Russian mob a worldwide threat

The Russia Journal
O U T LO O K
SEPTEMBER 6 - 12, 1999 Page 17
Russian mob a worldwide threat
By BARRY RENFREW
The Associated Press
P
erhaps the most successful
business in Russia today is
organized crime, which is
spreading across the world and
threatens to do more damage than
Soviet spies ever did during the
Cold War.
Reports of alleged money laundering that link Russian organized
crime to billions of dollars channeled through the Bank of New
York could show how Russia's
crime syndicates are multinational
operations.
Although often dubbed the
“Russian Mafia,” organized crime in
Russia does not fit the usual picture
of underworld mobsters. It is far
bigger and more complicated: a
three-way alliance of officials, businessmen and gangsters reaching
into every level of society and the
economy.
Organized crime and corruption
reach the highest levels of the
Russian government, with some
analysts saying it's no longer possible to distinguish between the two.
“It has been known for a long
time that the entire government
system is corrupt,” said Konstantin
Borovoi, an independent liberal
member of parliament. “Corruption
has drained the nation's resources
beyond all imaginable limits.”
At its core, corrupt members of
Russia's political and business elite
have plundered billions of dollars in
government funds and assets with
the aid of criminal gangs, authorities say. The money has been sent
overseas to secret bank accounts or
used to create hundreds of Russian
companies and banks that combine
legal and criminal activities.
Through these companies and
other rackets, the Russian Interior
Ministry estimates that organized
crime controls 40 percent of the
economy, although other observers
say the figure is higher. Corrupt
officials and gangsters work with
these criminalized businesses, helping them get insider deals, avoid
taxes and even kill rivals.
“The situation in our country differs from Western Europe and the
United States. There, organized
crime controls only ‘criminal’ activities, like prostitution, drugs and
gambling. In our country, it controls
all types of activity,” a Russian government study of organized crime
concluded.
Top political and business figures, including members of
President
Boris
Yeltsin's
entourage, have repeatedly been
linked to corruption allegations in
the Russian media. Very few have
ever been charged or convicted.
Russian law enforcement agencies
are seen as hopelessly incompetent
or corrupt, with many prosecutors
and police officers taking kickbacks.
Russia's top policeman, Interior
Minister Vladimir Rushailo, admits
his forces are not winning the
struggle. “Organized crime is occurring on an extremely dangerous
scale,” he said recently.
About 5,700 criminal groups are
thought to operate in Russia and
many of them are expanding
abroad, according to Russian and
Western estimates. Russian criminal syndicates are burrowing into
other countries, buying up legitimate businesses while also manag-
AP file
Key export for nation
A law-enforcement official in a raid at a Moscow apartment as part of Russia’s attempt to fight organized crime.
ing rackets like prostitution, gunrunning and sophisticated banking
and computer fraud operations,
Western officials say.
Corruption has been a problem in
Russia for centuries. It reached
unprecedented levels following the
collapse of the Soviet Union in 1991,
when some officials and their
cronies divided state assets among
themselves.
While the government talked of
creating wealth by selling off factories and other state property and
sharing the money with the
Russian people, insiders skimmed
off some of the most valuable assets.
As a few people became fabulously
wealthy, many Russians slipped
into abject poverty, souring their
beliefs in democracy and the market system.
At the same time, insiders were
getting government licenses to buy
oil, diamonds and other stateowned natural resources at artificially low prices and making millions by selling them overseas,
investigators say. Government
funds were diverted and disappeared without a trace or were used
by private banks to purchase state
assets in rigged privatization deals,
they say.
Borovoi gave an example of how
government funds are looted: If a
ministry wants funding, it must
allocate up to 3 percent of the
requested sum for bribes to lawmakers and officials. Lawmakers
then approve the request, and the
ministry must then pay up to half of
the funding to the lawmakers and
officials to get the money.
“A corrupt official can't act alone.
It's always a chain, and there is
always a mob connection,” he said.
Working alongside the corrupt
Police hold 6
for smuggling
uranium alloy
Bliss ‘spy’
lawsuit
wrapped
up in U.S.
The Associated Press
S
The Associated Press
AP
R
ichard Bliss, briefly
jailed in Russia on espionage
charges,
has
reached a settlement with
Qualcomm Inc., the wireless
communications company that
sent him there.
Bliss filed a negligence lawsuit for an unspecified amount
of damages against the company after his return to the United
States last year. Although his
attorney reportedly tried to settle the lawsuit for $1 million,
the amount of the settlement
was not disclosed.
“The case is resolved,” the
former engineer's attorney,
Kim Roberts, said.
Bliss, 30, went to the city of
Rostov-on-Don, about 965 kilometers (600 miles) south of
Moscow, to install a phone system for the San Diego-based
Qualcomm in 1997.
officials and businessmen are criminal gangs whose members fit the
Hollywood image of ruthless killers
in leather jackets and dark glasses.
Their activities include drug, prostitution and protection rackets,
with up to 80 percent of Russian
businesses estimated to be paying
for protection.
Corrupt businessmen use the
gangs for contract killings of rivals
when there are disputes over turf
and political clout. Police said there
were 567 contract killings, mostly
businessmen, during the first five
months of 1999 — more than double the number during the same
period last year.
Arrests and convictions for contract killings are almost unknown.
Convictions of any kind are rare
against corrupt officials or organized crime members.
Richard Bliss buys Sen. Richard Bryan (right) a beer earlier this year for helping him obtain his release from Russia.
Russian authorities charged
him with espionage because
they said he took land surveys
of restricted sites using illegal
satellite receivers, and brought
the equipment into the country
without disclosing it to customs
inspectors.
Bliss has said he relied on
Qualcomm to secure the correct
permits
for
the
Global
Positioning Systems equipment,
which the company told him to
transport into the country in his
suitcase. GPS equipment is
commonly used to make land
surveys for cellular phone systems, using satellites to pinpoint
locations on the Earth's surface.
But Russian authorities confiscated the equipment and
jailed him as a suspected
American spy.
After pressure from Vice
President Al Gore and the State
Department, Russian officials
released Bliss after 12 days in
jail on the promise he would
return to Russia for trial, if necessary. He faces 20 years in
prison, if convicted.
Bliss
resigned
from
Qualcomm in November 1998
and sued, saying the company
failed to file the proper paperwork for the satellite equipment and didn't work hard
enough at helping him to get
the charge dropped.
ix people were arrested in
Vladivostock for trying to sell
highly radioactive uranium
alloy stolen from military facilities,
police said.
The alloy, a mix of uranium-238
and nickel, was stolen from defense
factories and facilities belonging to
Russia's Pacific Fleet, police said.
Among the arrested was a woman
who worked at the Zvezda plant
that repairs and dismantles nuclear
submarines.
The suspects tried to sell six kilograms (13.2 pounds) of the alloy to
undercover police for $130,000 last
week, according to news reports.
The alloy emitted radiation 2,500
times higher than levels considered
safe for humans, police said.
Russia has been rife with reports
of smuggling of nuclear and other
toxic materials since the weakening of safeguards with the fall of
the Soviet Union in 1991.
Russian officials insist that
weapons-grade nuclear material
has never been stolen or sold, but
admit there have been scores of
thefts of radioactive substances
in the years following the Soviet
collapse.