-Caveat Lector-
>From www.security-policy.org/papers/1999/99-C94.html
> Publications of the Casey Institute
> of the Center for Security Policy
> No. 99-C 94
>
> ------------------------------------------------------------------------
> PERSPECTIVE
> 1 September 1999
>
>
> Message to Wall Street and Pennsylvania Avenue: Bank of New York's Russian
> Debacle is but a Symptom of a Larger Problem
>
> (Washington, D.C.): With breath-taking speed, the scandal described by the New
> York Times as "one of the biggest money-laundering operations ever unearthed in
> the United States" is expanding with implications for the future position of a
> major U.S. commercial bank, the presidential election prospects of Vice
> President Al Gore and the Kremlin's relationships with the United States, the
> International Monetary Fund and other benefactors.
>
> The Clinton Administration is in a desperate damage-control mode. Yesterday,
> Treasury Secretary Lawrence Summers was reduced, it seems, to echoing House
> Banking Committee Chairman Jim Leach's (R-IA) recent admonition that the U.S.
> should not support future IMF disbursements to Russia "without adequate
> safeguards to assure that any funds disbursed are used properly (and) without
> adequate accounting for the previous use of funds." The question now is: Will
> the next shoe to drop, in the absence of these and other "safeguards," be one
> that affects (literally) a host of American equities, via the Nation's capital
> markets?
>
> A Bill of Particulars
>
> A recap of some of the relevant highlights of the current drama, which began
> last month with the publication of reports that the Bank of New York (BoNY) was
> suspected of laundering at least $4 billion -- and perhaps as much as $10
> billion -- in funds possibly tied to Russian organized crime and/or top Kremlin
> officials and their associates, includes the following:
>
> •According to various reports, the BoNY account maintained by the Russian firm,
> Benex Corporation, alone saw over 10,000 transactions involving some $4.2
> billion between October 1998-March 1999. Law enforcement and other U.S.
> officials, moreover, are currently said to be investigating thirty-three
> companies that have done business with the bank to determine whether any others
> have engaged in suspicious Russian-related financial activity.
>
> •The misappropriation of taxpayer-funded aid flows to Russia from the
> International Monetary Fund and the U.S. Agriculture Department has also been
> alleged. While both agencies have vehemently denied such charges, the IMF has
> admitted that monitoring internal disbursement of aid flows has proven to be
> more challenging than it previously anticipated. In fact, according to a Wall
> Street Journal article of 25 August, investigators have identified at least $200
> million in IMF funds which surfaced in a Russian Channel Islands account for a
> short period before it was diverted to an unknown location. It is impossible to
> say with certainty how much of the more than $20 billion in Western taxpayer
> funds that the IMF has lent Russia since 1992 has met a similar fate.
>
> •Russian organized crime syndicates are not the only entities suspected of
> laundering funds through the Bank of New York, and perhaps other Western
> financial institutions. President Yeltsin's political "families" -- the latter
> prominently including a number of former apparatchiks-turned-"oligarchs" -- have
> also been implicated. Of particular concern is the apparently deliberate leaking
> of closely-held Russian plans to devalue the ruble and default on some $40
> billion in GKO debt. Insider-dealing seems to have contributed to the
> accelerated movement of capital out of Russia that immediately preceded this
> action taken on 18 August 1998.
>
> Importantly, much more appears to be in jeopardy than the interests of an
> American commercial bank and U.S. and multilateral financial institutions.
> Consider the following recent revelations that indicate the U.S. capital markets
> are also being penetrated by "bad actors"(1):
>
> •A U.S. company named YBM Magnex -- which has been linked to the same
> Russian-owned entity, Benex Corporation, that has been accused of facilitating
> the money transfers via its Bank of New York account -- was once publicly traded
> on the Canadian stock exchange. According to a 19 August New York Times report
> on the matter, American officials believe that the YBM case "was one reflection
> of the success of Russian organized crime in infiltrating Western financial
> markets."
>
> •On 30 August, USA Today reported a troubling -- and possibly related -- story
> of Bank of New York assistance to another questionable Russian institution,
> Inkombank, in winning regulatory approval to sell the Russian bank's stock in
> the U.S. equity market via American Depository Receipts (ADR's). It is said to
> have done so at a time when even Russian regulators had the bank under
> investigation.
>
>
> According to USA Today, the bank avidly promoted Inkombank's 1995-96 bid to sell
> bank shares to U.S. investors through the ADR mechanism. According to Russian
> investigators cited in the article, Inkombank had "inflated its income in 1995
> by tens of billions of rubles" and had "violated numerous laws and accounting
> standards." Incredible as it may seem, the bank still received permission to
> trade its ADR's on the U.S. equity market in 1996 -- even though regulators in
> Moscow were not the only ones aware of the apparent scam: The SEC and the
> Federal Reserve Board reportedly also received notice of these suspected
> misrepresentations, as well as English translations of Inkombank's financial
> reports. The bank was declared insolvent following the Russian financial
> collapse of last year.
>
> •According to the New York Times of 29 August, investigators suspect Semyon
> Mogilevich, a shadowy Russian operative who Western intelligence sources claim
> is "a major figure in Russian organized crime," is a primary player in the
> money-laundering scandal. Mogilevich is reportedly engaged in, among other
> activities, international arms trafficking. As the Times noted: "An F.B.I.
> report on Russian organized crime said that when the Soviet Union withdrew its
> military forces from East Germany, many Russian generals sold their weapons to
> Mr. Mogilevich, who in turn sold them, at much higher prices, to countries like
> Iraq, Iran and Serbia."
>
> The Gore Policy Toward Russia's Systemic Corruption: 'Don't Ask, Don't Tell'
>
> The Center for Security Policy and its Casey Institute have long been concerned
> about the apparent, if (in some cases, at least) unwitting, collusion between
> the Clinton-Gore Administration and corrupt elements in both official and
> unofficial circles in Russia.(2) The now-unfolding scandal only serves to
> reinforce this concern. The difference is that, today, it is a widely shared
> apprehension.
>
> For example, in response to a condescending call published this week in Newsweek
> by Deputy Secretary of State Strobe Talbott -- one of the principal architects
> of the Clinton Administration's failed Russia policy -- for the world to "calm
> down," long-time Washington Post foreign correspondent and columnist David
> Ignatius wrote in today's edition:
>
>
>
> The strategist Albert Wohlstetter(3) liked to observe that when policymakers
> talk about a "calculated risk," it usually means they haven't done any
> calculation. What they're really describing is a simple gamble, a roll of the
> dice. Wohlstetter's remark is a useful rejoinder to recent characterizations of
> the Clinton administration's policy toward Russia as a calculated risk -- a
> reasoned bet that the benefits of economic reform would outweigh the dangers of
> corruption....
>
> It would be more reassuring if these folks told the truth: Our policy toward
> Russia has been a crap-shoot, and growing evidence -- symbolized by recent news
> reports on the alleged $10 billion Russian money-laundering operation through
> the Bank of New York -- suggests that it hasn't worked....The bottom line is
> that Clinton and Gore had lots of warnings about Russian corruption under
> Yeltsin's banner of reform. And the question continues to be: Why didn't the
> Administration do more to stop it? (Emphasis added throughout.)
>
> The 'Culture of Corruption'
>
> In addition to strengthening an already robust Russian "moral hazard" trap --
> Russia's financial and political elite are well-versed in capitalizing on
> Western bailouts -- the kind of non-transparent official relationship epitomized
> by the secretive Gore-Chernomyrdin sessions has served to encourage Russia's
> thriving system of corruption by refusing to penalize corrupt financial and
> political behavior.
>
> This week's edition of the Economist gives a name to this sort of relationship
> and the behavior it spawns: a "culture of corruption," a culture, unfortunately,
> that extends far beyond Russia. In a powerful editorial, this respected journal
> declared:
>
>
>
> Far from "civilizing" the wreckage of the Soviet economy, economic transactions
> between Russia and the West are running the risk of corrupting the Western side,
> if only by forcing it to wink at practices which would be outlawed in more
> established economies. There is a particular irony in the fact that one western
> party is the IMF, whose stated purpose is to propagate virtues of sound economic
> policy and good governance. But if the IMF's integrity has been compromised, the
> cause does not lie in its own sloppy controls; it lies in the collusion of the
> American and Russian governments to cover up failures and press the Fund into
> treating Russian with greater generosity than its economic performance would
> warrant. (Emphasis added.)
>
>
>
> The Bottom Line
>
>
>
> The multi-billion-dollar scale of this latest financial scam by global "bad
> actors" in the U.S. financial markets calls into question the SEC and other
> official regulators' ability to monitor effectively transactions involving
> dubious foreign entities -- let alone their ability to protect adequately U.S.
> investors and depositors, to say nothing of the national interest. Among the
> "follow-the-money" questions which should now be asked are: What were the
> precise sources of cash profits being funneled through U.S. institutions? Which
> specific individuals and/or enterprises were involved? What policy and
> procedural changes need to be made to prevent a repetition of such misconduct?
>
> It is heartening that Rep. Leach's Banking Committee will shortly be holding
> hearings (at this point scheduled for September 21-23) at which, it is to be
> hoped, these and related questions about the emerging scandal and its
> implications will be addressed. The Casey Institute urges the Senate Banking
> Committee -- and other relevant panels on Capital Hill (especially those with
> oversight responsibility for arms trafficking and proliferation matters) -- to
> convene their own companion hearings on this long-neglected subject. As Steve
> Forbes (the 1994 recipient of the Center for Security Policy's "Keeper of the
> Flame" award) observed yesterday, Vice President Gore should properly be among
> those high-level Administration officials (notably, Strobe Talbott, Sandy Berger
> and Larry Summers) called to testify at such hearings.
>
> Such hearings should also give fresh impetus to the need for legislation like
> "The U.S. Market Security Act of 1999" (H.R. 2204), sponsored by House Banking
> Subcommittee Chairman Spencer Bachus (R-AL) and Rep. Dennis Kucinich (D-OH).
> This bill would require an Office of National Security to be established at the
> Securities and Exchange Commission charged with reporting to responsible
> congressional committees on a quarterly basis the names of foreign
> government-connected entities seeking to enter the U.S. capital markets. Even
> though the mandate of such an office would be modest and limited in scope (i.e.,
> a far cry from undesirable capital controls (4)), it would send a needed message
> to global wrong-doers that the United States is, at long last, following the
> money.
>
> - 30 -
>
> 1. For example, the issuance of some $800 million in U.S. dollar-denominated
> bonds and roughly $2.5 billion in yen-denominated bonds by arms dealer Wang
> Jun's China International Trust and Investment Corporation.
>
> 2. For example, see the Center's Decision Brief entitled Clinton Legacy Watch #
> 33: 'See-No-Evil' Security Policy-making (No. 98-D 189, 23 November 1998). It
> stated, in part:
>
>
>
> Today's New York Times discloses that in 1995 Vice President Al Gore chose not
> to be 'bothered with the facts' -- even though they called into question the
> premises of foreign policy initiative in which he and the rest of the Clinton
> Administration had hugely over-invested: a policy of U.S. 'support' for Russian
> 'reformers' led by President Yeltsin and Prime Minister Viktor Chernomyrdin, no
> matter what. As the Times put it:
>
>
>
> "When the CIA uncovered what its analysts considered to be conclusive evidence
> of the personal corruption of Prime Minister Viktor Chernomyrdin of Russia in
> 1995, they sent it to the White House, expecting Clinton administration
> officials to be impressed with their work. Instead, when the secret CIA report
> on Chernomyrdin arrived in the office of Vice President Al Gore, it was rejected
> and sent back to the CIA with a barnyard epithet scrawled across its cover,
> according to several intelligence officials familiar with the incident.
>
>
>
> "At CIA headquarters in Langley, Va., the message seemed clear: The vice
> president did not want to hear allegations that Chernomyrdin was corrupt and was
> not interested in further intelligence reports on the matter. As a result, CIA
> analysts say they are now censoring themselves."
>
>
>
> But the Times report makes clear that the Russians have been making choices for
> years now, many of them seriously wrong. Specifically, under Prime Minister
> Chernomyrdin, the Kremlin embraced crony capitalism with a vengeance -- the
> thoroughly corrupt mutant "market" system that has brought grief to economies
> throughout Asia and, most recently, in Russia itself. In fact, Chernomyrdin
> could have been the poster-child for this practice of self-dealing and
> -enrichment at the expense of the state and its citizenry.
>
>
> Obviously, the highest levels of the Administration -- most especially Vice
> President Gore, Chernomyrdin's interlocutor in a highly secretive joint
> commission -- did not want to change American policy towards Russia in light of
> the thoroughly dishonest character of the government in Moscow. It did not even
> want to know about the Kremlin's dishonesty.
>
>
>
> 3. In 1993, Dr. Wohlstetter was recognized for his innumerable, brilliant
> contributions to U.S. security policy over five decades with the Center's
> distinguished "Freedom Flame" award. For a text of his remarks on that occasion,
> see Aspin, Woolsey Join Center in Honoring Albert Wohlstetter, Winner of the
> 1993 'Freedom Flame' (No. 93-P 81, 21 September 1993).
>
> 4. See the following Casey Institute Perspectives entitled Bipartisan
> Congressional Letter Is Wake-up Call To State Officials Re: Portfolio Security
> Concerns (No. 99-C 88, 4 August 1999); Casey Initiative to Increase Transparency
> Re: Bad Actors' Efforts to Penetrate U.S. Capital Markets Gains Momentum (No.
> 99-C 80, 13 July 1999); A Job for C.F.I.U.S.: Proposed Chinese Buy of U.S.
> Telecommunications Assets Needs National Security Scrub (No. 99-C 75, 3 July
> 1999); and 'Follow the Money': The Next Shoe to Drop on China Scandal Should be
> Its Penetration of the U.S. Bond Market (No. 99-C 57, 13 May 1999).
> ------------------------------------------------------------------------
>
>
> NOTE: The Center's publications are intended to invigorate and enrich the debate
> on foreign policy and defense issues. The views expressed do not necessarily
> reflect those of all members of the Center's Board of Advisors.
>
> Top of Page© 1988-1999, Center for Security Policy
><>< Now, did Al Jr meet with some high level Soviet type during the Kosovo
fiasco who in turn 'helped' wind down the intensity of the conflict? Now,
'why' would Bill Jeff and Al Jr be able to sway the Soviets away from their
traditional ally? ><><
A<>E<>R
~~~~~~~~~~~~~~~
The only real voyage of discovery consists not in seeking
new landscapes but in having new eyes. -Marcel Proust
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
"Believe nothing, no matter where you read it, or who said
it, no matter if I have said it, unless it agrees with your
own reason and your common sense." --Buddha
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
A merely fallen enemy may rise again, but the reconciled
one is truly vanquished. -Johann Christoph Schiller,
German Writer (1759-1805)
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
It is preoccupation with possessions, more than anything else, that
prevents us from living freely and nobly. -Bertrand Russell
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
"Everyone has the right...to seek, receive and impart
information and ideas through any media and regardless
of frontiers."
Universal Declaration of Human Rights
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
"Always do sober what you said you'd do drunk. That will
teach you to keep your mouth shut."
--- Ernest Hemingway
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
Forwarded as information only; no endorsement to be presumed
+ + + + + + + + + + + + + + + + + + + + + + + + + + + +
In accordance with Title 17 U.S.C. section 107, this material
is distributed without charge or profit to those who have
expressed a prior interest in receiving this type of information
for non-profit research and educational purposes only.
DECLARATION & DISCLAIMER
==========
CTRL is a discussion and informational exchange list. Proselyzting propagandic
screeds are not allowed. Substance—not soapboxing! These are sordid matters
and 'conspiracy theory', with its many half-truths, misdirections and outright
frauds is used politically by different groups with major and minor effects
spread throughout the spectrum of time and thought. That being said, CTRL
gives no endorsement to the validity of posts, and always suggests to readers;
be wary of what you read. CTRL gives no credeence to Holocaust denial and
nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://home.ease.lsoft.com/archives/CTRL.html
http:[EMAIL PROTECTED]/
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
To UNsubscribe to Conspiracy Theory Research List[CTRL] send email:
SIGNOFF CTRL [to:] [EMAIL PROTECTED]
Om
