Moments in U.S. Diplomatic History

Whistle-Blowing on American Corruption in Russia


USAID unearthed a major corruption scandal in Russia in the late 1990s involving Harvard University’s Institute for International Development.  Dr. Janet Ballantyne, USAID’s mission director, blew the whistle. In her oral history, Ballantyne discusses the consternation this caused with U.S. Embassy leadership, and the repercussions of her reporting on relationships with key Russian officials.

Throughout the 1990s, after the fall of the Soviet Union, the United States and Russia worked together to implement privatization and other economic reforms. USAID funded the Harvard Institute for International Development (HIID) to help design and implement major economic reforms in the country, including privatization and market reforms.  In 1997, however, HIID contractors were found to be using their access to insider information for their own benefit. Harvard later settled with the U.S. government in 2005 and paid what is believed to be the largest settlement ever by a university in a case of this type.

Not long after being rejected from her dream job of becoming a spy right out of college, Janet Ballantyne began her career with USAID in the Latin American Bureau. A strong personality who fought hard for every assignment she set her sights on, Ballantyne landed posts in Peru, Nepal, Morocco, and Nicaragua, and eventually worked as the Mission Director for USAID in Russia (1996-99).

Read Dr. Ballantyne’s full oral history HERE.  

This moment was drafted by Jamie Smith.

Excerpts:
This guy walks in and he has absolutely flawless English and he said, ‘Do you know why you are here?’  I said, ‘I think you are going to kill me.’ I thought that was as good an answer because I didn’t know. He said, ‘We don’t do that anymore.’”

 

Exposing a Rogue Contractor:  There were two things that really defined the period when I was there. One was what is now the infamous case of HIID, the Harvard Institute for International Development. HIID had had the contract to basically oversee the privatization and market reforms. I had been there maybe six months when I started hearing rumblings that the contractors, the HIID people, were abusing their positions.

It turns out they were using insider information for personal gain. When we found out about it, I called our inspector general’s office in a way that caused some issues with the embassy. The so-called Russian reformers were also key to the embassy’s policies and diplomatic goals. They were key interlocutors and the embassy felt that Russia could not move to the next level without these particular reformers. Well some of these were the reformers that were very much involved in the issues with HIID. Some people say it [calling the inspector general’s office] was the stupidest thing I ever did, but I don’t agree. I called in our inspector general without informing the chargé because I knew he would have said no to it.

Backlash from the Embassy: The chargé was furious and I guess I would have been too. I was coming back from Boston . . . and my deputy called me while I was on the way from the airport and said, “Don’t even bother coming here; you have to go right over to talk to the chargé.” I went over and I took one look at his face and thought this is it. Then he took me into the bubble room and proceeded to rake me over the coals. It was clear that my time in Russia was going to be limited unless I did something about it. I said, “The reason that I’ve done this was because it was a clear violation of the ethics of the United States government. This goes beyond who we think are the right people or the wrong people here.  This was wrong; it’s a crime. And I would like to know if the two of you [the chargé and I believe the political counselor] would ever take a man into the bubble room and beat him up as badly as you have beaten me up.” He said, “Oh, this has nothing to do with gender.” I said, “Give me a break. If you want me to leave I will, but my first stop will be at the Washington Post because my next door neighbor happens to be the head of the editorial board and I think people need to know how seriously we take ethics.” He [the chargé] ultimately became my best friend.

Later, when it came out . . . there were serious breaks. I mean this ended up with the U.S. suing Harvard for the largest settlement that it’s ever gotten from a university, $42 million.

Backlash from the Kremlin:  The progressive forces of the government loved us, [but] some of the major reformers, who were seen as key by the U.S. Government, were involved and thus unhappy. But it also resonated very badly with the Kremlin; I mean there were lots of letters going back and forth. One very amusing thing is I sent a letter to the minister of foreign affairs and I did a copy to President Yeltsin’s legal advisor. I got a call from the legal advisor’s office saying the legal advisor wanted to see me in his office as soon as possible. I was to come alone and he gave me which Kremlin gate I was supposed to come to. I didn’t have any idea what it was but I figured this wasn’t going to be good. So I went at the appointed time.  It was not the public gate. I went in the private gate and there was one of the sentries who followed me. I walked down this red carpet, seemingly endless, all of these closed doors with signs in Russian saying the first deputy secretary of the something or other. It felt like we were walking for 20 minutes and we finally came to a door and he said, “Go in here.” I walk in and he says, “Ms. Ballantyne would you please go in and sit here.” I walked into the room and there is nobody there. “Have a seat, Mr. ______ will be here to join you.” So I was there for about ten minutes and this guy walks in and he has absolutely flawless English and he said, “Do you know why you are here?” I said, “I think you are going to kill me.’

I thought that was as good an answer because I didn’t know. He said, “We don’t do that anymore.” He pulls out this letter and he said, “You sent a copy to so and so, you are not allowed to do that, he is to get an original.” I said, “Oh that will be easy. I’ll come back and send him an original.” “You’ve already sent him a copy, so what you have to do is write him an original asking for the copy to be returned and then send him the original.” I said, “I can do that, easy.” He said, “Remember this for next time.”

TABLE OF CONTENTS HIGHLIGHTS

Education

     BA in Government, Cornell University                                                                                                      1957-1961

     MA in Public Administration, Syracuse University                                                                                1961-1962

     PhD in International Development Economics, Cornell University                                                   1969-1975

 

Entered USAID                                                                                                                                                1976

     Managua, Nicaragua—USAID Mission Director                                                                                     1990-1994

     Moscow, Russia—USAID Mission Director                                                                                             1996-1999  

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