grcssnien) last fall v’licn the banking scandal story broke.rnJ louse Banking Committee Chairman Jim Leach (R-IA) held arnseries of hearings last spring on the scandal, citing claims inrnRussian and European media that $200 million worth of IMFrnfunds had wound up in the BNY. The hearings were inconclusive,rnas the IMF pilfering charge was drowned out by a fit ofrnapologetics by IMF and Clinton administradon officials.rnThe scandal itself was very difficult to follow; American mediarnreports (deliberately?) skated over some very curiousrnfacts that turned up in Italian and some Russian accounts. First,rnthe numbers of BNY transactions inolving Russian accountsrnsharply increased around the time of the August 1998 Russianrnfinancial meltdown, as did the amounts of money invoked.rnBoris Berezovsky reportedU’ owned a stake in a BNY affiliate inrnSwitzerland. He, Smolensk, and Abramo’ich would haernbeen well placed to help the Russian Central Bank divert IMFrnfunds offshore during the August 1998 crisis. For his part,rnSmolensky has been pleading povert}- with his creditors sincernthe August debacle and stood to gain bv spiriting SBS-Agrornfunds abroad, l l i c Russian government has been fretting aboutrnthe fate of SBS-Agro, which ARKO, the Russian agenc’ inrncharge of bank “restructuring,” has deemed too big to write offrneompletelv. (The World Bank, among other semi-official institutions,rnhas been helping Rirssia bear the costs of “restructuring”rna slew of bankrupt and inefficient Russian enterprises.rnRussian financial institutions, we arc told, arc pracfieallv broke,rnand the Russian goxernment is doing all it can.) Meanwhile,rnAbramovich and Bcrezosk, both of whom were cr’ing poer-rnW, have recentlv’ bought 70 percent of Russia’s akuninum productionrncapacit). Nobodv knows where the’ got the monewrnSecond, Russian sources within the state audifing apparatusrnmaintain that nearh’ two billion dollars of IMF and World Bankrnfunds, some of which were designated as part of an emergencyrnIMF “stabilization credit” to Russia at the time of the crisis,rnwere diverted to offshore banks set up b- the Russian CentralrnBank. (Remember die IMF’s demand folloving the crisis thatrnthe Russian Central Bank sell off its ofl:shore affiliates?) Thisrnmoncv, which allegedlv never made it into Central Bank accounts,rncould have \ ound up in the BNY or its web of affiliates.rnMoreover, the Central Bank had been illegally speculating onrnGKO’s —die short-term, high-return securities that formed diern”GKO Pyramid” that financed the Russian budget—with itsrnown currency reserves and Russian budget funds, a definite nonornin die eves of the IMF. After all, the IMF billions were supposedrnto bolster the Central Bank’s currency reserves, not itsrnstake for die GKO crapshoot. Sergei Dubinin, Russian CentralrnBank chief at the dme, sharph’ denied diat an’ IMF funds hadrnbeen diverted —and he was replaced thereafter by ViktorrnCerashenko, a banker who was w idely respected in the Westrnand trusted by the IMF. Cerashenko also founded FIMACO,rndie notorious offsliore Central Bank affiliate diat was conceicdrnas a means of spirifing Communi.st Parh gold out of a collapsingrnSoviet Union and later was likely a transit point for some divertedrnWestern loans.rnThird, the IMF knew all about the chicanery, but kept its collectivernmouth shut, as did numerous American and Europeanrnbureaucrats and polideians. Nikolai Conchar, at the dme arnRussian Duma deput}’ and member of the Duma Budget Committee,rntold La Stampa last fall that the IMF “knew evervihing”rnabout die dixerted funds. According to Conchar, the IMF wasrnpresented with an audit of the Central Bank in 1995 thatrnshowed that the bank was diverting foreign loans abroad tornCerashenko’s HMACO. Moskovsky Komsomolets Leonid Krutako’,rnwriting in August 1999, claimed that he knew the reasonrnfor die IMF’s silence: Western speculators were playing thernCKO game as well. They—like the oligarchs, the Russian government,rnWestern polideos, and the IMF—foresaw the comingrncollapse and convinced die IMF to cough up a “stabilizadonrnloan” as a means of temporarily bolstering the weakening rublernso that they covdd withdraw dieir investments from Russia withoutrnincurring heav’ losses. The only problem was that the CentralrnBankers —and oligarchs—were not born yesterday. Theyrndid not even bother depositing the IMF cash in Central Bankrnaccoiuits before sending it out of the country. I’he money wentrnimmediately to offshore accounts.rnKrutakov’s explanation makes perfect sense, but it does notrnexplain ever^’tliing. Why does the IMF continue to stonewallrnabout die niachinadons of the Russian Central Bank and diernoligarchs, claiming to this day that no IMF funds were diverted?rn(It is impossible to believe that such a corrupt group of opportmiistsrnas the Russian bureaucracy and the oligarchs wouldrnhave passed up diis golden opportunib,’.) And why did the Clintonrnadministradon—and its nominal opposidon in Congress—rndrop the whole thing at the end of last year? Why has nobodyrnbrought up the cpiestion of embezzlement of IMF funds?rnChronicles readers arc already fanuliar widi the theon,- that thernentire BN’/IMF scandal was orchestrated by American elites asrnpart of pre-election maneuvering. (See “Banking on Boris” inrnthe December 1999 and Januan 2000 Chronicles.)rnThe pre-clecdon theor)- is supported by the fact that Russiarnheld its special presidential elecdon on March 26 and that therninterests of both Washington and Moscow elites appear to bernsened by a teniporan,- revival of the BNY scandal (widiout anyrnmention of the IMF if possible; no member of the global eliternwants to discredit such an important organ of the nascent worldrngosernment). ‘I’he flagship weekly of Russia’s nadonalfst movement,rnZavtra, carried a report in its “Tdblo” section in earlyrnFebruan’, before die revival of the BNl’ scandal in the Americanrnpress, on Secretary of State Madeleine Albrighf s recentrnmeeting with Vladimir Putin, Yeltsin’s designated heir. Accordingrnto Zavtra’s informers, Albright ouflincd a possible “secretrnagreement” between the Kremlin and die White Housernconcerning “mutual cooperadon in die period of the elecdonrnccle.” Albright allegedly secured a promise from Putin diatrnthe Duma woidd approve die S TARL II treah’ in return for arnmerel} feigned anti-Russian campaign in the United States, diernaim of which is to help Al Core’s presideiidal campaign. Presuniabl}’,rndie American side would also ease up on the Cheehnrna issue. (Clinton’s cridcisms have been much less stridentrndian die Europeans’.) According to die Zavtra sources, the recentrnseizure of a Russian tanker by American warships in thernPersian Gulf was part of the “secret agreement.” More interesting,rndiough, is Zavtra’s contention diat die Americans would re-rniye, for a time, their “struggle ” with Russia’s “financial mafia.”rnThe paper claimed that Pudn might use the opportunit)- to sacrificerna disposable member of the Russian oligarchy to burnishrnhis anti-corrupdon credenfials bodi at home and abroad. ThernNew York limes and Washington Post articles were publishedrndie following week. But die bottom line (for American taxpayersrnespecially) is fliat the Great Elite IMF Crapshoot will continuernand diat die ciuestions raised by the renewed BNY scandalrnwill likely go unanswered.rncrn20/CHRONICLESrnrnrn