Tainted Transactions: An Exchange

National Interest, The, Summer, 2000 by Jeffrey D. Sachs, Anders Aslund, Marek Dabrowski, Peter Reddaway, Igor Aristov, Wayne Merry, Michael Hudson, David Ellerman, Steven Rosefielde

* [dot{A}]slund, as I state in the article, has been involved in business activities in countries while consulting with their governments. He says he was an adviser to the Russian government beginning in the early 1990s. He continued to advocate on behalf of that government throughout the decade, during which he was also linked to Brunswick. Brunswick began as a Moscow-based brokerage firm and evolved into an investment bank, the Brunswick Group. While [dot{A}]slund claims that he only gives "lectures and briefings", he attended an April 1997 banking conference in New York sponsored by Brunswick Securities Ltd. as a representative of Brunswick. He promoted the Russian stock market to institutional investors and money managers, according to Michael Hudson, who also participated in the conference. Hudson adds that the minimum acceptable investment was between $400,000 and $500,000. As to the significance of [dot{A}]slund's business ventures in Russia, it was the head of the Interior Ministry's Department of Or ganized Crime that characterized [dot{A}]slund's investments in Russia as "significant."

* [dot{A}]slund appears not to understand that the problem of conflict of interest is no less real where an expert works in serial for conflicting interests rather than at the same time. The American investment bankers he refers to could well end up in jail if they were to use their Treasury Department contacts in violation of conflict-of-interest and revolving door laws and rules that limit the free use of connections. Thus, [dot{A}]slund sees no problem that the two close associates whom he introduced to privatization minister Chubais, and who helped to design and implement voucher privatization, then started Brunswick Brokerage to help sell vouchers and other assets to Western investors. But there is a problem.

* Nowhere in my article do I say that Sachs has investment activities in Russia.

* Sachs makes much of the distance between his project and that of his Harvard colleague, Andrei Shleifer, who continues to be under investigation by the U.S. Department of Justice. However, Sachs, Lipton and Shleifer are listed as the "three senior members" of the Russia advisory project conducted by Jeffrey D. Sachs and Associates, Inc. As I state in the article: "In time, Sachs and Shleifer emerged as rivals and ran largely separate operations in Moscow." However, "they shared the transactorship mode of operating and many contacts in the Chubais Clan", as well as many Western contacts.

* I have never written that [dot{A}]slund worked for HIID directly. In my book, Collision and Collusion, I did point out that [dot{A}]slund collaborated with Sachs on HIID's unsolicited proposal to advise Ukraine, the details of which are specified in the 1996 GAO report mentioned earlier. I have never said that he has made a huge amount of money on USAID. However, the grants that Sachs and [dot{A}]slund received from several sources were substantial. [dot{A}]slund's advisory project was awarded $642,857 in 1991-92 from the Swedish government. Sachs received $322,728 in salary and fees (not including expenses) for a WIDER Institute-sponsored project billed to Jeffrey D. Sachs and Associates, Inc. The project, the total cost of which was $2,036,122, was funded by the Finnish Ministry of Foreign Affairs and the Sasakawa Foundation.