-Caveat Lector-
www.wsws.org
WSWS : News Analysis : Europe : Russia the CIS
What lies behind the corruption scandals in the Kremlin?
By Patrick Richter
10 September 1999
Back to screen version
For over a week, accusations of corruption against President Boris Yeltsin and
his "family" have been mounting. They were unleashed by the almost simultaneous
publication of three articles, which for the first time linked Yeltsin
personally to a series of scandals in Russia.
First, the Italian newspaper Corriere della Sera reported that investigations
had been launched into the granting of credit cards to Yeltsin's family. During
a probe of the Swiss company Mabetex, records were found relating to credit
cards issued to Boris Yeltsin and his daughters, Tatyana Dyachenko and Yelena
Okulova.
Mabetex, which received $335 million worth of contracts for the restoration of
the Kremlin and other government buildings, had transferred millions of dollars
to the private account of Pavel Borodin at a Budapest bank. Borodin is the
director of the department for real estate and services in the Kremlin, and is
considered to be number two after Yeltsin, who is believed to have received a
million dollars in compensation. On the Mabetex balance sheet, the amounts
appeared as "local special expenditures". Under Swiss law, commissions paid to a
foreign official are not subject to taxation, but the name and account number of
the recipient must be shown.
Second, Yeltsin's name surfaced in a series of articles in Switzerland about the
seizure of Boris Berezovski's bank accounts. Berezovski, operating in league
with one of Yeltsin's sons-in-law, is accused of having defrauded the Russian
airline Aeroflot of $250 million.
Third, the New York Times has published reports on nine bank accounts with the
Bank of New York, through which up to $10 billion was laundered for the Russian
Mafia, with Yeltsin's knowledge. Other reports put the total amount of laundered
money at $15 billion. Even IMF funds were alleged to have flowed into the
pockets of the Russian Mafia. According to USA Today, in addition to 12 former
or current Russian cabinet members, Yeltsin and his daughter Dyachenko were
involved.
On September 3, Corriere della Sera published a report listing 24 names and
addresses of Russians at the heart of the Mabetex scandal. Among them were Pavel
Borodin and family, Anatoli Kruglov, the government official responsible for the
lucrative area of customs, and Oleg Soskovez, vice-premier responsible for
building, energy and health until his dismissal in 1996.
Newspapers and press agencies are falling over themselves with new and detailed
articles regarding the close links between Russian politics, business and the
Mafia. Reports are being published describing in detail the obscene wealth of
the new "jet-set Russians", whose Byzantine profligacy is on display at every
exclusive international health resort.
An article by Rudolph Chimelli, headlined "The Last Superpower", appeared in the
Süddeutsche Zeitung August 28. Chimelli describes how the "new Russians"as
Russia's nouveaux riches are calledindulge themselves on the French Riviera.
One of them, Gennadi, orders the most expensive champagne and Beluga caviar at
the beach. But he lacks the famous little ball of 24-carat gold, which, because
of its high specific gravity, sinks when placed in fresh caviar, but stays on
the resinous surface if the product is old."
Chimelli writes that by the end of May, holiday mansions with monthly rents
between 400,000 and 1.5 million francs (US$64,600-$242,350) are already
completely booked. A hotel employee is quoted as saying, Russians and Americans
fought for the most expensive mansions on the Côte d'Azur. In the end the
Russians won, because they are not frightened to overpay, and they rent for four
months."
The waiter at one of the haute cuisine restaurants recalls a meal at which the
diners ordered 23 bottles of Château Margaux 1971, at that time costing 8,000
francs (US$1,300) each. In the Hôtel de Paris in Monte Carlo and in the Hôtel
du Cap in Antibes, the reserves of rare Château Petrus 1985 and precious Romanée
Conti 1983 have dwindledeven at a price of almost $3,250 a bottle".
Although these descriptions throw light on Russian politics since the collapse
of the Soviet Union in 1991, they contain nothing surprising. In the recent
past, especially since the financial crisis of August 1998, detailed reports
have appeared on the extent of corruption and money laundering in Russia. Anyone
who has followed the developments in Russia even marginally, or, like the
Russian population, has experienced events firsthand, knows that this is only
the tip of the iceberg.
After the collapse of the Soviet Union, the IMF, the World Bank and the majority
of Western governments pursued a policy
