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. Last Updated: 07/27/2016

Pacolli Admits Credit Card Role

HAJVALI, Yugoslavia -- A construction magnate at the center of a kickback scandal involving former President Boris Yeltsin of Russia and his family, acknowledged Thursday that he helped supply the family with credit cards.

But the executive, Beghjet Pacolli, whose company had major construction contracts in Russia in the 1990s, including renovating the Kremlin, said he gave only an international financial guarantee for the Russian bank that issued the credit.

Pacolli, a Kosovo Albanian, insisted that the scandal was "nothing." He said that he did not pay the bills and that the family might not have been aware of his help.

When the scandal became public in the fall, Yeltsin denied all knowledge of the cards in a phone conversation with President Bill Clinton.

Pacolli, 48, has until now denied involvement. But in an interview Thursday he said he had helped arrange five cards with a Swiss bank for Yeltsin's daughters, Yelena Okulova and Tatyana Dyachenko; their husbands; and Yeltsin's wife, Naina. No card was issued to Yeltsin, Pacolli said, adding that he never saw or paid any bills.

"I only gave technical help," Pacolli said. "In 1995, no Russian banks had credit cards, and they had no convention with credit card companies," he said, relaxing by a fire in his house outside the Kosovo capital, Pristina.

Pacolli said he was in Moscow in 1995 working on a new building for a Russian bank, the Industrial International Bank, when the head of the bank asked him about credit cards for the Yeltsins. The Yeltsins had accounts at the bank, and Tatyana Yeltsin had asked about cards.

The director reportedly said that he would arrange it, but that without an agreement he could not issue the cards.

"I said to him, 'OK, I will speak to my bank,'" Pacolli recalled.

Back in Switzerland, where his company, Mabetex, has its headquarters, Pacolli asked his bank about the cards. Because the bank, Banca del Gottardo, had not heard of the Russian bank, Pacolli gave a personal guarantee, vouching for it.

"I did not make any guarantee to cover the bills," Pacolli said. "I just gave a guarantee for the IIB bank."

He carried the cards in a sealed envelope to Russia and delivered them to the bank, he added.

The arrangement lasted two months, because the Russian bank later signed a contract with Visa in the United States and canceled its guarantee for the Swiss cards. Pacolli then canceled his guarantee, and the cards were returned.

"That is the truth I am speaking in my own house," he said. Pacolli, here to present ideas to rebuild the capital, spoke openly about Mabetex's worldwide activities. He said although he had excellent relations with top Russian officials, as a Kosovar he also often encountered hostility, especially from members of the nationalist-dominated State Duma. He said investigations by the state prosecutor, Yury Skuratov, whom Yeltsin had tried to oust unsuccessfully two times, had been prompted by such figures.

The credit card scandal became public, he said, because of information from Felipe Turover, a former employee of the Swiss bank.

"He was fired and he was very angry and denounced the bank, and my guarantee was revealed and was made into an iceberg," Pacolli said.

He said Mabetex had obtained contracts in Russia and other former Soviet states through a good reputation. He said Yeltsin and the former prime minister, Viktor Chernomyrdin, had sought out Mabetex for state projects after having seen its first Russian project, a conference hall in Sakha.

But Pacolli conceded that Mabetex had paid the necessary dues, when required, "in the interests of my business." He agreed that no company could conduct business in Russia without paying kickbacks, bribes or making "donations."

"Everyone knows it," Pacolli said, "and every foreign company does it."