Financial Management Company Limited (FIMACO or FIMAKO) was a Jersey company founded in 1990. Alternate archive
The company was involved in a series of scandals related to the IMF loan funds, operations on the Russian debt market, and the issue of obtaining commission income from operations with the state currency reserve. The company has also been the subject of analysis as part of investigations into the fate of party financial resources of the Communist Party of the Soviet Union.
Background According to Fritz W. Ermarth, the "Saga of the KGB Money" began before the breakup of the Soviet Union. Ermarth stated that top-level Communist Party of the Soviet Union (CPSU) officials gave instructions: "Using semi-private cooperatives, the KGB sold cheaply acquired Soviet commodities abroad at world prices, putting the proceeds into disguised foreign accounts and front companies" beginning in the mid-1980s. For example, Paul Klebnikov explained that Marc Rich was the mentor to the 1990s looters of Russia. Before the 1990s to trade between the West and the Soviet Union, Rich established a trading house in Switzerland for each commodity to be traded: oil, aluminum, zinc, chromium, steel, etc. Each trading house had a monopoly on the trade for its commodity between the Soviet Union and the West and would purchase the commodity from the Soviet producers for only 5% to 10% of its market value then sell the commodity through its Swiss trading house at market value and pocket the difference. Marc Rich's firm Nordex followed this scheme. Ermarth stated, "Initially the KGB objective was simply commercial cover. But the program evolved into operating businesses for off-budget revenues, and from there into avenues for squirreling away funds for the safe retirement or political comeback of embattled communist leaders. Lines of business came to include money laundering, arms and drug trafficking, and other plainly criminal activities. Before long, intelligence, business, politics and crime blurred indistinguishably into each other." In the 1990s, the looting of Russia followed a similar scheme and, by 1993, the looters muscled Marc Rich out of commodities trading. Ermarth stated that the Soviet Union was engaging in this scheme in 1985 and, in the 1990s, Russia had many that were "squirreling away funds for the safe retirement or political comeback of embattled communist leaders."
History
On August 23, 1990, a secret memorandum from Vladimir A. Ivashko, who was Gorbachev's deputy general secretary, outlined strategies to hide the Communist Party's assets through Russian and international joint ventures because Boris Yeltsin, who was the new president of the Russian Republic in the Soviet Union, wanted to levy taxes on the Communist Party's vast administrative property holdings and on the Party itself. The memorandum was to organize the transfer of CPSU funds, CPSU financing and support of its operations through associations, ventures, foundations, etc. which are to act as invisible economics. In November 1990, the offshore structure Fimaco (also spelled Fimako) was formed by documents signed by Yury Ponomaryov under the direction of V. Gerashchenko of the Russian Central Bank, then known as Gosbank, to hide these funds. Alternate archive In November 1990, Leonid Veselovsky, a colonel in the First Chief Directorate of the KGB and an expert in international economics, was transferred from his KGB post in Portugal to Moscow to be under deputy chairman of the KGB of the USSR Philip Bobkov; however, two weeks before the August Putsch in 1991, Veselovsky quit the KGB and began working for the Switzerland office of Boris Birshtein's Seabeco; but, in the meantime, hundreds of banks, joint stock companies, and joint ventures had been created under the direction of the CPSU Central Committee.
According to Sergei Tretyakov, KGB chief Vladimir Kryuchkov sent US$50 billion worth of funds of the Communist Party to an unknown location in the lead up to the collapse of the USSR.
Russian officials claimed that FIMACO was 100% owned by the state-owned Banque Commerciale pour l'Europe du Nord, but never provided any proof according to a Newsweek article in March 1999.
From 1989 to 1998, Yury Ponomaryov was the CEO and chairman of the board at the Commercial Bank for Northern Europe (BCEN) - Eurobank in Paris; from 1993, he was chairman of the board of directors of the Moscow bank "Evrofinance" () which was a subsidiary of Eurobank; and during 1998 to 1999, he was chairman of the board of the Moscow Narodny Bank. Ponomaryov was the principal executor during the privatization of funds of international financial organizations and state foreign exchange reserves of Russia through FIMACO and other shadow companies. BCEN - Eurobank had numerous correspondent accounts with Western banks to secure lines of credit for facilitating financial flows from the Soviet Union and later Russia to both the West and also less developed countries.
In 1990 Alexander Mamut founded the "ALM-Consulting" law firm (ALM abbreviated after Mamut's name) and served as Managing Partner from 1990 to 1993. In 1991, ALM Consulting partnered with Frere Cholmeley Bischoff, a law firm based in London and headed by Tim Razzall from 1990 to 1994, to establish many offshore shell companies with support from ALM Consulting. In 1993, Mamut hired Igor Shuvalov as a senior advisor and instructed Shuvalov to establish many offshore companies to conduct special assignments to money launder very large amounts of cash away from Russia. In 1995 when Shuvalov was the head of ALM, Mamut introduced Shuvalov to Roman Abramovich, Alisher Usmanov, and Oleg Boyko who established Shuvalov's first investment which was in a business associated with Boyko. ALM was the preferred law firm for Russian oligarchs during the 1990s including Alisher Usmanov, Roman Abramovich, Boris Berezovsky, Oleg Boyko, and others. During the 1990s, Mikhail Kasyanov, while he was the head of the department of external loans and foreign debt at the Russian Ministry of Finance, made decisions in support of Mamut.
In Autumn 1990, Vladislav Surkov established an advertising company with support from Menatep Bank that achieved tremendous return on investments.Ходорковский, Михаил; Невзлин, Леонид (1992 г.). "Человек с рублем": Часть III. Горшки и боги With offices in Paris, Gibraltar, Budapest, and Geneva, Mikhail Khodorkovsky's MENATAP united a trading house, 2 insurance companies, 18 independent commercial banks, and about 30 industrial and other enterprises according to Delovoy Mir () on 8 June 1991. Organized by the Russian Ministry of Finance, MENATEP proposed methods of privatization and ways to secure foreign funds and support for securities.
On 13 August 1991, Valērijs Kargins and () in Riga, Latvia, opened the first foreign currency exchange as a closed joint stock company in the Soviet Union. They had opened a currency exchange at their Riga train station tourism office, previously on 3 April 1991. He along with Viktor Krasovitsky and Krasovitsky's wife Nina Kontratyeva later founded Parex Bank in January 1992. Riga was intended to become the global financial center in the former Soviet Union and Parex promoted itself as "We are closer than Switzerland!" ()
In a 1991 report, former KGB colonel Veselovsky, whose responsibility was to manage Communist Party commercial affairs overseas, explained that he had found ways to funnel party money abroad. In addition to Nikolai Kruchina and Viktor Geraschenko, Russian prosecutors also considered Veselovsky to be a principal figure in the money transfers. The stated goal was to ensure the financial well-being of party leaders after they lost power. Large amounts of state assets were transferred through FIMACO. One estimate is about US$50 billion.Russian Money Laundering: Congressional Hearing. James A. Leach. p. 816 Alexander Litvinenko stated that millions from the IMF loan went to Russian mafia. On 30 September 1991, Yevgeny Primakov became the head of foreign espionage or the KGB First Chief Directorate (FCD) which in December 1991 became the SVR which he headed until January 1996. Both the FCD and later the SVR had significant participation in transferring funds during this time frame because the staff of the FCD had previously created, developed and oversaw the commercial structures for illegal economies supported by the CPSU.
In 1991 in a dacha outside Moscow, Andrey Vavilov, Konstantin Kagalovsky, and three others developed an economic platform for Russia. Beginning in 1990 Kagalovsky was the Soviet Union's and later Russia's representative on financial matters with the IMF and the World Bank.Возобновление расследования о махинациях 90-х Reopening of the investigation into the machinations of the 90s In November 1991, he became Russia's representative on international financial matters and finally between October 1992 and 1995, he was Russia's representative to the IMF.
On April 4, 1992, Yeltsin issued "The fight against corruption in the public service" decree to provide for maximum transparency of officials and their institutions by providing a listing of their financial obligations, liabilities, securities, income, bank deposits, real estate holdings and their personal property and to prohibit officials from owning businesses. The people with access to FIMACO included senior officers of the Communist Party, Komsomol, state banks, KGB, and the military.
In June 1992, four tranches of IMF money totaling $4 billion were approved for transfer to Russia with the first $1 billion to be sent in June 1992.
A 1993 document signed by a senior deputy to Viktor Gerashchenko, the head of the Central Bank of Russia, forbid disclosure of transfers to FIMACO: "The balance of the investment account of the [Central Bank] in FIMACO shouldn't be disclosed on the balance sheet of the bank."
Coopers & Lybrand performed audits of the Central Bank of Russia during the period of 1993 and 1994, discovered FIMACO, and condemned its activities. The IMF and the World Bank did not receive the Russian Central Bank's audits for 1993 and 1994.
In 1995, Jules Muis, a Dutch auditor formerly with Ernst & Young that became a vice-president and controller for the World Bank, had his World Bank staff target Russia with audits because of dealings between government officials and consulting firms "where doubts have been raised". Since auditing Russian operations became the World Bank's most critical concern, Donald Strombom, a former procurement chief at the World Bank who later established the International Development Business Consultants and was an advisor to the Russian Ministry of Economy which was headed by Yevgeny Yasin, stated, "Obviously the Bank would not like to shut down operations in Russia." In June 1995 James Wolfensohn, who later became a president of the World Bank, wrote a memo that spot audits would occur using the in-house staff at the World Bank. According to Raghavan Srinivasan who was the chief procurement adviser at the World Bank, "We want to put the fear of God in them."
According to Sergei Dubinin, from February 29, to May 28, 1996, just before the 1996 presidential elections in Russia that were held in June and July 1996, the Central Bank of Russia issued approximately $1 billion to Eurobank and then FIMACO invested a comparable amount of funds in GKOs () or Russian State Short-Term Bonds which are often referred to as Russian Government Bonds or T-Bills.