#22 - JRL 8343 - JRL Home
Moscow News
www.MosNews.com
August 25-31, 2004
Where's the Money, Roman?
What happened to the IMF loan to Russia? A London Times correspondent believes that he is on the right track
By Yefim Barban, the Moscow News London bureau

Two articles in The Times, which lift the veil over the lingering mystery of the IMF's first $4.8 billion loan provided to Russia shortly before the 1998 financial meltdown to prop up the ailing ruble, have had a big response in Great Britain. The author of the publications, Dominic Kennedy, The Times political observer, gained access to a report by Swiss authorities who investigated the illegal transfer of that money to a secret web of caisses noires, or slush funds, in Switzerland by persons from President Yeltsin's inner circle. In an interview with an MN reporter, Dominic Kennedy talks about the content of the report that was never made public.

Specifically, what did the Swiss investigators try to find out?

There were suspicions that the loan was misused.

You note that the report mentions the name of Roman Abramovich on three occasions. In what connection?

The report describes him as the owner of Runicom SA, a company that purportedly controlled a web of secret reserve funds created by Russian authorities in 1995. Money was accumulated on the accounts of various financial institutions abroad. Access to the slush funds was limited to about a hundred people close to President Yeltsin.

Runicom is a subsidiary of a Russian company of the same name and Mr. Abramovich was once on its staff. Nobody knows who actually owns the parent company. The company has left a trail in Gibraltar: It seems that the bulk money from Switzerland was moved there. So only insubstantial assets were found on the accounts of Runicom's Swiss subsidiary, which caused Abramovich's representatives to say that the amounts of money that Runicom Switzerland handled were far too small to enable the company to take part in operations with the IMF loan.

Incidentally, the Swiss report indicates that some of the IMF loan was transferred also to the accounts of the Swiss bank Ost-West Handelsbank. The Swiss say that Runicom is in fact the bank's shareholder. They also believe that the IMF loan that had gone astray was partly transferred to the correspondence account of the Obyedinenny bank that is also controlled by Runicom.

It is known that the Runicom Swiss branch has a large debt to the EBRD.

Runicom owes the EBRD $15 million. It did not happen to have such an amount on its accounts: Following the bank's claim, the company was declared bankrupt. In extending Runicom the loan, the EBRD supposed that the money would be used to fund development projects in Russia.

Is Abramovich really not in a position to pay the debt to the bank from his personal assets?

I do not think that Abramovich will want to pay out of his own pocket. The fact is, he does not publicize his links with Runicom. In addition, Abramovich's representatives maintain that the EBRD debt was settled a long time ago. According to them, they do not intend to pay their debt twice.

One of your articles in The Times makes a reference to Yeltsin's daughter, Tatyana. Does she figure in the Swiss inquiry?

Her name is mentioned in connection with some shady Russian operations in Switzerland, worth more than 200 million Swiss francs. The Swiss authorities tried to trace the origin of that money. The account to which it was transferred was somehow associated with Yeltsin's daughter. Nonetheless, investigators do not link her name to any illegal operations.

The general thrust of your articles runs counter to statements by the RF Central Bank and the IMF both of which were apparently satisfied with an independent audit, conducted by Pricewaterhouse Coopers.

The auditors found no abuses.

You see, if some illegal operations were performed with the IMF loan, the IMF and the RF Central Bank officials could have been directly responsible for that. So now both of these organizations say that there is no evidence of any wrongdoing. In such cases a dispute is usually resolved by an independent arbiter. From my perspective, the Geneva investigator was in fact such an arbiter.

The Swiss authorities are convinced that the IMF loan to Russia was not used for its intended purpose - at least, not to stabilize the ruble. Here is a noteworthy detail: The Swiss asked the IMF and the RF Central Bank to make available certain information for the investigation, but were refused.

The IMF has no cause to disclose the secret of its loan - for the simple reason that Russia returned the money in full, and with interest, too. Russia's Central Bank also is reluctant to recall the episode: It was not an accident that Pricewaterhouse Coopers' auditors noted that the Bank's executives effectively misled them about its financial status.

Has there been any reaction from Abramovich or his representatives to your articles?

Abramovich's representatives say that the Swiss inquiry is designed to besmirch their boss.

But none of them have taken issue with The Times on this as yet.