Geneva blocks accounts in Russia laundering probe

(Reuters) – A Geneva investigating magistrate said on Tuesday he had blocked bank accounts as part of an inquiry into money-laundering allegations linked to Swiss-based construction firm Mabetex, which renovated Kremlin buildings.

(Reuters) – A Geneva investigating magistrate said on Tuesday he had blocked bank accounts as part of an inquiry into money-laundering allegations linked to Swiss-based construction firm Mabetex, which renovated Kremlin buildings.

“I have frozen accounts in connection with (the) Mabetex (inquiry),” Devaud told Reuters in response to a query. “I cannot say how many accounts or how much money is involved as the investigation is covered by judicial secrecy.”

Devaud did not make clear whether the accounts were directly held by Mabetex or just associated with the investigation.

“I blocked the accounts after the Geneva prosecutor informed me he had opened an inquiry on suspicion of money-laundering,” the magistrate said. “That was in early July.”

The head of Mabetex, Behgjet Pacolli, said none of his company’s accounts had been seized and reiterated that his firm had done nothing wrong.

“No accounts from Mabetex have been frozen. None of my private accounts or those of Mabetex have been frozen,” he told Reuters. “Our business is very clean. It is not my problem.”

He said Mabetex, which is based in the Italian-speaking Swiss canton of Ticino, had no accounts in Geneva except for a “very old consortium account”.

Devaud gave no details but said he had taken the action after Geneva’s chief prosecutor Bernard Bertossa had opened an inquiry into alleged money-laundering.

Bertossa’s office said he was not available for comment on Tuesday but the Geneva daily Le Temps said he was looking into accounts held by a total of 24 Russian nationals.

Devaud declined to confirm a report in the Italian daily Corriere della Sera newspaper that one of the frozen accounts was used by Pavel Borodin, who runs the Moscow office responsible for the Kremlin’s vast real estate holdings.

Borodin has repeatedly denied any wrongdoing. Le Temps quoted him as saying he had no Swiss accounts.

“The provocations are purely political, initiated in Moscow and aimed against President Yeltsin,” Borodin said in July when Swiss prosecutors first said they had asked banks to check on accounts held by Russians, allegedly including Borodin.

The Kremlin last week strongly denied separate allegations that President Yeltsin and his family may have benefited from money or facilities provided by Mabetex in Switzerland.

The issue has blown up as Russian politicians are preparing for a campaign for elections for parliament in December and for the presidency in mid-2000, when Yeltsin must step down.

Banking regulators in the United States and Europe are investigating separate allegations that billions of dollars of Russian money may have been laundered through Bank of New York.

In Berne, a senior Russian investigator into allegations of official corruption in Moscow began a second day of talks with Swiss federal authorities. Officials said investigator Nikolai Volkov was not scheduled to go anywhere else in Switzerland and would be returning to Moscow on Friday.