31 August 2004, Volume
WASHINGTON SPOTS INFOBANK AS 'PRIMARY MONEY-LAUNDERING CONCERN.'
The U.S. Treasury Department said in a press release on 24 August that two private banks, Infobank of Belarus and First Merchant Bank of the unrecognized Turkish Republic of Northern Cyprus, have been involved in money laundering. According to the U.S. administration, Infobank laundered funds from fraudulent transactions involving Iraq. "Infobank laundered funds for the former Iraqi regime of Saddam Hussein that were derived from schemes to circumvent the United Nations Oil-for-Food (UN OFF) program, including illegal surcharges and inflated contracts," the press release reads. "Proceeds from the illegal surcharges and inflated contracts either were returned to the Iraqi government -- in violation of UN OFF program conditions -- or were used to purchase weapons or finance military training through Infobank and its subsidiary."
"We continue to use our authority under Section 311 of the USA Patriot Act to protect the U.S. financial system from corrupt financial institutions such as these," Stuart Levey, the U.S. Treasury Department's undersecretary for enforcement and head of the Office of Terrorism and Financial Intelligence, commented on the two banks, which were designated under the Patriot Act as financial institutions of "primary money-laundering concern." "Today's designation alerts the global financial community of the threat posed by these entities. It also serves notice to others that there will be significant consequences for institutions that launder tainted money or engage in similar corruption: We will cut you off from the U.S. financial system."
The Treasury Department is authorized to require U.S. financial institutions to take "special measures" against the two designated banks in the event they fail to provide evidence disproving the money-laundering allegations. These measures range from "enhanced record keeping" or "reporting obligations" to the termination of the designated banks' correspondent accounts in the United States.
Infobank on 25 August denied the U.S. charges that it laundered funds for the former regime of deposed Iraqi President Saddam Hussein. "Infobank has in all of its activities strictly followed the spirit and letter of international agreements relating to the fight against the legalization of illegal financial transactions," the bank said in a statement. "We believe that this [allegation] by the U.S. administration was made hastily and we hope that this upsetting incident will be sorted out." Moreover, Belarusian Foreign Ministry spokesman Andrey Savinykh said the same day that the Belarusian authorities had looked into earlier U.S. concerns about Infobank's alleged money laundering but "found no violations."
The U.S. Treasury Department's designation of Infobank as a "primary money-laundering concern" under the Patriot Act follows a report by its Financial Crimes Enforcement Network (FinCEN) (http://www.regulations.gov./freddocs/04-19266.htm).
FinCEN found that Infobank, which was established in Minsk in 1994, is Belarus's 10th-largest bank. (Belarusian media reported that Infobank accounts for some 1 percent of the assets of the entire banking sector in Belarus). Infobank maintains four domestic branches; two additional branches in Russia were closed by Russia's Central Bank in 2001. Infobank is a commercial bank licensed by the Belarusian National Bank to engage in foreign trade, including foreign-exchange transactions. As of 2003, its license was expanded to enable Infobank to carry out banking operations in gems and precious metals.
Shareholders of Infobank include many private Belarusian companies as well as the government, which is a principal shareholder of the bank's capital. In 2001 Infobank sold a 35 percent stake to the Libyan Arab Foreign Bank, which is fully owned by the Central Bank of Libya. FinCEN said Infobank maintains correspondent accounts with several European banks and at least one bank in New York City.
In addition to banking operations, Infobank is involved in a number of business ventures through a network of affiliated entities, joint ventures, and its subsidiary -- Belmetalenergo. These ventures include Bel-Cel, a cellular telecommunications corporation; Systems Business Management, a joint venture that specializes in project finance in the Middle East and Eastern Europe; and MAZ-MAN, a tractor-manufacturing company. FinCEN stated that Infobank and its subsidiary, Belmetalenergo, have procured and financed weapons and military equipment for several countries considered by the Unites States to be "state sponsors of terrorism." FinCEN added that until the collapse of the Hussein regime, Belmetalenergo brokered various contracts with the former Iraqi government for the provision of military equipment and training for Iraqi armed forces in violations of relevant UN resolutions.
Furthermore, FinCEN asserted that Infobank continues to maintain funds in accounts established for the Central Bank of Iraq, thus violating UN Security Council Resolution 1438 (UNSCR 1483), which requires UN member states to transfer funds and other financial assets of the previous Iraqi government to the Development Fund of Iraq. According to FinCEN, until now, the Belarusian government has not taken steps to transfer Infobank funds in compliance with UNSCR 1483.
Quoting information from a "variety of sources," FinCEN stated that in 2001 Belmetalenergo entered into contracts to purchase oil from the Iraqi State Oil Marketing Organization (SOMO) -- which was overseen by the UN -- and secretly agreed with SOMO to pay illegal surcharges and deposit them into Infobank accounts for the benefit of the then-Iraqi government. Belmetalenergo also entered into contracts for the provision of humanitarian aids to Iraq, in which the value of the goods that were actually provided was inflated. FinCEN claims that the funds derived from the illegal surcharges and the inflated oil-for-food contracts were laundered through several other banks and shell companies. Finally, proceeds from these illegal operations were either returned to the Iraqi government or used to purchase weapons or finance military training through Infobank and Belmetalenergo, according to FinCEN.
The charges of the U.S. Treasury Department are in tune with reports in some Russian, Polish, and independent Belarusian print media that have suggested links between Infobank and murky Belarusian-Iraqi trade deals. "Nezavisimaya gazeta" revealed shortly before the U.S.-led intervention in Iraq in 2003 that an obscure organization called the Iraqi-Belarus Friendship Society chartered flights from Belarus to Iraq with secret cargos. It turned out that the society was registered at the same address as Infobank and Infobank Chairman Viktar Shastou served as head of this organization.
The Polish weekly "Wprost" in 2002 suggested links between Infobank and the trade of illegal weapons. According to "Wprost," the most important intermediaries in money-laundering operations involving Infobank were Belmetalenergo and Capital and Business Management, a company registered in Vienna. The illegally earned money from Capital and Business Management, the paper wrote, was reportedly transferred to the accounts of several dozen offshore companies in the Cayman Islands, the Isle of Man, and Jersey and subsequently transferred to foreign representations of Belarusian firms.
Finally, Ron Synovitz, an RFE/RL correspondent in Iraq, discovered in Baghdad in April 2003 a faxed letter from a tank-repair plant in Barysau. The letter was addressed to someone named Uladzislau Rachkevich. The letter suggested that the Barysau plant offered Iraq training, along with advice on additional mine-sweeping equipment on tanks and camouflaging combat vehicles. Rachkevich turned out to be the head of Systems Business Management, of which Infobank was a cofounder. Today, Rachkevich is general-director of Bel-Cel, in which Infobank holds a stake. (Jan Maksymiuk)WHERE 'PUTIN' IS 'PUTSIN': RUSSIAN NATIONALIST DISCONTENT IN BELARUS.
Many Russian nationalists in Moscow are inclined to see the regime of Belarusian President Alyaksandr Lukashenka in a positive light, as someone whose policies they prefer to those of Russian President Vladimir Putin. But at least some Russians in Belarus have a very different opinion about the Belarusian leader, viewing him as overseeing a regime openly hostile to the 1.5 million ethnic Russians who live in his country.
This difference -- and it is far from trivial -- casts doubt on some of the assumptions both Moscow and Western governments have made about Belarus and suggests that Belarusian national identity may be far stronger than many had assumed.
Praise of Lukashenka by Russian nationalists inside Russia has been so frequent and enthusiastic that it is now generally passed over in silence or seen as yet another indication of the fundamental authoritarianism of the Russian right. But criticism of Lukashenka by Russian nationalists inside Belarus has seldom attracted much notice. That makes a letter and an essay written by Vladimir G. Mikhailov of Minsk and published on the website of the St. Petersburg-based Orthodox Information Agency "Russkaya liniya" (http://www.rusk.ee) so intriguing.
In his letter to this website, Mikhailov argues that "In the Republic of Belarus, just as in the Baltic countries, the MVD [Interior Ministry] violates an elementary human right -- the right to one's own name by forcibly changing Russian first names and family names into their Belarusian equivalents."
In the view of the Belarusian passport and visa service, Mikhailov says, Russian names must be converted into their Belarusian equivalents, not simply transcribed from the Russian Cyrillic to the Belarusian Cyrillic. Thus, the Russian "Anna" becomes Belarusian "Hanna," the Russian "Grigorii" becomes the Belarusian "Ryhor," the Russian "Mikhailov" becomes the Belarusian "Mikhaylau," and the Russian "Putin" becomes the Belarusian "Putsin."
In the essay accompanying his letter, Mikhailov suggests that there are three reasons why ethnic Russians in Belarus and ethnic Russians in Russia should be outraged by this practice.
First, the practice violates the Belarusian Constitution, Belarusian law, and repeated declarations by Belarusian officials, but nonetheless continues with extremely negative consequences for anyone who refuses to go along with it. Indeed, says Mikhailov, the Belarusian government, as far as the public record is concerned, looks to be on the side of the "angels," but in fact, he notes, the situation in his country is "practically analogous to those of Lithuania and Latvia." And those who refuse to go along may be fined, jailed, or prevented from practicing their trade or continuing to live where they have long been resident.
Second, this Belarusian practice, Mikhailov claims, is applied only to ethnic Russians and not to any other ethnic group in the country. Ukrainians, Poles, Lithuanians, and representatives of every other ethnic group in Belarus, Mikhailov says, are allowed to register for passports, residence permits, and other forms by transliterating their names rather than replacing their national names with Belarusian ones. That makes the practice directed against ethnic Russians all the more unexpected and all the more exasperating, he says.
Third, the Belarusian authorities, the Belarusian opposition, and the Russian media in Russia have seldom discussed this problem, thereby making it virtually impossible for ethnic Russians in Belarus to protest against this forcible re-identification of ethnic Russians by the Belarusian government.
Indeed, Mikhailov suggests that there has been a virtual conspiracy of media silence on this point, citing a rare Belarusian television program about it in March 2004 as the exception that proves the rule and as the reason for ethnic Russian passivity in and around Belarus.
But, Mikhailov continues, the situation is even worse, and Russians in Russia need to know about it. He said that for the last two years he has been sending an appeal, signed by 300 ethnic Russians in Belarus, to all senior officials and agencies of the Belarusian government.
Not only has he not received an answer to his petition, but he has discovered a strange catch-22 situation in the Belarusian judicial system: The only court with the authority to overrule the Interior Ministry, the Constitutional Court, is one that he -- as a Belarusian citizen -- cannot appeal to directly. As a result, Mikhailov and his fellow ethnic Russians face an unpalatable situation. They can either agree to have their names translated into Belarusian as Interior Ministry officials insist, or they can refuse and face the legal difficulties almost certain to follow.
What is interesting about this cri de couer of a Russian nationalist in Belarus is not so much the problem he discusses but rather the light it sheds on the attitudes of Belarusian officials, a group many in both Moscow and the West view as more or less committed Russian nationalists. Instead, if Mikhailov is right about what is going on, at least some of them may be more nationalist than anyone suspected -- and that in a country where, as Mikhailov says, "even in the cemeteries you won't find any names written in Belarusian." (Paul Goble)
KYIV MARKET BLASTS RESOUND IN PRESIDENTIAL CAMPAIGN.
Two explosive devices went off in short succession at Kyiv's Troyeshchyna market in the late afternoon of 20 August. The explosions injured 14 people -- and a seriously wounded woman subsequently died in a hospital. There were reportedly citizens of Vietnam, Pakistan, and Bangladesh among the casualties.
Following the blasts, the Kyiv city administration closed the market and set up a commission to find out what should be done to enhance security measures at the market. The closure of the market sparked a protest by vendors who blocked several streets in its vicinity on 25 August, reportedly causing huge traffic jams in the Ukrainian capital. The following day, market vendors staged a picket in front of the mayoral office, and Kyiv Mayor Oleksandr Omelchenko, who is also a candidate in the 31 October presidential elections, reopened the market.
Police subsequently arrested four people suspected of organizing the explosions. Kyiv police chief Oleksandr Milenin caused a sort of media sensation on 27 August when he announced that two of the arrested individuals possessed membership cards of the Ukrainian Popular Party (UNP). The UNP is a component of the Our Ukraine bloc headed by leading presidential candidate Viktor Yushchenko. What is more, Milenin added that the motive behind the blasts was to "influence the political situation" and create "social tension" among the electorate. Police exhibited leaflets in support of Yushchenko's presidential bid among the evidence confiscated from the suspects.
Many observers of the Ukrainian political scene immediately recalled a grenade attack on 2 October 1999, during the previous presidential campaign, when two assailants in Dnipropetrovsk Oblast threw two hand grenades into a crowd surrounding presidential hopeful Natalya Vitrenko. The blasts injured some 30 people, including Vitrenko and her closest aide. Police subsequently said the attack was masterminded by Serhiy Ivanchenko, a regional organizer of Socialist Party leader Oleksandr Moroz's presidential campaign. In 2001, Ivanchenko was sentenced to 15 years in prison for organizing the attack. According to many commentators, media reports on the attack on Vitrenko gravely impaired Moroz's presidential chances in 1999 and might have prevented him from reaching the runoff with Kuchma.
"There is a striking likeness between the Troyeshchyna market events...and the well-know provocations against the opposition in 1999," Moroz commented on 28 August, suggesting that Ukraine's special services were behind both the 1999 grenade attacks on Vitrenko and the 2004 Troyeshchyna blasts.
Can the Troyeshchyna market blasts harm Yushchenko's presidential chances? Judging by statements that followed Milenin's revelations about the political affiliation of two of the arrested suspects, both Yushchenko and his political allies are fully aware of the possibility of such an unwelcome consequence.
Ihor Hryniv, deputy head of the presidential campaign staff of Our Ukraine leader Yushchenko, told journalists on 27 August that police resorted to a "planned provocation" and a "manipulation technique" in linking the market blasts to the UNP. "There is a large distance between UNP members and [Yushchenko], the candidate who joined [the presidential race] by way of self-nomination," Hryniv added.
Yushchenko's campaign staff spokeswoman Tetyana Mokridi on 28 August commented on Yushchenko's leaflets shown on television in connection with the Troyeshchyna blasts. "If a leaflet, newspaper -- or any other campaign material supporting Yushchenko that people bring home -- becomes a piece of material evidence today, then, following the logic of the law-enforcement agencies, the whole of the state should be put behind bars because campaign materials supporting presidential candidate Yushchenko can be found in every country cottage," Mokridi said. She added that the authorities were "flooding Ukraine with fake leaflets from Yushchenko carrying his campaign symbols, violating all sorts of laws, and doing nothing to find and bring to account those involved."
Roman Bezsmertnyy, head of the Our Ukraine staff, said on 28 August that there were no UNP members among the arrested suspects and suggested that the UNP membership cards found on the two suspects were fakes. According to Bezsmertnyy, the suspects included, in particular, Oleksandr Pastukh, who works on the presidential election staff of Bohdan Boyko, leader of the Popular Rukh for Unity; Taras Shvydenko, a former activist of the Tryzub nationalist organization that backs Boyko's presidential bid; and Dmytro Savchenko, who works as a sound engineer for Channel 5 (pro-Yushchenko television channel) and belongs to the extreme nationalist Ukrainian National Assembly led by Eduard Kovalenko. Kovalenko's UNA is known for staging anti-Russian and anti-Semitic rallies, during which it has manifested unsolicited support for Yushchenko's presidential bid. Our Ukraine has branded those rallies as provocations intended to portray Yushchenko as an anti-Semitic and anti-Russian politician.
Viktor Yushchenko said on 30 August that the suspects in the Troyeshchyna blasts do not belong to his election team. He added, however, that he is ready to defend them "as a people's deputy." "Undoubtedly, what happened at Troyeshchyna was done by the authorities," Yushchenko said. "I know that such incidents [as the Troyeshchyna blasts], and many others, will be organized with the sole aim of imposing [the authorities'] scenario on the election campaign." (Jan Maksymiuk)MEDIA NOT PLAYING FAIR IN PRESIDENTIAL CAMPAIGN.
Oleksandr Zinchenko, head of the presidential election campaign of opposition candidate Viktor Yushchenko, said on 25 August that the authorities have taken a "consistent position" to pressure mass media in Ukraine. "This pressure is increasing and becoming more and more cynical and severe; this is not simply administrative resource [in use], this is a strategy," Zinchenko stressed. According to him, only a change of government can improve the situation regarding the freedom of expression in Ukraine.
Even if Zinchenko's assessment of the media situation in Ukraine is somewhat exaggerated, the past eight weeks of the ongoing presidential campaign have brought a great deal of evidence to support his point of view. Regular monitoring of the media behavior in the presidential campaign by Ukrainian NGOs and international organizations unambiguously shows that the Ukrainian authorities spare no effort to shape public opinion in favor of Prime Minister Viktor Yanukovych and miss virtually no opportunity to broadcast a negative image of his main presidential rival, Our Ukraine leader Yushchenko.
Two months ago, two Ukrainian NGOs, the Common Space Association and the Equal Possibilities Committee, started an extensive media-monitoring project "Ukrainian Monitor -- For a Conscious Choice." The two organizations focused their attention on election-related reports in 12 programs on six national television channels and 93 programs on regional television channels, as well as on those in 10 national and 126 regional newspapers. Their findings are being published in regular weekly releases on http://prostir-monitor.org.
The most influential media in Ukraine are television channels, so Ukrainian television -- both state-controlled channels and those owned by oligarchs -- are the focus of attention of most media watchdogs. All but one of Ukraine's television stations are controlled and/or influenced by either the government or oligarchs supporting Yanukovych's presidential bid. Yushchenko's failure to win the support of some of Ukraine's private media moguls for the 2004 presidential campaign is widely seen as his major shortcoming.
Presidential administration chief Viktor Medvedchuk controls the most-watched state channel, UT-1. Furthermore, in his capacity as leader of the Social Democratic Party-united, Medvedchuk wields influence over two other popular channels -- 1+1 and Inter. Viktor Pinchuk (President Leonid Kuchma's son-in-law) and the Dnipropetrovsk oligarchic clan with which Pinchuk is associated control three television channels -- ICTV, STB, and New Channel. Yushchenko has only one friendly television station, Channel 5, which is owned by Our Ukraine businessman Petro Poroshenko. All of these channels -- plus the Donetsk-based Ukrayina television owned by oligarch Rynat Akhmetov, Yanukovych's closest ally -- are monitored under the "Ukrainian Monitor" project.
Since Yanukovych and Yushchenko lead in the polls and are generally expected to score the best results on 31 October, it is no wonder that the overwhelming majority of airtime on television and space in newspapers is devoted to their presidential bids, at the expense of the other 24 candidates. "Ukrainian Monitor" discovered the reporting pattern that has not undergone any essential changes over the past eight weeks -- UT-1 and the oligarchic channels provide either positive or neutral coverage of Yanukovych and predominantly negative coverage of Yushchenko. Additionally, Yanukovych gets far more airtime than Yushchenko. The pattern is basically repeated at the regional television level.
The above-mentioned reporting pattern is somewhat reversed on the pro-Yushchenko Channel 5, whose programs are broadcast over some 40 percent of Ukrainian territory. Channel 5, according to "Ukrainian Monitor," provides mainly negative coverage of Yanukovych and positive or neutral of Yushchenko, even though its reports are more balanced than those on other monitored channels. Channel 5 has not gone unpunished for this coverage policy -- it was temporarily taken off the air in several Ukrainian regions by rebroadcasters that usually cited various technical reasons for the move. Channel 5 claimed the reasons were political.
By comparing the content of newscasts on some oligarchic television channels, "Ukrainian Monitor" concluded that they use temnyks -- secret instructions supplied to Ukrainian media outlets by the presidential administration to tell journalists on what issues they are to report during a particular week and in what manner. One of the most glaring examples of this kind of state control over media was a temnyk quoted by some Ukrainian print media in early July, in relation to the coverage of a pro-Yushchenko's rally on 4 July: "When covering the event, do not give long shots of the rally and shots of the crowd; show only groups of drunk people with socially inappropriate or deviant behavior." Not surprisingly, perhaps, the rally was attended by unidentified individuals who distributed vodka for free.
A similar, even if less striking, bias in favor of Yanukovych can be observed in the coverage of the election campaign by Ukrainian nationwide newspapers. Most major nationwide newspapers are openly partisan in their election preferences: "Fakty i komentari," "Segodnya," Kyivskyy telehraf," "Kievskie vedomosti," and "2000" favor Yanukovych; "Vechirni visti" and "Ukrayina moloda" back Yushchenko; "Silski visti" supports Socialist Party leader Oleksandr Moroz's presidential bid.
Several independent or opposition-leaning regional newspapers -- including "Ostrov" in Donetsk and "Luhanchany" and "Na dnyakh" in Luhansk -- have had problems finding a printing house. Earlier this month, tax authorities froze the bank accounts of the Mega-Plus publishing house that printed "Vechirni visti," a newspaper linked to opposition leader Yuliya Tymoshenko, who supports Yushchenko's presidential bid.
Looking at Ukraine's media behavior from a historical perspective, it should be noted that the first large-scale -- and successful -- attempt at muzzling the media in a biased manner was made in the 1999 presidential-election campaign, when the government and media tycoons worked in concert to prevent Moroz from reaching the runoff with Kuchma and to vilify Communist Party leader Petro Symonenko, Kuchma's rival in the second round, as an agent of "Red revenge."
The 2002 parliamentary elections were also marred by biased and partisan media behavior, even though it did not look so condemnable as that in 1999, because there were many more political parties and options involved. In 2002, Yushchenko's Our Ukraine managed to win the election in a nationwide constituency, in which seats were contested under a party-list proportional system.
However, this year's election -- apparently because of the clear-cut Yanukovych-Yushchenko choice facing Ukrainians -- seems to have driven the authorities to interfere in media election coverage on a hitherto unprecedented scale. Now, Yushchenko needs to make a considerable greater campaign effort than in 2002 if he wants to offset his media handicap and persuade Ukrainians that they must choose him, and not the pro-government candidate. (Jan Maksymiuk)
"When the harvest campaign is over, I will start dealing with you full blast. You and the government will be held accountable for the bicycles that you impudently send to the president. I mean the Belarusian bicycles that you recently bought for the [presidential] residence.... I told my Dima [apparently, a bodyguard -- ed.]: Take one and ride with me.... We managed to ride [no more than] two kilometers! They [the Minsk Bicycle Plant] took the whole batch back. I think they reassembled and repaired something, and brought them to me once again. I will test them this weekend. The bicycle plant doesn't give a damn about good work! ...What kind of attitude is this? There is such demand for your equipment, while you are taking such a careless attitude toward quality, particularly with regard to new models. Today the entire world is shifting to bicycles. Do you know this? People are getting fed up with cars! Cars make fat bellies! People cannot walk, they suffer from breathlessness. People gasp for breath. It would be good to offer them a decent bicycle amid this bicycle boom. Our [bicycle] plant has been working for a century! But what [kind of] bicycles [are they manufacturing]?! We are going to lose our bicycle market.... The autumn and spring will be tougher for you than the harvest campaign for peasants. I will look at what you have done." -- Belarusian President Alyaksandr Lukashenka at a conference on production quality with business executives and government officials on 26 August; quoted by Belarusian Television.
"When we saw a portrait of Fidel Castro with our neighbors, Cuban female athletes in the Olympic village [in Athens], we felt sorry for not having a portrait of Lukashenka with us." -- Belarusian Olympic bronze-winning rower Natallya Helakh during a 26 August news conference in Belarus; quoted by Belapan.
"Let me introduce myself. I am Viktor Andriyovych Yushchenko, the father of five children, I have no criminal record. I was a communist, an honest communist. I belonged to the top five of the world's best bankers. I do not steal." -- Viktor Yushchenko at a presidential-campaign meeting with voters in Dnipropetrovsk Oblast, a traditional election stronghold of the Communist Party; quoted by the "Ukrayinska pravda" website on 31 August.