11 April 2002, Volume
TO STING OR NOT TO STING?
By Roman Kupchinsky
With corruption rampant in the former communist world, one of the most perplexing problems confronting local law enforcement is how to obtain the necessary evidence to send a corrupt politician or "oligarch" to jail. The assumption being, of course, that local law-enforcement agencies possess the will to go evenhandedly after corrupt presidents, prime ministers, parliamentarians, and crooked cops.
In early April, the Czech Republic's supreme state attorney, Marie Benesova, suggested that law-enforcement agencies in her country be given the right to use "provocations" against officials suspected of corruption -- thus obtaining the "smoking gun" to have them removed from office or placed behind bars. The next day, Justice Minister Jaroslav Bures rejected her proposal, insisting that such methods could lead to "entrapment." According to Minister Bures, more systematic solutions should be found: These include a functioning state administration, qualified civil servants, and strict and uncompromising controls. "We would come into conflict with the European Union. I do not know of a member state whose legal order allows for directed provocation," Bures added. Article 6 of the EU Convention on Human Rights outlaws evidence gathered through entrapment.
What the Czech state prosecutor called "provocation" is commonly known in the United States as a "sting" operation. The Czech minister is wrong that sting operations are not used. They are, and with great success. The tactic is used throughout the EU in fighting drug trafficking and child pornography. A hypothetical sting might unfold as follows: Police in Russia learn from an informant that two high-ranking army officers, stationed on a base where nuclear weapons are stored, are willing to sell enough nuclear fuel to construct a small nuclear device that can be housed in a suitcase. The police, acting covertly, organize a meeting between these military officers and "buyers" who are actually undercover police posing as members of a terrorist organization. They meet a few times and discuss the terms of the sale. Their conversations are recorded and videotaped. The date of the sale is set. The military officers bring the nuclear materials and they, in turn, are given a suitcase containing the $1 million they demanded in payment. This meeting is also filmed and taped. Once the "terrorists" take possession of the nuclear materials, the police enter and arrest the two officers. They are then tried and, if found guilty, sentenced in accordance with Russian law.
Is this entrapment or is it a preventive measure aimed at saving London or another major city from destruction?
The United States Congress allowed the use of sting operations in 1975. These were used most often to combat the sale of tobacco and alcohol to minors and in the fight against drug trafficking. A sting was used to arrest John DeLorean, the founder of DeLorean Motors, for a drug deal which would have brought him enough money to save his company from bankruptcy. DeLorean won acquittal by proving that he was not predisposed to drug dealing. In 1992, a sting was used by the U.S. Federal Bureau of Investigation to arrest 18 Chicago public servants and a member of Bill Clinton's election campaign in Indiana on charges of bribery. It was also used in a number of child pornography cases to arrest buyers of pornographic magazines from Internet dealers.
On 31 December 1980, the U.S. attorney general issued guidelines which were to be followed in sting operations. They stated, among other things, that: "an inducement to commit a crime should not be offered unless: There is reasonable indication, based on information developed through informants or other means, that a subject is engaging, has engaged, or is likely to engage in illegal activity of a similar type, or the opportunity for illegal activity has been structured so that there is reason for believing that the persons drawn to the opportunity, or brought to it, are predisposed to engage in the contemplated illegal activity."
In the event that a criminal defendant raises the issue of entrapment, the question boils down to a two-prong test. First, did government agents INDUCE the defendant to commit the crime? Second, was the defendant PREDISPOSED to commit the crime?
INDUCEMENT occurs when the government creates a special incentive for the defendant to commit the crime. This incentive can consist of anything that materially alters the balance of risks and rewards bearing on defendant's decision as to whether to commit the offense, so as to increase the likelihood that he will engage in the particular criminal conduct. INDUCEMENT can be any government conduct including persuasion, fraudulent representations, threats, coercive tactics, harassment, promises of reward, or pleas based on need, sympathy or friendship. IF this first prong of the two-prong test proves viable, the next question relates to PREDISPOSITION.
PREDISPOSITION is the defendant's willingness to commit the offense prior to being contacted by government agents, coupled with the wherewithal to do so. If a defendant is predisposed to commit the offense, he will require little or no inducement to do so; conversely, if the government must work hard to induce a defendant to commit the offense, it is far less likely that he was predisposed.
The relevant time frame for assessing a defendant's disposition comes before he has any contact with government agents, which is doubtless why its called PREDISPOSITION. In rebutting an entrapment defense, the prosecution must prove beyond a reasonable doubt that the defendant was disposed to commit the criminal act prior to first being approached by government agents.
One child-pornography case in which a sting was used went to the U.S. Supreme Court. The 1992 case of "Jacobson v. the United States" resulted in a narrow ruling by the court in favor of the defendant -- a ruling by the court which would delineate the use of sting operations in the future and place the question of entrapment on the agenda.
In connection with the decision, the justices effectively issued guidelines for such activities. "In their zeal to enforce the law...government agents may not originate a criminal design, implant in an innocent person's mind the disposition to commit a criminal act, and then induce commission of the crime so that the government may prosecute,'' Justice Byron White wrote for the majority. "Where the government has induced an individual to break the law and the defense of entrapment is at issue, as it was in this case, the prosecution must prove beyond reasonable doubt that the defendant was disposed to commit the criminal act prior to first being approached by government agents."
In a dissenting opinion, Justice Sandra Day O'Connor -- joined by Chief Justice William Rehnquist and Justices Anthony Kennedy and Antonin Scalia -- said the court had stripped a major law-enforcement tool away from police. "Today, the court holds that government conduct may be considered to create a predisposition to commit a crime, even before any government action to induct the commission of the crime,'' wrote O'Connor. "In my view, this holding changes entrapment doctrine.''
O'Connor asserted that despite the majority's belief that the ruling will not halt "run-of-the-mill sting operations,'' it very well could. "After this case, every defendant will claim that something the government agent did before soliciting the crime 'created' a predisposition that was not there before,'' O'Connor dissented. "For example, a bribe taker will claim that the description of the amount of money available was so enticing that it implanted a disposition to accept the bribe later offered.'' O'Connor continued: "A drug buyer will claim that the description of the drug's purity and effects was so tempting that it created the urge to try it for the first time.... In short, the court's opinion could be read to prohibit the government from advertising the seductions of criminal activity as part of its sting operation, for fear of creating a predisposition in its suspects'' (90-1124 "Jacobson v. United States of America").
Among former Soviet republics, illegal stings were often employed in which the secret service would plant an illegal substance, heroin for example, in the baggage of a person and then arrest that person for possession. Police in the United States in some cases have also planted evidence. The practice illegal and can result in the prosecution of the policeman who planted the so-called "evidence."
The seemingly successful experience of Poland in fighting high-profile corruption was described in the "Warsaw Voice" newspaper on 3 February:
"Last year, CBS [the Central Investigation Office, the recently formed Polish equivalent of the FBI] operations led to the breaking up of 240 organized crime gangs -- including 53 that were operating on an international level. As a result of 1,800 investigations, some 3,218 criminals were arrested and prosecuted.... The CBS operations that drew the most public attention included those linked with fighting corruption in the government, some of them involving high-ranking officials. One example is the detection of a scandal at PZU Zycie, one of the biggest insurance companies in Poland, and the consequent arrest of its president.
"The fight against organized crime was more successful due to some fundamental legal solutions, such as the system of state's evidence and sting operations. [The CBS's Pawel] Biedziak asserts that the excellent results brought by these developments dismiss any doubts that appeared before their introduction."
The Polish experience showed that even in the atmosphere of disrespect for the law prevalent in Eastern and Central Europe, a sting operation can lead to convictions and public censure for corruption and crime. Can it be repeated in other countries of the region?
Unfortunately in many countries in the region the answer is most likely no. The possibilities for abuse of a sting operation are too great. In some countries, the president could use the tactic to have the opposition removed and could defend himself before his critics by claiming he was "fighting corruption" (see Kazakhstan item, below). In other countries, the opposition would use stings to get their opponents locked up. If used even-handedly, most of the countries in the region might soon find themselves without elected officials or state property fund managers.
CRACKDOWN ON POLITICAL OPPOSITION IN ALMATY.
The arrest of prominent opposition member Mukhtar Abliyazov on criminal charges on 27 March inaugurated a week of mounting political tension in Kazakhstan, which also saw an independent TV station vandalized, a protest rally on the streets of Almaty, and the dramatic pursuit of a second opposition politician, former Pavlodar Oblast Governor Ghalymzhan Zhaqiyanov, by Kazakh law-enforcement officials endeavoring to arrest him. Eluding the police, Zhaqiyanov took refuge in the French Embassy in Almaty on 29 March. While the Kazakh authorities described their actions as legitimate attempts to bring accused criminals to justice, opposition forces charged them with orchestrating a political crackdown.
Thirty-eight-year-old Muhktar Abliyazov -- one of the founding members last November of the opposition movement Democratic Choice for Kazakhstan (DVK) -- was arrested in Almaty on 27 March. Currently serving as the director of a major Kazakh bank, he is accused of abuse of power and "illegal entrepreneurship" while head of the national power grid company KEGOC (1997-98) and minister of energy, industry, and trade (1998-99), RFE/RL's Kazakh bureau and Interfax reported. His trial could begin as early as April, the head of the country's financial police, Bolatbek Bulgakbaev, told journalists on 28 March. "Illegal entrepreneurship" is a euphemism for embezzlement. According to Bulgakbaev, Abliyazov, together with associates, lined their pockets by transferring property from KEGOC and the Ekibastuz-2 thermal power station to private companies they controlled. They also allegedly concocted a debt-paying scam in the way Kazakh utilities paid Uzbekistan for energy, bilking their country in total of approximately $6.6 million, Interfax-Kazakhstan said on 28 March.
The financial police chief denied that Abliyazov's arrest was politically motivated. He pointed out that the criminal case against him had been opened in October 1999 -- long before Abliyazov joined the opposition, Interfax reported on 28 March. Bulgakbaev explained the timing of the arrest by noting that Abliyazov, who had been instructed three years ago to remain in Almaty while the investigation continued, recently contravened that order by making a trip out of town and could go into hiding. But this explanation was dismissed by another leader of the DVK, former Governor Zhaqiyanov, at a DVK press conference in Almaty on 28 March, RFE/RL's Kazakh bureau reported. Instead, he drew a connection between Abliyazov's imprisonment and a recent revival in public interest in allegations that President Nursultan Nazarbaev, his family, top officials, and cronies have enriched themselves with kickbacks from American oil conglomerates. "Now that newspapers and deputies are talking about Nazarbaev's billions of dollars in Swiss banks, all of a sudden Abliyazov has been arrested. This means there is political motivation," Zhaqiyanov told RFE/RL on 28 March. ("RFE/RL Central Asia Report," 4 April 2002)
PRIME MINISTER ADMITS EXISTENCE OF 'SECRET FUND,' BANK ACCOUNTS.
Kazakh Prime Minister Imangali Tasmagambetov told the country's parliament on 4 April of the existence of a secret fund and revealed that there may be accounts in foreign banks under President Nazarbaev's name, the Kazakh service of RFE/RL reported. Tasmagambetov said the secret fund twice was used to save Kazakhstan from bankruptcy, adding that the fund arose from shares in the Tengiz oil field that the government sold in 1996. He said the fund now totaled some $1 billion. Tasmagambetov also said there are accounts in foreign banks under Nazarbaev's name and that the Kazakh president has ordered all such bank accounts liquidated and the money returned to Kazakhstan for construction in the new capital, Astana. Kazakhstan's opposition has said that Nazarbaev had large sums of money kept in personal bank accounts in western countries. His prime minister said Nazarbaev did not know about such accounts, adding that they were likely set up by people "for the purpose of compromising his [Nazarbaev's] name."
TASK FORCE SNIFFS TRAIL OF DIRTY MONEY.
The newly formed Financial Monitoring Committee in Russia is moving forward in its drive to remove Russia from a blacklist of countries soft on money laundering. "The Moscow Times" on 3 April reported that the committee announced on 2 April that it is investigating thousands of suspicious transactions and compiling its own list of countries suspected of harboring Russian money. "We are preparing a strategic plan to get Russia off of the blacklist," said the task force's head, First Deputy Finance Minister Viktor Zubkov, Interfax reported. "We will present it to the FATF [Financial Action Task Force, which is based in Paris] at the end of May, and at the FATF session in June, I will report on what Russia has done to be removed from the blacklist." RK
MOSCOW DENIES IT IS SUPPLYING IRAN WITH NUCLEAR-MISSILE TECHNOLOGY.
Russian Defense Minister Sergei Ivanov bluntly denied reports that Moscow has supplied nuclear-missile technology to Iran, Interfax reported on 4 April. "The issue of Russia's alleged supply of nuclear or missile technologies to Iran has been discussed for a long time, but it is nothing but a myth," Ivanov said after negotiations in Athens with Greek Defense Minister Ioannis Papandoniou. "They have never produced any facts to confirm cooperation between Moscow and Tehran in that sphere, and we know they will not do so in the future, because there are no such facts." RK
RUSSIA TO GET 'BIG MONEY' FROM INCREASE IN ARMS EXPORTS.
Russia will increase its exports of military equipment in 2002, the director general of Rosoboroneksport, Andrei Belyaninov, said on 3 April during a meeting with the governor of Nizhnii Novgorod Region, Gennadii Khodyrev RIA news agency reported on 3 April. According to Belyaninov, Rosoboroneksport has been fairly successful in its campaign to sign contracts. "As an analysis of the work we have done shows, our contractual base will be substantially increased: the country will get big money," Belyaninov said. He noted that anti-aircraft defense equipment will occupy a special place in the structure of exports from the military-industrial complex. At the same time, Belyaninov said it is possible that the share of aviation technology in the overall volume of arms exports might fall slightly. However, this area of the industry will not lose its relevance. In 2002, Russia's military-industrial complex exported $4.2 billion worth of arms. RK
JUDGES DENIES LAZARENKO'S REQUEST FOR DISCOVERY.
On 8 March defense attorneys for Pavlo Lazarenko filed a "memorandum in support of motion for discovery in support of claim alleging selective prosecution" to the United States Court for the Northern District of California. In other words, the defense asked the court to allow it to find evidence that its client, the former Ukrainian premier, is being selectively prosecuted (see "RFE/RL Crime and Corruption Watch," 21 March 2002). On 26 March, U.S. District Judge Martin J. Jenkins denied that motion. "Furthermore, the Government submits that Lazarenko's evidence consists of only hearsay allegations that offer no information about the Government's decision to prosecute," Jenkins wrote. "The Government argues this evidence is irrelevant because it focuses on violations of Ukrainian law and not the Government's decision to charge Lazarenko in the United States. The Government contends that if anything, it is impartial to the political situation in Ukraine citing the United States' recent grant of political asylum to Major Mykola Melnychenko, a whistle blower who allegedly illegally taped Kuchma incriminating himself, as support."
The judge continued: "The Court agrees with the Government. Lazarenko's discussion and evidence focuses on fraud in Ukraine and it is unrelated to the Government's purpose in bringing the charges against Lazarenko in the United States." RK
TI INTEGRITY AWARDS 2002 CALL FOR NOMINATIONS.
"RFE/RL Crime and Corruption Watch" would like to bring our readers' attention to a worthwhile project by Transparency International (TI): the TI Integrity Awards for 2002.
Call For Nominations
Transparency International, the coalition against corruption, wishes to recognize outstanding efforts in the fight against bribery, corruption, kickbacks, and extortion. The annual TI Integrity Awards seek to underline the work of individuals and organizations that have made a genuine difference with specific actions to investigate or expose corruption, to prosecute the corrupt, to undermine the determined efforts of corrupt public office holders, and to counter corruption in other ways.
Eligibility Requirements for Nominees
Nominees must meet the following requirements:
1. The nominees must have undertaken an action that is likely to significantly influence, or to have had a significant impact on, existing levels of corruption in his or her respective country or region.
2. The action should be one likely to attract interest and emulation in other parts of the world.
3. The action must be particularly imaginative, innovative or courageous and deserving of wide international recognition.
In considering nominations the Awards Committee also looks for both geographical and occupational balance.
Submission of Nominations
TI is now calling for nominations. Interested individuals and organizations should post, fax or email their nominations to the Secretariat of the Integrity Awards Committee at the following address: Transparency International Integrity Awards Secretariat, The Quadrangle (Unit 1), 49 Atalanta Street, London SW6 6TU, United Kingdom. Fax: (44 20) 7610-1550; E-mail: email@example.com
The deadline for submission is 1700 GMT on 30 May 2002.
For further details about the Integrity Awards please visit the TI website at: http://www.transparency.org/activities/awareness/iw_guidelines.html
'OUR COMMON HOME,' VIKTOR CHERNOMYRDIN, AND CORRUPTION
By Roman Kupchinsky
In 1995 the co-chairman of the Gore-Chernomyrdin Commission, U.S. Vice President Al Gore, was given a report prepared by the Central Intelligence Agency (CIA) which claimed that Viktor Chernomyrdin, the vice president's partner within the commission, was a highly corrupt official in the Yeltsin government. The report claimed that Chernomyrdin, as head of Russian gas monopoly Gazprom, stole billions of dollars. The then-vice president allegedly scribbled "Bullshit" in the margin of the report and had it sent back.
When this sequence of events was exposed in "The New York Times" on 23 November 1998, Vice President Gore denied having done anything of the kind. Writing in "The Washington Post" on 27 July 2000, Leon Fuerth, Gore's national security adviser, stated: "There have been a lot of charges and innuendo [about Chernomyrdin] but there has been no proof, no smoking gun, and certainly no indictment in a Russian court."
However, CIA officials have described the intelligence information on Chernomyrdin as "more detailed and conclusive than allegations of bribery and insider dealing that have been made in the Russian media and elsewhere," according to "The New York Times" of 23 November 1998.
On 20 August 1995, Peter Reddaway, a well-known and respected scholar and specialist on Russia and the former Soviet Union, published an op-ed article in "The Washington Post" entitled, "Better Than Whitewater: Scandal Dogs Russia's Rising Star." Reddaway presented the following arguments and purported facts to state his case:
"Chernomyrdin is 'the chief Mafioso of the country,' according to the former presidential security council secretary Yuiriy Skokov. Skokov told the weekly 'Obshchaya gazeta' that Chernomyrdin had become a billionaire from the privatization of Gazprom.
"How Gazprom was privatized is still a mystery according to former minister Boris Fedorov. While Gazprom's market value was estimated to be $120 billion, the best estimates of its wealth begin at $250 billion and go as high as $700 billion.
"Anders Aslund, the noted economist, has estimated that Chernomyrdin's maneuvers led Gazprom to make vast profits without paying taxes. According to Aslund, if Gazprom were taxed, it would have had to contribute up to $30 billion in tax revenues. This sum would solve the debilitating problem of the budget deficit at a stroke and remove the rationale for foreign aid."
The criminal aspect of Chernomyrdin's activities was supplied by the Swiss criminal justice system. Swiss magistrate Laurent Kasper-Ansermet, while investigating the Mabetex scandal around former Kremlin property manager Pavel Borodin, accused of taking kickbacks of $22 million for the renovation of the Kremlin, found that Chernomyrdin had transferred into his Swiss accounts tens of millions of dollars. The transfers were made by Mercata Trading, a firm linked to Mabetex, the company which paid the kickbacks to Borodin. Kasper-Ansermet ordered the account documents in banks in Geneva and Ticino seized and any further deposits blocked. The Swiss court found Borodin guilty of money laundering on 6 March and fined Borodin $175,000. The fine was subtracted from the $3 million bail paid by the Russian government. It should be noted that Russian law-enforcement agencies did not participate in the investigation of Borodin.
The investigation, according to Swiss authorities, has gone nowhere
During the U.S. presidential campaign of 2000, George W. Bush, then the Republican candidate, stated that Viktor Chernomyrdin stole some $1.2 billion in International Monetary Fund (IMF) resources given to Russia. Chernomyrdin was predictably outraged and threatened to sue; but for undisclosed reasons, the issue never came before a court. Chernomyrdin let the Bush remark slide and soon afterwards was appointed Russia's ambassador to Ukraine. This transfer removed Chernomyrdin from the Russian domestic scene to an important posting abroad -- the most important posting in the eyes of the new president.
The Bush campaign stood by the Texas governor's statements, saying Chernomyrdin, a former head of the natural gas monopoly Gazprom, "made a fortune in personal profits" in the Russian oil and gas business while a member of the cabinet.
It was no secret to the FBI and Russian businessmen that Chernomyrdin, as head of Gazprom, had extensive dealings with Pavlo Lazarenko when Lazarenko was running Unified Energy Systems of Ukraine. The former Ukrainian prime minister, now in prison in California awaiting trial on charges of money laundering in the United States, is reputed to have made enormous amounts of money on crooked deals with Gazprom at that time.
Vladimir Putin's presidential pardon, promising non-prosecution for illegal activities or corruption and granted to former Russian President Boris Yeltsin when he retired, was seemingly extended to Chernomyrdin.
Chernomyrdin, while not pardoned by Putin, had his talents put to good use. He was given a post which suited him and Russia best -- Russian ambassador to Kyiv. It seemed the perfect place for Chernomyrdin: He was among friends. Chernomyrdin, as head of Gazprom, had numerous dealings with Pavlo Lazarenko; the discredited former head of Naftogaz Ukraina, Ihor Bakaj; and other high-ranking Ukrainian energy traders and officials.
One of the first moves that Chernomyrdin made as ambassador to Ukraine was to purchase the summer villa, located near the Dnieper River, of the former head of the Central Committee of the Communist Party of Ukraine, Volodymyr Shcherbytsky. He bought the villa from Bakaj, whose former state gas trading monopoly worked with Chernomyrdin when he was head of Gazprom. Bakaj had been accused of embezzling millions of dollars from Gazprom and its partner-subsidiary, Itera, but was pumping big money into the election campaign of Leonid Kuchma -- presumably to buy freedom from prosecution. Bohdan Mysko, an American businessman who owned the villa before Bakaj and spent hundreds of thousands of dollars to have the residence renovated, he was forced to sell it under pressure to Bakaj for "peanuts."
During March 2002 parliamentary elections in Ukraine, Ambassador Chernomyrdin spoke out loudly and clearly in favor of the pro-Kuchma bloc of candidates. But it was never made clear if these were his own views or those of Russian President Putin. At one point prior to the elections, Chernomyrdin added a note of merriment by accusing Yuliya Tymoshenko, the leader of a large anti Kuchma bloc, of corruption. He also made it clear that the Russian government was supporting those candidates which, in his words "were friends of Russia."
The issue of Viktor Chernomyrdin's guilt has not been resolved. The former Russian prime minister, the joint chairman of the Gore Chernomyrdin commission, and presently the Russian ambassador to Ukraine -- who was once quoted as saying that "Gazprom is our common home" -- remains accused of being "The Biggest Mafioso in Russia."
Will he ever be brought to trial in Russia? Or perhaps in San Francisco?