Bank Dismisses Executive in Money-Laundering Case

The Bank of New York on Friday fired one of two executives suspended amid allegations that Russian mobsters had used accounts at the bank in a major money-laundering operation.

Lucy Edwards was in charge of the bank’s Eastern European operations in London. She was suspended Aug. 18, and her home and office were searched by authorities three days later.

Cary Giacalone, a spokeswoman for the bank, would not elaborate on Edwards’ dismissal. However, Edwards was reportedly suspected of misconduct and falsifying records.

A second executive suspended by the bank, Natasha Kagalovsky, a senior vice president in New York who also supervised the bank’s business in Eastern Europe, has denied wrongdoing.

Edwards could not be reached for comment and has not been charged with any crime.

Investigators suspect that billions of dollars were moved through accounts at the Bank of New York, partly through a company called Benex Worldwide Ltd. Edwards’ husband, Russian businessman Peter Berlin, is listed as a director of Benex.

Investigators believe the total amount funneled through the bank may exceed $10 billion, reports have said.

Among evidence found by British police during a search of Edwards’ London apartment last week was Bank of New York stationery with her home address on it, according to media reports. Investigators suspect she may have been conducting business from her house using the bank’s name, one report said.

Law enforcement authorities also are reportedly investigating the activities of Kagalovsky’s husband, Konstantin, who was Russia’s representative to the International Monetary Fund from 1992 to 1995 and later worked as a senior executive at Russia’s Menetap bank. He now is vice president of Russian oil giant Yukos.

The couple released a statement Thursday denying any wrongdoing and dismissing reports of Russian mob involvement as an “anti-Russian campaign.”

On Friday, the chairman of the House Banking Committee said IMF loans to Russia should be halted until controls are put in place to prevent illegal diversions of the sort that may have occurred through the Bank of New York.

“Unless and until firm methodologies for safeguarding funds are established, a moratorium ought to be put into place on IMF lending to Russia,” Rep. James A. Leach (R-Iowa) said.

The House Banking Committee plans to hold hearings next month on the issue.

The Bank of New York is the 15th largest in the nation.