Bank of New York Fires 2nd Executive as Probe Intensifies : Scandal: Investigation into whether Russian mafia used accounts to launder money faces an uphill battle.

Bank of New York Co. has fired another executive amid the intensifying federal probe into whether the Russian mafia used accounts there to launder billions of dollars drained from the former Soviet Union.

A person familiar with the case said the employee, Svetlana Kurdryavstev, a New York-based associate in the bank’s international division who handled Eastern European accounts, was fired for failing to cooperate in the bank’s internal review of “certain accounts.”

So far, the bank has fired or suspended three women executives, two of whose husbands have links to businesses under investigation in the money-laundering probe. Dismissal of Kurdryavstev comes as federal agents are sifting through thousands of transactions at the bank, a Wall Street institution whose foray into international finance includes handling transfers for Russian banks.

Investigators are trying to determine the source of more than $4.2 billion--and as much as $10 billion--that passed through Bank of New York accounts related to at least one firm, Benex International Co., since late 1997.

But the probe faces an uphill battle in proving much of the money represents criminal proceeds. Billions of dollars have spilled out of Russia and other former Soviet republics since the end of the Cold War as the political and business elite scrambled to shelter their assets--legitimate and otherwise--from the fragile bank structure and Russia’s punitive tax laws.

Some of this so-called capital flight is legal. And as the volume of funds streaming through Bank of New York makes clear, the U.S. has become a popular destination for money.

“The United States,” said one U.S. official, “has become the Cayman Islands of Russia in the 1990s.”

What’s more, efforts to overhaul the nation’s financial machinery have been crippled by the pervasive influence of organized crime. Russia’s top prosecutor has said publicly that near half its economy is controlled by mafia organizations.

Semyon Mogilevich, a reputed Russian mobster and a central figure in the current investigation, has been linked to Benex. He has denied any wrongdoing.

A confidential British intelligence report describes Mogilevich as “one of the world’s top criminals,” and current and former investigators say his organization stretches from Budapest, Hungary, to Tel Aviv to Los Angeles, where its members have been linked to at least one botched contract murder. People familiar with the organization say it also devised a scheme to defraud Medi-Cal in the 1980s.

Meanwhile, a Russian representative to the International Monetary Fund announced his resignation. Mikhail Zadornov, a longtime member of the Russian Cabinet, said he was resigning to run for parliament. He said at a news conference that his decision had nothing to do with reports that IMF aid to Russia, which totals about $16 billion since 1991, was illegally diverted to Bank of New York.

IMF officials have said they have found no evidence that loan funds were misdirected. But IMF became concerned this summer when a PricewaterhouseCoopers audit showed the Russian central bank had secretly parked $1.2 billion in IMF money in Financial Management Co., or Fimaco, a firm the central bank controlled in the Channel Islands off the coast of Britain.

“We have succeeded in fully renewing our relations with international financial institutions,” Zadornov said. “I consider my mission fulfilled.”

Kurdryavstev is the second Bank of New York executive terminated since the case was publicly revealed. She could not be reached for comment.

Lucy Edwards, who oversaw Eastern European accounts from the bank’s London office, was initially suspended Aug. 18, the day after British police searched her home, said a person familiar with the matter. Edwards was then dismissed last week for falsifying records and other misconduct, sources said. She is married to Russian businessman Peter Berlin, a director of Benex.

An attorney for the couple, T. Barry Kingham, said Thursday that they “firmly deny wrongdoing.”

Another employee, Natasha Kagalovsky, a senior vice president who directed the Eastern European division from New York, was suspended Aug. 18. Her husband, Konstantin, was deputy chairman of a now-insolvent bank, Menatep, and served until 1995 as Russia’s representative to the IMF.

No one has been charged in the case. People familiar with the matter said the unexpected disclosure of the inquiry in the press two weeks ago forced investigators to scrap a planned undercover operation.

The bank, which said it is cooperating in the investigation by the U.S. attorney’s office in Manhattan, has retained KPMG Peat Marwick to review its internal monitoring procedures.

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Times wire services were used in compiling this report.