DATE=8/31/1999
TYPE=BACKGROUND REPORT
TITLE=KREMLIN SCANDAL
NUMBER=5-44174
BYLINE=PETER HEINLEIN
DATELINE=MOSCOW
CONTENT=

VOICED AT:

INTRO: The Kremlin is attempting to battle back 
against two separate sets of corruption allegations 
making headlines in the Western press.  The charges 
have damaged Russia's international reputation and 
raised questions about future aid and investment. But 
as V-O-A Moscow correspondent Peter Heinlein reports, 
average Russians see the twin scandals as little more 
than "business as usual."

TEXT:  First came an expose in an Italian newspaper 
accusing senior Russian officials, including President 
Boris Yeltsin and his two daughters, of taking 
millions of dollars in kickbacks from a Swiss 
contracting firm.  That was followed by a "New York 
Times" article alleging that as much as ten billion 
dollars may have been laundered through accounts at 
the Bank of New York since early last year.

/// Opt ///

The U-S magazine "Newsweek," citing unnamed United 
States intelligence sources, reports that the C-I-A - 
the Central Intelligence Agency - suspects that a 
reputed Russian organized crime boss is involved in 
the money laundering affair. In this week's edition, 
"Newsweek" says members of Russia's political elite, 
including former Prime Minister Victor Chernormyrdin 
and former economics tsar (chief) Anatoly Chubais, 
sought out the crime boss for his money-laundering 
expertise.

The "Segodnya" newspaper, owned by anti-Kremlin media 
baron Vladimir Gusinsky, followed up on the kickback 
allegations.  The paper carried a front-page interview 
with a Russian investigator Tuesday saying he had 
evidence that 90-percent of the published bribery 
allegations were true.

/// End opt ///

But the Kremlin, clearly stung by the flurry of news 
reports, has gone on the offensive, bringing out a 
number of prominent figures to counter the charges. 
Kremlin property manager Pavel Borodin, in a rare 
interview with a French newspaper, said President 
Yeltsin was convinced the media barrage was part of a 
well-orchestrated plot against him. 

Another Kremlin loyalist, oil baron Mikhail 
Khodorkovsky, told a radio interviewer the money 
laundering charges were both malicious and absurd.

            /// KHODORKOVSKY ACT ///

      He says, "All of Russian business is discredited 
      by these accusations, and now they are accusing 
      the entire country of being corrupt. Mr. 
      Khodorkovsky said the amount of money alleged to 
      have been laundered was equal to Russia's entire 
      oil export proceeds for that period. He called 
      that "an impossible situation." 

/// OPT ///

Others who issued flat denials of the news reports 
included Mr. Chernomyrdin and Mr. Chubais.

/// End opt ///

But experts and average Russians alike say despite the 
denials, there is a ring of truth to the allegations. 
Analyst Yevgeny Volk of the Moscow Heritage Foundation 
says no Russian politician is immune to corruption 
charges.

            /// VOLK ACT ///

      Everyone knows corruption has penetrated all 
      levels of power. So there is no news for common 
      people that money is laundered. It's common 
      knowledge and not so much a sensation as it 
      looks in the West.

            /// END ACT ///   /// BEGIN OPT ///

But Mr. Volk says there is little or no chance any of 
the accused in the money laundering or bribe taking 
scandals will ever face charges in Russia. 

            /// VOLK ACT ///

      It is almost impossible to prove anything. 
      Russian people were very sophisticated in 
      concealing incomes throughout 70 years of 
      Communist, very tough totalitarian economics, so 
      it's quite easy for them to deceive the 
      Westerners who are much more naive in many 
      cases.

            /// END ACT ///   /// END OPT ///

A sampling of opinion on a Moscow street Tuesday found 
Russians  not  surprised by the corruption charges, 
and uniformly cynical about their politicians.

/// NIKOLAYEV ACT IN RUSSIAN, THEN FADE TO... ///

38-year old college professor Alla Nikolayeva says, 
"All this is absolutely normal. Everything is a mess."

/// IVANOV ACT IN RUSSIAN, THEN FADE TO.. ///

52-year old economist Vasily Ivanov asks, "Is it 
possible to trust them at all?"  He adds, "This is not 
a place where anyone can be trusted. I don't even 
trust priests."

Experts say the money laundering and kickback charges 
are just the opening shots (i.e. just the beginning) 
in what promises to be an extremely ugly parliamentary 
and presidential election season. Analyst Yevgeny Volk 
said the elections are likely to be free, but  not  
fair, because those who have more money, including 
criminals, will have a better chance than the others. 
(Signed)

NEB/PFH/GE/KL 



31-Aug-1999 13:35 PM EDT (31-Aug-1999 1735 UTC)
NNNN

Source: Voice of America
.