-Caveat Lector- Dave Hartley http://www.Asheville-Computer.com http://www.ioa.com/~davehart Opening Statement of Rep. Ron Paul Hearings on Russian Money Laundering House Committee on Banking and Financial Services September 22, 1999 http://www.house.gov/paul/committeework/bankingtrans/99_9_22.htm Chairman Leach, ranking member LaFalce, thank you for holding a hearing so quickly in response to the reports of scandal regarding the Bank of New York and allegations of laundering of International Monetary Fund payments to Russia. An examination of the objective facts illustrates clearly that our current approach regarding money laundering has failed. It also questions the wisdom of more unfunded government reporting requirements--and attacks on consumer privacy such as the Know Your Customer proposal (still required under the Federal Reserve�s compliance manual of the Bank Secrecy Act despite overwhelming public opposition). Overwhelmed with millions of bank forms required to detect money laundering, U.S. law enforcement officials did not act for months on British leads (initiated by a kidnapping charge) of money laundering at the Bank of New York. The bank did not file any Suspicious Activity Reports on the questionable accounts until after they were notified that the accounts were under law enforcement investigation. Given that the IMF claims not to know what happened to the money and admits that the Russian central bank lied to them, we should not allow the IMF to hide behind the shallow defense that there is no evidence of wrongdoing. When using taxpayer funds, we must demand a higher standard: IMF, World Bank and U.S. Treasury officials should provide evidence that no public funds were siphoned off and that no officials profited from the conversion of the high-yield Russian GKO bonds into dollars just days before the default or from other public funds. When Allan Meltzer, head of the congressional commission on the IMF, asked recently whether the use of IMF funds could be traced, Joint Economic Committee staffer Chris Frenze replied that someone "would have to be rather an incompetent criminal to conduct their affairs in such a way that it could be traced." We cannot justify taxpayer money going to an organization with such a lack of accountability. In the (Russian) St. Petersburg Times ("Skuratov Says IMF Billions Sold on the Sly," September 17, 1999), Russian Prosecutor General Yury Skuratov charged in an interview that the IMF money funded profitable insider trading. He quoted from a memo President Yelstin refused to accept, "An analysis of the Central Bank�s use of the account where the IMF stabilization loan was deposited showed that $4.4 billion was sold from that account between July 23, 1998 and August 17, 1998. Of that money, $3.9 billion was sold directly to Russian and foreign banks, bypassing the trading session at the Moscow Interbank Currency Exchange." He claimed only $571 million went to support the ruble. I am concerned that Treasury Secretary Larry Summers cites Anders �slund, senior associate at the Carnegie Endowment for International Peace, given his controversial views on the benefits of encouraging bribery! He clearly states in his article "Russia�s Collapse" in the current issue of Foreign Affairs, "As Andrei Shleifer of Harvard and Robert W. Vishny of the University of Chicago have observed, the best way of fighting corruption is encouraging competition in bribery [emphasis added]. August�s financial crisis was a logical outcome of the oligarchs� war, as they tried to maintain their high and dubious incomes by any means. In the end, the Russian state could no longer deliver enough cash to satisfy their ravenous appetites. The crash radically reduced the amount of money that could be made on the state--and thus the power of the corrupt businessmen." George Washington University professor Janine Wedel has warned about the appearance of corruption surrounding Andrei Shleifer heading the Harvard Institute for International Development ("The Harvard Boys Do Russia," the Nation, June 1, 1998) and the effects of collusion in her book Collision and Collusion: The Strange Case of Western Aid to Eastern Europe 1989-1998. It seems the best course for avoiding any perception problems would be more transparency of the activities of U.S. officials. Our IMF/Treasury policies are not only a waste of taxpayer dollars, they are often counterproductive. "German officials both in and out of office are infuriated by the manner in which the U.S. Treasury rewrites history to paper over its own colossal blunders mainly to service financial interests on Wall Street," writes Klaus C. Engelen, "American Arrogance" in the current issue of The International Economy. He quotes J�rgen Stark, deputy to the Bundesbank president, as confronting IMF Managing Director Michel Camdessus, "I do not concur with the argument that exceptionally high IMF financing is justified in financial crisis situations with systemic or contagion risks...Starting with the Mexican crisis in 1994/95, [IMF financing policy] might have contributed to moral hazard and encouraged reckless financial behavior, both by the private sector and by governments." Economists Kurt Schuler and George A. Selgin ("Replacing Potemkin Capitalism: Russia�s Need for a Free-Market Financial System, Cato Institute Policy Analysis No. 348, June 7, 1999) point out, "Approaches that do not eliminate Russia�s socialist monetary institutions are unlikely to put the monetary system on a sound basis for the long term" and explain that the Russian central bank, one of the world�s oldest, directs credit to particular favored firms though the banking system and that past loans to the government served as a drug helping to maintain an unhealthy system. We need to stop funding socialist institutions impeding economic growth and not "encourage competition in bribery." I agree with the Investor�s Business Daily editorial on September 1, 1999, "Get Rid Of The IMF," when they said, "The only way to stop [the IMF] from sucking up scarce resources to waste on favored nations is to end it. Some in Washington advocate reforming the IMF. But it�s useless to reform an outfit with such a poor record. Abolish it now." Passage of HR 1147, the Bretton Woods Sunset act is important and urgently needed as the best way to prevent more corruption. 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. 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