Reply #53: Foreign Loans Diverted in Monster Money Laundering?

[UpInArms]

http://www.worldbank.org/html/prddr/trans/julaug99/pgs1...

excerpt:

During an August 21 raid on the Bank of New York, U.S. federal investigators seized the files of Natasha Gurfinkel Kagalovsky, a senior vice president who supervised the bank’s East European division. She and the bank’s vice president in London, Lucy Edwards, were suspended. Ms. Kagalovsky is the wife of Konstantin Kagalovsky, Russia’s representative to the IMF in the early 1990s under Prime Minister Yegor Gaidar’s government. After Gaidar was replaced, Kagalovsky moved to Russia’s Bank Menatep, headed by Russian oil and banking baron Mikhail Khodorkovsky. Menatep snapped up a number of enterprises during Russia’s controversial "loan to share" privatization, including a controlling stake in the country’s second-largest oil company, Yukos. Menatep failed last year amid Russia’s financial crisis (see box on page 16). Kagalovsky is now deputy chairman of Yukos.

Investigators say Menatep and Kagalovsky increasingly are becoming a focus of the investigation. Federal and international law enforcement officials say they are looking into whether Kagalovsky helped construct a byzantine network of offshore corporations that politically connected or mob-linked Russians may have used to siphon hundreds of millions of dollars out of the country. Investigators say that sum may include part of foreign aid and funds pumped into Russia by the IMF to shore up the reeling Russian economy.

Yukos denies that it has been involved in transfer pricing schemes, but oil industry analysts calculate that its subsidiaries effectively lost hundreds of millions in revenue last year by selling its oil to the holding company at bargain rates. Yukos, like all petroleum companies battered by last year’s low world oil prices, itself reported a $79 million loss for 1998. A deal earlier this year scattered the ownership of Yukos’s two oil production companies among six separate offshore firms, from the British Virgin Islands to the windswept Pacific atoll of Niue in the South Pacific.

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Also under the scrutiny of U.S. federal and local investigators is Russian businessman Peter Berlin and his wife, Lucy Edwards. Berlin, British corporate records show, is listed as a director of Benex Worldwide Ltd., the company that kept several of the suspicious accounts at the New York Bank. Benex maintained close ties to Semion Mogilevich the alleged head of Solnetsevo, Russia’s largest organized crime group. Mogilevich has built a $100 million empire from arms dealing, extortion, prostitution, and other rackets. Before submerging in recent years, he lived in Budapest, Hungary, but is thought to have moved to Moscow in recent weeks. Mogilevich allegedly is the principal target of a strike force assembled in early 1998 by the U.S. government. The force is comprised of the FBI, the Treasury Department, the State Department, the Central Intelligence Agency, and the Hungarian Interior Ministry.

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