Corruption Watch: September 19, 2002

By Roman Kupchinsky

In the early 20th century, Russian revolutionaries raised money to finance the Bolshevik party by robbing banks. One of the more renowned bank robbers of that era was a former seminarian from Georgia, Josef Dzugashvili, known later as Joseph Stalin. Members of the Irish Republican Army were reported to have been in league with Colombian narcotics cartels in their quest for funding. The Organization of Ukrainian Nationalists robbed Polish post offices in the 1930s in order to raise cash. The FARC guerrilla movement in Colombia overtly sells cocaine to finance its activities. These are but a few examples of how criminal activities have been used by movements (terrorist or revolutionary) in order to fill coffers to pay for items like guns, printing presses, Semtex, or flight training.

The line dividing crime and terrorism is an amorphous one at best. The kidnapping of innocent civilians held for ransom in the Chechen conflict is a case in point. Are the kidnappers merely Chechen bandits, or are they "freedom fighters" using an ancient method to raise cash to buy weapons from enemy Russian soldiers? Will the proceeds from the release of schoolchildren held hostage by a group of terrorists be used to further their murderous activities or will those rubles be used to fight the Russian army that is destroying their villages?

Where did Al-Qaeda find the estimated $500,000 required to pay for the flight training, travel, phone calls, and flight tickets for the 19 men who attacked America on 11 September? Was this merely money belonging to one individual, or was it money raised from the sale of Afghan opium to criminal drug cartels in Europe for resale on the streets of Berlin and Amsterdam?

Many experts claim that the fight against terrorism and organized crime represents two sides of the same coin. While organized crime may have a broad range of ends, the means that organized criminals and terrorists employ are essentially the same.

Speaking at a hearing of the U.S. House of Representatives Committee on International Relations on 1 October 1997, the committee chairman at the time, Benjamin Gilman (Republican-New York) said: "Up until recently, most of us have viewed the problems of drug trafficking, organized crime, and terrorism as issues of obvious concern, really only of marginal nature, though. In other words, drugs were only a danger to a small percentage of our citizenry; that organized crime was a menace, but restricted to car theft, gambling scams, and racketeering in larger cities. And finally, the terrorist groups were dangerous but were usually operating in foreign countries and could only muster up an occasional suicide bomber.

We truly wish it were that simple. Regrettably, we are in something far worse. I will humbly suggest that what we are witnessing these days are three types of criminal activities -- drugs, terrorism, and organized crime -- which are like three huge geological plates which are slowly starting to shift and grind together. They could ultimately produce an earthquake of unprecedented magnitude and destruction."

Criminals and terrorists both employ illegal means to achieve their final goal. At the same time, there are also cases in which a complete merger has taken places between crime and terror. The case of Abu Nidal's gang, which shot the Israeli ambassador in London, Shlomo Argov, was one such group. It combined its "terrorism for hire" methods with a loose anti-Israeli philosophy and became a criminal gang selling terrorist services to other, less organized groups and governments who wanted to further their policies by other means. The possibility of similar groups emerging in the future is not far-fetched. Will a decimated Al-Qaeda hire a gang of Russian criminals to commit an act of terror for a few million dollars? This should be a real and present concern for law enforcement.

Writing in "Jane's Terrorism and Security Monitor" on 13 September, C. Boucek stated: "Ahmed Ressam, the convicted Millennium bomber, and his Canadian cell were financed largely through petty crime. Many cells in Europe and the U.K. survived on legitimate business fronts and criminal activity. Often the interests of organized crime intersect with those of Al-Qaeda's through the sale of stolen passports and documents, smuggling, and trafficking in persons."

One terrorism expert told a conference on economic crime in Cambridge, England, according to an article in the "Financial Times" of 16 September: "The biggest thing that terrorism can give organized crime is manpower. Organized crime has a shortage of manpower, while terrorism has a surplus." These are cadre who understand and practice conspiratorial methods of behavior and therefore provide the skills needed by organized-crime groups. They are also trained in using criminal methods to finance themselves. "The line between terrorism, drugs, and other crime has simply disappeared," Edward Jurith, general counsel in the White House Office of Drug Control Policy, told the "Financial Times."

"The ultimate kind of power is violence," Texas-born radical intellectual C. Wright Mills once wrote. This was the motto of Andreas Baader of the Red Army Faction as well as that of Osama bin Laden. It was also the same type of violence practiced by Al Capone and Lucky Luciano of La Cosa Nostra in the United States.

Boris Gryzlov, the Russian interior minister, announced on 6 September that the Commonwealth of Independent States has decided to establish an agency to combat the drug trade in Central Asia, the Russian news agency Interfax reported. The decision was announced in the capital of Azerbaijan, Baku, during a meeting of interior ministers from CIS member states. The decision needs to be ratified by CIS heads of state that are scheduled to meet on 7 October in Chisinau.

Gryzlov also said the interior ministries of CIS countries plan to exchange information on drug traffic more intensively. He added that a unique centralized database on drug traffic has been put together in Russia and will be used by the new agency.

Central Asia is considered by many law-enforcement agencies a transit point for heroin and opium from Afghanistan. From Central Asia it is transported to markets in Western Europe and to some extent into Russia, where drug use has steadily increased in recent years. RK

Two armed drug couriers were killed on 8 September by Russian border guards on the Tajik-Afghan border, ITAR-TASS reported. A border patrol spotted the traffickers as they were fording the Panj River toward the Tajik bank. In the ensuing shootout, one courier was killed on the riverbank and the other in the water. Guards found 17 packs containing heroin and a Kalashnikov. RK

Some 40 kilograms of heroin were confiscated by Russian border guards in the early hours of 10 September on the section of the Tajik-Afghan border defended by the Moscow border guard detachment, ITAR TASS reported. Frontier guards detected a group of four men crossing the Panj River from Afghanistan to Tajikistan. The smugglers fled to an island on the border river, leaving behind several bags containing the heroin. RK

Traffic police seized more than 35 kilograms of heroin on 11 September from a Tajik citizen in the Samara Region of Russia. Traffic inspectors stopped a VAZ-2108 car en route from Orenburg to Perm as to check the driver's documents. In the trunk of the car they found two plastic bags containing 38 packs of heroin, ITAR TASS reported on 16 September. RK

A smuggler was killed on the Tajik-Afghan border in an area controlled by the Moscow border-guard detachment, the press service of the Russian border guard group in Tajikistan reported on 13 September. The smugglers ignored an order to stop and tried to flee to Afghan territory. Crossing the Panj River, one of the smugglers was wounded and subsequently drowned, while the second managed to escape to Afghanistan. A bag with 11 packets of heroin weighing a total of 11.6 kilograms of heroin were confiscated. RK

Inspectors at the Hoptovka customs checkpoint on the Ukrainian-Russian border confiscated a shipment of synthetic drugs, a spokesman for the Ukrainian security service told ITAR-TASS on 13 September. Five kilograms of a synthetic drug nearly hundreds of times stronger than morphine were discovered in a car belonging to a Sevastopol resident. According to a preliminary version, the narcotic poison was manufactured in an underground laboratory in Sevastopol. RK

In Austria's largest-ever police scandal, three former undercover police investigators were put on trial in Vienna on 5 September and charged with obstructing justice. According to the DPA press agency, police investigators were allegedly protecting a notorious Polish Mafia chieftain, Jeremiasz Baranski, from prosecution on a variety of charges, including the murder of five people in a Warsaw bar in 1999 and suspicion of being behind the murder of Polish minister for sport, Jacek Debski. The reputed Mafia boss has been living in Austria for quite some time and in 1998 was granted Austrian citizenship.

According to the "Central European Review" of 24 April 2001: "Jacek Debski, former Sport and Tourism Minister, was shot dead outside the Warsaw restaurant 'Casa Nostra,' where he celebrated his birthday in April 2001. He was accompanied by three people: sports journalist Janusz Atlas, businessman Filip Koc, and a key figure in the ongoing investigation, 24-year-old woman, Halina G. Shortly after 11 in the evening, Jacek Debski and Halina G left the restaurant and minutes later Debski was shot and died a few hours later in the hospital. The police investigation centers around Halina G who most probably saw the killer, and it is not excluded that she knew him."

The Polish press speculated that the killing was connected to Debski's relationship with the Polish mafia. On the night of his death, he called Baranski, thought to be one of the bosses of Polish mafia, several times in Vienna.

In pretrial custody, one of the suspects was quoted as hinting at a further scandal: He reportedly claimed a Russian mafia boss gave $1 million to a Vienna City councilor and a senior police chief, allegedly to grant him Austrian citizenship. Another of the arrested policemen was charged with taking a $60,000 bribe from a Russian citizen, allegedly to give the Russian a clean police record so he might become honorary consul of Uzbekistan. RK

During the early morning of 12 October, Sergei Kukura, vice president of OAO LUKoil, was abducted on his way to work by a group of men in police uniforms who flagged down his chauffeur-driven Mercedes for what appeared to be a routine document check, international media reported. A LUKoil spokesman said Kukura, 48, was stopped by men who emerged from a car with police markings armed with Kalashnikov automatic rifles. They handcuffed his bodyguard and driver to the car and injected them with sedatives. A LUKoil spokesman initially said the company had not received any ransom demands from the kidnappers. He added that the case had been taken under the personal control of Russian Interior Minister Boris Gryzlov, and a criminal investigation had been opened by the Moscow region prosecutor's office.

Then on 16 September, a man called LUKoil's hot line claiming to represent the group that abducted Kukura. He demanded a $6 million ransom for the oil executive's release. "The money should be paid in cash, in small banknotes, half in dollars and half in rubles," he said. Officers of the Russian Interior Ministry and LUKoil's security service continued talks the next with the "Kommersant-Daily" newspaper reported.

Commenting on this event, the "Financial Times" on 14 September wrote: "If this is a 'commercial' kidnapping by bandits seeking a ransom, then it breaks new ground in Russian crime. For all the dozens of attacks on bankers and businessmen in Russia over the years, never before has such a high-ranking figure in such a blue-chip company been a victim. Coming as it does a month after the contract killing of a member of parliament, and three months after the attempted murder of a deputy mayor of Moscow, the kidnapping of Mr. Kukura is not exactly a dazzling advertisement for Russia's supposedly much-improved business environment." RK

THE EURASIAN MAFIA OUTSIDE EURASIA

By Roman Kupchinsky

As the Soviet empire disintegrated into newly independent states, the established totalitarian structures of law and order rapidly disintegrated and were replaced by often inept and corrupt police forces lacking in will and the resources needed to do their jobs. From this disorder there arose a number of organized criminal groupings unique in the history of organized crime. Brutal in pursuit of their goals yet sophisticated in the scams they organized and ran, this "Red Mafia" -- as Robert Friedman, an investigative journalist and author of a book by the same name -- soon left the physical constraints of the former USSR and Warsaw Pact and spread out worldwide. By the end of the last decade, they were operating in over 50 countries. These multinational, Eurasian organized-crime groups (most were not based on family or national origin but consisted of Russians, Ukrainians, Balts, Central Asians, Czechs, Slovaks, etc.) were, and still are, involved in every known and some brand new types of crime. From drug smuggling, human trafficking, prostitution, contract murder, and gambling to credit-card and computer fraud, money laundering, chlorofluorocarbon (CFC) smuggling, and illegal-arms trafficking -- just to name a few of the best-known rackets and activities in which these gangs engage.

Such criminal groups viewed the wars in Africa and the Balkans as lucrative markets for the vast quantities of small arms rusting in warehouses throughout the region. The sudden poverty in their regions provided the human pool to fill the brothels of Western Europe. Besides, the profit margins in the West were much greater than anything they could have hoped to make back home. The Eurasian mafia rapidly and violently went to work.

Western Europe became one of the first bases outside of the former Soviet bloc for these organizations. With the unrest in the Balkans soon to be followed by full-scale wars, the new Eurasian mafia's saw great opportunities in the emerging chaotic situation. Western European law-enforcement agencies, including Interpol, were unprepared for this onslaught from the new mobs of Eurasia. They had few liaison arrangements with the police forces of these new countries and, further, did not wholly trust the ones that did exist. But the shear volume of violence and fraud was far greater than anything they had experienced. Boris Urov, the former chief investigator of major crimes for the Russian attorney general, famously warned: "Now we've opened the gates, and this is very dangerous for the world. America is getting Russian criminals. Nobody will have the resources to stop them. You people in the West don't know our Mafia yet. You will, you will!"

By the late 1980s and early 1990s, the first Eurasian mafia structures began setting up shop in Western Europe. Vienna became one of their first bases of operations. Close to Budapest, where they already controlled prostitution and other rackets, the new mobsters found the Austrian authorities to be unprepared for the assault. The lax antimoney-laundering laws in Austria in the early 1990s made this a popular country for joint ventures through which millions of dollars was hidden and legitimized.

At about this time, the new mafia moved into Switzerland. Followed by corrupt politicians hiding their ill-gained money in coded Swiss accounts and emerging Russian and other oligarchs seeking to launder their profits without paying taxes, Switzerland soon became a haven for Eurasian criminals. In November 1997, Swiss Federal Police wrote the following in a report on the threat of Russian organized crime in their country: "In coming years Switzerland could be increasingly hit by the expansion in organized crime structures, particularly Russian. Switzerland must prepare itself for an influx of capital from former Soviet countries and massive amounts of investments of dubious origin in businesses and real estate" (see "Russian Organized Crime Across the World" at http://www.proximalconsulting.com/WhitePapers/WhitePaper16.htm).

Switzerland was where former Ukrainian Prime Minister Pavlo Lazarenko, presently in a U.S. prison, is alleged to have laundered money. Kazakh President Nursultan Nazarbaev is alleged to have accumulated $1 billion in a numbered account in Geneva. Pavel Borodin, the Kremlin's former property manager, was also involved in a scandal in Switzerland involving money laundering.

Germany has suffered the most in Western Europe from the invasion of the Eurasian mafia. Bordering Poland, it is a convenient route for stolen cars to be transported east. The German police estimate that over 50 gangs from Eurasia operate in the country -- dealing in drugs, human trafficking, arms sales, and the like. In August, police in Cologne arrested a Russian with Canadian citizenship who was part of a gang from the Czech Republic that allegedly sold millions of dollars of arms obtained from Russia to "countries in the Middle East that are under an arms-sale embargo." When the reunification of Germany was in its early stages, Soviet army units in the DDR sold millions of dollars' worth of weapons to the black market.

In the past, German law-enforcement officials saw organized crime as strictly an American and Italian problem, and little attention was paid to it. But soon, organized burglary rings from Albania and Kosova arrived in the Federal Republic and new drug-smuggling routes into that country from Poland in the north and Albania from the south were formed. Also at this time, organized Vietnamese gangs are widely seen to have taken control of street sales of untaxed cigarettes in the former DDR. Police realized that they were facing a serious challenge for which they were unprepared.

Raising his concern over the explosion of organized crime from the east, Heinz Eggert, a former interior minister of Saxony, told "Der Spiegel" magazine on 13 March 1995 that, "Crime imported from the former East Bloc has such dimensions that it endangers the internal liberty of the Federal Republic."

The West European experience of the Eurasian mafia is now being transported to Southeast Asia and South America. Recent reports of Russian organized-crime activities in Pattaya in Thailand, and Polish mafia activities in Malaysia are signs that cultural differences mean little if anything if there is money to be made -- particularly for criminals.

On 1 October 1997 during a hearing on international organized crime, Lee Hamilton (Democrat-Indiana), a member of the U.S. Congress pointed to the role that the Russia Mafia was playing in Colombia: "And let me also point out the link between the Colombian drug cartels and the Russian mafia. It is palpable. The mafia provides weapons and ammunitions for the emerging smaller drug cartels who stepped up to replace the enormous Medellin and Cali cartels that were destroyed by General Serrano's courageous Colombian National Police, some of whom are here today.

"But this international enemy, the Russian mafia, is as deadly a threat as there could be, and it comes from within as well as without their country. And I would like to put in the record a list of arrests that have been made recently by the Colombian police and military of drug traffickers with Russian affiliation."

Speaking at the same hearing, Representative Benjamin Gilman (Republican-New York) stated: "The Colombian narco-guerrillas, such as the FARC and ELN, have used drug proceeds to purchase such weapons as heavy machine guns, mortars, surface-to-air missiles, and high-tech communication equipment, often from Eastern Europe. Russian organized-crime elements have become virtual arms bazaars for the Colombian narco-guerrillas to purchase weapons. The drug trade, beginning in Colombia, moves to Eastern Europe and Russia and then returns to Colombia in the form of weapons of death that feed the violence in Colombia, and this cycle continues."

Police have discovered that Eurasian organized crime differs from older criminal associations active in the West in that it is both violent and highly sophisticated. Dealing in such matters as cybercrime and bankruptcy fraud, the Eurasian gangs also use the older methods of violence to gain and protect turf. But they also differ in their approach in that they do not see violence as an end unto itself. They have shown great interest in making alliances with other criminal groups in order to stop infighting and in creating a criminal superpower.

The Eurasian mafia is a new and powerful challenge to law-enforcement agencies worldwide. It has created a powerful nexus with political forces among its native countries and often enjoys their protection as well as that of oligarchic structures in the states of the former USSR. Its ability to operate successfully worldwide has been proven numerous times, and this requires a new approach to international organized crime.