Russian leaders accused of scam

SLOWLY, QUIETLY, an extraordinary saga is unfolding in Moscow with the potential to be an international embarrassment to Russia and one of the biggest financial scandals of the post-Soviet era.

At its heart, two questions: why did the government set up a shell company in Jersey through which it channelled hard currency reserves, apparently for five years? What happened to the profits?

An explanation came this week from Boris Fyodorov, who was finance minister when the firm was set up. It was, he says, a money-making scam for the government's cronies and corrupt officials in the Russian Central Bank. "They were simply allowing friends to earn handsome profits."

If he is right, this happened during a period when Russia received multi- billion-dollar support from the International Monetary Fund, while failing to pay wages and pensions to many millions of Russians

Mr Fyodorov - an economist widely respected in the West - said in 1993 he demanded information about the use of the firm, called Fimaco, but was told by top government officials it was none of his business.

The media has been strangely muted over the affair. Whether the parliament can glean more details is uncertain.