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Published: Sunday, 3/28/2004

Improper use of $4.8B IMF loan probed

“You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”

Authored by Abraham Lincoln, this principle is still novel in Russia. It is now its president's turn to learn the meaning of it.

Despite the “re-election” of President Vladimir Putin to a second term, he is running head on into serious problems with the West.

On the eve of the re-election circus in Russia, U.S. Rep. Dan Burton and Mike Pence wrote a letter to Secretary of State Colin Powell expressing their concern “over the recent developments with regards to Russia's democratic direction and progress.

“The apparently selective use of the rule of law, along with a new predominance of Russian military-intelligence officers or ‘siloviki' in key positions of power, have hampered the ability of Russia to continue to prosper under a free democracy.”

The two lawmakers cite an example that hits close to home — Mr. Putin's failure to cooperate with the Russian government's investigation of the “improper use” of the $4.8-billion IMF loan that was meant to prevent the financial crisis that hit Russia in August, 1998, but got stolen after money was transferred to a Russian central bank account. It is yours and my money we are talking about because the bulk of the loan comes from U.S. taxpayers' pockets.

Several key figures in former President Boris Yeltsin's entourage, including then-Prime Minister Sergey Kirienko, are primary suspects in the case.

Luckily, this is a presidential election year not only in Russia but in the United States. The Bush administration is almost certain to react to the letter and put pressure on Mr. Putin to cooperate with the investigation. To make sure it's understood in the Kremlin that Washington is talking business, the congressmen are even citing the number of the case with the Office of the Prosecutor General of the Russian Federation: 18/221050-98.

However, it may take more than words to make Mr. Putin cooperate.

Just like Mr. Kirienko, the siloviki were unleashed by the Yeltsin administration with a specific function in mind.

Mr. Kirienko presided over the disappearance of the IMF loan and a resulting default on domestic debt, which robbed millions of their savings and enriched a few. The loot was estimated at $21 billion, including the IMF loan. That's about a third of Russia's GDP — more than enough for a comfortable retirement.

To make sure they don't end up behind bars, the key players of the Yeltsin administration essentially hired siloviki to guarantee their freedom from prosecution. There is a good chance they used the IMF money to do so.

Handpicked by Mr. Yeltsin as his successor, Mr. Putin appoints siloviki to key government positions and trains them after his political opponents while shielding the perpetrators of the largest theft in the history of the post-Soviet Russia.

For example, he throws in jail oil magnate Mikhail Khodorkovsky on politically motivated charges of embezzling $1 billion. At the same time, he stalls investigation of the theft of almost five times as much money.

Moreover, Mr. Putin effectively absolved Mr. Kirienko by making him his plenipotentiary representative in one of Russia's federal districts.

There is no way Mr. Putin is going to cooperate with the investigation in good faith. Kremlin lies will inevitably multiply, but so will the number of people who can't be fooled anymore.



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