Russian Under Suspicion Goes on Offensive

If the vortex of Kremlin money scandals has a center, his name is Pavel Pavlovich Borodin.

Borodin’s title--director of the Kremlin’s property department--may not pack a wallop. But the nine telephones on his desk demonstrate his might. Four are direct lines to Russia’s most powerful men: the heads of the two houses of parliament, the prime minister and President Boris N. Yeltsin.

Borodin is the only Russian official Swiss prosecutors so far have named as a target in a probe of Kremlin ties to a Swiss company. As FBI investigators seek the source of what they suspect is massive Russian money laundering through U.S banks, Borodin is also the first Kremlin official to go on the offensive.

“I spoke to the president just before you came,” he said Tuesday in an interview with The Times. “He told me: ‘Don’t pay attention to such filth. I would ignore the scoundrels.’ ”

As Borodin portrays it, the Russian financial scandal is a clever political conspiracy by hard-liners in Russia and the United States seeking to discredit their respective presidents.

In Russia, he said, Yeltsin’s political enemies are trying to use him to get at the president. And in the United States, he added, Republicans who can’t criticize the Clinton administration’s economic program are taking aim instead at its policies toward Russia.

“The Republicans are staging a savage attack against [Vice President Al] Gore. They can’t find anything serious on him. The [U.S.] economy is in a good state . . . so they write that he lobbied the IMF [on behalf of Russia] and $15 billion was stolen,” he said, referring to the International Monetary Fund.

The FBI is trying to trace the source of about $10 billion that passed through the Bank of New York in the past year in what investigators suspect was money laundering. So far there have been no charges of criminal wrongdoing in the case.

Some news reports have speculated about a link between the money and top officials in the Russian government, but the Kremlin has not been implicated in the Bank of New York scandal.

But in a separate scandal involving a Swiss engineering company, Russian and Swiss investigators are looking into whether Borodin, Yeltsin or others accepted bribes or kickbacks from Mabetex, a Swiss firm that took part in the renovation of a number of Kremlin properties.

In July, Swiss authorities launched an investigation into two dozen bank accounts allegedly belonging to Russian officials. The only account owner they have listed by name is Borodin.

Last week, an Italian newspaper, Corriere della Sera, reported that the head of Mabetex provided Yeltsin and his family with credit cards and deposited $1 million in a Hungarian bank for their personal use. Both the Kremlin and Mabetex director Behgjet Pacolli have denounced the stories as untrue.

The stakes for the Kremlin are high. For years, Russians have believed that the political elite has been looting the country’s best assets for personal gain. But past investigations have petered out before anyone was brought to trial.

Should the Mabetex allegations be proved, Yeltsin would be seen not only as the president who helped dismantle the Soviet Union but as the president who looted its ruins.

As president, Yeltsin enjoys immunity from prosecution. If the scandal generated evidence that he personally violated any laws, he might cling to power as a way to avoid prosecution.

For the most part, the Kremlin has ignored the charges. But last week, the facade cracked when the presidential press service issued a rare statement denying that either Yeltsin or his family has foreign bank accounts.

In the interview Tuesday, Borodin insisted that he also has no bank accounts or credit cards outside Russia.

“I don’t rule out that somebody may have opened an account in my name, just as someone may have opened a credit card in my name,” he said. “This is simply politics. I am of little interest here. They are after Yeltsin.”

He left unnamed the “they” but made clear whom he meant: the new political team of former Prime Minister Yevgeny M. Primakov and Moscow Mayor Yuri M. Luzhkov, who have formed an anti-Kremlin election bloc.

Borodin doesn’t raise his voice when he speaks. He doesn’t need to. He is a big man with a hefty build who is clearly used to commanding attention. His style is equal parts “new Russian” and “old apparatchik”: He wears an Hermes tie but has decorated the wall facing his desk with a poster-sized color photograph of his boss.

Borodin said he was interviewed earlier this year for 40 minutes by Russian investigators also looking into the Kremlin’s relationship with Mabetex, but added that they have not shown him documents to substantiate any allegations against him.

“There is nothing to implicate me,” Borodin said. “They can’t provide either accounts or money transfers, credit card slips or property acquisitions. But they accuse me all the same.”

Daniel Deveau, a Geneva-based magistrate investigating the Swiss accounts, confirmed Tuesday that Borodin is implicated in his inquiry. He declined to provide further details, but he ridiculed Borodin’s suggestion that someone could have opened an account in his name without his knowledge.

Deveau said that although Swiss law allows a foreigner implicated in offenses such as money laundering to ask that the findings be sent to the suspect’s home country, “I’ve yet to receive such a request” in this case.

Borodin controls an empire of Kremlin-owned facilities that includes government buildings, country homes, health resorts and fleets of official vehicles. His department employs about 100,000 people and takes in about $2.5 billion annually.

Compared with the size of his operation, Borodin claimed, Mabetex is small potatoes. During his six years in the job, he said, his department has awarded about 340 renovation contracts, of which Mabetex received six. Those six contracts, totaling about $300 million, were awarded in a process overseen by the country’s Ministry of Trade.

“If Mabetex were king of our market, then they would have gotten 250 of the 340 contracts,” he said. “But we gave them only six.”

Borodin acknowledged taking three or four trips to Switzerland to meet with Mabetex officials on two- or three-day visits, with Mabetex picking up the costs. But he insisted that the payments were aboveboard and contractual, with his department picking up the bills when Mabetex officials visited Moscow.

“This is a normal practice in dealing with partners,” he said.

The Russian investigation into Mabetex began early this year under the leadership of Prosecutor General Yuri I. Skuratov, who was subsequently forced from office by the Kremlin. On Friday, the main investigator, Georgy Chuglazov, was taken off the case on the eve of a planned trip to Switzerland to confer with investigators there.

Borodin said he is confident that the investigations will uncover no evidence of criminal wrongdoing. But he is worried that the political storm surrounding the Bank of New York and Mabetex investigations will spin out of control.

“These are different scandals, but they have the potential to escalate,” he said.

Sergei L. Loiko of The Times’ Moscow Bureau and Times staff writer John-Thor Dahlburg in Paris contributed to this report.