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Thursday, February 11, 1999 Published at 21:37 GMT

Business: The Economy

Scandal at the bank

Russia's Central Bank has become embroiled in a deepening scandal of allegations of mismanagement and corruption.

[ image: Sergei Dubinin...protests his innocence]
Sergei Dubinin...protests his innocence
The Russian prosecutor's office has accused bank officials of secretly putting more than $50bn into the virtually-unknown offshore accounts of a company called Fimaco, based in a tax haven off the coast of England.

The former head of the Russian Central Bank, Sergei Dubinin, has defended his role in hiding state funds in the tax haven. In an open letter to President Yeltsin, he said money was hidden in a company called Fimaco, registered in the Channel Islands, to keep it away from foreign creditors who might have tried to seize it.

Mr Dubinin, who headed the bank until last September, said he had been defending Russia's economic security and had done nothing illegal.

Mr Dubinin said the bank was the victim of politically-motivated attacks by forces trying to limit its independence.

Sums 'exaggerated'

He said the prosecutor's office had vastly exaggerated the sums involved and that the largest amount ever placed in Fimaco accounts was $1.4bn.

The prosecutor general, Yuri Skuratov, has resigned since the allegations were first made. He claimed that money was syphoned off by corrupt officials.

A former finance minister, Boris Feodorov, has backed the claims and said people in government are allowing their friends to make handsome profits.

Both the bank's current and former leadership described the allegations as irresponsible and inaccurate.

Mr Dubinin and the current central bank chief, Viktor Gerashenko, say the figures involved have been exaggerated.

This is not the first time the bank has been involved in a scandal. After last year's financial crash, foreign creditors and businesses accused it of illegally propping up commercial Russian banks, rather than forcing them to pay off huge debts.

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