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Russia: Lawmaker Questions U.S. Interest In Corruption

  • Andrew Tully



Washington, 23 September 1999 (RFE/RL) -- A member of the Russian state Duma is skeptical about America's sudden interest in financial corruption in his country which he says has been around for so long.

Yuri Shchekochikhin, who is also the editor of the Moscow newspaper "Novaya Gazeta," testified Wednesday before a Congressional hearing on Russian corruption.

American law enforcement officials are investigating whether Russian businessmen, criminals and senior officials "laundered" as much as $15 billion through the Bank of New York. Recent American news accounts say some of that money may have included aid from the International Monetary Fund.

"Money laundering" is transferring illegal profits through many bank accounts until the source of the money cannot be traced, and the funds appear to be legitimately earned.

Shchekochikhin said recent American news reports about Russian money laundering and other corruption remind him of a "bombing attack."

Shchekochikhin said: "The constant publications in the press here, and releases, remind me of a bombing attack. ...All of this happened a long time ago. ...America knew about this. ...Why only today?...I want to warn you about making -- about coming to conclusions about the money-laundering situation in the Bank of New York."

Shchekochikhin testified on the second of two days of hearings by the House of Representatives Banking Committee, which plans to hold further hearings on Russian corruption in the coming weeks.

On Tuesday, U.S. Treasury Secretary Lawrence Summers testified before the same committee that Russia's problems with financial corruption should not drive the United States to abandon the Russian people. He did say, however, that Washington should be stricter in its financial dealings with Moscow.

And the secretary said the administration of U.S. President Bill Clinton supports the decision by the International Monetary Fund to loan Russia money that can be used only to repay existing debt to the IMF.

After Summers spoke, two members of the Nixon Center, a conservative think tank, testified that the Clinton administration was at least in part to blame for the current scandal.

Paul Saunders and Dmitri Simes said the administration had been aware for a long time that Russian banks were stealing public money, and yet it pushed for billions of dollars in IMF loans to Russia anyway.

Wednesday's hearing began with testimony from James Robinson, the U.S. assistant attorney general in charge of the Justice Department's Criminal Division.

Robinson said American law-enforcement agencies need more resources to fight the illegal flow of Russian foreign money into the United States. He said such "capital flight" threatens to corrupt Russia's financial institutions.

The assistant attorney general said the meetings last week in Washington between U.S. and Russian law-enforcement officials about the money-laundering investigation was "productive." Hours later, Russian Foreign Minister Igor Ivanov echoed that. Speaking with reporters at the White House, Ivanov said Moscow has agreed "to fully cooperate" in the investigation with the United States and all other nations involved.

Also testifying at the House Banking Committee hearing on Wednesday was Thomas Renyi, chairman of the Bank of New York. He stressed that his institution has not been formally charged with wrongdoing. But Renyi conceded that the bank was slow to recognize the questionable flow of money through one of the accounts involved in the scandal because the holder of the account was married to one of the bank's executives.

Otherwise, Renyi said, the Bank of New York acted responsibly and according to accepted practice, and he said it has instituted new procedures to prevent similar trouble in the future.

Meanwhile, a parallel Congressional investigation into Russian corruption is opening in Washington. Deputy Secretary of State Strobe Talbott, the second-ranking diplomat in the Clinton administration, is scheduled to testify Thursday (today) about the scandal before a hearing of the Senate Foreign Relations Committee.

Also on Thursday, U.S. Attorney-General Janet Reno and Summers, the treasury secretary, are expected to announce a new joint initiative of the Justice Department and the Treasury to fight money laundering. Robinson mentioned the program during his testimony Wednesday, but declined to give details.

During Wednesday's congressional hearing, Representative Jim Leach, the chairman of the Banking Committee, asked Shchekochikhin why he believes so much money is being siphoned out of Russia. The Russian legislator replied by recalling the end of World War II, when Charles DeGaulle became president of France. DeGaulle, he said, asked the French to put all their money into French banks, and promised that "not one centime will be lost."

Shchekochikhin said there is no one in Russia today who can make the same assurances to the Russian people.

Therefore, he said, Russians are eager to get their money out of the country.

In his words: "And of course lack of trust in the government is the first or the foremost reason."

The Russians do not distrust only their own leaders, Shchekochikhin said. They also have become disillusioned with the United States, at part because of its conduct in Vietnam, in Iraq, and in Yugoslavia.

"Well, right now, the hope for America in Russia is gone," says Shchekochikhin.

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