Duma Deputy Nikolay Gonchar, a member of the Budgetary Affairs Committee, showed me some astonishing figures: "Do you see? This year we have to include in our budget expenditure of 116.8 billion rubles [R] to service our debt. That is almost $7 billion, 29.1 percent of the state's expenditure. It is crazy. No country can survive that. But in 00 we will have to allocate R2 billion to this. There is only one solution: to declare a "default" and to ask the international community to freeze all Russia's foreign accounts...
He smiles. He is the first to realize that this is an unfeasible method. "But we must at least understand how we reached this situation," he explained, "because there is something that escapes many Western observers, and that is the scale involved. In 1990 the USSR's debt was $37 billion. In nine years it has risen to over $160 billion. The question is: how was it possible for the debt to increase fourfold, despite reducing our population by over 100 million, keeping all the Soviet Union's natural resources, achieving a surplus balance of trade, and drastically reducing all budgetary expenditure -- despite all this? Obviously we are dealing with a systemic distortion. It is ridiculous to talk in terms of the mafia. It is the political leadership that has done all this. And not on its own."
So can those in the United States who talk about mafia laundering, albeit on a very large scale throughout Russia, not see the wood for the trees?
"Precisely. Believe me, the whole Bank of New York business is a diversionary tactic. It was the leading actors in the disaster themselves who initiated these rumors. What is $15 billion compared to the total? The simple fact is that the Bank of New York was the laundry for the entire elite. Since everyone, both great and small, is implicated, they hope that, amid this great confusion, the details will disappear and the big fish will manage to camouflage themselves."
What do you mean by "big fish"?
"First and foremost, the oligarchs' banks. Then there are the names of prominent government members, which have already been leaked in the United States (these are the names published by USA Today at the end of August including Tatyana Dyachenko, Anatoliy Chubays, Oleg Soskovets, Aleksandr Livshits, and Vladimir Potanin -- La Stampa editor's note). Last, there could be some big names from the international financial institutions themselves. As far as central banker Yuriy Dubinin is concerned, we know that Prosecutor Skuratov initiated criminal proceedings against him in January."
There is another point that needs to be clarified here. There have been only two chairmen of the Russian central bank in recent years -- Viktor Gerashchenko and Yuriy Dubinin. What is the difference between them? Is there any difference? I recall that Gerashchenko was very much hated by the pro-Yeltsin "reformers," who accused him of wanting to pursue a Soviet-style inflationist policy and who succeeded in having him ousted by Boris Yeltsin, replacing him with Dubinin. Then Dubinin was ousted after 17 August, the day the ruble collapsed, and Gerashchenko returned to the helm of the central bank, together with Yevgeniy Primakov, the Prime Minister chosen by the Duma. But Gerashchenko seems to have undergone a conversion in the interim. Indeed everything continues almost as before.
Nikolay Gonchar lets slip a grimace: "During the three years in which Gerashchenko did not work as the state's banker, he was in fact working as a banker. And even before that, during the immediate post-Soviet period, it was he who founded Fimaco. If you look at the history of the Royal Bank of Scotland Trust Company, based in Jersey, you will find records of Gerashchenko's name. It was that very bank that first owned Fimaco, via which former CPSU money "circulated." And then specialized in purchasing Soviet debts abroad, at a rate of 10 percent, and selling them on to the central bank at market prices."
So we return to the heart of the greatest scandal -- the $50 billion that passed through Fimaco, a strange offshore company with a capital of $1,000 and based in Jersey. Nikolay Gonchar is one of the people who know most about it, having been able to examine Attorney General Skuratov's files. Moreover, it was Gonchar, in July, who produced final proof that the IMF knew about the improper and fraudulent use that the central bank was making of its reserves, and also about the loans received from the various international institutions. How?
By displaying extracts from a 1995 document produced by Coopers and Lybrand, the firm tasked with auditing the central bank's accounts in the years 1993-1994 (under the Gerashchenko administration.) These show that Coopers and Lybrand discovered and reported the irregularities. Gonchar says that he knows that those documents were forwarded to the IMF no later than the end of 1995.
Do you now reaffirm that assertion?
"Certainly. I discovered what was going on in 1997, on my own account, when I was Chairman of the Federation Council's Banking Committee. This is why I proposed that the upper chamber reject the central bank's accounts, which were flagrantly irregular."
May I see? There is a very clear reference to the 1994 audit.
"During previous audits we expressed our doubts about the investment of funds in Fimaco and recommended that it [the central bank -- La Stampa editor's note] seek the services of other investment firms with a stronger reputation. We still recommend this."
And the non-Gogol-ite auditors of Coopers and Lybrand added elsewhere, in connection with a mater of detail: "As far as we are able to establish, the source of the R1,854 billion [as published] deposited by the central bank with Fimaco... are credits that the Finance Ministry obtained from the World Bank and the IMF."
And when we examine the list of banks that purchased dollars from the latest IMF loan -- that of July 1998 -- we discover Evrofinans, among others. This is a front company whose owners include Evrobank, a Paris-based subsidiary of the Russian central bank (35 percent) and -- surprise, surprise! -- Fimaco (also 35 percent.) In other words: a) the central bank pumped money into this sham company, whose profits were exported abroad and not accounted for; and b) acting prosecutor Yuriy Chayka is lying when he says that in 1998 Fimaco did not take part in this fraudulent game. So the misdeeds date back a long way.
Nikolay Gonchar adds that he can prove that the central bank concealed millions of dollars in profits generated by transactions via Fimaco; that is, he accuses the central bank of having taken money from the state budget inasmuch as, according to current law, Russia's central bank is obliged to transfer 50 percent of its profits to the federal budget.
Did the IMF know about this? "It knew everything," Gonchar replies categorically. It is a pity that on several occasions, after the scandal broke out in Russia in February 1999 with Skuratov's denunciations, the IMF's official spokesmen maintained that they did were not even aware of Fimaco's existence.