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Russia `misused World Bank $1.4bn'

ALLEGATIONS that Russia squandered, and even stole, international loans intensified yesterday with a fresh claim of wrong-doing - this time, that it mis-spent more than $1bn of Work Bank funds.

Russia's Audit Chamber added its voice to a growing chorus of concern about the fate of billions of dollars which were lent to Moscow in a vain effort to avert a melt-down, including the first tranche of a $23bn IMF- supervised rescue package.

The chamber, a budget watchdog under parliament, has concluded that the government misused a $1.4bn World Bank loan by channelling the money into its cash-starved budget and into servicing foreign debts, instead of on structural reforms, as intended. A senior official also claimed that an audit of the Russian Central Bank had uncovered "gross violations" of the law.

Although the chamber has a record of criticising the government with little result, it is far from alone. Russia's chief auditor, Venyamin Sokolov, has said that the Central Bank stole or wasted billions of dollars from the IMF - a claim which prompted a call from Tony Blair for an overhaul of the fund and the World Bank.

Russia's procurator-general has also announced an investigation into the bank, saying that preliminary findings suggested irregularities.

The allegations diminish still further Russia's chances of getting any more funds out of the world's lenders. In particular, they will further jeopardise the next $4.8bn instalment of the now discredited rescue package from the IMF. No lesser figure than Helmut Kohl, Boris Yeltsin's best friend (and biggest creditor) in the West, has said that further funds cannot be justified.