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Corruption Watch: March 20, 2003

20 March 2003, Volume 3, Number 9
By Roman Kupchinsky

On 26 March 1995, the signing of the Schengen agreement eliminated border controls among the seven signatories to that document, including: Germany, France, Belgium, the Netherlands, Luxembourg, Spain, and Portugal. Great Britain did not sign the agreement, with then-Prime Minister John Major asserting that Britain has the right to maintain its own border controls.

By 12 September 2001, many in those European countries no doubt felt it was a precipitous decision. The threat of terrorism, while present during the signing of the Schengen agreement, had become a dangerous reality and now was foremost in the minds of many.

The Schengen agreement, while eliminating border controls within the zone, increased security at its entrance points. A new, computerized Schengen Information System (SIS) was created that maintained ready access to records of arrest warrants, stolen property (especially stolen automobiles), lost documents, and illegal aliens. At the time the agreement was signed, a study conducted at the University of California estimated that there were 1.5 million-3 million illegal workers in Europe (

After the events of 11 September 2001, it was discovered that none of the individuals arrested in Germany on suspicion of connections to the Al-Qaeda terrorist network, nor the eight men arrested in Spain on similar suspicion, had been placed on the SIS "watch list." The system's effectiveness clearly depends on the input of intelligence information about suspect individuals into the computer data bank so that the inspectors on the borders know who to be on the lookout for.

In the United States, 11 September 2001 exposed the disarray and confusion that could be found all along the steps on the entrance ladder to the United States.

The intelligence community reportedly was not providing information on suspected terrorists to U.S. consular officials, and, therefore, such suspects were not on watch lists. There was no single watch list as such, but numerous lists compiled by different agencies and, as a rule, not shared among them.

Visa procedures were, according to Wayne Merry, a senior associate at the American Foreign Policy Council, "fixated on keeping out the tired, the poor, the huddled masses," according to "Government Executive Magazine" of 30 November 2001. Merry, who spent 26 years with the U.S. Foreign Service, stated: "If you've got money, education, or influence, the system doesn't filter you out. It's completely missing the problem."

According to the "National Journal" of 30 November 2001, in Saudi Arabia, home to many of the 11 September hijackers, many visas to the United States were issued by tourism agencies, and U.S. consular officials never even saw those who received the visas. The same publication also claimed that in October 2001 a Saudi national was arrested for taking bribes to issue U.S. visas to other Saudis.

Every year, about 500 million people cross the borders of the United States. Of these, some 350 million are foreigners. Every day, more than 250,000 people enter the United States from Canada, to the north, and 800,000 enter from Mexico, to the south. While many are U.S. citizens who travel back and forth with regular frequency, many are not. To find a lone terrorist in such a mass is daunting, if not impossible. Along the nearly 3,000-kilometer border with Mexico, most of the resources of the Border Patrol are spent on preventing poor Mexicans who want to improve their lot from entering the United States. Any reasonably educated, middle-class Mexican might arguably find it simple enough to obtain the needed permission.

Another kink in the system is the criteria for placement on a watch list and the purpose of such treatment. People with arrest records, those wanted by law-enforcement agencies, and those previously deported for trying to enter a country illegally are natural candidates for inclusion. But there are also more dubious cases. A Greenpeace activist from New Zealand was refused a visa to visit the Netherlands because France had placed his name on the SIS database. It seems that he was considered dangerous because Greenpeace was protesting France's nuclear tests in French Polynesia. The numerous horror stories of people being refused visas from Russia, Ukraine, and other former communist countries for seemingly no reason can fill volumes.

As "The New York Times" pointed out on 3 March, the United States on 7 February was placed at "high risk" status with respect to possible terrorist attacks. Eight hours prior to that alert being issued, four heavily armed men -- in fact, subjects of an unfriendly government -- landed on U.S. territory. Armed with two AK-47 rifles and clips of ammunition, they were Cuban Coast Guard agents who landed their boat, still flying the Cuban flag, at the marina of a major hotel in Key West, Florida. The hotel's marina was a short distance from a U.S. Coast Guard station. The men walked undetected into the middle of town, looking for someone to whom they could surrender. RK

On 12 March, at least one sniper, using high-velocity bullets, shot and killed the prime minister of Serbia, Zoran Djindjic, in the parking lot outside his government offices in the capital city, Belgrade. Soon afterward, police arrested two unnamed suspects, and top Serbian government officials said the killing was carried out by a Belgrade underworld group. The leader of that group is a former special police commander, Milorad Lukovic, whose support helped Djindjic oust former President Slobodan Milosevic in October 2000. The group has been accused of numerous other murders and kidnappings.

According to "The New York Times" of 13 March: "Mr. Djindjic was shot on the very day that his cabinet was to sign warrants for the arrests of Mr. Lukovic, who is known throughout Belgrade by his nickname, Legija, and other leaders of the gang that is believed to be behind [the] assassination and other recent killings, according to a statement issued by the Serbian government. That statement listed 20 members of the self-styled 'Zemun clan,' named after a Belgrade suburb."

According to "The New York Times," Lukovic deserted the French Foreign Legion in the early 1990s and returned to the Balkans, where he became a senior officer in the most feared Serbian police unit under Milosevic. Later, he defected to the opposition.

"The New York Times" quoted Brenda Pearson, a specialist on Balkan affairs at the Washington-based Public International Law and Policy Group, as saying: "The assassination portends a dark period for Serbia and the region.... This period will see a resurgence of nationalism that was never repudiated by much of the Serbian establishment and continues to be allied with the underworld."

Commenting on the assassination, "The Washington Post" wrote on 13 March: "Though his killers have not been identified, the prime minister's most dangerous enemies were widely known: war criminals and organized crime gangs linked to the old Milosevic regime. Mr. Djindjic had been increasing the pressure on the gangsters, who, with their allies in the military and security forces, threaten Serbian democracy and Balkan stability. He recently shook up the leadership of the secret police and went on television to declare an offensive against the trafficking in drugs and women that fuels the underground."

The "Financial Times" of 13 March stated: "Pragmatism marked Mr. Djindjic's short rule. He forced his countrymen to send Mr. Milosevic to The Hague war crimes tribunal and to accept the end of the once-proud state of Yugoslavia and its replacement with the union of Serbia and Montenegro. Before his death, he tackled the sensitive issue of Kosovo, acknowledging its separation from Serbia."

"Jane's Intelligence Digest" noted on 14 March: "Djindjic's attempt to reform the highly centralized Serbian economy -- much of which remains dominated by powerful vested interest groups that enjoyed the patronage of the Milosevic regime -- was also a highly risky endeavor. Dismantling the 'parallel' economy, much of which is widely alleged to be linked to Serbia's notorious organized crime groups as well as to sectors within the army and the security services, had put the prime minister on a direct collision course with some of the most ruthless elements in Serbian society."

Serbia acted rapidly to name a replacement. After the funeral, which attracted some 500,000 Serbs, the Democratic Opposition of Serbia nominated Zoran Zivkovic to fill the post.

Zivkovic was characterized by "The Guardian" of 17 March as a "youthful democracy activist with a 10-year pedigree as a firm opponent of Slobodan Milosevic and a close ally of Djindjic." As interior minister of Yugoslavia until that state was dissolved to create the joint union of Serbia and Montenegro last month, Zivkovic was in charge of the country's police force, where he was involved in trying to root out corruption. Before Djindjic's assassination, Zivkovic had been expected to become Serbia's defense minister. RK

Who is responsible for arresting Osama bin Laden, the head of the Al-Qaeda terrorist network -- the United States, Pakistan, or Hamid Karzai's government in Afghanistan?

According to existing agreements, if bin Laden is found to be hiding in Pakistan, then it is the responsibility of Pakistani authorities to make the arrest. If he is unearthed in Afghanistan, then the captors may be the forces of either the United States or any other coalition partner, including the transitional government led by Afghan President Karzai.

The recent capture by Pakistani forces in Rawalpindi of the number-three man in Al-Qaeda, Khalid Shaykh Muhammad and Mustafa Ahmed al-Hawsawi, who allegedly helped funnel money to the 11 September hijackers, and the documents found during these arrests have led many to believe that the capture of bin Laden is close at hand. This, in turn, has facilitated the rise of numerous rumors as to his whereabouts.

On 11 March, "The New York Times" reported that Khalid Shaykh Muhammad told interrogators that he met with bin Laden in December but refused to describe the location. "From our intelligence gathering, we feel that bin Laden is alive," a Pakistani official from the Inter-Services Intelligence (ISI) agency said, "but we have no evidence that he is in Pakistan." Recent reports of urgent searches in Afghanistan and Pakistan were dismissed by these ISI officials as uninformed speculation.

According to "The Washington Post" of 8 March, Pakistan's president, General Pervez Musharraf, told CNN in an interview aired on 8 March that while "Pakistani intelligence agents were pursuing leads throughout the country, he [Musharraf] doubted bin Laden was in Pakistan." "He seems to be alive," Musharraf told the network, adding, "He would be moving with a large number of bodyguards. He can't be in Pakistan."

Reports in the Pakistani press have reported military operations aimed at finding bin Laden in Baluchistan; others claim he is near the city of Chitral in the North-West Frontier Province.

"The New York Times" on 7 March wrote: "Expectations that the authorities had achieved a breakthrough in the search for Mr. bin Laden were ratcheted higher today by news reports that George J. Tenet, the director of central intelligence, had met this week with the president of Pakistan, Gen. Pervez Musharraf." The U.S. administration denied this and said Tenet had only congratulated President Musharraf on the capture of the pair of wanted terrorists.

In the meantime, residents of local villages in the northwest border province of Afghanistan reported that leaflets had been dropped recently reminding them of the $25 million-dollar reward for information leading to the capture of bin Laden. RK

A court in Frankfurt, Germany, sentenced four Algerian men to prison sentences ranging from 10 to 12 years for plotting to bomb an open-air Christmas market. The "Financial Times" of 11 March reported that presiding Judge Karlheinz Zeiher said the men were members of a cell that was ordered to carry out the attack by a London-based Islamic group. The four men were arrested in Frankfurt in December 2000 and had in their possession bomb-making equipment, dangerous chemicals, and a homemade video of the Strasbourg Christmas market. Their trial began in April 2002, where it was disclosed that they planned to blow up pressure cookers filled with explosives. The men had undergone training at Al-Qaeda camps in Afghanistan. RK

The head of the Ukrainian parliament's anticorruption committee, Yuriy Karmazin, sent a letter on 14 February to Prime Minister Viktor Yanukovich asking that a government commission be created to investigate an alleged vast value-added-tax (VAT) scam taking place in the port city of Odesa that, he claims, is defrauding the government of tens of millions of dollars annually.

In the letter, a copy of which was obtained by "RFE/RL Organized Crime and Terrorism Watch," Karmazin alleges that the companies Sintez Oil, International Port Services, Albion, and United Oil -- all owned or controlled by Oleksander Zhukov -- conspired in 2001-02 to defraud the Ukrainian government. It goes on to say that, using Odesa port facilities and the company Odesnaftoprodukt, those companies conspired to falsify export documentation to show that diesel fuel was being exported to Romania, when in fact refined gasoline was being loaded on board the tanker "Panorea," which in the specified time period made 15 trips from Odessa to Romania.

By falsifying the export documentation and claiming that diesel fuel, which has a much lower VAT than refined gasoline, was being exported, they were allegedly able to defraud the government of tens of millions of dollars. Karmazin, in his letter, writes that the customs service responsible for energy exports is subordinated to the State Customs Service of Ukraine, which makes it almost impossible for local Odesa law-enforcement agencies to investigate the case. Karmazin asks that the Ukrainian Security Service (SBU) investigate the cargo manifests of the tanker "Panorea" at the Romanian port where it unloaded its cargo to compare them with the export documentation filled out in Odesa.

Zhukov, the head of Sintez Oil company, is presently a co-defendant in a trial in Torino, Italy, of suspected arms smugglers to Croatia during the UN-imposed arms embargo to that country during the 1992-96 war. Zhukov's lawyer has stated that his client is innocent of all charges.

In an earlier case involving Zhukov and oil fraud in Odesa whose investigation was never completed by the Prosecutor-General Mykhaylo Potebenko, Zhukov was accused along with a member of parliament, Andriy Derkach, and other individuals of having defrauded the government of millions of dollars by stripping the assets of state oil companies they controlled in Odesa (see "RFE/RL Organized Crime and Corruption Watch," 22 November 2001). RK


By Katka Krosnar

The International Chamber of Commerce is heralding a rare court ruling that it says will help deter shipping attacks worldwide.

In February, an Indian court sentenced each of 14 Indonesian pirates to seven years' imprisonment in what the London-based International Chamber of Commerce's International Maritime Bureau (IMB) has called "a breakthrough" in the fight against pirates.

The men were convicted of hijacking the Japanese-owned vessel "Alondra Rainbow" off the coast of Indonesia in October 1999 and setting its 17 crewmembers adrift on a raft, thus committing armed robbery.

According to the IMB's director, Captain Pottengal Mukundan, the decision sets a precedent -- with a national court assuming jurisdiction over a crime committed in international waters -- that will help deter copycat crimes of piracy. "This is a very good deterrent to prevent other organized groups carrying out similar incidents," Mukundan said.

But Mukundan said shipping remained vulnerable to terrorism and piracy, and said much more still must be done to reduce that risk. Last year, there were 370 attacks on worldwide shipping at sea -- up from 335 in 2001 -- while hijackings rose substantially, from 16 incidents in 2001 to 25 last year.

"Shipping is a very vulnerable form of transportation because, unlike aviation, there is not a lot of awareness about security [and there are] very few measures in place in the case of shipping. When a ship anchors, any boat can come alongside and it is very accessible," Mukundan said.

Mukundan said ships are increasingly susceptible to attacks by organized groups seeking to hijack crews for large sums of money, usually hundreds of thousands of dollars.

Mukundan said he is "very worried" about the vulnerability of Somalian waters to local militia groups due to that country's lack of a legal framework for dealing with the problem, and of Indonesian waters due to established terrorist cells there and the volume of shipping traffic, much of it carrying valuable cargo.

The IMB is calling on coastal states to establish patrolled, 1-mile-wide shipping lanes with 1-mile buffer zones on each side that are kept free of all leisure, fishing, or unauthorized traffic to make it difficult for rogue ships to approach cargo ships.

"If you have a clutter of fishing boats and other small vessels in the water and a small boat suddenly launches an attack, there is no time to react. But if you create a dedicated shipping lane and buffer zones, any vessel which strays into this lane will quickly be spotted by coastal authorities and will be immediately investigated. If it won't stop, there is only one answer -- to blow it up before it hits the target," Mukundan said. "It has to be that way; otherwise, you can't stop these kinds of determined suicide attacks."

The IMB recommends that cargo ships and tankers stay at least 50 miles off the coast, but preferably up to 100 miles away, and that they not stop if they come under attack.

Middle East waters are also vulnerable to such attacks. Seventeen American soldiers died after the U.S. Navy's "U.S.S. Cole" was attacked by suicide bombers from a small boat packed with explosives in Yemen's Aden port in 2000 -- an attack that has been blamed on Al-Qaeda militants.

Since the terrorist attack on the French oil tanker "Limburg," which was rammed by a small boat and caught fire in October, Yemeni authorities have been escorting ships and increasingly patrolling the waters. "But you can always do more," Mukundan said, pointing the finger of responsibility at coastal authorities, who he said could be doing more to reduce risk.

"The risk of terrorist attack can perhaps never be eliminated, but sensible steps can be taken to reduce the risk," he said. "The issue here is how seriously do the governments take the threat of maritime terrorism.... Post-"Limburg," we cannot continue to hope for the best and ignore the lessons."

Indonesia appears to be the most susceptible to attacks, with 103 reported incidents involving ships in its waters in 2002. Mukundan said: "Indonesia is the most dangerous area as far as piracy is concerned. Ships are boarded there on a regular basis, two or three times a week. We know because of the Bali bombing that there is a terrorist movement there, and that factor together with the proven vulnerability of shipping in those waters and the fact that Indonesia borders the main waterway into Asia, where many vulnerable ships are moving, makes it very dangerous. Indonesia does not have the resources to deal with these kind of problems so one possibility would be if such countries with low resources would allow law enforcement authorities from other countries to take responsibility."

Mukundan continued: "We are very worried about Indonesia. It is a country with 7,000 islands, and it produces oil and gas so many vessels carrying these commodities are passing through the waters there."

Bangladesh reported 32 attacks on ships off its coast last year, and India 18 attacks. In South America, Brazil, Colombia, the Dominican Republic, Ecuador, and Guyana all showed a significant increase in attacks.

The waters off Somalia are also among the most dangerous in the world, Mukundan said. "The risk of attack to vessels staying close to the coastline from Somali armed militias has now increased from one of possibility to certainty," he said. "Any vessel not making a scheduled call in a Somali port which slows down, or stops close to the Somali coast, will be boarded by these gangs."

(Katka Krosner is head of the Prague News Agency)