Moscow, 3 July 1997 (RFE/RL) - Russian President Boris Yeltsin -- who today is celebrating the anniversary of his election to a second term -- announced in his March address to the nation that he was determined to stop the practice of authorizing commercial banks to distribute budget funds. At that time, observers predicted the move would face fierce resistance from the most aggressive and political influential Russian banks.
Now, first signs are emerging that the battle for control is reaching its peak, as financial institutions - which control media outlets - are using the press to level unprecedent accusations of wrongdoing. And, the accusations involve top political officials, accused to having favored or covered speculative operations.
Two days ago, a long and detailed article published in the liberal daily "Izvestia" charged that First Deputy Prime Minister Anatoly Chubais received a loan from Aleksandr Smolensky's Stolichnyi Savings Bank (eds: one of Russia's top ten banks) under suspicious circumstances. The newspaper alleged that in February 1996, Stolichnyi Bank extended a five-year, interest-free loan worth about $3 million to the Center for the Defense of Private Property, created by Chubais. The loan was made during the several- months period when Chubais, dismissed from Government, did not hold an official post. Soon after, Chubais, with the backing of a number of powerful bankers, masterminded Yeltsin's successful and against-all-odds re-election campaign.
Chubais' center is reported to have put up no collateral for the loan, the stated goal of which was the "development of civil society." "Izvestia" claimed it has obtained a copy of the agreement, but did not publish a copy of it on its pages. According to the paper, the bank credits were allegedly used to speculate on the lucrative Russian treasury-bill market (GKO). And, citing the journal "Demokratizatsiya," "Izvestia" also said that the Russian Center for Privatization, which Chubais had long coordinated, received more than $100 million in recent years from international financial organizations.
"Izvestia" also claimed that Chubais subsequently helped Stolichnyi win a post-presidential election competition to acquire Agroprombank, which, since Soviet times had the best developed, nationwide network of branches. The article implied that Chubais' contacts with international financial organizations helped Stolichnyi participate in programs run by the European Bank for Reconstruction and Development and the World Bank.
The formerly pro-government "Izvestia" followed up its attack on Chubais with an article published yesterday and signed by the same authors strongly criticizing another major Russian bank, Menatep, and its alleged government patrons, such as Central Bank Chairman Sergei Dubinin, of wrongdoing in obtaining and using budget funds.
Some analysts believe the umprecedent editorial line of "Izvestia" is related to the recent election of a representative of a third top Russian financial institution, Oneksimbank deputy chairman Mikhail Kozhokin, as chairman of the paper's board of directors. Oneximbank became an important shareholder of "Izvestia," following a highly public and vociferous standoff between the paper's editors and the former majority shareholder, oil giant LUKoil. The oil company is considered to be close to Prime Minister Viktor Chernomyrdin.
Oneximbank President Vladimir Potanin, who held the post of first deputy Prime Minister from August 1996 to March 1997, was considered by many Moscow observers close to Chubais. During the period Potanin held office, Chubais was serving as head of Yeltsin's administration.
A senior associate of the Moscow Carnegie Endowment for International Peace, Sergei Markov, told RFE/RL that Potanin seems to have recently turned against the government. Markov noted that Oneksimbank lost a bid to acquire one of Russia's more desirable outlets, the Sibneft oil company in May.
He also noted that last week, Oneximbank failed to install the head of one of its affiliates, Andrei Vavilov, president of MFK, on the board of directors of Russia's natural gas giant Gazprom.
Gazprom management, reportedly backed by Chernomyrdin, fought off an attempt by Oneximbank to secure a seat on the company board.
Shareholders elected eleven board members at the company's annual meeting. Most of them were already members of Gazprom's board and represented either the management or the government. The incumbent chairman of the board, Rem Viakhyrev, a fierce opponent of restructuring the company and loosening restrictions on trade of its shares, also was re-elected.
Oneximbank had hoped to secure a key swing vote on the board between government and Gazprom management. An observer wishing to remain unnamed told our correspondent that Oneximbank's Potanin was sure to have won the endorsement of Chubais and other government members to bring in Vavilov. But, after a night of negotiations, Vavilov was defeated. Vyakhirev said the management had sought to avoid a showdown at the meeting by cutting a deal with shareholders ahead of the vote. But, he added, that talks had led nowhere, and that the management had been able to prevail without an agreement.
Vavilov is a former deputy minister of finances and is considered a very controversial figure. Establishing a list of commercial banks authorized to handle budget funds was reported among his duties as deputy Finance Minister.
The government, which owns 40 percent of Gazprom, nominated Vavilov's successor at the Finance Ministry, Aleksei Kudrin, for a seat, with the other three representatives from the government and the presidential administration. Gazprom, controlling one-third of all known Russian gas reserves, is potentially one of the world's more valuable companies.
Markov said following this last drawback, Oneximbank possibly decided to prove that it is stronger and more independent that other players.
According to Markov, Chubais, who previously inspired the government's authorization to distribute budget funds through commercial banks, and other government officials are now determined to put into force Yeltin's decision to stop the practice and create a Federal Treasury. Critics have said the old practice has allowed a closed circle of banking insiders to accumulate huge state funds and speculate on financial markets at the expenses of citizens. But, Markov said, the attempt to put the interest of banks behind the state's interests is fiercely opposed by the banks. Another event taking place yesterday seems to confirm Markov's observations. Central Bank Chairman Sergei Dubinin told reporters that a Central Bank inspection recently discovered that two commercial banks authorized to handle state funds had defrauded the budget of more than $400 million. Dubinin said that, according to new regulations, details about those banks, which he did not name, have been sent to the Procurator-General's Office for investigation.
One of Moscow's leading dailies, "Kommersant daily," alleged, in a front page article published today, that last February a military complex company producing Mig fighters obtained authorization from Potanin, then first deputy prime minister, to handle more than $200 million from state funds. The paper said the operation had been overseen by then finance ministry representative Vavilov. It also alleged that it was one of the two illegal operations mentioned by Dubinin. Observers say the "Kommersant Daily" article may be a first response to the "Izvestia" publications. "Kommersant" is close to Stolichny bank, now called SBS Agro.
A second article today, this time in the daily "Segodnya" claims another top bank, Unikombank, also defrauded the budget of more than $220 million.
Asked by RFE/RL to comment on the "Izvestiya" report saying he had used his connections to help Menatep gain permission to handle more state funds than any other bank, Dubinin avoided a direct answer, but said that he is not a lobbyist.
Neither Chubais, Dubinin, nor the government's press service or Stolichny and Menatep banks have replied officially to the accusations. Several Moscow observers wishing to remain unnamed told our correspondent it is unlikely that anyone will file suit on the issue. But they said concerned people and institutions are more likely to continue their fight publicly, using the media outlets they influence, before privately trying to settle the dispute.
A new round of sales of government stakes in several Russian oil companies is now beginning. And the biggest privatization event of the year, centered on the best of the last government-owned, integrated oil company Rosneft, has been announced. Banks and companies are preparing for the new division of state property. The "Kommersant" article says it is unlikely banks will drop their political interests, but that the Yeltsin decision in March is likely to lead to a change of tactics, and the political balance that has allowed the influence of banks to grow.