PwC alerted the IMF to this
pernicious practice, but to no avail.
Moreover, FIMACO paid exorbitant management fees to self-liquidating
entities, used funds to fuel the speculative GKO market, disbursed
non-reported profits from its activities, through "trust companies",
to Russian subjects, such as schools, hospitals, and charities -
and, in general, transformed itself into a mammoth slush fund and
source of patronage. Russia admitted to lying to the IMF in 1996. It
misstated its reserves by $1 billion.
Some of the money probably financed the fantastic salaries of
Dubinin and his senior functionaries. He earned $240,000 in 1997 -
when the average annual salary in Russia was less than $2000 and
when Alan Greenspan, Chairman of the Federal Reserve of the USA,
earned barely half as much.
Former Minister of Finance, Boris Fedorov, asked the governor of the
central bank and the prime minister in 1993 to disclose how were the
country's foreign exchange reserves being invested. He was told to
mind his own business. To Radio Free Europe/Radio Liberty he said,
six years later, that various central bank schemes were set up to
"allow friends to earn handsome profits ... They allowed friends to
make profits because when companies are created without any risk,
and billions of dollars are transferred, somebody takes a (quite
big) commission .
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