The Bank of New York is one of America's oldest. Founded in 1784 by Alexander Hamilton, a hero of the War of Independence, its reputation was built on conservative banking practices. It stood for solidity and reliability, dealing in tedious but profitable transactions. One of its main activities was assisting foreign companies have their shares listed on US stock exchanges.

Then along came the Russians and everything changed. The Bank of New York is now at the centre of what may have been the biggest money-laundering operation of all time. Between $10 billion and $15 billion in Russian money may have passed through its accounts - sums so big that there are suspicions some of the money may have originally been part of IMF loans to support Russia's economy.

The scandal, disclosed by the New York Times, has rocked the American political and financial establishment. The Vice-President, Al Gore, who ran a joint commission with former Russian prime minister Viktor Chernomyrdin, is under attack for dealing with corrupt Russian officials. The Deputy Secretary of State, Strobe Talbott, stands accused of misjudging Russia. Treasury Secretary Larry Summers says the US will now reconsider loans to Russia.

Leading Russian officials have been accused in the US media of involvement. All of them deny the allegations. The US magazine Newsweek, in an article headed "The Gangster State", claims Russia has, with the help of a blind eye from the West, become a "kleptocracy" run by corrupt officials.

Official Russia claims it's all a plot to discredit the Motherland. The average Russian on the street has no doubt about corruption in high places. President Yeltsin's popularity and that of his associates is at its lowest ebb.

Although nothing has been proved beyond doubt, US intelligence sources have leaked names to the media. They include important members of The Family, as Mr Yeltsin and his entourage are known. Among them is his younger daughter Tatyana Dyachenko, known as an associate of billionaire intriguer Boris Berezovsky. Regarded as Russia's latter-day Rasputin, Berezovsky built himself up from car dealer to media magnate and played a major role in supporting Boris Yeltsin's re-election campaign in 1996.

Also named as part of the scandal is the former deputy prime minister in charge of privatisation, Anatoly Chubais, who is perhaps Russia's least popular politician. Under his privatisation programme, all Russians received a voucher for investment in newly-privatised state companies but the big blocs of shares went elsewhere.

Privatisation auctions were won by those with good connections. One winner was Vladimir Potanin, a former deputy premier. One of his companies paid Chubais $90,000 as an advance on an unpublished book on Russian privatisation. Potanin, rated in Forbes magazine as one of the richest men on earth, has been named in the American media as being involved in the Bank of New York transfers. He denies it. So too does former finance minister Alexander Livshits and Oleg Soskovets, the man who apologised to Albert Reynolds for Mr Yeltsin's absence at Shannon in 1994.

The man accused of being the eminence grise behind the operation also denies complicity. Semyon Mogilevich (53) is a shadowy businessman from Ukraine but now based in Hungary. He has been accused of drug trafficking, gun running and organised prostitution but claims all this is untrue and part of a plot by the FBI to discredit him and to harm Russia.

A British investigation has shown that Mogilevich channelled £31.3 million sterling through accounts in the Royal Bank of Scotland in London in 1995 but that these accounts are now closed. These accounts pale in comparison with the amount of money channelled through the Bank of New York.

The money in question went through a section of the bank headed by Natasha Kagalovsky, known in New York banking circles as Miss Russia for her involvement in Russian financial deals.

Natasha Kagalovsky and an associate, Russian-born Lucy Edwards, have been suspended by the Bank of New York pending an investigation into the Russian funds. The accounts through which the funds passed were in the name of Russian-born US citizen Peter Berlin, who is Edwards's husband.

Ms Kagalovsky's husband, Konstantin Kagalovsky, is a former Russian representative to the IMF and was one of a group of so-called young reformers, which included Chubais, Potanin and others, who made a seamless transition from the communist system to the new Russian market economy. No accusations of wrongdoing have been made against either Natasha or Konstantin Kagalovsky.

While the Kagalovskys, Berlin and Edwards have been silent, Mogilevich has given an interview to Russia's most popular daily, Moskovsky Komsomolets. It was all an American plot, he said, organised by FBI agents who were looked for "medals and credit".

Americans were embarrassed, he said, by Russia's rapid deployment of paratroopers at Pristina Airport in Kosovo and were getting back at Russia through him. His Russianunder-attack theme has been taken up in Moscow by new Prime Minister Vladimir Putin, Foreign Minister Igor Ivanov and others.

Mogilevich denies he has ever had money comparable to the sums which passed through the Bank of New York and said his personal fortune was worth "less than $10 million". When the story of his alleged involvement broke, he said, it caused a row at his home when his wife wanted him to buy a new carpet and he told her he didn't have enough money.

The only money laundering he had ever done, he told Moskovsky Komsomolets, was when he once inadvertently put a shirt with a five dollar bill in its pocket into the washing machine in his home.