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IMF to investigate Ukraine charges - Fischer

DAVOS:The International Monetary Fund is investigating charges that Ukraine misused money from previous loans but has yet to find out exactly what happened, a top IMF official said on Saturday.

Stanley Fischer, the IMF's first deputy managing director, said the Fund would look into how Ukraine used some of its reserves in 1997, before the country agreed to quarterly audits of its central bank.

"We're pretty confident about the current situation," Fischer told a news briefing at the World Economic Forum's annual meeting.

"We'll have to go back and check on what happened in 1997 in that allegation. We have no evidence that it happened, but we had better check what happened and we will do that."

The Financial Times reported on Friday that former Ukrainian Prime Minister Pavlo Lazarenko was preparing to air allegations that members of the government of President Leonid Kuchma misappropriated millions of dollars of IMF funds.

Lazarenko, who is wanted in Switzerland on money laundering charges, is seeking asylum in the United States.

According to the report, Lazarenko said some $613 million of IMF funds were invested in high-yielding government securities and he alleged that some of the proceeds were deposited in overseas accounts of people close to Kuchma.

Fischer declined to speculate how the allegations would affect future IMF lending to Ukraine.

"What we'll do about this one -- I'm not sure, we'll have to figure that out. But it's clear what was done in the Russian case," he said.

Russia, the fund's biggest borrower, was accused last year of mishandling IMF money. The IMF says an audit shows Russia lied to it about what it did with cash from a previous loan but that it has no evidence that its money was misused.-Reuters