Russian prosecutor seeks arrests of 2 financial barons

Politics behind the move, not the facts of the case, intrigue observers most

April 07, 1999|By Kathy Lally | Kathy Lally,SUN FOREIGN STAFF

MOSCOW -- In an astonishing and unprecedented attack on Russia's powerful financial barons, the prosecutor general's office issued an arrest warrant last night for Boris A. Berezovsky and said it also was seeking Alexander P. Smolensky for questioning.

Each was accused of illegally making off with millions of dollars, but in a country where nearly everyone is considered guilty of something, there was little speculation about whether the charges were true.

When scandalous accusations arise here, Russians rarely ask, "Did he do it?" The important questions are "Why now?" and "Who benefits from this?"

The questions were being asked about Berezovsky last night because he is the most politically ambitious of the so-called financial oligarchs, has been a close friend of President Boris N. Yeltsin's family and helped finance the president's re-election campaign in 1996.

The most common answer to "Who benefits?" was the prosecutor general and his Communist allies. And politicians across the spectrum had the same answer to "Why now?": It's all politics.

"A big game is being played," said Gennady A. Zyuganov, the Communist Party leader in the State Duma, the lower house of parliament.

"The prosecutor's office is engaged by political forces," said Vladimir Ryzhkov, leader of the moderate Our Home Is Russia Party. "It's a very bad sign."

Politicians found it curious that both men were out of the country and couldn't easily be detained when the prosecutor decided he wanted to see them.

Berezovsky, who founded a chain of car dealerships and reportedly has large stakes in the national airline Aeroflot and an oil company, was in France. Smolensky, president of SBS-Agro Bank, the nation's largest private retail bank before the financial collapse in August, was in Austria.

Berezovsky was accused of siphoning millions of dollars away from Aeroflot through a Swiss company that was established to handle foreign ticket sales. The head of Aeroflot is Yeltsin's son-in-law.

Smolensky is being investigated on charges of misappropriating $32 million from operations connected to his businesses.

The men are two of the seven "oligarchs" who controlled much of Russia's wealth before August.

But the accusations go far beyond money.

Communists vs. Kremlin

"It's a fight between the Communists and the Kremlin," said Alexei Mitrofanov, a Duma deputy who belongs to the Liberal Democratic Party.

Last month, Yeltsin tried to dismiss the prosecutor general, Yuri Skuratov. When Skuratov fought for his job, videotapes surfaced showing him in bed with two prostitutes. The Federation Council, the upper house of parliament, apparently decided Yeltsin was too heavy-handed and exercised its prerogative to reject the resignation.

Last week, Yeltsin tried again, suspending Skuratov and saying he was being investigated for malfeasance. Skuratov is scheduled to appear today before the State Duma in an attempt to fend off this latest attack.

Though some of Skuratov's allies asserted that the prosecutor was fired because he was too aggressive about investigating corruption close to Yeltsin's circle, Skuratov hasn't put officials of any consequence on trial and hasn't solved any high-profile murders during his three years on the job.

"It's a fight against the oligarchs," said Mikhail Leontyev, a political commentator on the state television channel, "and Skuratov serves as an instrument for his political sponsors, who plan a political coup. He hasn't investigated anything."

The fight also comes only a week before the Communists plan to try marshaling support for impeachment charges against Yeltsin in the Duma.

The arrest warrants reportedly were the work of a deputy prosecutor who is described as a close friend of Communist leaders in the Duma.

Claims made less credible

If the warrants had been issued a few months ago, Ryzhkov said, assertions of a fight against corruption might have been credible. Now it looks as if Skuratov's supporters simply want to portray him as fighting corruption to bolster his fight to stay in office.

"Now, everyone will say it's politics," he said.

Berezovsky's lawyer denied the charges in a televised interview. "They're trying to frighten him," said Anatoly Kucherena. "They did it when they knew he was out of the country, because they don't want him to return to Russia."

Zyuganov, a bitter enemy of Berezovsky, apparently agreed with this interpretation. He said that Berezovsky's allies -- implying they came from Yeltsin's circle -- had decided to sacrifice Berezovsky.

Berezovsky was sent abroad, he said, so he could avoid a trial while taking the blame for corruption that might touch the Kremlin too closely.

Alexander Lebed, the former Army general who has presidential ambitions, said the warrant for Berezovsky's arrest was a blow aimed at Yeltsin and said more about the president than about the oligarchs.

"It shows how weak he is now," Lebed said.

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