Federal authorities have subpoenaed business records from Belka Trading Corp. and about a dozen associated companies that paid the son-in-law of Boris Yeltsin about $2 million over the past several years.
The subpoena, issued about two weeks ago, is the clearest indication yet that investigators now intend to focus on Leonid Dyachenko, husband of Yeltsin's daughter Tatyana, as part of a global probe of mysterious money flows totaling $7.5 billion through several bank accounts at the Bank of New York.
Investigators want to know why officials who oversee Belka Trading and the related companies deposited money in two accounts that Dyachenko maintained at a Bank of New York branch on the Cayman Islands. In the subpoena, a federal grand jury requires the Belka companies to turn over any documents relating to Dyachenko, as well as financial records dating to January 1990, according to Belka attorney Irwin Rochman.
So far, no direct link has been found between the Dyachenko or the Belka companies and the suspicious accounts--connected to a company called Benex International Co.--under investigation in New York. A source who has analyzed the activity of the Benex-related accounts said no money was wired to or from the Belka accounts.
Rochman defended the companies in an interview, saying Belka officials have nothing to do with money laundering and should not be associated with the broader investigation. He said Belka officials are cooperating with authorities. Belka officials are putting together the paperwork now and intend to deliver it to investigators within a week or so.
"These are real businesses. They do real things. They are not conduits for money," Rochman said of the Belka companies and the companies' officials, adding that he does not represent Dyachenko. "The amounts of money have been significant over the years. We don't deny that. But there is nothing criminal or illegal. . . . These are businessman. They dabble in lot of business. They make lots of money."
Dyachenko has not commented on the investigation.
Rochman said company officials openly acknowledge working with Dyachenko.
"There's no doubt he is connected to our companies. There's no disputing that," Rochman said. "Do we do business with Mr. Dyachenko? Yes. We're happy to do business with him. We're pleased to do business with him. We're proud to do business with him."
Rochman said Dyachenko was paid to work on deals involving oil products and several of the companies. He said that in some instances that meant working as a "senior manager in the oil department." Rochman said Dyachenko heads an oil-products trading company, East Coast Petroleum, that is related to the Belka companies. He said Dyachenko did not serve merely as a liaison to the government, adding that the Belka companies have no government contracts.
"He did real work for our companies," Rochman said, adding that Dyachenko was well paid for his work. He said the amounts in the Cayman Islands accounts are consistent with Dyachenko's pay. "The amounts of money have been significant over the years. We don't dispute that. But there is nothing criminal or illegal."
Federal investigators turned their attention to Dyachenko and the Belka companies several weeks ago. Bank of New York officials, alerted to allegations of possible corruption in the Yeltsin family, sifted through company records and found that Dyachenko had two accounts at the bank's Cayman Islands branch. Officials determined that more than $2 million had been deposited in those accounts by Belka officials over a period of a few years.
Until now, there has been little publicity about the Belka companies. They were started more than a decade ago. Among the founders was a Russian native named Viktor Khrolenko. Kenny Schaffer, a former rock-and-roll publicist who once arranged opening acts for the Rolling Stones, was also a founder. Other principals included Alexsei Milroud and Andrei Tentiouk, Rochman said.
The group's early efforts were a hodgepodge of enterprises, including a satellite telephone system that catered to major American companies in Russia. A spinoff company was called BelCom, according to Scott Robb, a New York lawyer who helped form the companies and is listed on New York state incorporation records.
The group also sponsored a telethon fund-raiser in St. Petersburg and arranged to broadcast Soviet television in the United States on the Discovery Channel, Robb said.
In the early 1990s, the founders began creating other companies to trade oil, refurbish oil refineries and conduct other trading. Robb said the companies are based in Moscow and incorporated to do business in the United States.
At the Moscow office, a secretary refused to give out any information, except to say emphatically that Dyachenko had nothing to do with the company. Repeated messages from The Washington Post went unanswered. When a researcher visited the office, a man who identified himself as the janitor said no one would be in, except the secretary, for a week or two.
New York records show that Belka International was incorporated in April 1987. Its address was listed as 515 Madison Ave. in New York City. In June 1991, Belka Trading was incorporated at the same address. Belka Energy was formed in January 1992, Belka Publishing was formed in April 1994 and Belka Trading International was formed in October 1995, according to state incorporation records.
Other related companies include Belka Imports, which was formed in January 1992, and Strelka Corp., which was formed in January of last year. Strelka lists its address as care of Belka Trading Corp., records show.
Robb was listed as "chair of the board" of Belka Trading Corp., but he said he only helped incorporate the companies. Robb said he does not know much about the companies' activities or the ties to Dyachenko. Robb said the companies receive mail at his office--and are listed in the lobby as a building tenant--but no longer conduct business there. Robb said they moved to an office in New Jersey several years ago.
"I just set up companies," Robb said. "I don't know what they do. I don't know what he [Dyachenko] does."
Robb said one of the last deals he worked on was the selling of Yeltin's memoirs by Belka Publishing.
The Belka companies originally were named after a dog that flew aboard Sputnik 5 in August 1960. Belka means "squirrel" in Russian. Strelka, the name of a related company, was a dog on the same flight. (One of Strelka's puppies was given to President John F. Kennedy as a gift.) Strelka means "little arrow." The founders of the companies chose the name, Robb said, to set a positive tone.
Staff writer Sharon LaFraniere in Moscow and research editor Margot Williams in Washington contributed to this report.