Corruption Watch: August 30, 2002

By Roman Kupchinsky

Vladimir Golovlev, a member of the Russian State Duma, was shot dead in Moscow on 21 August, "RFE/RL Newsline" reported. Golovlev, who was elected to the Duma as a member of the Union of Rightist Forces (SPS), left that party in early 2001 and later became a co-chairman of Liberal Russia. "The murder of one of the five co-chairmen of Liberal Russia is undoubtedly of a political nature," fellow Liberal Russia co-Chairman and Duma Deputy Sergei Yushenkov was quoted as saying by regions.ru.

According to NTV, unknown assailants attacked Golovlev, 45, about three months ago, but the attack was foiled by Golovlev's dog. Last fall, the Prosecutor-General's Office asked the Duma to lift Golovlev's immunity from prosecution in order to investigate his activities when he headed the Chelyabinsk Oblast State Property Committee in 1991-92 (see "RFE/RL Newsline," 21 December 2001). The Duma partially granted the request by authorizing prosecutors to proceed with an investigation. According to dpa, Golovlev is the seventh member of the Duma to be murdered since 1994. The other six all died during the presidency of Boris Yeltsin.

According to "The Moscow Times" of 22 August, Golovlev was walking his dog at around 8 a.m. in a park near Pyatnitskoye Shosse in the Mitino district when an unknown assailant or assailants opened fire on him. He was shot twice in the head and died instantly, and minutes later his body was found by a passer-by, a police spokesman said.

The attack had all the markings of a contract hit carried out by a professional killer, said city prosecutor Mikhail Avdyukov: "There were two bodyguards with him who said that they did not see anything," Avdyukov told reporters. Members of his party, however, denied that he had any bodyguards.

Golovlev's party, Liberal Russia, was founded this year by Russian oligarch Boris Berezovskii, once one of the most influential people in the country but now an archcritic of President Vladimir Putin who lives in London.

Berezovskii was quoted by the "Guardian" newspaper on 22 August as stating that "The criminal case against Golovlev was started the day after he joined Liberal Russia. This [murder] is very simple: it is a message to the political classes of Russia that anyone who crosses the red flags of the existing powers will be killed."

Yet Boris Nemtsov, the leader of the Union of Rightist Forces, told Russian media that he believed the contract killing was linked to the corruption inquiry.

Oleg Kovalev, acting head of the pro-Kremlin Unity faction, told "The Moscow Times" that Golovlev could have been killed because he gave evidence of wrongdoing by high-ranking officials to prosecutors while being questioned.

Golovlev was elected to the Duma for the third time in 1999. He left the Union of Rightist Forces last fall to become an independent deputy and one of the co-founders of Liberal Russia.

At about the same time, in October, writes "The Moscow Times," "the Prosecutor-General's Office asked the Duma to strip him of his legislative immunity because of an ongoing investigation into his past activities in Chelyabinsk."

The chief of the investigation department of the Chelyabinsk Oblast Prosecutor's Office, Yurii Artser, said on 21 August that the investigation into Golovlev's work as the head of the oblast's State Property Committee has been closed, RosBalt reported. Duma Deputy Mikhail Grishankov (People's Deputy), who formerly headed the oblast's Federal Security Service's (FSB) organized-crime department, said that the case focused on the sale of 22 billion rubles worth of shares in the Magnitogorsk Metallurgical Plant. According to Grishankov, authorities suspect that Golovlev transferred 89 packets of shares to a public social-security fund that was allegedly illegally privatized. Reportedly, shares in several other major enterprises in the oblast were also involved. Artser added that there are five other potential defendants involved in the case and that the investigations into their activities will continue ("RFE/RL Newsline," 22 August 2002).

The murder will likely be viewed as a major embarrassment to Putin. Golovlev's murder occurred one month after the deputy head of Moscow Railways was shot dead by unknown assailants. Some analysts point out that mafia contract killings are on an upsurge. In addition to the two above-mentioned murders, they cite the case of the second attempt on the life of Moscow Deputy Mayor Josef Ordzhonikidze in June.

A week-long multinational antismuggling operation, code named "Labor" and involving naval ships and helicopters, failed to live up to Albanian government expectations. The operation netted only 12 alleged smugglers. According to the "Financial Times" of 23 August, news of the impending operation was leaked, allowing 30 or 40 smugglers to suspend their operations and hide their boats. As a result of this breach of security, the Albanian chief of police was fired.

The "Financial Times" reported that: "The operation started with the Albanian army and police and seaborne Italian security forces in the form of the Guardia di Finanza sweeping into Vlore by land and sea in the hope of catching up to 30 boats. But many of the smugglers escaped. The police chased them in previously-impounded boats capable of speeds of up to 80 miles an hour." Greek and Yugoslav forces also took part in the operation.

Albania has been singled out by the EU for its smuggling of women, many of whom wind up as sex slaves in Western Europe. The smugglers are also known to transport drugs and guns by boat to Italy where numerous Albanian gangs operate and have established close links to the mafia.

A new anticorruption program is to be launched in September or October in Armenia after public debate on the issue is conducted, the Institute for War and Peace Reporting (IWPR) reported. However, many Armenians doubt that the program, paid for by the World Bank in the amount of $300,000, will have any impact upon society.

Reporting on this event, the IWPR on 26 August quoted pensioner Sedmara Sedrakian, who said: "I think bribes will always be taken, where ordinary citizens make direct contact with an official. Surely it should be possible to reduce the number of documents you need to receive a pension or an inheritance, so as to do less running around the bureaucrats' offices. I know many people who are simply ready to bypass the law, so as not to be dependent on the appetite and mood of bureaucrats."

According to the IWPR, "The first question being asked is how an anticorruption drive can be enforced, when many of those in charge of it are suspected of being corrupt themselves. By some estimates, around 95 percent of Armenian businesses work in the shadow economy, with the result that around 1 trillion drams ($2 billion, a sum almost equivalent to the country's GDP) bypasses the state budget."

Furthermore, many experts and Armenian parliamentarians fear that an antigraft agency will itself become a generator of corruption.

The British daily "The Guardian" reported on 20 August that Russian officials from Emercom, the Russian government ministry which distributes emergency aid and which signed a $270 million deal with Iraq under the UN oil-for-food program in July, have been accused of giving Iraqi officials millions of dollars in bribes. The deal involves Iraq supplying Russia with $12 million in oil. The oil-for-food program permits Iraq to sell crude oil at below market prices.

According to "The Guardian," a spokeswoman for Emercom strongly denied the allegation, saying that it had been awarded the $270 million contract because of "its humanitarian work in the area."

The bribery accusation became known two days before Russia announced that it intended to sign an economic and trade cooperation agreement with Iraq worth an estimated $40 billion.

According to a Western diplomat who spoke to "The Guardian" on conditions of anonymity: "The Emercom deal, approved by the UN on 11 July, is twice the size of any other under the oil-for-food program in the last three months. It was noticeably large."

He added that "Iraq is having a problem attracting people prepared to break the sanctions. When they find someone who is willing, then they give them the biggest deal that they can." He also said that he had seen clear evidence of payments being made "within the last few months."

Millions of dollars were made by a group of swindlers in Moscow who sold fake metro and bus tickets before 12 of the 15 alleged ringleaders of the scam were arrested on 6 August, "The Moscow Times" reported on 23 August. The other three were arrested at a later date. According to the daily, this was the largest case of fraud ever in the city's public transport system.

Filip Zolotnitsky, a spokesman for the police department's Economic Crime Directorate, explained the scam. The counterfeit tickets were printed in unknown locations in East Europe and smuggled into Russia. Some 300 people sold the tickets in Moscow. According to "The Moscow Times," this group included many of the metro's official ticket sellers, scores of bus and trolley drivers, and inspectors "who gave fake receipts to passengers they fined for not having a ticket," he said.

Zolotnitsky gave further details: "Metro cleaning women collected used tickets from the waste bins and sold them to the swindlers for a few dozen rubles. The swindlers then removed the magnetic strips off the used tickets, glued them to new ones, [which were] printed at a Moscow-based printing house; remagnetized the strips and sold the ready-to-use tickets to distributors." He said that it cost less than a ruble to produce on ticket, which were then sold to distributors for 8 rubles, who sold them for 10 rubles.

Police estimate losses by the Moscow metro due to the scam to be as high as $8 million.

The newly appointed Ukrainian prosecutor-general, Svyatoslav Piskun, sent a letter to parliament on 21 August asking that body to strip Deputy Yuliya Tymoshenko of her parliamentary immunity in connection with an ongoing investigation of her activities as the former head of the Unified Energy Systems of Ukraine. According to the "Ukrainska Pravda" website (http://www.pravda.com) of 22 August, the charges against Tymoshenko, the leader of the opposition Bloc of Yuliya Tymoshenko, include:

-- large-scale fraud which deprived the government of 2.271 billion hryvnia ($413 million)

-- payment of a bribe to former Prime Minister Pavlo Lazarenko in the sum of $162 million.

-- fraudulent use of a company credit card issued by Somali Enterprises totaling $908,000.

-- abuse of her official position when she was deputy premier from 1999 to 2001.

-- payment of a bribe of $14,000 to Russian Defense Ministry officials.

Tymoshenko denies all of the charges, claiming that they are part of an ongoing effort to discredit her as the leader of a large opposition party. Viktor Yushchenko and Oleksander Moroz, the leaders of other opposition groups, have said that their blocs will vote against depriving Tymoshenko of her parliamentary immunity from prosecution.

FIGURE SKATING SCANDAL WIDENS

By Roman Kupchinsky

The arrest in Italy on 31 July of reputed crime boss Alimzhan Tokhtakhunov -- known as Taivanchik or Little Taiwanese due to his Uzbek roots -- for allegedly fixing the ice dancing and pairs figure skating competitions at the Salt Lake City Olympic Games in February (see RFE/RL "Crime and Corruption Watch," 8 August 2002), has taken on new dimensions.

According to international press reports, Tokhtakhunov has been identified by French officials as a friend and possible accomplice of Arkadii Gaydamak, a former Soviet citizen who moved to France from Russia in 1972 at the age of 19. Gaydamak is wanted on a French international arrest warrant issued in December 2001. According to "The New York Times" of 1 August, Gaydamak helped Tokhtakhunov open accounts at a Paris branch of Barclay's Bank in 1995. At the same time he is reported to have bought and helped renovate a flat for him in the fashionable 16th Arrondissement.

Reports say Gaydamak may have had connections to a group of Russian mobsters who were involved in illegal commercial operations in France. In the 1990s, Gaydamak moved into the business of international metals trading and arms trafficking. "The New York Times" reported that in 1996 the Swiss police, who were investigating money laundering through Swiss banks, detained well-known Russian metals dealer Mikhail Chernoi on suspicion of being in contact with Tokhtakhunov. It is not clear what the nature of these reputed contacts were. The daily goes on to say that according to a Russian-born commodities trader living in the West, Tokhtakhunov was involved in efforts by Chernoi and his brother to gain control of the Russian aluminum industry. The Chernois were unable to obtain control of the industry and then emigrated to Israel. Tokhtakhunov and Gaydamak, according to "The Guardian" of 26 March 2001, both have Israeli passports.

Italian police Colonel Giovanni Mainolfi told the Toronto-based newspaper "The Globe and Mail" on 2 August that Italian investigators became aware of large amounts of money being transferred from the Bank of New York to Russian citizens living in Italy, and that this trail led them to Tokhtakhunov. Mainolfi told "The Globe and Mail" that Tokhtakhunov belonged to a Russian organized crime group, identified in the paper's 13 August edition as the "Solsnetskaya" organization.

"The Globe and Mail" on 2 August writes that in Paris in 1999 Tokhtakhunov was inducted into a Russian religious order, and the man anointing him was Josef Kobson, whom the AFP on 4 August called "the Russian Frank Sinatra." Kobson, who has been banned from entering the United States, has been called far less complimentary names. According to Robert I. Friedman's study of Russian organized crime, "Red Mafia," "Joseph Kobson...is, according to a classified FBI report, the spiritual leader of the Russian mob." Kobson has repeatedly denied all such allegations. Also present at the affair was Anzor Kikalishvili, the former head of the Russian Olympic Committee who, in Friedman's book, is mentioned as "the native Georgian the U.S. government considers one of Moscow's top crime bosses" (p. 194). He, too, is banned from entering the U.S.

Tokhtakhunov's early sponsor in Paris, Gaydamak, is well known to the French police, as is his former associate, Pierre Falcone, a Franco-Brazilian arms dealer who was arrested in France in December 2000 and released on bail in December 2001. Falcone was the director of a number of British companies linked to Brenco International, the company which, according to "The Guardian" on 26 March 2001, allegedly gave 1.3 million British pounds in bribes to Jean Christophe Mitterrand, son of the former French president. The younger Mitterrand was arrested in December 2000. The investigation widened in March 2001 when Jacques Attali, a former adviser to Mitterrand and former head of the European Bank for Reconstruction and Development, was put under criminal investigation for allegedly taking a bribe of 150,000 British pounds from Falcone.

Gaydamak, in the meantime, has been living in Israel, where he is now teamed with Russian/Israeli businessman Lev Leviev in the Africa-Israeli Investments holding company, which has exclusive rights to market Angolan diamonds and owns the assets of TotalFinaElf in the U.S. After the French arrest warrant was issued for Gaydamak he resigned from his post as president of Russia's Rossiiskii Kredit Bank. Gaydamak, according to "The New York Times" of 1 August, has also been linked to Victor Bout, the arms trafficker who is presently free in Russia as Russian authorities refuse to consider an Interpol "Red Alert Warrant" for his arrest that was issued by Belgium. Britain has also requested his extradition. Likewise, Israeli authorities seem to be ignoring the French arrest warrant for Gaydamak.

Tokhtakhunov, meanwhile, continues to elicit support from the Russian sports elite. Gennadii Shvets, a member of the Russian Olympic Committee, told "The Globe and Mail" on 2 August that charges against Tokhtakhunov "may have stemmed from his propensity to boast. "He is not involved with figure skating and this is a closed world," he said. "The Globe and Mail" quotes Russian security officers who classified Tokhtakhunov as a petty criminal and a gambler.