American Russian Law Institute
A US-Russian not-for profit public policy research and advisory organization dedicated to promoting legal reform in Russia and newly independent countries of the former USSR, based upon democratic principles, market economy and rule of law

PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS
PRESS

World Bank Suspects Russian Passed Data to
Moscow Bank

By DAVID E. SANGER

WASHINGTON -- The World Bank said Friday that it was launching an investigation "as a matter of urgency" into the actions of a former member of Russia's delegation to the international development institution who is suspected of passing insider information to a major Russian bank.

The investigation, which is being aided by a Washington law firm, will focus on whether the official, Leonid Grigoriev, was secretly receiving payments from Inkombank, a Moscow bank that has since had its license revoked, in return for information about the World Bank's plans to aid the Russian economy. Grigoriev, who now directs a Moscow research group financed largely by the World Bank, was placed on "administrative leave" today.

Grigoriev worked in Washington, where the World Bank has its headquarters, between 1992 and 1997. At first he was the alternate executive director for Russia, meaning that he was Russia's No. 2 representative to the World Bank's board. Later he was an adviser to the executive director.

In that post, World Bank officials say, he would have had virtually no say over how its money was disbursed to Russia. But he would have had extensive information about the bank's plans in Russia, and the plans of its sister institution, the International Monetary Fund, with headquarters across the street.

The Wall Street Journal reported Friday that in 1993 Grigoriev sent a fax to Inkombank urging it to invest in debt securities issued by the former Soviet Union. The debt had been sold at a significant discount because of doubts over whether Russia would honor it and make payments to those holding the debt. The World Bank and the I.M.F. have been at the center of continuing negotiations over whether and how the debt would be paid, so information about their plans could significantly affect the price of the securities.

The conflict-of-interest rules in effect at the bank in 1993 were adopted a decade after the World Bank's creation, in 1944, as the International Bank for Reconstruction and Development. They required any executive director or alternate to notify the bank of "any substantial direct or indirect personal interest in any matter known by him to be under consideration by the bank."

The wording was strengthened two years ago to read that an executive director "shall not use information obtained in the discharge of his/her duties which is not available to the general public for the purpose of furthering his/her personal interest or the personal interest of any other person or entity."

The bank said Friday that it had hired the firm of Venable, Baetjer, Howard & Civiletti to aid in its investigation. "The investigation is being conducted with the full cooperation of the Office of the Russian Executive Director and the Russian Government," the bank said.

So far little evidence has emerged that World Bank or I.M.F. money for Russia has been stolen, but several audits are still under way. The issue has come up frequently in Congress, however, and James D. Wolfensohn, the bank's president, is clearly worried that a steady trickle of charges that it has been caught up in Russian corruption could endanger its funding. Wolfensohn declined to comment Friday on the pending investigation.