Harvard caught up in Moscow row

Allegations of doubtful practices and ill-judged speculation are two a penny in Russia, where corruption has thrived since the collapse of the Soviet Union.

Boris Yeltsin has pledged to clean the place up - a commitment echoed yesterday by the arrest of a former deputy defence minister and chief military inspector, Konstantin Kobets, on bride-taking charges.

But even the most hardened Moscow cynic will have raised a small eyebrow at the latest claims to surface here - that staff from Harvard University no less, that emblem of respectability and good practice, have been abusing their positions as advisers to the Russian government and misusing funds.

These amount, it should be stressed, only to allegations, like most Russian scandals. But according to the Wall Street Journal and The Boston Globe, the US government has suspended a $14m contract with the university after a preliminary investigation found that two staff had "abused the trust of the United States government by using personal relationship for private gain."

Since Russia's economic reforms began in 1992, Harvard scholars have been advising the Russians on how to manage the transformation from a centrally planned to a free-market economy, a task that has included explaining how the capital markets function.

According to the newspapers, the US Agency for International Development (USAID) has written to Harvard to say that two employees - the general director of the world-renowned Harvard Institute for International Development, Jonathan Hay, and the project director, economics professor Andrei Shleifer - went beyond that brief.

The agency has reportedly claimed that Dr Hay "used resources financed by USAID to support the private investment activities" of his colleague, Dr Shleifer's wife.

Support staff, paid by the American government, have been buying and selling bonds, compiling information about tax, and tracking investments.

The two men's Washington-based lawyer, Michael Butler, said the USAID's letter was "wrong in its conclusions, wrong in its assumptions, inaccurate in its facts and foolish in its rhetoric."

The case is certain to run and run, doubtless spawning law suits as it goes.

But for Russians it is, at the very least, a reminder that all is not always as rosy as it sounds either in the cradle of democracy or in the stratosphere of its academia.