Yeltsin and IMF

bernie wool bernard.wool at
Sun Oct 17 11:49:11 MDT 1999

Observer UK

IMF knew about Russian aid
Yeltsin's Russia: special report

Simon Pirani and Paul Farrelly
Sunday October 17, 1999

The International Monetary Fund faces fresh embarrassment this weekend
after it admitted turning a blind eye as Russia  siphoned off billions
of dollars of western aid to help President Boris Yeltsin. The  IMF has
come under intense pressure  following revelations last month that more
than $10bn was laundered offshore  through accounts held by the Bank of
New York.

Earlier this month, despite IMF denials, US Treasury Secretary Robert
Rubin told Congress that much of a $4.8bn IMF loan last summer may also
have been misused.

According to senior Russian parliamentary sources, the siphoning-off of
western aid stretched back five years, and was designed to boost
Yeltsin's chances of re-election in 1996.

This weekend the IMF finally admitted to  The Observer that it knew
Russia's Central Bank had placed funds with offshore subsidiaries, and
that the fund had advised Moscow that this was not 'good practice'.

The revelations come amid mounting allegations of corruption against
Yeltsin and his inner circle. In Switzerland, a scandal surrounding
Yeltsin's links to building firm Mabetex, which won lucrative Kremlin
contracts, deepened when a Swiss bank said it had been asked to
guarantee credit cards for members of Yeltsin's family.

In the US, the FBI is investigating accounts held by Yeltsin's
son-in-law at the Bank of New York in the Cayman Islands. The latest IMF
revelations centre on the rapid growth of the Russian treasury bond
market in early 1996, which helped to ease Yeltsin's budget crisis.  One
of the largest 'foreign' investors in bonds was in fact the Russian
Central Bank itself, which siphoned $1.2bn into the bonds that year
through its Jersey-based subsidiary, Fimaco, and its French arm,

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