IMF loans to Russia sold on sly, alleges Skuratov

YURI SKURATOV, Russia's suspended prosecutor, has given what appears to be the first evidence from Moscow that International Monetary Fund loans were sold on the sly through the Bank of New York.

In an interview with The Moscow Times yesterday, Mr Skuratov claimed that almost $4bn of an IMF bailout was sold by the Russian Central Bank to Russian insider banks instead of being used to stabilise the rouble. Bypassing the main exchange forum in Moscow, the dollars were sold to 18 Russian banks using their accounts at the Bank of New York, he said. The sales took place just before Russia's economy crashed in August last year.

"An analysis of the Central Bank's use of the account where the IMF stabilisation loan was deposited showed that $4.4bn was sold from that account between 23 July and 17 August 1998," Mr Skuratov said. "Of that money, $3.9bn was sold directly to Russian and foreign banks, bypassing the trading session at the Moscow Interbank Currency Exchange (Micex). Only $471m went to support the rouble exchange rate on Micex. Another $100m went for intervention on other [currency] exchanges."

The insider banks used the $3.9bn to convert their rouble-denominated short-term treasury bills or GKOs into dollars, Mr Skuratov said. Days later, Russia defaulted on the bonds, which had been paying yields as high as 200 per cent.

The IMF had put together a rescue package for Russia worth $22.6bn. The first installment of $4.8bn was released on 23 July. Further IMF aid was frozen after the August crisis and resumed assistance is now in doubt because of the scandal at the Bank of New York. US investigators examining alleged money laundering by Russian gangsters through the Bank of New York say the amount is so large they wonder whether the Russian government is behind it.

Mr Skuratov said he prepared a memo for President Boris Yeltsin about how the IMF money was used. But he was unable to present it because he was sidelined after getting too close to the Kremlin while pursuing another corruption investigation.

The Russian Central Bank declined to comment but its chairman before the August crisis, Sergei Dubinin, has said the Finance Ministry, not the Bank, handled the IMF money, all of which supported the rouble.