DATE=8/24/1999
TYPE=BACKGROUND REPORT
TITLE=RUSSIA MONEY LAUNDERING
NUMBER=5-44126
BYLINE=BARRY WOOD
DATELINE=WASHINGTON
INTERNET=YES
CONTENT=
VOICED AT:

/// re-running w/correct the Speaker in first act and 
first line 8th graph from text ///


INTRO: The U-S Federal Bureau of Investigation, the 
Russian state prosecutor, British and Swiss 
authorities, and the International Monetary Fund are 
investigating alleged fraud involving the deposit of 
up to ten billion dollars of criminally obtained 
Russian funds in a New York bank. V-O-A's Barry Wood 
reports the money laundering investigation is likely 
to have far-reaching consequences.


TEXT:  Money laundering refers to the criminal 
practice of taking ill-gotten gains and moving them 
through a sequence of bank accounts so that they look 
like legitimate profits from legal businesses. The F-
B-I is trying to determine if criminal operations were 
behind the deposit over two years of up to ten billion 
dollars of Russian deposits in the Bank of New York.

The bank, one of New York's oldest, has already 
suspended two Russian born women who were in charge of 
developing new business in Eastern Europe. Neither has 
been charged with a crime. One of the women, Natasha 
Gurfinkel Kagalovsky, is married to Konstanin 
Kagalovsky, who was Russia's representative at the 
International Monetary Fund in the mid-1990s.

Ariel Cohen, an analyst on Russian affairs at 
Washington's Heritage Foundation, says the allegations 
are very serious.

            //first Cohen act//

      The allegations involve connections to a major 
      international bank, Menatep, based in Russia and 
      some top people including the former executive 
      director of Russia at the International Monetary 
      Fund, Konstanin Kagalovsky, were also mentioned 
      in the report.


            //end act//

Mr. Kagalovsky is now the vice-chairman of Yukos, a 
major Russian oil company.

News of the investigation first surfaced (last week) 
in the New York Times newspaper. British investigators 
last year alerted U-S authorities to suspicious 
transactions through the Bank of New York's London 
office that was headed by the second suspended bank 
employee, Lucy Edwards. She was born Lyudmila Pritzker 
in Leningrad in 1958. She had married an American, Mr. 
Edwards and emigrated to the United States in 1977.

British officials traced the suspicious deposits to 
Semyon Yukovich Mogilevich, a Russian who Western law 
enforcement officials say is a major figure in Russian 
organized crime. 

There are now suspicions that the Russian central bank 
may have deposited some of the loans it obtained from 
the I-M-F with the Bank of New York. The I-M-F has 
lent Russia about 20 billion dollars, only four 
billion dollars of which has been paid back.

Researcher Ariel Cohen says the current investigation 
will take time to conclude.

            //second Cohen act//

      Listeners need to know this is very difficult 
      and complex investigation. This is not a murder 
      case or a traffic case. This requires what are 
      called forensic auditors to go to work, people 
      with very specific skills. People who know how 
      to read documents and understand accounting 
      rules.


            //end act//

Most Western banks employ experts to watch for 
suspicious transactions that could involve money 
laundering. Bank of New York manager Lucy Edwards has 
reportedly been regarded as an expert on the subject 
and presented papers on money laundering at 
international conferences before she was suspended. 
(signed)



NEB/BDW/PT






24-Aug-1999 18:34 PM LOC (24-Aug-1999 2234 UTC)
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Source: Voice of America
.