Advertisement
YOU ARE HERE: LAT HomeCollections
(Page 2 of 2)

How the Chubais Clan, Harvard Fed Corruption

September 12, 1999|Janine R. Wedel | Janine R. Wedel, associate professor at the Graduate School of Public and International Affairs at the University of Pittsburgh, is the author of "Collision and Collusion: The Strange Case of Western Aid to Eastern Europe."

Besides failing to achieve viable economic reform, the Chubais-Harvard partnership undermined democratic and state institutions. With U.S. support, it operated through executive decree, circumventing the Duma, the democratically elected parliament. The partnership also ran a network of aid-funded "private" organizations, some of which usurped state functions. For example, the Russian Privatization Center negotiated loans with the IMF on behalf of the Russian state, bypassed the Duma and contributed to the Chubais clan's political and financial base. It attracted some $4 billion in Western aid, according to its CEO, which the Chamber of Accounts, Russia's rough equivalent of the GAO, said "was not spent as designated."

In 1996, the GAO also had objections. It found that U.S. oversight over Harvard was "lax," and, following allegations in 1997 that Shleifer and another Harvard manager used their positions and inside knowledge as advisors to profit from investments in Russia, the U.S. government canceled the last $14-million award earmarked for Harvard.

Did the Russians do all this alone? Clearly, the administration consistently backed a small group of self-interested insiders by giving them the "dream team" seal of approval and a blank check in the form of billions of dollars in Western aid and loans, while neglecting to encourage the development of a legal and regulatory backbone for Russia's nascent market economy. In 1996, Chubais was placed on Harvard's (U.S.-assistance-funded) payroll. Even his admission, after the Russian economic crash last August, that he had "conned" from the IMF its most recent $4.8-billion installment, the details of the deal having been worked out with Summers, brought administration officials to Chubais' defense. As we now know, the IMF money disappeared in short order.

Still, Chubais has remained an administration favorite son. In Washington last May, Chubais, now chairman of Russia's electricity monopoly, was received by U.S officials, including Summers, then-Treasury Secretary Robert E. Rubin, Secretary of State Madeleine K. Albright, Undersecretary of State Strobe Talbott and National Security Advisor Samuel R. Berger, as well as by top officials of the IMF and World Bank. Were these officials and politicians oblivious to the "clan-state" developing in Russia, in which property was concentrating in a very small circle and owners were chosen by government officials? Were they totally unaware that billions of dollars were being looted from Russia and channeled through Western banks?

As information trickles out about capital flight and money laundering, it will be easy to point fingers at "corrupt" Russians, to replace the image of the "evil empire" with that of Russian gangsters. It will be crucial to scrutinize with equal fervor the officials and institutions on the Western side that enabled, indeed may have even encouraged, the misdeeds.*

Advertisement
Los Angeles Times Articles
|
|
|