Russia has cut off all diplomatic contacts with the Bosnian Serbs and will support further NATO air strikes against them to retaliate against specific acts of aggression, a high-ranking Russian diplomat said Monday.


Ties with Russia's traditional Bosnian Serb allies will now only be reopened if they approve an international peace plan to end the Bosnian war, said the Foreign Ministry official who declined to be identified.


"We have told them that they must accept this plan and before they say 'yes,' there is really nothing more to discuss with them," said the diplomat, who has played a leading role in Russian mediation efforts in the former Yugoslavia.


His remarks reflected an official Foreign Ministry statement Saturday that supported a NATO air strike on a Bosnian Serb tank outside Sarajevo on Friday. Previously, Russia had criticized Western air strikes in April against fellow Slavs.


The diplomat said the Bosnian Serb actions, including stealing weapons from Ukrainian UN troops and firing at a UN helicopter, were "absolutely obvious provocations" that deserved retaliation.


"Their behavior -- I mean of the Bosnian Serbs -- is so defiant to the international community, including to ours, that naturally" it would have been strange if Russia had supported the Bosnian Serbs, he said.


Similar Bosnian Serb actions could also justify further air strikes, said the Sergei Mavrodi, the mastermind behind the shell game, seems to have so carefully constructed his edifice that the criminal case opened against him concerns only one company, Invest Consulting, a securities consulting agency that is suspected of failing to pay taxes on 24.5 billion rubles (about $12 million) in money found on its accounts.


The only formal connection between MMM and Invest Consulting, as with most of the other companies, is Mavrodi. MMM lawyers said Monday they would go to court to protest illegalities in the raid last week on Mavrodi's apartment.


Authorities have not made any formal allegations against MMM itself, although they did seize several thousand MMM "tickets" and several hundred million rubles in cash last week in a search of MMM headquarters.


According to Alexander Borisov, a spokesman for the Moscow Tax Police, news reports that officials had found 10 trillion rubles worth of MMM shares were inaccurate. He said officials had not counted the shares and there was no way of knowing how much had been seized.


Borisov said documents found so far indicated Mavrodi formed each company as part of an elaborate shell game. These firms bought and sold MMM stock in a scheme to push share prices higher and get around legal restrictions on the joint-stock company AO MMM, the one company licensed to issue shares.


Mavrodi, who received a degree in mathematics, was always methodical in the process of forming and naming his firms. In 1989 and 1990, he formed a series of cooperatives to import computer equipment. In 1991 and 1992, he walked away from these companies and registered 10 "small enterprises," which at the time were given tax breaks, and used names from the Greek alphabet: Alpha, Delta, Gamma and Lambda.


In 1993, he registered nine "joint-stock companies," using names of precious and semi-precious stones: Diamond, Sapphire, Aquamarine and Jasper. It was these companies, Borisov said, that formed the shells in the MMM scheme. They bought MMM shares from AO MMM, the issuing company which was only licensed to sell 991,000 shares at their nominal price of 1,000 rubles, and sold them at higher prices between each other, on stock markets and to Russian investors.


The other companies, Mavrodi apparently believed, could legally sell the shares at a higher price while AO MMM was restricted by the Finance Ministry. But Borisov said the tax police were investigating whether these shell companies had the legal right to act, in effect, as brokers. He also said that tax police had concluded that these shell companies were involved in artificially bidding up the price of MMM shares on stock exchanges around the country.


Sergei Taranov, an MMM spokesman, acknowledged much of what the tax police have concluded. "There are a number of firms with meaningless names," he said in an interview. "There are a bunch of shell firms and hundreds of firms working for MMM. The structure is a giant holding company."


Beyond the shell companies were two other types of companies: the first supporting the operations of MMM, the second indulging the "hobbies" of Mavrodi, Borisov said.


In the first type, Borisov placed MMM TB, which produced the MMM commercials. Another company, MMM Security, employed security guards. The National Pensione Bank was formed by four Mavrodi subsidiaries, with names such as Butterfly, for profits from MMM Invest, a voucher investment fund, and other MMM activities.


The second type appeared to have no relation to the larger securities scheme. MMM Agro was involved in agriculture, MMM Northern was involved in development in the Far North and MMM Migration assisted people in acquiring visas."People would come to Mavrodi and explain their activities and he never refused anybody," Borisov said. "He was ready for any idea."





-- Mikhail Dubik and Alexei Grammatchikov contributed to this article.