Washington denies any problem, as does the International Monetary Fund. But Russians who should know are sure that a $4.8 billion loan never reached its destination. They have been joined recently by Swiss prosecutors who are equally skeptical. PNS contributor Lucy Komisar is a freelance journalist who, sponsored by PNS, spent three months in Russia on a U.S. National Research Council grant to investigate the impact of offshore bank and corporate secrecy.

What really happened to the $4.8 billion?

In his second debate with Al Gore, George W. Bush claimed that some of the $4.8 billion loaned to Russia by the International Monetary Fund in August 1998 to prop up the ruble had ended up in the pockets of former Russian prime minister Viktor Chernomyrdin.

Denials came quickly from Chernomyrdin, the IMF, and the Gore campaign -- some citing an August 1999 report by the accounting firm PriceWaterhouseCoopers saying the loan had been accounted for with no evidence of theft. The IMF insists the Central Bank used the money as intended.

In Russia, such defenses are widely discounted. As Kim Iskyan, a vice-president of Renaissance Capital brokerage in Moscow, says, "The problem with PriceWaterhouseCoopers is it looks at just what the Central Bank gives it. It's the problem with all the accountants. Companies keep two sets of books."

The $4.8 billion was supposed to avert a financial collapse brought on by widespread stripping of Russian assets, capital flight, and looting of international loans and investments. It was purportedly given to allow major Russian banks to buy rubles and stabilize the currency.

But according to Viktor Ilyukhin, chairman of the security committee of the Duma, Russia's legislature, the money "was robbed."

"The IMF money was sent from the Bank of New York via Russia to the Frankfurt Ost-West Hendelsbank, an affiliate of the Central Bank," he said in June.

Copies of money transfers provided by an employee of the German bank implicate Yeltsin's daughter Tatyana Dyachenko, Yeltsin advisor Anatoly Chubais (who now runs the national electric company), Boris Berezovsky (deputy secretary of the National Security Council in the Yeltsin administration), and former prime minister Viktor Chernomyrdin.

Ilyukhin claims to have copies of the paper trails showing $235 million went to the Bank of Sydney, was changed to pounds sterling and went to Great Britain with the help of Dyachenko.

"Another part, $1.7 billion, went to the Swiss Bank of Lausanne. Our information is that Chubais and Berezovsky were involved," Ilyukhin claimed, with a major part of that going to the Bank of New York. "In this, Chernomyrdin was involved."

Official Russian sources give "contradictory information," said Ilyukhin. "The Central Bank told us this money was used to buy securities. The Finance Ministry said that part went to the salaries of Russian government employees and part for other purposes."

Prosecutor Yuri Skuratov, who angered the Yeltsin government by repeatedly digging into scandals, confirmed that he had been given copies of requests to transfer money between companies with bank accounts in Germany and Australia. He ordered the documents checked in 1999, but never saw the investigators' report because he was fired a month after he started the inquiry.

This July, a Swiss magistrate, Laurent Kasper-Ansermet, reopened the issue saying he wanted to investigate a report that as much as $4.8 billion in IMF funds had been transferred to a Swiss bank account.

Kasper-Ansermet ordered the account documents in banks in Geneva and Ticino seized and any further deposits blocked. He, too, noted that the Price Waterhouse Coopers audit did not show how the credit had been used, telling reporters that Russian prosecutors and U.S. authorities were ignoring his requests for cooperation.

Nikolai Volkov, an investigator for the Russian prosecutor's office, arranged for a Swiss official to bring the papers to Moscow. He was fired.

A week later, Swiss officials announced that, in connection with this investigation, prosecutors seized papers from the headquarters of Runicom, which handles trades for the Russian oil company, Sibneft. Sibneft, bought at auction by Berezovsky, is controlled by his erstwhile partner, Roman Abramovich, known as "the banker" of the Yeltsin family.

The Swiss built their wealth on a banking system that promises secrecy. Ironically, American pressure persuaded them to allow penetration of secrecy in cases involving illicit funds.