Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

53. On Zimmerman and the Yale endowment, see “Yale Connection to Harvard Russian Fraud Case,” Yale Insider , October 1, 2002, http:/www.yaleinsider.org/article.jsp?id=16, accessed October 1, 2002. On Shleifer’s advisory role with regard to GKOs, see United States District Court District of Massachusetts, US Complaint and Jury Trial Demand, USA, Plaintiff, vs. The President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman, and Elizabeth Hebert , pp. 25, 27; and Bruce Rubenstein, “Harvard Accused of Ignoring Russian Aid Scam: Academics Rigged Russian Market,” Corporate Legal Times , January 2001.

On Harvard Management Company’s deals, see Wedel, Collision and Collusion , pp. 160–165. Aside from these deals, the Harvard Management Company also may have benefited from information provided by this nexus of players. Andrei Shleifer acknowledges in his deposition that he had numerous conversations with a Harvard Management Company representative. He said that that representative also met with Jonathan Hay and Maxim Boycko in Russia. See United States District Court for the District of Massachusetts, United States of America, Plaintiff, v. The President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman, and Elizabeth Hebert, Defendants , Civil Action No. OOCV11977DPW, Deposition of Andrei Shleifer, October 16, 2001, pp. 838–842. It remains for financial investigators to discover just how much of the mushrooming Harvard endowment (from $4.683 billion in 1990 to $19.200 billion in 2000, with this 310 percent increase [http://www.ilr.cornell.edu/cheri/wp/cheri_wp16.pdf] largely attributed to “emerging markets”) is due to investments in Russia. That some people made themselves instant millionaires—even billionaires—during the period is a fact.

54. See Deposition of Lawrence Summers in: United States District Court for the District of Massachusetts, United States of America, Plaintiff, v. The President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman, and Elizabeth Hebert, Defendants , Civil Action No. OOCV11977DPW, Deposition of Lawrence Summers, March 13, 2002, pp. 109–114, especially p. 112.

55. With regard to Chubais receiving money for privatization favors, the money came from Potanin’s Oneximbank through a Swiss subsidiary as a front. See, for example, Dimitri K. Simes, “Moscow on the Potomac–Russian Foreign Policy,” National Review , January 26, 1998, http://findarticles.com/p/articles/mi_m1282/is_n1_v50/ai_20221441/print (accessed 4/9/2008). See also http://www.pbs.org/wgbh/pages/frontline /shows/crash/etc/russia.html and Global Integrity Report , which reported in November 1997: “President Yeltsin removes Anatoly Chubais from his post as Finance minister after it is revealed that Chubais and three other top officials received a US$90,000 book advance in an alleged ‘sweetheart’ deal” (http://report.globalintegrity.org/Russia/2008/timeline).

56. For Russian corruption in the headlines, see, for instance, Eric Schmitt, “State Dept. Expert Upbeat About Russian Fund Case,” New York Times , September 24, 1999, http://query.nytimes.com/gst/fullpage.html?res=9400E4DB123FF937A1575AC0A96F958260.

For Chubais’s statement with regard to IMF funds, see Kommersant Daily , September 8, 1998, and Los Angeles Times , September 9, 1998.

For the meeting in Summers’s home, see Michael R. Gordon and David E. Sanger, “Rescuing Russia: A Special Report; The Bailout of the Kremlin: How U.S. Pressed the IMF,” New York Times , July 17, 1998, p. A1.

For Summers’s congressional testimony: Summers, “The United States and Russia, Part II: Russia in Crisis,” U.S. House of Representatives, Committee on International Relations, Washington, DC: U.S. House of Representatives, September 17, 1998, Hearing Transcript, pp. 29–30.

With respect to the Bank of New York, in August and September 1999, newspapers reported that billions of dollars had been laundered through it. See Raymond Bonner with Timothy L. O’Brien, “Activity at Bank Raises Suspicions of Russia Mob Tie: Billions Thought to Be Laundered Through Bank of New York,” New York Times , August 19, 1999, p. A1.

For details regarding the alleged involvement of Chubais and Kokh, see, for instance, Oleg Lurye, “Alfred i ego barbadoss,” Novaya Gazeta , July 16, 2001, http://www.novayagazeta.ru/data/2001/49/02.html, and a summary of the article in Jamestown Foundation Monitor , “Did Chubais Launder Money Through The Bank of New York?” July 18, 2001, http://www.jamestown.org/publications_details.php?volume_id=24&issue_id=2066&article_id=18551.

For details about the Bank of New York case, see Alan A. Block and Constance A. Weaver, All Is Clouded by Desire: Global Banking, Money Laundering, and International Organized Crime (Westport, CT: Praeger, 2004).

57. The name of Moscow’s energy conglomerate is Mosenergo.

For information on Chubais’s current positions, see: http://document.kremlin.ru/doc.asp?ID=47868

and http://www.marketwatch.com/story/jp-morgan-appoints-anatoly-chubais-to-advisory-council. For information on Vasiliev’s positions, see: http://corp-gov.ru/bd/db.php3?db_id=3623&base_id=3.

58. The Donnelly quote is found in John Donnelly, “The New Crusade: Jeffrey Sachs’s Mission to Reform the Russian Economy Was a Bust. The Harvard Economist’s Campaign for Global Health Is Faring Better—So Far,” Boston Globe Magazine , June 3, 2001, p. 14.

Sachs honed his skills as a flexian in the late 1980s and early 1990s—most famously in central and eastern Europe and the former Soviet Union. For instance, while in the United States Sachs presented himself as a pro bono consultant in eastern Europe (when in fact he often worked under the umbrella of his consulting firm, Jeffrey D. Sachs and Associates Inc.). He and his colleagues also appeared as advisers to the Russian side during negotiations in 1992 between the IMF and the Russian government. At the same time, according to journalist John Helmer, they were writing secret memoranda advising the IMF negotiators. (See John Helmer, “Russia and the IMF: Who Pays the Piper Calls the Tune.” Johnson’s Russia List , no. 3057, February 17, 1999.) And when the future of Yegor Gaidar, the first “architect” of economic reform, with whom Sachs had been working, was precarious and he came under attack in the Russian parliament, Sachs switched loyalties and offered his services to Gaidar’s opposition. (Memorandum from Jeffrey Sachs to Ruslan Khasbulatov of November 19, 1992, in author’s possession; author’s interviews with Stanford University economist Michael Bernstam of August 21, 1997 and October 17, 1997.)

With regard to activities in the 2000s, in 2002, Sachs, by then head of Columbia University’s Earth Institute, obtained an appointment as a special adviser to Secretary General Kofi Annan on the Millennium Development Goals (MDGs). He also became director of the Millennium Project, commissioned as an independent advisory body underwritten by a special Millennium Trust Fund administered by the United Nations Development Program (UNDP), the UN’s global poverty-fighting network and its biggest provider of development grants. Through this arrangement, Sachs set up a UNDP-funded parallel informal structure. At the same time he became identified with other initiatives that blurred into what John McArthur, his right-hand man, described as a “hodgepodge” of all things Millennium—among them the Millennium Villages Project, model development experiments to mitigate poverty in selected African villages, and Millennium Promise, the project’s financing arm (author’s conversation with John McArthur, October 2, 2007). (For a blog that shows the interconnectedness of these projects, see http://blogs.ei.columbia.edu/blog/author/jsachs/. For a Web site describing Millennium Promise and Millennium Villages Project, see http://www.millenniumpromise.org/site/PageServer?pagename=about.) While of these initiatives the UNDP housed only the Millennium Project, no one in Sachs’s parallel hodgepodge formally reported to the UNDP management, according to UNDP sources here cited. This meant that Sachs et al. were able to circumvent many of the UNDP’s institutional standards, regulations, procedures, and training requirements, while appearing to be sanctioned by the secretary general (or someone at the top), as well as the administrator of UNDP, a strong supporter and longtime associate of Sachs. McArthur’s characterization of the Millennium Project as a “special status project” that was “for the UN, but not of the UN” is telling. The ten or so full-time equivalent staff (at any given time) on the project (author’s conversation with John McArthur, October 2, 2007) were granted UN passports and UNDP identification and they enjoyed the same salaries, benefits, and privileges of UNDP employees. Yet these staff were not recruited, vetted, or trained by the UNDP, though their contracts and paychecks were issued by the UNDP. They did not report to the UNDP, but to Sachs. UNDP staff did not evaluate the Millennium Project or approve the publications it issued. Yet all these actions were sanctified under the mantle of Annan’s authority, if not undertaken with his knowledge or direction. (Information and documents provided to author by UNDP sources, including Dorothy Rosenberg, former senior adviser for MDGs and civil society, UNDP; author’s interview of March 13, 2007 and e-mail messages of February 20, 2007, and March 12, 2007.) Rosenberg recalls: “They continually made clear that their mandate came from the Secretary General and they were not subordinate to anyone in UNDP” (Email of October 16, 2007 to Janine Wedel from Dorothy Rosenberg.) Eventually, in 2006, under criticism from numerous quarters, the UN set out to wrest control of the project. Yet the distinctions and lines of authority remained messy as of 2008, with people who converted to regular UNDP staff still taking orders and doing work for Sachs et al.