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. Last Updated: 07/27/2016

Central Bank Vows to Set Record Straight on FIMACO

Russia's Central Bank chief Viktor Gerashchenko said Thursday that the Central Bank would come clean when the results are released of an audit into the bank's use of an obscure offshore company, FIMACO, to manage its reserves.

"The auditors will come to the conclusion that no violations were committed and that all the funds transferred to FIMACO were returned to the Central Bank," Gerashchenko told a Cabinet meeting Thursday, Itar-Tass reported.

Both the International Monetary Fund and several Russian politicians critical of the Central Bank have been waiting for the results of an investigation into FIMACO by Central Bank auditors PricewaterhouseCoopers for months.

The results of the audit are due to be made known next week.

Prosecutor General Yury Skuratov stirred up a major scandal when he alleged in February that the Central Bank had secretly churned $50 billion in hard currency through FIMACO between 1992 and 1997.

Nikolai Gonchar, a deputy head of the State Duma budget committee, repeated Thursday his earlier allegations that the Central Bank had used the Jersey-based firm to siphon off millions of dollars in profits generated through insider trading on the GKO market.

He claimed Gerashchenko was turning the audit into a farce by claiming he knew what the results would be before they are released.

"The auditors should present these results before the Duma. I have to see for myself exactly what documents they had access to," he said.

Gerashchenko has refused to make public the results of previous audits into Central Bank activity.

The IMF has said it would only approve its loan program to Russia when it has seen the auditors report on what happened to funds channeled through the company.

Outgoing U.S. Treasury Secretary Robert Rubin fielded questions earlier Thursday from senators worried that the current IMF loan package would disappear into similar off-shore zones.

"This money will never actually go to Russia," Rubin said.

"The money that is going to Russia is less than the money that Russia owes the IMF and will be used for that purpose," he reassured the senators, Itar-Tass reported.

Gerashchenko also told the Cabinet on Thursday that seven of a list of 18 top banks could face action to make them bankrupt.

The 18 banks were those which the Central Bank considered major banks and had organized for the World Bank to audit them to check their financial situation after the crisis of August 1998.

So far, only one former top bank, Bank Menatep, has had its license withdrawn.