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Corruption Watch: March 13, 2003

13 March 2003, Volume 3, Number 8
After following a circuitous trail from Qatar in 1996 to Rawalpindi, Pakistan, law-enforcement officials on 1 March arrested one of the FBI's most-wanted terrorist suspects, senior Al-Qaeda operative Khalid Shaykh Muhammad. An elusive member of an elusive organization, Muhammad is widely believed to be the operational planner of the 11 September 2001 attacks in the United States. According to "The New York Times" of 3 March, Muhammad was arrested by Pakistani police, who were acting on a tip from an informer, in the city of Rawalpindi. He was roused from his sleep, photographed, then handed over to U.S. authorities, who moved him to a secure location for questioning.

Muhammad was planning another attack on a target in the United States, according to "The New York Times" of 4 March, which the paper claimed was the reason for the recent heightened alert status in the United States. Pakistani officials told "The New York Times" that Muhammad had been hiding in the same apartment in Rawalpindi "for quite some time." RK

An official from U.S. State Department told Reuters on 20 February that the United States will include three Chechen groups on its list of international terrorist organizations whose assets in the United States must be frozen and to whom it is illegal to make financial contributions. The official declined to name the organizations. "We are also consulting with other governments about placing these groups on various international listings on terrorist organizations," the source said.

Diplomatic sources told AFP on 21 February that the three groups are the Battalion of Kamikaze Shahid, the Congress of Peoples of Ichkeria and Daghestan, and the United Force of Caucasian Mujahedin -- all led by Chechen commander Shamil Basaev.

The announcement came during talks between the United States and Russia about a proper response to the situation in Iraq. Many observers believe that the inclusion of Chechen groups was a concession to Russian President Vladimir Putin in order to obtain his support on the Security Council for military action against Iraq. Russia has steadfastly declined to support the position advocated by the United States and has threatened to veto a resolution backing military action against Iraq.

In an interview with Russia's RTR television on 21 February, U.S. Secretary of State Colin Powell said: "We are very sensitive to the threat that Chechen terrorists present to Russia. I've spoken with Mr. [Foreign Minister Igor] Ivanov about it many times and with Mr. Putin many times. Recently, we added three organizations to our terrorist list, three Chechen organizations, and we are doing everything we can, working with Georgian authorities and we're working with our Russian colleagues to help them in the war against terrorism but, at the same time, seeing whether or not a peaceful solution can be found to the situation in Chechnya. We know how deeply felt this situation is to all Russians, especially after the tragedy that occurred in the theater in Moscow [in October]."

The United States had previously refused to label any Chechen group a "terrorist organization" and called on Russia to solve the Chechen question peacefully. After the 11 September attacks, Russia repeated claims that Al-Qaeda is helping finance and train Chechen guerillas. This evoked strident denials by the Chechen leadership.

After an armed attack on a Moscow theater -- during which some 900 people were held hostage by Chechen rebels and 129 people were killed, most of them hostages, after Russian security forces stormed the building using a chemical agent to stupefy the attackers -- the position of the United States slowly began to change. Chechen rebel commander Shamil Basaev subsequently said he was behind the hostage taking.

Russian presidential spokesman Sergei Yastrzhemskii told Interfax news agency on 20 February, "This is good, long-awaited news.... It's a good signal indicating that even on these delicate issues, accurate and proper decisions can be made in the interests of Russia, the U.S., and the entire antiterrorist coalition." Responding to Powell's actions on a Chechen website (, Chechen representatives stated that at least two of the three organizations named by Powell existed neither physically nor legally. RK

The Czech Republic last year exported a total of 5 tons of raw gold worth some 1.6 billion Czech crowns ($56 million at the current exchange rate), according to customs figures cited by "Prague Business Journal" on 19 February. The quantity represents one-third of the Czech National Bank's gold reserves. According to the figure, the Czech Republic surpassed largest European gold producer, Sweden, with a yearly yield of 4.5 tons of gold. However, no one has been able to explain the source of so much gold in the Czech Republic, the paper reported. Czech Stamping Office CEO Martin Novotny said he believes the gold export is fictitious, to allow for profits from VAT deductions, the paper wrote. RK

Three Iranian ministers are being questioned about a "secret deal" to import 15,000 automobiles from Germany, France, South Korea, and Japan, the "Iran Daily" website ( reported on 24 February. The three were summoned to the parliament to answer questions about the deal, but few details were released. Reports from parliament indicate that members of economic and development commissions are gathering evidence and documents to bring to light the details of the agreements. A key issue is the lack of a clear policy on automobile imports into Iran. According to members of the development committee, if the government decides on a concrete policy for auto imports, questions remain as to what will become of the money invested into domestic auto manufacturing. RK

The Polish market for illicit drugs is estimated at some 300 million euros ($324 million) a year, according to Polish police, Polish news agency PAP reported on 26 February. Police confiscate about 100 million zlotys ($25 million) of narcotics every year. Polish traffickers cooperate with cocaine dealers from Brazil, Colombia, and Peru, police said. Heroin reaches Poland from Afghanistan and is controlled and organized by Turkish, Albanian, and Polish criminal groups. The UN International Narcotics Control Board's recently released report for 2002 points to Poland as a significant source of amphetamine supplies to Europe. It says that about 60 percent of the amphetamines seized by police in Scandinavian countries comes from Poland.

According to a U.S. State Department annual report on narcotics in 2001, there are more than 400 criminal groups operating in Poland; but just three syndicates operating in the Warsaw area and Gdansk largely control the drug trade. "Poland's law-enforcement community has had marked success in breaking up drug-smuggling operations, specifically those engaged in the smuggling of cocaine from South America, and it is continuing to improve its ability to identify and locate locally produced narcotics, much of which come from mobile clandestine laboratories," the report states. RK

The U.S.-based magazine "Newsweek" reported on 13 February that Belarus has acted as a middleman for Russian weapons sales to Iraq. Lucy Komisar, an American investigative journalist, wrote in "The Sacramento Bee" on 23 February that a Belarus official who visited Iraq in the fall of 2002 was on the board of a Russian-Belarusian company that markets weapons. One of the weapons they have allegedly sold to Saddam Hussein's regime is the Russian-made S-300P missile. Komisar wrote: "U.S. Deputy Assistant Secretary of State Steven Pifer, who headed a State Department delegation to Belarus in February 2002, said Washington had evidence that country was involved in arms smuggling and had trained Iraq's military to work with Russian S-300P missiles. The S-300P is a transportable system designed for site defense."

"The Sacramento Bee" goes on to quote "Air Forces Monthly" of London. In its October issue, that publication reported that "high on Saddam's shopping list" are the S-300P and also S-300V antiaircraft systems. "There have been reports of his agents traveling extensively in Eastern Europe in attempts to buy them from corrupt officials in former Soviet republics."

In a related story run by the "Financial Times" on 8 February, unofficial Russian suppliers were reported to have attempted to sell shoulder-launched Igla surface-to-air weapons "in one of a number of transactions where the ultimate destination of Iraq was concealed by using 'cover' purchasers in neighboring countries such as Syria." RK

The homicide rate in Russia as a whole was 22.4 per 100,000 citizens in 2002, while the rate in Sverdlovsk Oblast was 26.1, Perm Oblast's was 28.8, and Irkutsk Oblast's was nearly 50, Interfax reported on 22 February, citing the Prosecutor-General's Office. Khabarovsk Krai is the worst in terms of crime density, with 2,800 offenses registered per 100,000 residents, according to the agency. Last year, some 163,400 crimes were registered in Moscow, compared with 90,500 in Sverdlovsk Oblast and 72,200 in St. Petersburg. Moscow has a population of about 9 million, compared with 4 million in Sverdlovsk Oblast and nearly 5 million in St. Petersburg. Julie Corwin

The European Commission announced plans in Brussels on 11 February to create a European Network and Information Security Agency. It would serve as a central location for information dealing with crime and security in e-commerce and as a link between member states and European political organizations. The new organization will not be a law-enforcement agency as such, but merely a coordinating center where governments can seek consultation and exchange information.

At a U.S.-EU Information Security Forum held in Brussels on 28 October, Robert Holleyman, president and CEO of the Business Software Alliance (BSA), outlined the core principles for achieving computer security and privacy, or "cyber trust":

* Co-operation is essential: Industry, government, users, and law enforcement must work together.

* Innovation leads to solutions: The market is the best agent of innovation; governments should avoid mandating technology and standards.

* Flexibility is key: Security solutions are not one size fits all; governments should work to ensure that businesses and individuals have a range of security choices.

* Security starts with the user: Individuals, businesses, and public entities can do much to safeguard their own information.

* Governments should lead by example: Governments need to implement sound security management policies and technology. They should also strengthen and harmonize criminal penalties and civil damages against computer crimes, increase security research and education, and promote a greater level of information sharing.

The secure functioning of networks and information systems "has become a key concern, especially in the aftermath of the 11 September events...for everybody: citizens, businesses and public administrations," the cyber-security website of the publication "The Register" states ( "From an EU-policy perspective the activities related to network and information security is interrelated with the legal framework on telecommunications, data protection and cyber-crime." RK

Western intelligence sources are pointing to Ukraine as the country that sold and smuggled 380 Al-Sumud 2 missile engines to Iraq, according to "The Guardian" newspaper of 27 February. Ukrainian President Leonid Kuchma was already the focus of intense U.S. condemnation for his apparent attempt to covertly sell the Kolchuga radar system to Iraq in 2000. The Ukrainian president adamantly denied the sale of the radar systems, but Kyiv has not officially responded to the allegation that it sold the Al-Sumud 2 engines. The United States is awaiting answers from the Ukrainian side on a number of unanswered questions concerning the Kolchuga.

UN Monitoring, Verification, and Inspection Commission (UNMOVIC) Executive Chairman Hans Blix reported in January that, despite an arms embargo, Iraq had imported 380 rocket engines for the Al-Sumud 2 as well as chemicals used in propellants, test instruments, and guidance-and-control systems. Blix did not name the country from which Iraq purchased those engines.

When Iraq began its construction program on the Al-Sumud missile, it ignored a 1994 UN letter restricting the missile's diameter to less than 600 millimeters. The UN issued the order with the express intent of preventing Iraq from equipping the missile with two engines. Baghdad also violated a 1997 UN letter prohibiting the use of engines from certain surface-to-air missiles, such as the Volga SA2, in surface-to-surface missiles.

According to the resolution adopted by the UN Security Council on Iraqi Al-Sumud 2 missiles as reported by AP on 22 February: "Accordingly, the government of Iraq should present to UNMOVIC for verifiable destruction all Al-Sumud 2 missiles and associated items, as follows:

"1. All Al-Sumud 2 missies and warheads, whether deployed, assembled or partly assembled;

"2. Fuel and oxidizer, where deployed with Al-Sumud missiles;

"3. The SA-2 missile engines imported outside of the export/import mechanism and in contravention of paragraph 24 of resolution 687 (1991), which have been configured for use in the Al-Sumud 2, are in the process of being so configured, or are otherwise associated with the Al-Sumud 2 missile program;

"4. All engine components acquired for the modification of the SA-2 engine for use with the Al-Sumud 2 system, such as thrust regulators, gas generators and air pressure regulators;

"5. All SA-2 autopilots and other guidance and control items, such as gyroscopes, accelerometers, inertial equipment and software imported or developed for use with the Al-Sumud 2 system."

Blix told the UN Security Council that he wanted international experts, not just his own, to study the technical issues regarding Iraq's missile programs. He said he also wanted UN lawyers to look at the legal side of the matter, the AP reported on 12 February.

The experts came from seven nations with missile programs, including the five permanent Security Council members -- the United States, Britain, Russia, China, and France -- as well as Ukraine and Germany.

According to Iraq Watch, in its earlier SCUD-missile programs, "Iraq was able to buy missile components from a number of Western countries. Most of what Iraq needed to extend the range of its SCUDs came from Germany. The West German firm Inwako sold 38 million marks worth of parts and machinery. Another West German firm, Thyssen, contracted to supply 305 turbopumps especially designed for installation in SCUD rocket engines, and shipped at least 35 before German Customs officials intervened. Iraq also received assistance from Austrian firms, Brazilian firms, British firms, and even US firms." (

According to a UN Special Commission report of 11 April 1996: "The Iraqi investigations confirmed that its authorities and missile facilities had been involved in the acquisition of these components through a specific middleman, currently residing in Iraq. Iraq determined that these components fell under a category of proscribed items under resolution 687 (1991). The middleman involved admitted to concluding a number of contracts with Iraq for the delivery of these and other missile components and equipment and to receiving substantial amounts of money from the Government of Iraq. It was established that some missile guidance and control components had been delivered to Iraq in July 1995 while others together with testing equipment had been stored in transit in a free port in Jordan waiting for shipment to Iraq" ( What remains unanswered is the question of where the middleman bought the proscribed items. RK

Responding in parliament in mid-February to charges leveled by his predecessor that he was involved in a racket to confiscate automobiles and other goods and then resell them to friends while working for the Tax Administration (see "RFE/RL Organized Crime and Terrorism Watch," 27 February 2003), Ukrainian Prosecutor-General Svyatoslav Piskun made an astonishing revelation: He told members of parliament that he was in possession of a letter sent by then-Prosecutor-General Mykhaylo Potebenko to Volodymyr Radchenko, head of the Ukrainian Security Service (SBU), in which Potebenko asks that Piskun's investigation into the disappearance and murder of journalist Heorhiy Gongadze be halted because it might place the leadership of the country in an awkward position. Piskun repeated his claim the next day, 28 February, at a televised press conference in Kyiv.

Gongadze, an independent journalist who wrote articles exposing high-level corruption in Ukraine, disappeared in Kyiv on 16 September 2000. His decapitated body was discovered in early November of that year in a village some 80 kilometers from Kyiv. In December 2000, Oleksander Moroz, the leader of the Socialist Party, informed parliament that he had recordings made by a member of the president's security detail, Major Mykola Melnychenko, in which President Kuchma is seemingly heard discussing Gongadze with Interior Minister Yuriy Kravchenko (recently appointed by Kuchma to head the State Tax Administration), SBU head Leonid Derkach (currently a member of parliament), and presidential office chief (and current speaker of parliament) Yuriy Lytvyn. In the clandestine recordings, Kuchma is heard telling Kravchenko to "get rid of" Gongadze. In that recording, Kravchenko told Kuchma that he has a squad of "Eagles" who are ready to "do anything needed." Kuchma has consistently denied having said anything about Gongadze. The recorded conversation was authenticated by BEK TEK, a U.S. company specializing in audio authentication.

Potebenko, the prosecutor-general at the time of the murder, was often accused by Gongadze's family and their lawyer of stonewalling the investigation. He was finally replaced by Piskun in the fall of 2002 and was later elected to parliament on the Communist Party slate.

Responding to Piskun's charges concerning the letter to Radchenko, Potebenko called it a "falsification." According to the "Criminal Ukraine" website (, Potebenko told journalists that he and Piskun had discussed this letter at a private meeting and Piskun had told him that he had no such letter.

Last year, the parliamentary commission investigating the Gongadze slaying, a commission that Potebenko wanted disbanded, sent a letter to Piskun asking that charges of obstruction of justice be brought against Potebenko for his handling of the case. RK