CHRONICLES INTELLIGENCE ASSESSMENTrnBanking on Borisrnby Sergey BerdyaevrnOn Wednesday, September 1, a homemade bomb explodedrnon the third level of the Manezh Square undergroundrnshopping mall —dubbed “lAizhkov’s pyramid” by eritics of thernMoscow mayor’s taste in architecture — in the heart of Russia’srnancient capital, only yards away from the red brick walls of thernKremlin. Fort)-one people were injured, but none thus far (asrnof the second week in September) has died as a result of the terroristrnattack. I’hat same week, with mobs of clashingrnprotesters—divided over the results of regional elections—gatheringrndaily in the North Caucasian region’s capital, a call fromrnKarachay-Cherkessiya’s leading citizens was made to BorisrnYeltsin: appoint magnate (and former secretary of the Commonwealthrnof Independent States, the loose organization of formerrnSoviet republics) Boris Berezovsky as Moscow’s plenipotentiaryrnrepresentative in the troubled “subject” of the RussianrnFederation. Meanwhile, Russian troops were engaged in heav)’rnfighting with Islamic militants in the mountainous region ofrnWestern Dagestan, also in the North Caucasus. Back inrnMoscow, Yeltsin’s press spokesman denied any Kremlin involvementrnin the latest scandal to shake the Russian politicaleconomicrnelite: The Russian government was not involved inrnlaundering any funds, either IMF money or alleged kickbacksrnfor Kremlin refurbishing, and, furthermore, the West was obviouslyrnattempting to use the story as yet another political weaponrnin the ancient struggle to belittle Russia and prevent her fromrnassuming her proper place as a great power.rnIt was no quieter across the Atlantic. In America, HousernBanking Committee Chairman Jim Leach (R-IA) called forrnhearings on the alleged laundering of $200 million of IMFrnfunds through the Bank of New York (BNY) by Russian mobstersrnand high-ranking Kremlin officials. Vice President AlrnGore, who shares responsibility for Russia policy with longfimern”friend of Bill” Strobe Talbott, was feeling the heat both fromrnRepublicans, already takirrg a halfliearted stab at stoking arn”Wlio lost Russia?” debate, and from Gore’s Democratic challenger.rnBill Bradley. Meanwhile, in Europe, Swiss investigatorsrnreportedly uncovered evidence of Yeltsin, his daughter andrnclose advisor Tatyana Dyachenko, former privatization czarrn(and hero to the Wall Street journal crowd in America) AnatolrnChubays, and a host of other lesser Kremlin-connected lightsrnparticipating in what looked like a bribery and kickback schemerninvolving credit cards, Swiss bank accounts, and a refurbishedrnKremlin. All of this was apparently facilitated by Kosovo AlbanianrnMabetex construction company boss Begzhet Paccoli, arnman the European and Russian press have tied to the Albanianrndrug mafia, which uses Kosovo as a conduit for transporting narcoficsrnto Europe. Needless to say, Paccoli’s warm relations withrnlongtime Yeltsin crony and Kremlin property manager PavelrnBorodin raised some delicate questions about Russia’s about-rnSergey Berdyaev is a journalist who eovers FSU affairs.rnface in Kosovo, first assuming a seemingly uncompromising anti-rnNATO stance, then gradually caving in, pressuring the Yugoslavrnregime to accept the occupation of Kosovo b’ NATOrnand the Kosovo Liberation Army, which many observers see asrnan arm of the Albanian drug mafia.rnT’hese seemingly imrelated events may well be part of tvvo orchestratedrnpolitical “kompromat” (Russian shorthand for “compromisingrnmaterial”) campaigns timed for upcoming presidentialrnelections in both America and Russia. It is a strange tale ofrntwo political cidtures and two sets of political elites who appearrnready to force their respective peoples to bear any burden andrnpay any price to preserve their own power.rnThe tale of the venerable Bank of New York’s alleged involvementrnin laundering money for transnational organizedrncrime broke on August 19 in the New York Times, followed byrnrelated pieces over the next week in the Wall Street journal, thernWashington Post, and USA Today. The papers’ unnamedrnsources in British, American, and Russian intelligence and lawrnenforcenrent agencies wove a tale that sounds all too eonvineingrnto anyone familiar with the state of affairs in today’s Russia,rnas well as the state of moral decay among both American andrnRussian elites: BNY, interested in garnering a share of Russianrnbusiness after the Cold War—”emerging market” is the catchphrase-rnemployed Natasha Garfinkel, an immigrant from thernSoviet Union, Princeton grad, and BNY executive, to establishrncontacts with possible clients in the former Soviet Unionrn(FSU). By the time the scandal was exposed in the Times,rnGarfinkel had become Natasha Kagalovsky: She had nrarried arnver)’ prominent “young reformer” of the first wave of Russianrn”democrats,” Konstantin Kagalovsky (see John Ldoyd’s excellentrnNew York Times Magazine piece, “Who Lost Russia?” whichrnappeared a scant four days prior to the August 19 “outing” ofrnBNY, another nice piece of timing). Kagalovsky, now deputyrnchairman of the Yukos oil company, owned by magnaternMikhail Khodorkovsky, was Russia’s official representative tornthe IMF from 1992-95 and is a longtime friend of Russia’s leadingrn”young reformers,” Chubays and former acting premierrnYegor Gaydar. The BNY’s London branch also employed LucyrnEdwards, another immigrant and divorcee, now married to arnRussian citizen, Peter Berlin, who works for Benex, a U.K.-rnbascd company. According to press accounts, British authoritiesrnalerted the FBI to Berlin’s and Benex’s ties to a major figurernin FSU organized crime circles, Semyon Yukovich Mogilevich,rnwho apparently used Benex to fminel money out of thernFSU for laundering in Western banks, a large portion of it in sixrnBNY accounts reportedly set up by Berlin. Benex itself has hadrnvery few business transactions, other than money transfers, andrnappears to be a front company. The sunrs involved in the BNYrnend of the scandal approach ten billion dollars, some of it possiblyrndiverted IMF funds. If BNY was ignorant of the possible ihrnlicit nature of the money, it was willfully so.rnTn/r”|-[pr~iirr^i pcrnrnrn