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Yeltsin Fires Top Diamond Official

February 21, 1996

MOSCOW (AP) _ President Boris Yeltsin fired Russia’s top diamond official today for alleged links to a shadowy deal with a California company in which at least $178 million in Russian gems disappeared.

Yeltsin’s office said Yevgeny Bychkov, head of Russia’s Committee on Precious Metals and Stones, was dismissed for ``poor discipline.″

Bychkov already is accused of exceeding his authority and violating currency regulations in a 1993 deal with Golden ADA of San Francisco. He has denied any wrongdoing and was not available for comment today.

Russia shipped rough diamonds to the company for cutting and polishing, but got neither stones nor money in return. Bychkov has sued Golden ADA, and a California court has frozen the company’s assets.

Russia has admitted shipping at least $178 million in uncut diamonds, gold coins and other valuables to Golden ADA without security or advance payment, in violation of its own rules.

Diamond industry experts say the embarrassed Russian government may be concealing its real losses, which could hit $400 million.

U.S. federal investigators suspect the Russian mob stole the gems. The company’s Russian owner, Andrei Kozlenok, also is missing.

It was not clear what effect Bychkov’s firing would have on Russia’s current negotiations with De Beers Consolidated Mines Ltd. of South Africa, which runs the cartel through which major diamond producers market most of their stones.

Russia, one of the world’s biggest diamond producers, exported about $1 billion in rough gem diamonds in 1995. Its contract with the cartel has expired and negotiators hope to reach a new agreement.

Bychkov has pushed for greater independence from the cartel, proposing Russia increase the share of uncut gems it sells directly on the world market. Russian media speculate that De Beers may be connected with charges against Bychkov.

Bychkov was one of several people that Yeltsin, running for a second term, dismissed today. Only a few days ago, he mentioned Bychkov by name when promising in a campaign speech to take action against official corruption.

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