Corruption Watch: May 16, 2002

Underscoring growing concerns over Iran, U.S. President George W. Bush's administration has decided to impose new sanctions on Chinese, Armenian, and Moldovan companies accused of aiding Tehran's alleged efforts to obtain weapons of mass destruction, a senior U.S. official said on 8 May, Reuters reported the following day. The source said Congress will be notified soon about the decision, which was made under the 2000 Iran Nonproliferation Act. The sanctions are being imposed because of "weapons transactions with Iran" -- part of what President Bush has called the "axis of evil," along with Iraq and North Korea -- and to demonstrate that "we're paying increased attention to the Iran Nonproliferation Act," said the official, who requested anonymity. The source did not disclose the names of the companies affected, their number, or the nature of their activities. But he said the number of sanctions imposed and the count of companies being penalized are "going up." The official said companies and individuals in Moldova and Armenia may be "fronts" for Russian entities, given those countries' status as former Soviet republics.

In comments to journalists at Zvartnots Airport in Yerevan, Armenian President Robert Kocharian declined to comment on reports that the United States has imposed sanctions on unnamed Armenian companies believed to be engaged in the illegal export to Iran of technology that could be used for the manufacture of weapons of mass destruction, according to Mediamax, as cited by Groong. "We must prove that this is not true. If it is, we will have to find out why it happened," Mediamax quoted him as saying. Armenia's declared exports to Iran in 2001 totaled $32.5 million and consisted of scrap metals, primarily aluminum and copper ($12 million), metal-cutting tools and copper ore, and small quantities of chemical substances including synthetic rubber, polymers, and oxides. Experts consulted by RFE/RL's Yerevan bureau said none of those substances can be used in the production of chemical weapons. ("RFE/RL Newsline," 10 and 13 May 2002)

Croatia's HRT 1 TV in Zagreb aired a special program on 6 May exposing the drug trade and links between drug dealers and Croatian politicians in the former Yugoslavia. Ivana Petrovic prepared the investigative report. The report claimed that -- since the United Nations effected an embargo in the early 1990s -- illicit drugs, mainly heroin and cocaine, have entered Croatia by sea along with smuggled arms. The route subsequently was changed and drugs began entering Croatia via Hungary, the report asserted.

In 1994, an SIS officer was caught near the city of Varazdin with four kilograms of heroin. That case, according to the TV report, was hushed up. The report suggested that the reason for the cover-up was the involvement of senior government officials who were using narco-money for their own needs. The report stated that 660 kilograms of pure heroin was seized in the port of Rijeka in 1997, only to resurface in the cellar of a bank in Belgrade in March 2001. The HRT 1 report speculated about why this heroin was never destroyed but ended up in a Belgrade bank: The conclusion was that the SIS and Yugoslav leader Slobodan Milosevic were using drug money to fund covert operations.

On 10 March 2001, the BBC reported that Serbia's interior minister accused former President Milosevic's secret police of hoarding illicit drugs and carrying out illegal surveillance of two public figures who were later murdered. Minister Dusan Mihajlovic told reporters that the drugs, worth almost $30 million, were found in a bank vault belonging to the police service. The drugs -- including 600 kilograms of heroin and smaller amounts of cocaine, marijuana, and other substances -- had never been registered by the police or reported to a court as required by law.

Mihajlovic added that four officers were being questioned by a judge and could face prosecution for spying on public figures and tapping their phones. The four were said to be close associates of Rade Markovic, the former secret police chief currently under arrest in connection with an alleged attempt to murder opposition politician Vuk Draskovic in 1999. Markovic has denied the allegations.

Investigations by Serbian prosecutors have established that the amount of money stolen by Milosevic and his cronies at $4 billion. Milosevic's inner circle, including close family members, are believed to hold hundreds of millions of dollars abroad in private bank accounts in Cyprus, Switzerland, Lebanon, Russia, Greece, and Israel. During the early 1990s, sackfuls of foreign currency are believed to have been spirited abroad into such secret accounts.

Officers of the Novosibirsk regional branch of the Federal Security Service (FSB) have blocked an international channel for smuggling narcotics from Central Asia to Siberia. "Six criminals were arrested, including two organizers of the drug-trafficking channel -- both foreigners," Stanislav Chekalin, head of FSB regional branch's press service, told ITAR-TASS on 7 May. Some 50 kilograms of opium and 23 kilograms of heroin from Afghanistan, an exceptionally large amount for Siberia, was confiscated. According to early reports, the narcotics were brought to Siberia via Kazakhstan. Criminal proceedings were instituted in the case.

A resident of Elban in Khabarovsk Krai found two bags of explosives in one of the village's streets. Employees from the Emergencies Ministry and police officers who came to the scene found TNT charges with a total weight of about 15 kilograms, 9.8 kilograms of granulated TNT, and thermal warheads of about 3 kilograms, according to the Khabarovsk Krai police department as reported by ITAR-TASS on 8 May. Elban houses an ammunition disposal plant. The criminals were believed to have stolen the explosives from the plant but for some reason left them behind.

Lawyer-cum-witness Artem Kosogov was found slain at the entrance to his home in Krasnoyarsk Krai on 7 May, ITAR-TASS reported the same day. Kosogov was the defense lawyer for Krasnoyarsk's alleged criminal kingpin Vilor Struganov, also known as "Pasha Tsvetomuzyka." The territory prosecutor's office said the murder took place at about 9:00 a.m. local time, adding that the cause of death was deemed to be several blows to the victim's head with a blunt object. Police are investigating. Kosogov was involved in all of Struganov's high-profile criminal cases and defended him in court several times. However, he went on to appear as a witness in a case concerning disruptions to the election campaign in December 2001, for which Struganov has been charged. The prosecutor's office and internal affairs directorate have refrained from offering any theories about the murder. According to "Kommersant-Daily" on 8 May, the trial against former Krasnoyarsk Aluminum head Anatolii Bykov (see "RFE/RL Newsline," 7 January 2002), who has been charged with conspiracy to murder Struganov, was scheduled to reconvene on 14 May. A fellow attorney in the krai, Valerii Kakaulin, suggested that the Bykov's possible role in Kosogov's death will be examined. Meanwhile, Aleksandr Uss, chairman of the krai's legislature, told "Gazeta" in an interview published on 8 May that he plans to run for governor in upcoming elections. When asked whether he thought Bykov might also run, Uss declined to comment.

Turkmenistan has demanded that the United States extradite former Foreign Minister Boris Shikhmuradov, who has been charged in Turkmenistan with illegal arms dealing and embezzlement, rferl.org reported on 12 May. Shikhmuradov, who is now a leading pro-democracy activist and opponent of Turkmen President Saparmurat Niyazov's rule, has dismissed the charges against him as politically motivated. A statement from the Turkmen Foreign Ministry quoted by the ITAR-TASS news agency says the U.S. ambassador to Ashgabat, Laura Kennedy, has twice been summoned to the Foreign Ministry to hear demands that the United States hand over Shikhmuradov. The statement said the Turkmen government has a "total lack of understanding" of why the U.S. government has allowed Shikhmuradov to remain free on U.S. territory. The Foreign Ministry statement said Turkmenistan and the United States have been developing ties in various areas, including in the fight against international terrorism.

Turkmenistan Prosecutor-General Kurbanbibi Atadjanova announced on 7 May that criminal charges were brought against the ex-chairman of the National Security Committee (KNB, former KGB), Mukhammed Nazarov, and 21 of his subordinates from the KNB, ITAR-TASS and AP reported. At the same time, ex-Defense Minister Kurbandurdy Begendjev, who like Nazarov was fired in March, was charged with four counts of corruption.

The Prosecutor-General's Office unveiled the charges on 6 May at a closed-door meeting with President Saparmurat Niyazov, who told Turkmen TV that the cases would be sent directly to the Supreme Court. The defendants allegedly committed 80 crimes all told. Nazarov, who had often been seen as the second-most-powerful man in the country, was accused of 11 crimes, including murder, procuring prostitutes, bribe taking, and fraud, AP said. Meanwhile, his fellow security officers were charged with crimes ranging from murder and torturing suspects to unsanctioned searches, drug-running, and embezzlement, RFE/RL reported. As a result of their criminal activities, Atadjanova said, five people died in custody, 69 were arrested and 16 searched without proper cause, and 22 were beaten and humiliated with electric-shock torture, Turkmen TV and ntv.ru reported on 7 May. The defendants face sentences of between 15 and 20 years, Atadjanova noted. Niyazov said that "even though I have a soft heart, I do not plan to amnesty them" and that Nazarov's crimes "have been completely proven" -- although the president paid at least lip service to due process by adding that "his crimes are ready to be brought to court," Turkmen TV reported.

The announcement followed a two-month investigation into KNB activities, which was opened on 4 March in tandem with an official anticorruption campaign that resulted in a wide-scale purge of Turkmenistan's security services by Niyazov (see "RFE/RL Central Asia Report," 14 March 2002). In recent weeks the president has also reshuffled numerous military, border guard, and regional officials. The former head of the Turkmen State Border Service, Tirkish Tyrmyev, is among those due to be tried by the Supreme Court together with Nazarov, Turkmen TV mentioned on 6 May.

On the same day, the latest victims of the ongoing purge were announced: the chairman of Turkmenistan's National Bank, Seitbai Gandymov, and the head of Turkmenistan's main television channel, Dovletmurat Annamuradov, who were dismissed by Niyazov on 6 May during a meeting of the Cabinet of Ministers, where Gandymov also served as deputy chairman. Gandymov was accused of embezzling state funds, nepotism, and "immodesty," according to the newspaper "Neitralnyi Turkmenistan." In his capacity as deputy chairman of the Cabinet of Ministers, he was replaced by Economy and Finance Minister Enebay Ataeva, RFE/RL reported on 8 May, adding that no new National Bank chairman has yet been appointed. Meanwhile, Annamuradov was supposedly sacked "for producing substandard programs," Turkmenistan's Altyn Asyr TV said.

But according to the television report, the new head of the KNB, Poran Berdyev, also hinted at political reasons behind Gandymov's dismissal when he told the Cabinet of Ministers meeting that Gandymov has links to Khudaiberdy Orazov, former National Bank chief and deputy prime minister in charge of finance, and to Nurmukhammed Khanamov, former Turkmen ambassador to Turkey. In recent months, both men have joined Turkmenistan's opposition-in-exile that is based in Moscow and Istanbul. At the same meeting on 6 May, Niyazov mentioned a plan to beef up the KNB above and beyond the 5,000 people who already work there. Analysts have speculated that Niyazov's decision to purge and restructure the Turkmen security apparatus is related to its failure to deal with his political opponents. The People's Democratic Movement of Turkmenistan has been raising its profile since last autumn with major figures defecting from Niyazov's camp. Former Foreign Minister and now leader of the opposition Boris Shikhmuradov, who has been stumping for support in the United States, told American audiences recently that Niyazov spread false information about economic conditions in Turkmenistan, talking down its foreign debt, exaggerating economic growth rates and profits from gas sales to Ukraine, and lying about bumper harvests (see "Turkmenistan: Opposition Leader On U.S. Tour Continues Criticism Of His Government," rferl.org, 7 May 2002).

Meanwhile on 7 May, Niyazov's government announced an ambitious program to increase oil production in 2002 by 60 percent over last year's figures, and natural gas production by 40 percent, AP reported. The plan calls for 13.5 million metric tons of crude to be produced in 2002, 2.7 million tons of which is to be exported, and 70.8 billion cubic meters of gas, 56.6 billion cubic meters of which is for export, mainly to Ukraine, Russia, and Iran, the news agency said. ("RFE/RL Central Asia Report," 9 May 2002)

The trial of seven Ukrainian nationals charged with smuggling hundreds of Ukrainians to Los Angeles via Mexico City and Baja California began in Los Angeles on 8 May. Some of these illegal aliens were young women who were then sold into prostitution. "The immigrants paid an initial $2,500 to get to Mexico City, where they were shuttled to hotels," and then they were told to pay more to enter the U.S., AP reported on 8 May. U.S. Attorney for the Central District of California John S. Gordon said a Federal Grand Jury handed down a 22-count indictment on 17 May 2001. In it, 18 defendants are charged with involvement in an international smuggling ring that imported illegal aliens from Ukraine into the U.S. and sold several female aliens into prostitution, the agency said.

The indictment names Sergey Mezheritsky, 35, of Hollywood as the ringleader of the group's Los Angeles and Mexico operations. Tatiana Komisaruk, 49, of North Hills was the alleged manager of the smuggling operation. Six of the defendants are fugitives being sought by federal authorities. They include Valentyna Ivanivna Drozd, the owner of Svit tours in Ukraine, whose company allegedly helped coordinate the transport of aliens to Mexico. Alleged recruiters for the operation in Ukraine include Yevgeniy Frolov, Elena Kravchenko, and Larisa Palomar. Ten of the defendants are being charged on a separate count of conspiracy to import and harbor aliens for the purpose of prostitution. According to the AP report, the investigation by the Federal Bureau of Investigation, the Immigration and Naturalization Service, and the United States Border Patrol was triggered by a video camera that Border Patrol agents found on a dirt trail near the U.S.-Mexico border in 1999. The tape showed what appeared to be the journey of a family "through Hungary, Mexico City, and up to Tijuana." The defendants face up to 10 years in prison for each smuggled alien.

SHUTTING DOWN ILLICIT ARMS TRADING: A CASE STUDY (Part 1)

By Roman Kupchinsky

The murky world of illegal arms sales to rogue regimes and countries subject to United Nations arms embargos is dominated by frequent reports of successful smuggling operations. However, these must be weighed against those operations where cooperation by intelligence services of different countries leads to the interception and prosecution of smugglers.

One such case is that of the "Jadran Express" and illegal sales of Belarusian arms to Croatia. On the basis of a report by the Security Service of Ukraine (SBU) obtained by "RFE/RL Crime and Corruption Watch," it is now possible to describe a successful operation.

The story of the "Jadran Express" begins in February 1992 with the arrival in Kyiv of Dmytro Streshinsky, the president of Global Technologies International, Inc. Streshinsky, a former Ukrainian citizen, arrived in Kyiv with the aim of buying $4.5 million worth of military goods. The end-user certificate he produced identified Morocco as the end user. The arms were sold and shipped to Casablanca, Morocco.

Having successfully negotiated this deal, and by the same token having built his reputation as a man who could get things done, Streshinsky returned to Kyiv in October 1992. He now was in the market to buy $3.85 million worth of arms, and he produced an end-user certificate from Egypt to allow him to do so.

Streshinsky's Global Technologies then signed a contract with a Ukrainian firm called Progress for armaments that left Ukraine in October 1992. The export license was signed by a cabinet minister and the deal was expedited by an adviser to Ukrainian President Leonid Kravchuk. The shipment left Ukraine aboard two cargo ships, "Island" and "Diana Delta," and was moved to Egypt.

In October 1992, according to the SBU report, the SBU's military counterintelligence department reported that Global Technologies was preparing a third purchase of arms. This report was based on a letter sent to President Kravchuk by Streshinsky on 2 October 1992. The analytical section of the SBU sent this report on to the head of the SBU, Yevheniy Marchuk, who on 5 December 1992 instructed his agency to act in a "very conspiratorial" manner (in the words of the SBU) and sent instructions to "organize an active investigation of 'S' and to cooperate with the GRU [military intelligence] in exposing this. To expose the entire mechanism of lawlessness and machinations in the Ministry of Defense."

The sale of arms to Streshinsky was halted in December 1992 by the SBU, which unearthed "serious violations of existing regulations on export controls."

On 19 January 1993, Streshinsky approached President Kravchuk through a letter in which he asked for "the opportunity to explain to the president cooperation in military-technical cooperation and present his plans for long-term mutually beneficial cooperation."

On 12 February 1993, SBU head Marchuk sent a letter to President Kravchuk advising him that if arms were sold to Streshinsky, he (the president) could be forced to testify in the case and warning that the sale would compromise Ukrainian state policy in arms sales. The arms to Egypt were nevertheless sold despite Marchuk's letter to Kravchuk. Later, the sale was deemed legitimate by the SBU.

Streshinsky never returned to Ukraine after April 1993. He did, however, make one last, ill-fated attempt to sell arms -- this time to Croatia. He attempted to do so via Belarus, where he was able to purchase weapons using a false end-user certificate made out to Nigeria. In February 1994, he bought the small arms in Belarus and shipped them to the Oktabersky port in Odesa. But this time the police were aware of the sale and the use of a fake end-user certificate (the intended end user was in fact in Croatia). By this time, the Ukrainian SBU and intelligence services within NATO countries had coordinated their actions and the "Jadran Express" was allowed to go to sea under close, but discreet, surveillance. The craft was eventually seized on 8 March 1994 in the Adriatic Sea near Venice and its cargo was confiscated. All of it was bound for Croatia. On 5 May 1994, the UN Committee on Sanctions officially thanked Ukraine's SBU for its help in preventing this illegal sale.

Streshinsky was arrested by Italian police in 2000 along with another arms dealer, Aleksandr Zhukov. As soon as these arrests were made, a massive disinformation campaign began in Ukraine trying to link Yevhen Marchuk, the former head of the SBU, to these arms sales.