[Congressional Record (Bound Edition), Volume 145 (1999), Part 17]
[House]
[Page 24954]
[From the U.S. Government Publishing Office, www.gpo.gov]



               QUESTIONING THE CONTINUANCE OF RUSSIAN AID

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Florida (Mr. Stearns) is 
recognized during morning hour debates for 5 minutes.
  Mr. STEARNS. Madam Speaker, here in Congress we must answer tough 
questions regarding the continuance of aid to Russia. We, along with 
the IMF, have pumped billions and billions of dollars into a corrupt 
system. Is it any wonder that the Russian economy is floundering? How 
can we stand by while this fraud continues?
  Was anyone surprised to learn that Moscow's government and the 
Russian Central Bank were not following sound banking principles? The 
indicators have been there since the fall of the Soviet Union that an 
organized crime establishment was thriving under a weakened Russian 
Government. Yet, the U.S. Government has continued to loan billions of 
dollars to this high-risk government.
  The amount of Russian aid and the numbers involved in embezzlement 
are staggering. According to Russian officials, capital flow from the 
USSR and Russia between 1985 and 1999 was over $120 billion, possibly 
as high as $200 billion. That is more than the entire foreign debt on 
the Russian Federation, in and up to 10 times more than the total 
foreign investment in Russia.
  Now, sadly, Madam Speaker, a significant portion of this money was 
plundered by self-serving Federal and local government officials. We in 
Congress must acknowledge this catastrophe and take steps to prevent 
this from happening again.

                              {time}  1300

  Even more disturbing is that this money was siphoned off and funneled 
out of Moscow and mixed with the profit from activities such as 
prostitution and illegal weapons sales.
  Moreover, a Lugano-based engineering and construction company, 
Mobitex, allegedly opened credit cards and deposited large sums in 
private accounts for the benefit of president Boris Yeltsin, as well as 
members of his family and close associates, according to the Swiss 
authorities.
  Madam Speaker, as the scandal unfolds, we must re-evaluate our policy 
with Russia that has been pursued by the IMF and the Clinton 
administration. Congress should also review the lax standards applied 
by the U.S. Government and international financial institutions in the 
distribution of financial aid to post-Communist and developing nations.
  Earlier this year, the IMF and Russian central bank acknowledged the 
diversion of IMF funds to private companies. There were other reports 
that the World Bank loans were also misused or embezzled by Russian 
officials. In fact, one disclosure was a $250 million loan made by the 
prime minister of Russia and a close ally of Boris Yeltsin at the time.
  The extensive abuse of U.S. aid could not have happened had the 
President, Vice President, and other senior administration officials 
not aggressively pushed for multi-million dollar loans to keep Boris 
Yeltsin afloat.
  The question, Madam Speaker, occurs with regard to how much did they 
know. Were there reports about the abuse from the intelligence 
communities and the FBI? How could this administration continue to 
support pumping billions more into this flawed system?
  Another possibility is that the misuse was overlooked by bankers who 
had financial gains in assisting with the laundering of this money. 
They would potentially stand to gain the most if the United States and 
the IMF continued to prop up the Russian economy. Did political 
pressure from these bankers help keep the money flowing continually 
into the Russian economy?
  The Committee on Banking and Financial Services has the unique 
opportunity to stop the abuse associated with Russian assistance. 
Congress should assess the damage that has been done by this 
corruption. We must ascertain whether the law has been broken by any 
U.S. officials or banks.
  Within the IMF, what steps are being taken to improve obvious 
problems with Russian policy? Has the IMF bailout of 1998 significantly 
improved Russia's economy? I hardly see how the answer could be yes, 
since the $40 billion short-term bond market, GKO, collapsed, the ruble 
was devalued by 75 percent, and the rate of inflation increased from 6 
percent annually to 60 percent.
  Where are the accountability measures? Where are the preventative 
steps to avoid this happening again? Are due diligence standards or 
risk assessments being applied to foreign loans? How could between $4.5 
to $10 billion, not million but billions, go unnoticed?
  Congress must face the music and answer these questions. We cannot 
continue to line the pockets of corrupt officials.

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