STATEMENT OF EMANUEL E. ZELTSER
(7 minutes 05 seconds; 1096 words)
Mr. Chairman, Esteemed Members of the
Committee:
I am a New York attorney, also
qualified as a lawyer in the former USSR. I represent here the American Russian Law
Institute, a not-for profit legal and 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.
In 1992, at the request of then Russian
Minister of Justice, my colleagues and I participated in drafting of the new Russian
banking legislation. In 1993, jointly with the Academy of Jurisprudence of the Ministry of
Justice of Russia and the Law School of Pittsburgh University, we translated and codified
the first Official English language Codification of Russian trade and commercial laws.
For the past several years my Russian
and American colleagues and I have taken part in major litigations in Russia, the US and
other countries, involving the Russian banks’ interaction with the Western financial
system in general and with the Bank of New York in particular.
[EXHIBIT 1.
PHOTOGRAPH OF
VINOGRADOV
AND GROSHEV]
The man on the left is Vladimir
Viktorovich Vinogradov. Until October of last year Mr. Vinogradov was the Tsar of a realm
called Inkombank, one of the largest privately owned Russian banks and the biggest Russian
correspondent of the Bank of New York. The man on the right is Vladimir Groshev, a former
high ranking official of the Soviet Politburo and the chairman of Inkombank’s governing
board.
Prior to Inkombank’s collapse last
year, Mr. Vinogradov was also one of Russia’s five foremost oligarches, reigning over a
financial-industrial empire consisting of commercial concerns, state of the art military
production facilities and an array of obscure offshore corporations. In the past five
years Mr. Vinogradov has been implicated in massive world-wide financial frauds, currency
market manipulations, financing of narcotics trafficking, laundering of illicit proceeds,
contract murder and other Russian mob-related activities.
We now know that Vinogradov, one of the
most notorious, powerful and dangerous Russian dons, was also most welcome and respected
guest in the highest circles of financial elites in the United States and other Western
countries.
[EXHIBIT 2. CHART
OF INKOMBANK’S
CORRESPONDENT ACCOUNTS]
According to Inkombank’s own
promotional material this mob-controlled bank had correspondent relationships with top
banks in the United States, Canada, Switzerland and many other Western countries. Its
representative offices and branches were licensed in Switzerland, UK, Germany and Cyprus.
Illicit proceeds could flow to any point in the world at the touch of a button in Moscow.
In May of 1996, the US Security and Exchange Commission approved a $10 M Inkombank/Bank of
New York joint securities issue, known as ADR. The American public was given the
opportunity to buy an equity stake in the world’s most profitable enterprise, Russian
Organized Crime.
How could this all have happened? The
answer is: easy -- because the most sophisticated security systems are ineffective
when they are turned off. And who better to push the “disarm” button than those whose
duty it is to respond to the alarm?
In the past several weeks the press
abundantly referred to a certain letter which the former head of BONY’s Eastern European
Division, Natasha Gurfinkel, forwarded to the Chairman of the Federal Reserve Board, Alan
Greenspan. The letter praised Inkombank and urged the Fed Chairman to expedite approval of
Inkombank’s representative office in the US. The media never mentioned however, how this
letter originally surfaced.
[EXHIBIT 3.
LETTER FROM GURFINKEL
TO ALAN GREENSPAN]
The letter dated April 23, 1996, was
produced by the Bank of New York itself pursuant to my subpoena in a litigation involving
Inkombank.
[EXHIBIT 4. CBR
AUDIT REPORT]
Ms. Gurfinkel wrote this letter to Mr.
Greenspan amidst revelations that a surprise audit of Inkombank by the Central Bank of
Russia uncovered multiple improprieties, indeed, criminalities and recommended severely
restricting Inkombank’s license.
If I were to wonder around the Bank of
New York’s headquarters on One Wall Street, I would definitely be approached and
questioned by its security personnel. Not so if a BONY’s senior officers says: “this
guy is with me”. We do not know at this time whether sufficient evidence will
ever be uncovered to prove beyond reasonable doubt any crimes which may or may not have
been committed by some of the Bank of New York officers. I do know however something which
is perhaps more damaging to the banking system, possibly the American system of values.
The Bank of New York brought Russian organized criminals into the US and world banking
systems by-passing security because “these guys were with them”. [EX. 1, THE
PHOTOGRAPH]
I want to be clear that I do not
suggest that the Bank of New York bears 100% responsibility for the “he is with me”
phenomenon. Rulers of Russian criminal and semi-criminal empires, loaded with billions of
dollars of the monies stolen from Western creditors, including the IMF, secured the
unwarranted “he is with me” endorsements from other banks,
“political” law firms, major accounting firms and other power brokers. This permitted
them to manipulate American banking system as well as legal system.
Zealously courted by prodigiously
compensated endorsers Russian mob-bankers have been successful in subverting and delaying
for years investigations and judicial proceedings relating to their machinations in the
US, persuading regulators to disregard reports of whistle blowers, casting aspersions on
“unfriendly” witnesses by the strategic phone calls, and removing those who could not
be thoroughly defamed by intimidation, harassment and strong arm tactics -- all according
them ample time to launder and secret their loot in their offshore coffers before
declaring their banks insolvent. Indeed their diversionary machinations compelled the
shareholders opposing Inkombank in the proceedings pending in the District Court for the
Southern District of New York to request District Judge to recuse himself because of the
bias in favor of Inkombank and extra-judicial communication with its principals.
The Chairman most correctly identified
the issues which are before this Committee as (a) "... whether foreign theft has been
facilitated by self-serving banking practices in the Western world, including the
U.S."; and (b)”...with regard to the Bank of New York, the question is whether they
were unwittingly duped or were willing facilitators." In the past four years my
colleagues and I, with the help of several brave Russian-American news reporters,
assembled significant evidence showing that regrettably the answer to the first question
is yes. As regards the Bank of New York, the evidence shows that at the very least its
management was willfully blind in disregarding alarming evidence that its Eastern European
Division provided Russian organized crime wide access to the US and western banking
systems.
The Institute was called upon by the
Chairman to share this evidence with this Committee and provide our input as regards
Russian banking system and laws and I will be pleased to answer the questions which the
esteemed members of the Committee may have in this regard.
- END -
