A Swiss investigation has uncovered evidence that a construction company that received major Kremlin contracts paid tens of thousands of dollars of bills charged to credit cards in the names of Russian President Boris Yeltsin and his two daughters, according to law enforcement authorities.
The company, a Swiss firm called Mabetex, also provided $1 million that was transferred several years ago to a Hungarian bank account intended for Yeltsin's benefit, the authorities said.
The alleged payments for the Yeltsins were part of what law-enforcement officials describe as a broader scheme by Mabetex to bribe or curry favor with high-ranking Kremlin officials. In all, Mabetex poured $10 million to $15 million into bank or credit-card accounts for numerous Russian officials, according to officials familiar with the inquiry.
The Swiss investigation has been in and out of the news for more than a year. But the alleged favors to Yeltsin and his family have only recently been disclosed, and their dollar value was not known publicly until now.
A spate of allegations in recent weeks of high-level Russian corruption has caused political storms in Russia and the United States. In a money-laundering inquiry revealed last month, U.S. prosecutors are investigating billions of dollars that flowed from Russia through accounts at the Bank of New York.
The Kremlin has denied any wrongdoing in the Mabetex case, and the company's top official, Behgjet Pacolli, has repeatedly said he never bribed anyone.
The Swiss investigators, led by prosecutor Carla del Ponte, stumbled on the alleged links between the Yeltsin family and Mabetex in the course of an inquiry into Pavel Borodin, the Kremlin official who oversaw Mabetex's renovation contracts with the Russian government.
Acting on information from a businessman angry with a former Mabetex executive, del Ponte went looking for bank accounts and credit cards allegedly provided by Mabetex to Russian government officials. Yuri Skuratov, then Russia's chief prosecutor, formally asked for del Ponte's help in November.
Swiss investigators found Mabetex had opened bank accounts for Borodin in the Swiss cities of Lugano and Geneva, sources said. The company also set up accounts and credit cards for numerous other Russian officials -- mostly in Borodin's department -- or for their relatives, the sources said. Borodin has denied any wrongdoing. Some of the bank accounts were opened at Banca del Gottardo in Lugano, whose Russian clients were managed by an official named Franco Fenini.
Mabetex records also revealed other credit card payments to a Swiss bank, and a follow-up showed the card holders to be Yeltsin and his two daughters, Yelena Okulova and Tatyana Dyachenko, according to sources familiar with the investigation. In addition to being Yeltsin's daughter, Dyachenko is a top Kremlin aide.
Mabetex head Pacolli had the bills for the Yeltsins' credit cards sent to a small clothing store outside Lugano -- owned by the wife of Fenini, the bank official -- so as not to arouse suspicion, one official said.
Mabetex's records showed the company made payments of tens of thousands of dollars a year over two to three years for the Yeltsins' credit cards, sources familiar with the investigation said. It is not clear what the credit cards were used to purchase.
Early this year, del Ponte called Russian prosecutor Skuratov to tell him about the alleged links between Mabetex and the Yeltsin family. Skuratov was afraid to speak on the phone, for fear it was tapped, sources said. Just a few days later, Yeltsin suspended Skuratov as the nation's top prosecutor, effectively removing him from office.
The Mabetex inquiry in Russia suffered another blow in recent weeks when the lead investigator, Georgi Chuglazof, was transferred to another job. The prosecutor's office said he had been promoted, but Chuglazof said he had been sidelined.
The problems with the Russian side of the investigation are worrying the Swiss, because their inquiry can bear fruit only if Moscow prosecutes Borodin or other Russian officials for corruption. "The Russians have the main investigation," del Ponte said in an interview today. "We hope they can go on and complete it."
Del Ponte is resigning next week to become the chief U.N. war crimes investigator at The Hague. She said the Mabetex probe would be pursued aggressively by her successor.
In Moscow today, Skuratov said in newspaper and television interviews that the alleged favors to Yeltsin and his daughters should be fully investigated. "Naturally it is necessary to ask if the president knew or not about this situation, and certainly the daughters," Skuratov said. "How did they perceive this money? Why did they consider it possible to spend it?"
But he said that "the current leadership of the [Russian] prosecutors' office is unlikely" to ask to interview Yeltsin's family.
In Washington today, three senior U.S. officials sought to deflect criticism that the Clinton administration has been slow to respond to allegations of corruption in Russia. They told reporters they knew few details about the Bank of New York money-laundering probe until the case became public last month.
The State Department first heard about the movement of huge amounts of money from Russia to the Bank of New York in March, officials said. Authorities in another country suggested that Russian organized crime might be involved. There was no suggestion then that U.S. or Russian government officials, or U.S. or International Monetary Fund money was involved, officials said.
The State Department and the National Security Council took the information to the Justice Department. Officials there declined to discuss the matter, which was already under investigation by the FBI.
The Treasury Department learned about the FBI investigation in April from the Federal Reserve Bank of New York. Treasury took no action because the FBI was investigating. Attorney General Janet Reno and other senior administration officials -- including Vice President Gore -- were not briefed in detail about the case until late last month, the officials said.
Correspondent David Hoffman in Moscow and staff writer Robert O'Harrow Jr. in New York contributed to this report.