USA - INFORMATION RELEASE From the GBC Executive Committee, 11 August, 1998

Recently a rumour has been propagated which asserts that Harikesa Swami had speculated with ISKCON and BBT funds on the Russian stock exchange. When the Russian market suddenly collapsed, the rumour continues, tens of millions of Prabhupada's dollars were lost.

The executive committee has investigated this allegation and found it to be false. Here is our report about what actually happened.

Put simply, there was no capital investment and consequently no capital loss, at any time, by either ISKCON or the BBT, on the Russian stock exchange.

Among the many disciples of Harikesa Swami in Moscow were several householders who worked as financial consultants. Together they formed their own investment firm, which in time became enormously profitable. From these profits these devotees offered a substantial donation to Harikesa Maharaja.

Taking the suggestion of some of his disciples, Harikesa Swami asked the Russian financiers to keep the sum they had offered him invested in their company's mutual funds. A percentage of the regular earnings generated by that capital should be used for Krishna conscious projects. (The remainder of the earning would be added to the original capital.) This investment was handled by his disciples, who were professional financial managers, and Harikesa Swami did not take an active part in it.

The sum, invested in long-term stocks, grew considerably. With a high rate of return on the investment, a large and regular fund became available for ISKCON projects.

A preference was given to education, the most important and neglected of Srila Prabhupada's priorities. Thus, there was money to develop a number of important and progressive initiatives in education.

One is the VTE, or Vaisnava Training and Education, which designs and runs courses throughout the world in subjects such as book distribution, new-devotee training and communications. A second is the Ministry for Educational Development, which has supported many devotees engaged in developing curriculum and teacher training for both child and adult education in ISKCON. A third is the Ministry for Child Protection, which has been able to develop programs for child abuse prevention and for helping existing abuse victims.

Harikesa Maharaja also channelled substantial funding into the Sri Mayapur Project. He personally oversaw the development of the exhibitions and the welfare work in the villages around the ISKCON Campus.

The management of the profits generated by those Russian investments and earmarked for ISKCON was entrusted to a foundation managed by a group of experienced devotees in the West. They invested those foundation funds very conservatively in the Western financial market. When it became clear to them, toward the end of 1997, that the Russian market was going to collapse, they were able to shift some of the capital from Russia to the West.

The rest of the capital remained in Moscow in the form of long-term investments, and when the value of these fell, the capital ceased to generate a profit. Consequently, since April this year the foundation has had only the funds generated by its own investments to dedicate to ISKCON projects. Some projects had to be cut back.

It was this cutback which apparently gave impetus to the rumour of massive losses of ISKCON funds on the Russian market.

The original ISKCON-earmarked investment, earned by independent householders and invested and managed by them through their own private company, has, in spite of everything, grown substantially.

Again for clarification. No funds belonging to either the BBT or ISKCON were invested at any time on the Russian stock exchange and consequently no BBT or ISKCON funds were lost.

For the GBC Executive Committee Bhagavat Dharma dasa

Please contact Bhagavat Dharma das with any further questions:

On COM gbcco@com.bbt.se
On the NET gbcco@netcomuk.co.uk