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Russia: IMF Again Faces Money-Laundering Probe

The International Monetary Fund (IMF) is having a recurring nightmare. Last year, an audit by a prestigious accounting firm cleared the Russian central bank of involvement in a suspected scheme to use Swiss banks to launder billions of dollars that the IMF had loaned to the Russian central bank. Now a Swiss investigator says he is still looking into the matter. RFE/RL's Andrew F. Tully in Washington reports that the IMF is baffled that the case has not been laid to rest.

Washington, 27 July 2000 (RFE/RL) - A year ago, the International Monetary Fund (IMF) thought it had disposed of a major embarrassment -- the suspected laundering of billions of dollars that it had loaned to the Russian government.

The international accounting firm PriceWaterhouseCoopers had concluded that the Russian central bank did not mishandle the money. But now a Swiss investigator says he is still looking into the case.

The investigator, Laurent Kaspar-Ansermet, has said only that he is conducting the probe and can say no more without further investigation. But on Wednesday, an American newspaper published an article quoting from a letter Kaspar-Ansermet sent to banks in southern Switzerland about his investigation.

The letter asked the banks for help in determining which of their accounts may have been used for moving $4.8 billion that the IMF had disbursed to the Russian central bank in July 1998.

According to The New York Times, Kaspar-Ansermet's letter said the $4.8 billion was believed to have been deposited in one of the accounts on 14 August 1998. At about the same time, the letter says, nearly $7 billion was transferred out of the same account to banks in Britain, Australia, Switzerland, and the U.S.

Money laundering is the criminal practice of transferring illegally earned funds through many bank accounts until its source appears legitimate.

On Wednesday, the IMF's chief spokesman, Thomas Dawson, was asked about the Swiss investigation during a briefing at the fund's Washington headquarters. Dawson said the IMF is puzzled that the issue is being raised again.

"Many of these accusations are precisely the ones that the PriceWaterhouse report, I believe, conclusively refuted."

Dawson said there are several inaccuracies in the prosecutor's letter. They include the date of transactions between the IMF and Russia's central bank and the naming of a bank that Dawson said appears not even to exist.

"There were no disbursements that in any sense matched the disbursements that supposedly took place in what is in the prosecutor's letter and has been referred to in press reports over the last couple of weeks."

The IMF spokesman stressed that the IMF has not been contacted by Swiss investigators or other authorities looking into the suspected money laundering. He made it clear that the fund was not disregarding the Swiss investigation. But he said the IMF is puzzled nonetheless.

"So we have some difficulty what these accusations are. We will look at all accusations, take, you know, take them seriously, but thus far in terms of specifics -- names, dates, numbers that have been mentioned -- we haven't been able to find anything...Those that we can respond to, we don't believe are true. And those that we can't respond to we will try to take a look at. It doesn't -- quite frankly, it doesn't seem to hold together."

Victor Yasmann, a specialist in corruption at the American Foreign Policy Council, a Washington think-tank, told RFE/RL that he has no doubt that the audit by PriceWaterhouseCoopers was conducted properly. But he wondered exactly what the accounting firm had been asked to look for. He noted that different directives for an audit can lead to different outcomes.

In any event, Yasmann said, it is not surprising that the Swiss authorities are still investigating the matter. He noted that Kaspar-Ansermet has recently complained that he has not received what he believes to be appropriate cooperation in his investigation from governments linked to his investigation, including the U.S.

"The Swiss are not happy with the level of cooperation they've received in their investigation. And there are charges that all parties are leveling at each other. And it's certainly premature to just say the matter is dead. It's not dead."

The $4.8 billion IMF disbursement to Russia was designed to increase the cash reserves of Russia's central bank and strengthen the ruble. But the Russian currency collapsed anyway in August 1998.

At the time, there were suspicions that the Russian central bank had misused the IMF funds. So Russia and the IMF commissioned PriceWaterhouseCoopers to audit the central bank. The audit cleared the central bank of wrongdoing in handling the money, but it did find that the bank had misled the IMF over the size of its foreign exchange reserves for a brief period in 1996.