Moscow prosecutors to begin criminal proceedings

The Washington Post

MOSCOW - Moscow prosecutors announced yesterday they will begin criminal proceedings against former privatization chief Alfred Kokh, a close ally of economic reformer Anatoly Chubais. An investigator questioned whether a $100,000 payment to Kokh to write a book was an effort to influence a telecommunications deal.

Kokh, who resigned Aug. 13, has denied any wrongdoing and said he intends to deliver the book, which has not been published. But as privatization chief, he was at the center of the hotly contested auction of a telephone holding company last summer that has led to a widening schism between the Chubais reform team and several of Russia's wealthiest business tycoons.

Media reports have raised questions about whether the $100,000 payment to Kokh played a role in the success of Uneximbank, a large financial industrial group headed by Vladimir Potanin, in the bidding for a stake in the state-owned telecommunications company Svyazinvest. The $1.9 billion bid by Uneximbank stunned the losing bidders, another group of Russian bankers who bid $1.7 billion and thought they had the deal sewn up.

Vladimir Gusinsky, the media magnate whose group was part of the losing consortium, has charged that there was "collusion" between the government and the winning bidders.

The case has taken on special importance because Chubais and Boris Nemtsov, the deputy prime ministers appointed by President Boris Yeltsin, have cited it as an example of what they claim will be a new fairness in the sale of state companies.

If it turns out that the telecommunications tender was just another case of insider dealing, and that a Chubais ally was involved, it would cast a shadow over the argument by Yeltsin and his young reform team that they are battling cronyism and corruption in the distribution of state assets.

Kokh first revealed the $100,000 payment last summer in his initial income declaration, required of many senior officials by Yeltsin for the first time this year. Subsequent reports in the Russian newspaper Novaya Gazeta and the London-based Financial Times said the money came from a little-known Swiss firm, Servina, and that an intermediary in the deal now works for a Swiss subsidiary of Uneximbank. Kokh has acknowledged taking a family vacation with Potanin last summer but said he did not know about the connection to the bank when he took the money.

Yuri Syomin, the deputy prosecutor who announced yesterday's decision, told the Interfax news agency that the sum given Kokh was "quite unconventional" and "far outdistanced expected revenues." He said prosecutors have been told the deal was put together by a deputy chairperson of Uneximbank.

In the years since the Soviet collapse, Russian prosecutors often have decried rampant corruption but rarely have been able to make charges stick against high-ranking officials.

After leaving the government, Kokh went to work for a private fund with links to Chubais, and Chubais came to his defense yesterday. "I have known Kokh for 10 years and know that he is a man of integrity," Chubais told reporters. "Lavishly paid lies are reprinted from one newspaper owned by a banker to a newspaper owned by another, from a TV channel owned by one of them to a TV channel owned by another."

"I know full well that the (Kokh) book does exist, that it has been written," Chubais said. "I also know that some will not find the reading exactly pleasurable." A spokesperson for Uneximbank told Interfax the conglomerate "has nothing to do with" the Kokh book.

But Alexander Minkin, an investigative journalist who wrote about the deal in Novaya Gazeta, appeared on Gusinsky's television network Wednesday night and declared, "A hundred thousand dollars is not a fee, it's bribes."

"He did not sell a manuscript, he sold something different," Minkin said.

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