16 November 2001, Volume 1, Number 3
THE GOVERNMENT-CRIMINAL ALLIANCE
By Roman KupchinskyThe fight against organized crime is inseparably linked to the question of high-level government corruption. When a corrupt government forms an alliance with organized crime, domestic law-enforcement agencies become cops on the beat -- chasing down muggers and pickpockets -- while aiding, and benefiting from, major criminal activity. Only when the government/criminal alliance is destroyed can the rule of law return.
In the former USSR such a situation exists today. The examples are numerous and brazen: The head of the department in charge of battling corruption at the Russian Ministry of Internal Affairs (MVD) recently fled abroad, fearing arrest for selling protection to criminal groups. The head of the Ukrainian MVD was fired by the president, both of whom are suspected of complicity in the murder of a journalist. Members of parliament in Georgia have demanded the resignation of the interior minister and the prosecutor-general for corruption. A Korean businessman recently confessed to having given the president of Kazakhstan a bribe of $10 million. Can the criminal/government alliance in the former USSR be defeated, and if so, by whom?
In the past four years the only serious prosecution of corrupt officials from Ukraine has been undertaken by Western governments. The United States is preparing to try former Prime Minister Pavlo Lazarenko on charges of money laundering and mail fraud. Lazarenko has already been convicted on money-laundering charges in Switzerland. Belgium is continuing its investigation of the activities of Oleksandr Volkov, a close adviser to President Leonid Kuchma. Germany has put on trial Viktor Zherdytsky, a member of the Ukrainian Parliament, and Ihor Didenko, a former senior official of the Ukrainian state gas-trading company, Naftogas Ukraina, on charges of stealing millions of dollars from a fund established to compensate former "Ostarbeiters" (workers from the East) who were in fact slave laborers for the Nazi regime. The Italian police in Turin arrested a group of Ukrainians for smuggling vast quantities of arms to Croatia during the UN embargo in 1993. At the time of their arrest in 2001, one of the arrested suspects, Leonid Minin, had in his possession $500,000 worth of uncut diamonds and numerous forged end-user certificates for illegal arms sales to Liberia (see below). An alleged co-conspirator, Oleksandr Zhukov, was also arrested. He is the president of Syntez Holdings in Odesa, which controls the Marine Transport Bank which in turn holds on deposit most of the Odesa city budget's money. Yet Ukrainian law-enforcement agencies remain strangely paralyzed when it comes to bringing Ukrainian criminals to trial.
The situation in Russia is better, but not by much. Pavel Borodin, the secretary of the Russia-Belarus Union, was arrested and held in jail in New York until his release on bail. He is also being investigated in Switzerland on charges of fraud and taking kickbacks. The Russian authorities issue periodic arrest warrants for Boris Berezovsky, yet are unable or unwilling to detain him. The Russian MVD seems to be hopelessly mired in endless corruption scandals; there are fears that its former minister and the current national security adviser, Vladimir Rushaylo, is deeply involved in the corruption of his former subordinates. Georgia has been caught up in a never-ending crisis of corruption and graft that has implicated the top leadership in the country and could point to the country's president, Eduard Shevardnadze. The Central Asian states are in a class by themselves when it comes to top-down corruption. Can it be cleaned up?
A reasonable proposition for the West to consider is that, in order to defend its own interests, it might have to undertake this enormous task by itself -- without substantial help from existing law-enforcement agencies in these countries. Past experience has shown that when the West is forceful in its demand that practices such as money laundering cease, then action is taken. Related laws were passed in Russia largely because the United States demanded that this be done or sanctions would be applied. The same is true of laws aimed at defending intellectual property. And while the mere passage of laws in these countries is no guarantee that such illegal activities will end, it is an important beginning.
The existing situation is such that internal ministries (law-enforcement bodies) of the former Soviet Republics are unreliable and highly corrupt. The intelligence services have been transformed into private investigative organizations for the leadership and their friends. Parliaments are too corrupt to pass necessary laws and provide oversight. Vote-buying remains a common practice in the Ukrainian, Latvian, and other parliaments while their members remain immune from prosecution.
Western intervention in domestic legislation and law enforcement in the former USSR is an unavoidable consequence of the government/criminal alliance in those societies. It is no wonder that recently democratic opposition organizations have appealed to the FBI to help solve domestic crimes in their countries, while others have turned to the Council of Europe to create special investigative bodies to look into such cases as the murder of Heorhiy Gongadze in Ukraine. Does the democratic West have the wherewithal and the legal and moral right to police the former USSR? With no alternative in sight, this might be the only method left for establishing the rule of law in those countries.
WARSAW CONFERENCE FOR WAR ON TERRORISM.Central and East European leaders gathered in Warsaw on 6 November at a conference dedicated to coordinating measures in the war on terrorism. Stressing that the battle must be regional and national as well as global, leaders of 17 nations in attendance pledged "full support" for the U.S.-led fight. They promised to tighten border controls, crack down on money laundering, and improve intelligence-gathering and coordination.
"This is the political manifestation of our presence in the international antiterrorism coalition," stated Polish President Aleksander Kwasniewski, the organizer of the conference.
U.S. President George W. Bush praised the organizers and participants of the conference and compared the Al-Qaeda organization and the Taliban regime to the former communist regimes in the Soviet Union and East Europe.
STILL NO ARRESTS IN ARMENIAN CAFE DEATH.Fifty people, including members of President Robert Kocharian's bodyguard, have been questioned so far in connection with the death in a Yerevan cafe on 25 September of an Armenian from southern Georgia, Poghos Poghosian, Armenian agencies quoted Prosecutor-General Aram Tamazian as telling journalists in Yerevan on 8 November. No one has been arrested and charged with Poghosian's killing. It is widely believed that Kocharian's bodyguards assaulted Poghosian after he directed insulting remarks at the president, who was visiting the cafe that evening together with French singer Charles Aznavour (see "RFE/RL Newsline," 27 September and 2 and 9 October 2001).
TEN JAILED FOR 1999 PLOT TO KILL GEORGIAN PRESIDENT.Georgia's Supreme Court passed sentence on 8 November on 10 men accused of plotting to assassinate President Eduard Shevardnadze in May 1999, Caucasus Press reported (see "RFE/RL Newsline," 26 May 1999). Former General Gudjar Kurashvili, identified as the leader of the conspiracy, and nine associates were sentenced to three years' imprisonment; taking into account the time they have already spent in pretrial custody, they will be released in May 2002. Nine other men walked free as the sentences passed on them were less than the time they have already spent in detention. One of the alleged plotters, 29-year-old Security Ministry official Temur Papuashvili, died suddenly in custody in January of last year (see "RFE/RL Newsline," 6 January 2000).
TRAINING TERRORISTS.One of two highly placed defectors from Iraq, a lieutenant general and former senior officer of the Iraqi intelligence service, the Mukhabarat, said that he had worked for a number of years at a secret Iraqi government camp that trained Islamic terrorists since 1995. The general, who refused to reveal his identity, said he did not know if the militants being trained in the camp, known as Salman Pak, were linked to the bin Laden network.
According to the former general, the trainees came from a number of countries including Saudi Arabia, Yemen, Algeria, Morocco, and Egypt. "We were training these people to attack installations important to the United States," he said.
Earlier reports by Iraqi defectors who claimed to work at the camp, along with suspicions voiced by United Nations biological weapons inspectors, have centered around the camp, which is located on the Tigris River.
American officials told "The New York Times" on 9 November that they had spoken to the former general in Turkey but said they had not learned much from him.
REPORT SAYS ROMANIA-BASED ARAB BUSINESSMEN FUNDED TERRORISTS.An investigation ordered by Premier Adrian Nastase found that Arab businessmen living in Romania have donated hundreds of millions of dollars to terrorist organizations, the daily "Adevarul" and Romanian television reported on 8 November. The investigators found that the money was channeled through legally established companies. It said an Egyptian businessman transferred some $150 million to Egyptian-based associates with close links to Islamic terrorist organizations. The money was registered as "advance payment" for goods that were never delivered. ("RFE/RL Newsline," 9 November 2001)
PARIS TRIBUNAL DISMISSES CASE AGAINST ILIESCU.On 8 November, a high court in Paris dismissed the complaint launched by a company owned by Romanian-born businessman Adrian Costea against President Ion Iliescu, Romanian Radio reported. Costea had complained that Iliescu and his former Party of Social Democracy in Romania (PDSR) failed to pay over $1.3 million for services delivered by the company, which printed posters for the 1996 electoral campaign. The scandal later triggered an investigation in Romania, as some of Iliescu's former PDSR associates were suspected of money laundering. The court ruled that the complaint was launched four years after the alleged misconduct took place, and that the statute of limitations applied. It also said that the plaintiff failed to submit any documentation attesting to a contract between the company and either Iliescu personally or the PDSR. ("RFE/RL Newsline," 9 November 2001)
THE RAILWAYS SCANDAL.The Russian Prosecutor-General's Office on 9 October opened a criminal investigation into the Railways Ministry. On 19 October Railways Minister Nikolai Aksenenko was charged with abuse of office that resulted in the loss of 70 million rubles ($2.3 million) in government funds, based on the findings of the Audit Chamber. According to the newspaper "Vedomosti," more than $2 million went to buy apartments for ministry employees, including one for Aksenenko's deputy, Aleksandr Kasyanov, at a cost of $886,700.
Aksenenko rejected the charges and refused to sign the list of charges. He told a press conference, "If the document is from the Prosecutor-General's Office, it is a lie."
Writing about the Aksenenko case in "The Moscow Times" on 9 November, journalist Yulia Latynina claimed that certain firms which have close ties to the ministry have received and continue to receive preferential freight tariffs, thus giving them a competitive advantage. This, Latynina said, "is a mechanism for pumping ministry funds to private freight firms." Such activities, she added, are "not a crime, it is economic policy." She concluded: "If the tariff system remains and the minister is prosecuted for abuse of office, then this is no battle on corruption. This is simply substituting one corrupt official for another."
BACKERS PUSH FOR PASSAGE OF ANTICORRUPTION BILL -- AGAIN.The Duma has included a draft bill on corruption for consideration in the near future, the eleventh time that it has done so without success, former Interior Minister and Duma Security Committee member Anatolii Kulikov noted in an interview published in "Tribuna" on 31 October. He said the parliament needs to approve the measure because Russia's direct losses from corruption total at least $15 billion a year. Its indirect losses in terms of loss of public and investor confidence in Russia and its government are even greater. In other comments, Kulikov said corruption has not declined under President Putin but only taken on other forms, with the government drawing on the shadow economy to increase its own revenues. ("RFE/RL Security Watch," 6 November 2001)
WIDESPREAD CORRUPTION SUSPECTED IN USE OF IMF LOANS.A probe into the way Russian officials handled loans from the International Monetary Fund has found widespread corruption, "Novaya gazeta" reported on 29 October. The paper noted that much of the alleged impropriety involves a small, 53-person office called the Federal Center of Project Financing that does not have any rules for tracking how the loans, all of which passed through its hands, are distributed. The paper noted that this center gained the status of an open-share holding company when the current chief of the Audit Chamber, Sergei Stepashin, was prime minister ("RFE/RL Security Watch," 6 November 2001).
MAYOR OF DAGHESTAN CITY OF MAKHACHKALA SURVIVES GRENADE ATTACK.Said Amirov, the mayor of Makhachkala, survived what was apparently the fourteenth attempt on his life on 3 November. Unidentified gunmen fired grenade launchers at his four-vehicle motorcade as he was being driven to his apartment. Amirov and two of his guards escaped unhurt. The grenades were fired from an unfinished building along the road. Amirov has been the mayor of Makhachkala since February 1998. He suffered a gunshot wound to the spine in a 1994 attempt on his life that has left him wheelchair-bound.
END NOTEBREAKING THE EMBARGO -- ARMS SALES TO LIBERIA.
An arms embargo was first imposed on Liberia by the United Nations in 1992 and subsequently tightened in March 2001 to stop arms from reaching Revolutionary United Front (RUF) rebels in Sierra Leone, which is also subject to such an embargo. Thousands of people have died in Liberia's civil war, many of them children. Countless others have been tortured, raped, or maimed during the brutal conflict. Most of the weapons that have found their way into the hands of the RUF originate in Eastern Europe and are sold on the basis of forged documents that declare the weapons as destined for other countries. The documents, called End-User Certificates, are presented by arms brokers to sellers, often governments, before the weapons find their way into the hands of the RUF.
The following is based largely on a United Nations panel of experts report on Liberia made public on 26 October, along with a UN panel of experts report on diamonds and arms in Sierra Leone from December 2000. It also includes information gathered and broadcast by RFE/RL, independent Internet publications in Ukraine and Russia, and interviews with sources in Eastern Europe:
Part 1. "WAS 123"
On 15 July 2000, a Liberian-registered Ilyushin-18 aircraft, registered as EL-ALY and operating for a company called West Africa Air Services with the call sign "WAS 123," left Moldova for Bishkek in Kyrgyzstan. There it was loaded with spare parts and rotor blades for MI-24 military helicopters before leaving Bishkek on 17 July, apparently bound for Guinea: Guinea was the country stipulated on the End-User Certificate for the cargo shown to Kyrgyz authorities by Alexander Islamov, an arms broker. At a stopover in Cairo, the pilot produced a flight plan and cargo manifest for a flight to Guinea. Yet on 18 July, the Ilyushin-18 landed in Monrovia, Liberia, where the rotor blades and spare parts were unloaded and picked up by a company called San Air General Trading, which was registered in the United Arab Emirates and whose director was Sergei Denisenko, a Russian national and a close friend of one "Victor Bout." Later, Denisenko was to tell a UN panel of experts that he had bought the rotor blades from Islamov, a regular supplier to San Air, and sold them to Sanjivan Ruprah of West Africa Air Services in Monrovia.
Upon checking the flight history of the Ilyushin-18 registered under EL-ALY and using the call sign "WAS 123," the UN team discovered that it had made eight return flights from Monrovia to Abidjan (Ivory Coast) and back. The first of these flights coincided with the arrival in Abidjan of an Antonov-124 airplane from Ukraine via Libya.
On 14 July 2000, an Antonov-124 chartered from the Antonov Design Bureau by the Moscow-based Aviatrend company -- represented by Valerii Cherny -- left the Ukrainian airport of Gostomel carrying 113 tons (5 million shells) of 7.62-millimeter cartridges. It arrived in Abidjan after a fuel stop in Libya on 15 July. The cargo was unloaded in Abidjan by the local military. The End-User Certificate for the 5 million cartridges was signed by General Robert Guei, who was the head of state of the Ivory Coast at the time of the delivery. His signature was authenticated by the ambassador of the Ivory Coast in Moscow on 2 June 2000. On that basis, Ukrainian authorities issued an export permit for the ammunition to the broker who purchased the ammunition, Valerii Cherny, and authorized the flight. To ensure compliance, Ukraine also sent a military officer with the plane to verify the delivery of the weapons to the Ivory Coast.
The boxes of cartridges in an Abidjan warehouse were loaded onto the Ilyushin-18. (The Ilyushin-18 is a smaller airplane that could not transport 113 tons of cartridges in one load and had to make seven additional flights to transport the entire cargo.) They were then flown to Monrovia to be passed to RUF rebel forces using the services of Sanjivan Ruprah, Mohamed Salame, and Charles Taylor Jr., the son of the Liberian president.
As the investigation by the UN experts continued, it was revealed that Cherny was an associate of a Ukrainian "businessman" from Odesa, Leonid Minin, who had a long history of arms smuggling to Africa.
Leonid Yefimovych Minin began his criminal career by selling stolen icons in Germany in 1978. In 1976 he had lived in Rome under the alias of "Leonid Brodsky" before moving to Austria, where he lived until 1978. Minin was known in Odesa for his dealings in the illegal oil trade, where profits were divided up between him and state officials participating in his schemes. In 1993, Minin helped organize illegal arms sales to Croatia during the UN boycott. He was also suspected of breaking the embargo on oil deliveries to Serbia during the NATO bombings. Minin's name surfaced once again in conjunction with massive arms smuggling from Burkina Faso to Monrovia in 1999. He was also known as the owner of a company called "Exotic," which dealt in timber from Liberia. By the late 1990s, Minin had teamed up with Vadym Rabinovych, a high-profile player in the Ukrainian media business and a former inmate of a Soviet prison in Kharkiv. Rabinovych was sentenced to 10 years in prison, from 1982-92, for "economic crimes." Rabinovych had once been expelled from Ukraine by President Leonid Kuchma's SBU intelligence service and told that he could not enter Ukraine again. Yet, the Ukrainian government apparently changed its mind and Rabinovych returned.
Rabinovych became interested in Minin's tropical wood business in Liberia; so Minin, a close friend of Liberian President Charles Taylor and his son, introduced him to highly placed friends in Monrovia. A month after his visit to Liberia, Rabinovych began meeting with known Liberian arms dealers.
Another Minin colleague who was to surface was Oleksandr Borisovych Zhukov, an important member of the Odesa underworld. Zhukov traveled in powerful circles in Ukraine. He was close to Ruslan Bodelan, the head of the Odesa Oblast administration and former first secretary of the Odesa area's Communist Party organization. Zhukov's company, Syntez Holdings, controlled the Odesa Marine Transport Bank, which disbursed budget payments for the city of Odesa. Bodelan was able to exercise control over organized crime in Odesa through the head of the city police, a man called Hryhorenko who was eventually relieved of his post after a series of bloody mob killings in that city in the late 1990s.
In the recently released transcript of a conversation reportedly taped in Ukrainian President Kuchma's office by Mykola Melnychenko, a member of his security detail, Kuchma was reportedly introduced to Zhukov by Bodelan, at that time, the mayor of Odesa. A transcript of that conversation follows:
Zhukov: I have a problem. I am not ready to work with Yushchenko...You tell me, with whom should I work?
Kuchma: With Lytvyn.
Zhukov: Then introduce me to him. We are not acquainted.
Kuchma: [Apparently into the phone.] Hello, come in.
[Lytvyn apparently enters.]
Kuchma: Let me introduce you to Zhukov, Aleksandr Borisovych from Odesa. You will work with him. Some time ago he helped us through Pustovojtenko [the prime minister before Yushchenko] and through that guy.
[Lytvyn apparently whispers a name.]
On 5 August 2000, Alexander Zhukov was arrested in Torino, Italy. That same day, Leonid Minin was arrested in Monza, Italy.
When Italian investigators searched Minin's hotel room, they found $500,000 worth of polished and uncut diamonds, along with an entire library of amazing documents. (To be continued)