USIS Washington 

03 November 1998


(American University Center hosts legislators, seminar) (690)

By Rick Marshall

USIA Staff Writer

Washington -- A group of Russian legislators visited Washington
recently to learn more about how the United States deals with official
corruption, money laundering, and organized crime. On October 30, they
gave a press conference at American University, whose Center for the
Study of Transnational Crime and Corruption had hosted them for their
week-long stay.

Valery Vorotnikov, whose committee in the Russian Duma recently
drafted legislation aimed at suppressing money-laundering, expressed
hope that the new law would help drive Russia's substantial "shadow
economy" toward more legitimate business practices.

"We want to change the business culture so that the payment of taxes
becomes a sacred duty," he said. But he was quick to add that his
committee is "fully aware that implementing this law is going to be
very difficult."

Vorotnikov said that the Duma members had discussed a related problem
-- capital flight -- with the Federal Bureau of Investigation (FBI)
and other government agencies during their stay in the hope of
recovering at least some of the huge funds which have fled the

The visit, which included meetings with members of Congress and their
staff as well as law enforcement officials, was extremely useful,
Sergy Boskholov said. We intend to make use of the experience, he
stated. A member of the Duma's Security Committee, Boskholov noted
that the Duma had already established regulations governing Russian
police and security organizations.

Unfortunately, he added, their work "has met some obstacles." Indeed,
he said through a translator, "there are people in the Duma and the
executive branch who are not eager to see these kind of laws passed."

Michael Dipretaro, an FBI official who was the U.S. legal attache at
the U.S. Embassy in Moscow from 1994 to 1997, said that he had found
"very professional people" in Ministry of Interior and the other
Russian agencies with which he worked.

"As Russia fights the crime problem, we fight it together," he
commented, pointing to a number of criminals sitting in U.S. and
Russian jails now thanks to the two countries' cooperation. He added
that he was heartened at the Duma's recent efforts to crack down on
corruption. The recent money-laundering legislation, he added, is "an
excellent piece of legislation."

Nonetheless, he commented, "Russia has been looted." FBI
investigations have pointed to thefts of diamonds, oil and gas worth
upwards of $500 million.

Sergy Maximov, a fellow at the Moscow Center for the Study of
Organized Crime, which is affiliated with the American University
program, opened his remarks by noting the lack of control over the
financial aid which the West has given Russia since the collapse of
the Soviet Union. Most of these funds "have been spent and wasted," he
said. "Large sums of money are missing from bank accounts."

The United States made a mistake by relying too closely on the Russian
government, fearing what the Communist Party, which is the largest
party in the Duma, would do if it had access to the funds, Maximov
said. Instead, control was given to a handful of officials who
disposed of it with a singular lack of transparency. Given this
history, it is time to reevaluate how Western assistance is monitored,
he said, suggesting that a mechanism be established to give the Duma
more say in how international assistance is used.

This view was echoed by Dr. Louise Shelley, the director of the
Center, who said that the lack of Duma oversight had contributed to
Russia's economic problems.

Concluding this part of the program was Vladimir Brovkin, an associate
research professor at American University, who noted that Western
investment in Russia has been "miniscule" so far this year. Only one
percent of global investment has been placed in Russia, and even that
is fleeing, he said. The reasons are clear, he said. Investors have to
have functioning, transparent banking, financial and legal systems.
Without them, he added, the Russian system is going to continue to

On the other hand, he proclaimed himself heartened at what he heard
from the Duma members at the session.