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Corruption Watch: November 29, 2001


29 November 2001, Volume 1, Number 5
SPOTLIGHT
LATVIA LOSES GROUND IN BATTLE AGAINST CRIME.
Latvia placed 59th out of 91 countries in Transparency International's annual Corruption Perceptions Index for 2001. By comparison, its Baltic neighbors were perceived as freer of corruption, with Estonia coming in at number 28 and Lithuania at number 38. Latvia is thus in the middle of the pack -- a country not terribly corrupt, yet considerably worse off than its neighbors.

Latvia finds itself facing three major problems in particular: drugs, money laundering, and a corrupt parliament. According to the U.S. State Department's narcotics report in 2000, "Drug trafficking and abuse in Latvia continued to increase rapidly in 1999 following the pattern of previous years. The government's limited counter-narcotics efforts reflect the lack of funding brought on by severe budget constraints during a recent economic recession."

Latvia, like Lithuania and Estonia, has become a transit point for drugs from Russia and Central Asia destined for Europe and, in particular, Scandinavia. Latvian officials identify the port of Riga as the main destination for outbound drugs, mostly hashish and marijuana originating in Afghanistan and Kazakhstan. They also point out that many Azerbaijanis are involved in hashish trafficking into Latvia. The drug traffic is controlled by crime groups from the CIS, including ethnic Russians, Azerbaijanis, and Latvians who have connections to Dutch nationals involved in the trade.

Until recently, Latvia was seen as the big hub for money laundering for the CIS countries. The Baltic states, as the first nations to leave the ruble zone and peg their currencies to the dollar, soon attracted millions in stolen rubles from Russian organized crime groups. This and poor regulation of the banking system translated into a welcome mat for organized gangs looking to launder stolen money. The Banka Baltiya scandal, which involved reputed Russian mobsters Vladimir Leskov and Aleksandr Lavent, is just one example of the practice. Much has been done by Latvia to clean up the banking system, but the job is far from finished.

One of the least-discussed problems in Latvia, as in other former Soviet republics, is corruption among members of parliament. Reliable accounts by RFE/RL journalists in Latvia describe large-scale bribery of members of parliament. Much of this is carried out on the basis of political party affiliation and masks itself as "party discipline." Thus, when a faction in parliament is approached and "persuaded" to vote a certain way on a particular bill, each member of that faction is guaranteed a percentage of the bribe. However, if any member "breaks party discipline" and votes otherwise, the bribe for the entire faction is withdrawn.

A recent report on crime trends in the areas adjacent to the Nordic region compiled by the Working Group of the Nordic Council states: "In itself, trans-boundary crime is not a new phenomenon neither in the Nordic region nor in the Baltic States and Russia [sic]. What is new is the scope and the professionalism characterizing the upsurge in crime in the past decade.... The Working Group has formed the impression that the criminal threat in Northern Russia is often exaggerated, whereas the problems in the Baltic region are more serious than many observers in the Nordic region realize."

DRUG TRAFFICKING
THE ALBANIAN CONNECTION.
More than 40 percent of the heroin originating in Afghanistan and bound for Western Europe is distributed by Albanian organized crime (AOC) groups. These groups are involved in the transport of another 40 percent. AOC is seen by experts as the fastest-growing European criminal syndicate, with operations stretching all the way to the United States and Australia. Kosovo is largely under AOC control, as well as parts of Macedonia. These AOC groups are well-armed -- some claim they are much better armed than the police -- despite the destruction of over 130,000 small arms and light weapons in Albania by the end of 1999.

According to "Jane's Intelligence Review" (24 October 2001), there is no single "Albanian mafia" but rather a collection of separate clans dominated by 15 families of northern Albania. These AOC families are intimately connected with drug smugglers in Turkey who, according to numerous news reports, have at least the tacit support of the Turkish government. According to the U.S. State Department, Turkey is the main drug-trafficking route from south-western Asia to Europe and, to a lesser extent, the United States.

One of the reputed leaders of the Albanian mafia drug trade, Daut Kadriovski, is based in Turkey and reportedly has extensive links to underlings in Europe and the United States (where, in New Jersey and the Bronx, they allegedly operate out of a number of cafes such as the Besa and the Two Star).

Turkish and Kurdish gangs of drug traffickers bring in processed heroin and raw opium. But they are not alone. In 1998, the Turkish police arrested 415 foreigners on drug-trafficking charges; the single largest group of those arrested, 150, were Iraqis. The drugs are then handled by AOC groups who move it through Macedonia and Kosovo into Bulgaria, Hungary, Romania, and Austria -- the so-called "Balkan Route." Another favorite route is from Turkey to the Albanian ports of Sarande, Durres, or Viore and then by boat to Brindisi and Bari in Italy for further resale. From Bari, Italian organized crime groups (IOC) such as the United Holy Crown and La Rosa (Rose) move it further.

The Italian-Albanian connection has taken on major proportions in the past few years. The Albanian immigrant community in Italy numbers approximately 110,000, roughly 40 percent of whom are illegal and many of whom maintain close links to relatives and friends back in Albania. The AOC groups have established themselves in Italy's north, where there is no single indigenous "mafia." The mayor of Milan recently warned that his city is rapidly "becoming the capital of the Albanian mafia" in Italy, and police in Florence have established a special "Albanian squad" to combat the trend. One of Italy's top prosecutors, Cataldo Motta, says, "Albanian organized crime has become a point of reference for all criminal activity today.... Everything passes via the Albanians. The road for drugs and arms and people...is in Albanian hands."

BULGARIA
DRUG SEIZURES INCREASE.
The Bulgarian Customs Authority reported that between 13 August and 13 November, some 705 kilograms of illegal narcotics was seized. This includes 492 kilograms of heroin, (almost half of the total seized all year), 150 kilograms of marijuana, and more than 50 kilograms of opium, hashish, and amphetamines.

CROATIA
REPORTS OF GRAFT ON THE RISE.
There has been a significant increase in reported cases of corruption since 1997 in Croatia. This was examined at a two-day seminar sponsored by Transparency International on the role of the media in fighting corruption that took place in Opatija on 17 November.

The purpose of the seminar was to acquaint journalists and the public with the problem and forms of corruption, along with the role of the media in its prevention. A Zagreb law school professor, Davor Derencinovic, said that of the 570 cases in which sentences had been handed down, only 14 of those convicted were punished with substantial prison terms. Probation was granted in 430 cases, while in the remaining 140 cases the court decided on fines or prison sentences of between six months and a year.

After 1997, the number of reported cases of corruption increased significantly, but there is still no systematic information on the verdicts from the courts. "The existence of a tacit agreement about bribery alone constitutes corruption," Professor Derencinovic said. The imbalance between the sentences and the number of reported cases stems from the "secret nature" of corruption as well as the lack of trust in institutions of authority and the judiciary. On the whole, both those who receive and give bribes are punished, but those receiving such payments are given lighter sentences if they report.

Transparency International's head in Croatia, Josip Kregar, said the role of journalists in the fight against corruption is to mobilize the public so it can effect changes in society and change the widespread belief that corruption cannot be prevented.

KYRGYZSTAN
CRIME, DRUG SMUGGLING CREEPING UP.
Law-enforcement agencies in Kyrgyzstan reported that in the first nine months of 2001 they recorded 31,000 crimes, some 2.8 percent more than in 2000. A total of 2,626 kilograms of illegal drugs were seized, substantially higher than the 1,702 kilograms seized in 2000. In the largest drug bust in the south of the country, police found 1.54 kilograms of heroin in a car on 15 November. The State Drug Control Commission reported that, since the start of the antiterrorist war in Afghanistan, more than 200 kilograms of opium and over 60 kilograms of heroin have been confiscated by police.

RUSSIA
DUMA PASSES NEW CRIMINAL PROCEDURE CODE.
A major revamping of Russia's judicial system was passed by the State Duma on 22 November. The newly adopted criminal procedure code sets new limits on judges' terms in office, introduces trials by jury for "dangerous crimes" such as murder and rape, and expands the powers of defense lawyers while separating the functions of the court and those of the prosecution. From 1 January 2003, warrants for searches and arrests will be issued by courts and not by the prosecutor's office. Prosecutors would be required to attend all court proceedings and would not be allowed to submit evidence obtained illegally. The bill is expected to meet with approval in the Federation Council and to be signed into law by President Vladimir Putin.

UKRAINE
SECURITY SERVICE RAID TARGETS 'CRIMINAL UKRAINE' PUBLISHER.
Representatives of the Security Service of Ukraine (SBU) conducted a search of the home of Oleh Yeltsov, the editor of the website "Criminal Ukraine" (http://www.cripo.com.ua/) during the evening of 26 November. They presented a court order allowing the search and informed Yeltsov that the raid was being carried out in order to "prevent the release of confidential information." After the search, Yeltsov's computer was disabled. Yeltsov's website recently began posting Ukrainian translations of articles from "RFE/RL Crime, Corruption, and Terrorism Watch."

UZBEKISTAN
IMU LEADER REPORTED DEAD IN AFGHANISTAN.
Juma Namongoniy, leader of the terrorist Islamic Movement of Uzbekistan (IMU), was killed together with 24 companions, probably on 18 November during the bombing of Kondoz in northern Afghanistan by U.S. air forces, Russian sources and the Tajik Varorud news agency said. A second possibility was that Namongoniy died during a skirmish as Taliban groups that had surrendered outside Kondoz were disarmed by the Northern Alliance.

News of his death was first reported by General Aborrashid Dostum, one of the Northern Alliance's main military leaders, who did not say how he came by the information. But the Islamic State of Afghanistan's foreign minister, Dr. Abdullah Abdullah, who was in the Uzbek capital of Tashkent on 19 November for discussions about the country's post-Taliban future, expressed skepticism, Varorud said. The agency noted that Namongoniy had mistakenly been reported dead before and that other reports suggested that he and 6,000 fighters of his group might already have moved south since their northern base at Taloqan was captured earlier in November by the Northern Alliance.

Nevertheless, Interfax reiterated on 20 November that the IMU leader was dead, citing anonymous Tajik military sources.

If true, Namongoniy's death is cause for celebration in Tashkent, where he has been regarded as public enemy number one since a series of bombs, apparently intended to kill President Islam Karimov, exploded in the capital in February 1999 and were blamed on Namongoniy and his associates. His elimination would also be a coup for the Pentagon, which is widely believed to have promised to destroy IMU forces and bases in Afghanistan in exchange for Uzbekistan's cooperation in the U.S.-led campaign against the Taliban (and the IMU).

The Pakistani newspaper "The Frontier Post" reported on 8 November that Taliban leader Mullah Mohammed Omar had appointed Namongoniy front-line commander of the Taliban's northern forces, based at Taloqan and numbering 14,000 men including Arab, Tajik, Uzbek, and other foreign mercenaries and volunteers. Meanwhile Asia-Plus reported on 19 November that Taliban fighters who survive the battle of Kondoz might be looking to regroup in the northern Afghan province of Badakhshan with a view to crossing the mountain passes into Tajikistan and continuing the struggle from Tajik territory.

END NOTE
BREAKING THE EMBARGO -- ARMS SALES TO LIBERIA (Part 3).

An arms embargo was first imposed on Liberia by the United Nations in 1992 and subsequently tightened in March 2001 to stop arms from reaching Revolutionary United Front (RUF) rebels in Sierra Leone, which is also subject to such an embargo. Thousands of people have died in Liberia's civil war, many of them children. Countless others have been tortured, raped, or maimed during the brutal conflict. Most of the weapons that have found their way into the hands of the RUF originate in Eastern Europe and are sold on the basis of forged documents that declare the weapons as destined for other countries. The documents, called End-User Certificates, are presented by arms brokers to sellers, often governments, before the weapons find their way into the hands of the RUF.

The following is based largely on a United Nations panel of experts report on Liberia made public on 26 October, along with a UN panel of experts report on diamonds and arms in Sierra Leone from December 2000. It also includes information gathered and broadcast by RFE/RL, independent Internet publications in Ukraine and Russia, and interviews with sources in Eastern Europe:

Part 3. "Joy Slovakia"

Helicopters were in great demand among the warring regimes and movements in Africa, and the best supplier was the existing network of arms traffickers from the former USSR and Eastern Europe. The organizational work needed to deliver these items was immense, but not insurmountable.

On 2 July 2000, the LOT helicopter repair plant at Trencin in Slovakia signed a contract with Kyrgyzstan's Ministry of Defense for the repair and refurbishment of two Mi-24 helicopter gunships belonging to Kyrgyzstan. The arrangements were made by the Kyrgyz Defense attach� in Moscow, a Major General Urazmatov. The first Mi-24 arrived in Slovakia in late June 2000 aboard an Il-76 (registration number TL-ACU) with the approval of the Slovak Defense Ministry. It was repaired and flew back to Kyrgyzstan. The second Mi-24 arrived in October 2000 and was to have been picked up by an Il-76 in February 2001. The transportation in both cases had been arranged through a private airline company, Centrafrican Airlines.

However, the Slovak authorities became suspicious. Their inquiries turned up some interesting facts. Kyrgyzstan's Ministry of Defense was not aware that any of its helicopters were to be repaired in Slovakia. In fact, the helicopters in question had been sold to an arms broker, Aleksandr Islamov. The repair contract in Trencin set up by Major General Urazmatov was thus concluded without the knowledge of the Ministry of Defense of Kyrgyzstan. The second Mi-24 was then grounded.

Soon after the grounding of that Mi-24, Peter Jusko, a Slovak businessman representing a company called Pecos, arrived in Trencin claiming the Mi-24 helicopter belonged to him. Jusko was already known to Slovak authorities as the director of an arms brokerage called Joy Slovakia. As a UN panel of experts later learned, one of the directors of Joy Slovakia was Aleksandr Islamov, the same person who had bought the helicopters from Kyrgyzstan. The UN also learned that Joy Slovakia had done business with the Slovak military in the past. The Slovak Defense Ministry had once sold them small arms destined for Guinea. The UN experts were even shown a copy of the End-User Certificate for the deal with Guinea. But the arms were never delivered to Guinea -- or even ordered by them. The End-User Certificate that Joy Slovakia had presented was a forgery. The weapons had been smuggled into Liberia.

The second Il-76 airplane, whose mission was to transport the now-grounded helicopter in Slovakia, had been registered in the Republic of Congo and in the Central African Republic. Requests for landing the Il-76 in Slovakia had come from the MoldTransavia company in Moldova, and the billing address for the airplane was in the United Arab Emirates. As it turned out, the Il-76 was owned by one Victor Bout: a reputed Moldovan gangster, a friend of Leonid Minin, and a gun-runner who was also the owner of Centrafrican Airlines -- which shared the a post-office box (P.O. Box 2190 in Ajman) in the United Arab Emirates with another Bout front, Transavia Travel Agency, and San Air General Trading, which is owned by one Yuriy Denisenko. In March 2001, San Air and Centrafrican Airlines moved to new offices in the rebel-controlled Ajman Freezone and now are part of the entity known as CET Aviation Enterprise.

This Il-76 picked up the first helicopter that was repaired in Slovakia on 2 August 2000 and filed a flight plan back to Kyrgyzstan. However, it arrived in Kyrgyzstan only on 22 August, from Tbilisi, and then only for a fuel stop before departing to Conarky in Guinea. But flight-control logs show that it never went to Guinea; instead it landed at Roberts International Airport in Liberia. All evidence points to the conclusion that it delivered the Mi-24 there.

These elaborate and well-planned operations to break the United Nations arms embargo against Liberia required a number of different skills and players. End-User Certificates had to be forged and notarized, shell companies set up, insurance purchased, pilots and crews hired, government officials bribed, and the arms actually purchased. The proceeds from the sales had to be laundered or, in the case of payment by diamonds that had no certificate of origin, diamonds had to be resold on the black market. In other cases where payment was made by providing favorable concessions for timber operations, elaborate logging and shipping expertise was needed. For example, among the documents found in Leonid Minin's hotel room after his arrest were a number of maps showing that he was negotiating the possibility of a vast timber concession in north-west Liberia. Minin's timber business never became profitable, however, and he sold his equipment to a firm owned by his partner in the Spanish-registered company Forum Liberia. Minin also tried to introduce a Ukrainian businessman, Vadym Rabinovych, to the timber business in Liberia and arranged for Rabinovych's visit to Liberia. A United Nations panel of experts interviewed Rabinovych in Ukraine, but no information is yet available on what they found. Rabinovych is alleged to have been a one-time associate of Semyon Mogilevich, a well-known figure in Russian and transnational organized crime.

Such a large-scale smuggling operation could not take place without the covert support of government officials both in Africa and Eastern Europe. The role of President Charles Taylor of Liberia and his son are clear and well-documented, as are the activities of officials in the Ivory Coast. It is also quite evident that senior officials in Ukraine, Moldova, Kyrgyzstan, and Slovakia knew, or at least suspected, that the embargo was being broken by their citizens but chose not to stop them.

A letter dated 12 February 1993 from the head of the Ukrainian Security Service (SBU), Yevhen Marchuk, to Ukrainian President Leonid Kravchuk is one example of such behavior. The SBU knew that illegal arms sales were taking place. They knew the players, they had evidence that senior officials in the Ukrainian Ministry of Defense were demanding, and getting, bribes for their roles in these activities. They also knew that many weapons were being sold and that buyers did not even have forged End-User Certificates; there were no certificates at all. It seems from the above-mentioned letter that the main concern of the Ukrainian authorities was that the weapons were being sold at a very low price. This was in 1993.

By 1998, there was evidence to show that the new administration of President Leonid Kuchma also was aware of such practices but took no action. The former mayor of Odesa, Edward Hurvitz, in an interview in 2001 for the Internet publication "Criminal Ukraine," openly stated: "I know for a fact that [the current mayor of Odesa and a Kuchma confidant Ruslan] Bodelan, Zhukov, Hryhorenko, Anhel, and Minin were part of one group. They went to Italy together, lived in villas there together. All of the cities' money they transferred to the Maritime Transport Bank [a bank owned by Zhukov]." When asked if such arms sales are possible without the approval of authorities in Kyiv, Hurvitz replied: "I don't believe that. Furthermore, the arms business today is totally criminalized. Here you will find the business interests of a number of institutions coming together."

In Slovakia, police and intelligence services knew about Joy Slovakia and were aware that its founder, Peter Jusko, was involved in questionable arms deals. The military in Slovakia had even done business with him and had sold him with arms on the basis of a fake End-User Certificate. Yet the Slovak authorities did not bother to arrest Jusko. Similar behavior was evident in Moldova and Kyrgyzstan, where officials turned a blind eye to arms sales and preferred to see hard-currency earnings instead.

All the governments concerned in these arms sales knew very well that the weaponry was going to a region in Africa where a conflict was taking place and arms were in great demand. And even if the fake End-User Certificates stated that the end user was a country not on the embargo list, they should have alerted intelligence officials to be extra vigilant. They ignored those facts and chose to make the disingenuous argument that they still use to this day -- that they were "acting in the best interests" of their respective countries.

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