Moscow, 21 July 1997 (RFE/RL) -- Who does Russia's Central Bank turn to for inspection of the books of the most controversial banks in the country? A Connecticut Yankee named Robert Porter.
A veteran of the Federal Reserve Bank of Boston, Porter is head of the Bank Review Unit (BRU), a ten-person team of bank supervisors that is advising the Central Bank on problems that have hit the headlines of the Russian press this month.
Controversies and conspiracies involving Russia's leading commercial banks are nothing new. A few days ago, however, the Central Bank chairman, Sergei Dubinin, broke a long silence to accuse high-ranking officials of prominent banks. He said they had unlawfully diverted several hundred million dollars of federal budget funds through a chain of banks, generating windfall profits, and possibly even depriving the intended beneficiaries of the money.
Officials who are under investigation include Vladimir Potanin, the chief executive of Uneximbank, the leading commercial bank in Russia, and Andrei Vavilov, head of MFK investment bank, an affiliate of Uneximbank. MFK recently announced a plan to merge with Renaissance Capital, a Moscow-based investment house run by Boris Jordan, an American financier.
Potanin was first deputy prime minister, and Vavilov first deputy finance minister at the time the alleged diversion occurred. They deny wrongdoing, and claim they observed government orders and rules.
American and international bankers are having to puzzle through the allegations, because Potanin and Vavilov are seeking thousands of millions of dollars in equity, loan, and bond financing on American and European markets. This is to enable them to capture control of major new shareholdings of state companies to be privatized in the coming weeks.
The treasure-trove of data Porter and his Bank Review Unit have amassed is something American bankers would give much to see right now. But Porter say he cannot talk about the condition of any bank. The World Bank, which -- with the European Bank for Reconstruction and Development, the Japanese government, and the British Know-How Fund -- funds Porter's BRU, confirms that the BRU's data on Russian banks are known only to the Central Bank.
Porter cautions Western bankers against trying to gauge the condition of Russian banks from what he calls "simplistic ratios." He says balance-sheet analysis of bank costs or bank income may produce misleading pictures of the soundness of the institutions.
According to Western analyses, the ratio of costs to assets is unusually high among Russian banks. Porter says these figures are difficult to interpret.
Since he left the Federal Reserve, Porter has spent 16 years abroad, advising mostly Middle Eastern and African countries. The difference between bank regulation there and in Russia today, he says, is one of scale and speed.