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The Biggest Money Laundering Scandal In History

Concern is mounting worldwide that donor-money countries provide to the IMF and World Bank for loans may not be reaching those in need. John Howard reports.

What international law enforcement agencies now call the biggest criminal money laundering scandal in history is developing in Russia where an estimated US$ 40 billion in IMF and World Bank Loans has found its way into the wrong hands.

This follows revelations last week that US$ 200 million in World Bank Loans to China for a "Technlogy Development Project," went towards weapons research labs and businesses wholly owned by the Chinese army.

In the Russian scandal Swiss, American and British investigative officers regard the scandal as just the tip of the iceberg of theft and corruption.

The money, originally intended to assist development of a new free Russia, is alleged to have been used to gain control of major blocks of former Soviet state-businesses which are again sold-off and the "new" money shipped out of the country and into Swiss and American Bank Accounts.

Switzerland's federal prosecutor, Carla Del Ponte held an emergency meeting last week with Russia's prosecutor, Nikolai Volkov, to discuss the corruption allegations against top Russian officials.

The Russian people are said to be outraged that money intended to rebuild their shattered economy is being looted by what they call "internationalist" thieves.

The Clinton Administration have been one of the most powerful advocates of the Russian bail-out programme and investigators are now turning their focus towards Washington and American banks.

Meanwhile, the Chinese scandal is far from over. From a 1995 report written by the Industry and Energy Operations Division of the World Bank "The objective of the project is to support the Chinese Government's continuing reforms in technology policy and institutions so as to promote the development of clear, productivity-enhancing technologies in China's industries."

"The Government will pass on US$ 194.3 million of the loan proceeds through SPC (State Planning Commission) to eligible sub-borrowers in the form of sub-loans with the Golden China Corporation acting on its behalf as a financial agent," the report says.

However, according to the US Defence Department, Golden China Corporation and many of the so-called "Engineering Research Centres (ERC's)" supported by World Bank loans are owned and operated by the Chinese army unit COSTIND, (Chinese Commission for Science, Technology and Industry for National Defence).

US$ 5 million of World Bank loans were provided to the Northwest Institute for Nonferrous Metal Research. This organisation is part of the National Nuclear Corporation, the producer of all nuclear weapons for the Chinese Army.

Another US$ 5 million went to the Harbin Research Institute identified by the US Defence Department as a Chinese army front used to purchase Allied Signal turbo-fan engines for the Chinese air force.

Over US $4 million of World Bank loans went to the Nanjing Radio Factory for "audio/visial" products used in satellites, radio's, CD players and television sets. This factory is also owned and operated by the Chinese army.

The Xi'an Jiatong University also received US$ 3 million for "fluid machinery" research used in turbo-compressors. The university is another organisation identified by the US Defence Department as a major research centre for the Chinese army, sharing facilities with the army's chemical and biological weapons facilities that are located nearby.

According to a 1997 Rand Corporation report on the Chinese Defence industry, the profits from the army's business ventures, including textile exports, are split between the army and the general's.

US House of Representative Policy chairman, Rep Christopher Cox, says the White House claimed in September to have assigned the task of identifying the Chinese Army's companies to the Defence Intelligence Agency (DIA). The DIA, however, has informed congressional leaders that the White House did not ask them to prepare such a list.

US Congressional leaders are said to be calling for a widespread anti-corruption inquiry with a view to a clean-out of the IMF and World Bank loans system. Nations who provide donor-money to aid the world's impoverished countries will have a significant interest in a future investigation. They should stop providing funds until there is.


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