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The Eurasian Politician - Issue 4 (August 2001)

RUSSIAN SECRET SERVICES AND THE MAFIA

By: Vladimir Ivanidze
Source: The Independent Information Centre Glasnost - Caucasus

I think that the moral responsibility of the KGB for the numerous crimes committed in Russia and the former Soviet republics over the past 15 years is large. But I think that all this has also been a tragedy for many officers of the secret services. On the one hand the party bosses and KGB authorities were transferring money of the party, and then suddenly a newly rich "foreign partner" of Soviet origin like Boris Birnstein appeared. But on the other hand, lamps and toilet paper were disappearing in Lubyanka’s lavatories in 1992. Officers were offering to escort smugglers’ trucks for $100. People were suffering. Some officers couldn’t bear it. It was real agony that was typical for our poor criminal country.

Now, when the President is a former KGB officer, though there are no ‘former’ there, like the officers of secret services say, I try to understand the following: is his sudden appearance a revenge by those who hid the money of the party or is it another manipulation by the "family"? I guess many people are questioning themselves about it. There is no generally recognized answer yet. But I am not asking the question: has Putin come to put an end to corruption? I have no reason to believe that he is ready for that. I cannot forget his words about the presumption of innocence of Pavel Borodin, former manager of the President’s administration. This phrase is from that strange book by Putin, published before the elections.

Why did he really appoint to an important state position a man against whom the Swiss Police were seeking to bring a criminal case - a case involving the theft of hundreds of millions of dollars from Russia? Isn’t it striking? And despite the clear answer, Putin talks about presumption of innocence. But just several months before, as the director of the FSB, he and Sergei Stepashin accused General Prosecutor Yury Skuratov of malfeasance. That accusation was shown on TV, though neither court nor investigators had proved Skuratov’s guilt. Putin was not concerned with presumption of innocence then. He had to stop Kremlingate by any means. That hypocrisy was also evident in some other episodes. So this gives no confidence that the new President has come to fight corruption and organized crime. In fact these two things have created the Mafia, in the existence of which in Russia Putin does not believe.

But if we analyze the management of the Foreign Relations Department in St. Petersburg by then vice-mayor Putin, the following picture can be seen: His directions promoted the privatization of the city’s most valuable structures, such as casinos, ports, gas stations, and many others into the hands of the most influential organized crime groups. There have been no materials in the mass media until lately about Putin’s relationships with organized crime. "Vedomosti" newspaper did not publish my article about Putin’s machinations with issuing licenses and quotas to export natural resources in early 1992. Among those whom Putin gave licenses were representatives of organized crime. My investigation only supplemented the materials on the investigation by the Commission of St. Petersburg Deputies headed by Marina Salie.

I have learned some interesting details lately. If there had been no financial scandal in Liechtenstein, we would not know that before the inauguration Putin had been an adviser to the German company SPAG, which has close economic contacts with St. Petersburg. Among the officials of the company are people who work for various clans of the Colombian drug barons. Another adviser was German Gref. After publication of these facts in Mond [Le Monde?] and "Sovershenno Sekretno" (Top Secret) newspapers, there were no refutations from the President’s Administration. Another interesting detail: The directors of some firms organised by SPAG in St. Petersburg are the leaders of Tambov’s organised crime grouping [the Tambov mafia]. And one of the directors of SPAG has recently become an official in the President’s Administration, having been Putin’s friend and partner for many years.

I am not a specialist in the history of the secret services. My journalistic investigations are connected with economic crimes. Over time I have noticed that many of them are somehow connected with former or present officers of the secret services. Sometimes it seems that in the early 1990s former KGB officers were operating in Russia as if it were foreign territory.

I realize that Yeltsin’s first government, headed by Silayev, acted in the same manner. This is very well explained in the first edition of the book by Viktor Yaroshenko, the first Russian Foreign Trade Minister. In the book he gives examples of real propaganda and the manipulation of public opinion against Gorbachev. Yaroshenko, however, viewed it as a political struggle within the regime. But such explanations have no historical value.

Soviet and Russian secret services must share the responsibility for their many crimes committed in recent years. But the problem is who represents these services? I guess there is nobody to address. There is no such substance as collective will with management responsibility for every officer. The degradation of Russian secret services is not the lack of muscle among their officers. Furious expressions on the faces are always ready. The issue is the lack of will. First the Soviet regime, and now tiny salaries, have accustomed our secret services to belonging to someone.

Once, working for the Russian Telegraph, I agreed with the FSB press service to do an interview with the head of the drug department. I spent some time in the hall waiting for somebody to escort me to this individual. In the hall I noticed a cash dispenser located near the control checkpoint. I was surprised that this machine belonged to the bank whose officials were connected with organized crime – in particular with Vyacheslav Ivankov, Yaponchik. Later I learned that the same bank also provided services to external intelligence and other secret services and even the state company for arms trading.

This cash dispenser became for me a real symbol of the degradation of the Russian secret services. I realise that the word hurts. But we must speak in public about some cases. Here is another example of such degradation. Officers of one of the FSB department did not receive a salary for two months. They got nervous and the head of the department decided to clear out everything. He began to trace the money for the salary. Very soon some interested authorities noticed his interest and explained to him the danger of getting involved in other people’s affairs. The salary was paid though. But it is clear that the money had first worked for someone else.

The most interesting recent news in the mass media is a mass joining of oligarchs to Arkady Volsky’s Russian Union of Industrialists and Entrepreneurs. Some policy experts say that they need a lobbyist who can talk to Putin. But nobody asks the obvious question: Why is Arkady Volsky the only one now who can put in a word for oligarchs before the President? Nobody asks this question, though it is a very important one.

Here is this statement: "It has become known that in Moscow at the Friday meeting of the board of directors of the Russian Union of Industrialists and Entrepreneurs, the following persons were admitted to the Bureau of the union: Vladimir Potanin (Interros), Mikhail Khodorkovsky (Ukos), Mikhail Friedman (Alfa group), Anatoly Chubais (RAO YeES Rossii), Vladimir Yevtushenkov (AFK Sistema), Alexander Mamut (IDM-bank), Oleg Deripaska (Russian Aluminium), Khaha Bendukidze (United machine building plants), and other representatives of large-scale business."

And here are two statements of Volsky: "The state should actively interfere into economic processes, because some problems cannot be solved only on a market economy basis". The other is that Volsky thinks that one of the main tasks of this union is "the establishing of relationships between business and authorities". It should be added "the right relationships".

Mr. Volsky is a real patriarch of the epoch of "the conversion of the KGB and military industrial complex of the USSR". If questions about the party money and budget money of soviet economic super enterprises were to be raised, these questions should be addressed to Arkady Volsky. Besides the fact that he was Yury Andropov’s assistant, he belonged to the "priesthood" of the collapsing USSR. I suspect that Volsky knows how and from what those whom we now call oligarchs evolved, including Vladimir Gusinsky and Boris Berezovsky, who now do not want to return to Russia. All the others have silently returned to their so-called origins.

In order to understand it, we should feel for a little while the atmosphere of chaos that reined on the eve of the final collapse of the USSR. As you know, there have been no textbooks published on the topic I’m going to tell you about, so there may be some unintended chronological errors in the recounting.

At the very beginning of perestroika, Gorbachev ordered the Soviet secret services to concentrate their efforts on economic and scientific-technological intelligence rather than on political. Following those instructions the first main department of the KGB began to organize enterprises abroad. As an example I can name the Seabeco company with its branches in different countries all over the world, including Italy, Switzerland, Belgium and Canada. The company was importing toxic waste into Russia and thus Greenpeace put it on its blacklist. It also organized foreign concerts of the Soviet pop star Alla Pugacheva. Then Seabeco became one of the largest traders operating in the USSR. Corruption scandals and accusations of relationships with organized crime lay ahead for Boris Birnstein.

In 1987 they started organizing small companies in the USSR. They were often co-operative firms or associations of external economic partnerships. Those enterprises were based on the principle of self-financing and were very active in external trade of the USSR. In addition to officers of the secret services working in those firms, there were officers of scientific research institutions of the Academy of Science of the USSR and of State Committee on Science and Technique. These two departments were the main customers for the KGB and the GRU (military intelligence) in the spheres of economic and scientific technological intelligence. At the same time small enterprises (MP) and scientific technological centres for youth (NTMTs), bound with party and Komsomol nomenclature, were organized. Many MPs and NTMTs were trading computers that were bought by foreign companies organized by soviet intelligence officers.

These enterprises had special benefits in contrast to co-operatives organized by common citizens. For example, NTMTs were allowed – rare at that time – to get cash from the State Bank for commercial operations. Practically all other enterprises had to use cashless settlements. As a result, those benefits were used by Komsomol businessmen to convert money from the shadow economy. In fact shadow economy was developing very rapidly due to the difference between official prices and those of the black market. The "Menatep" bank had its origins in such an NTMT. And its head, Mikhail Khodorkovsky, became one of Russia’s oligarchs. It is due to these benefits and the corruption of Komsomol leaders that NTMTs became dependent on economic crime groups. A vivid example of it is the history of "Alisa" stock exchange, which had functioned before its bankruptcy in 1993 as a mixer of state and shadow money. The "Alisa" stock exchange, too, was organized with the help of the secret services.

Some laws adopted by Gorbachev, like "the law on enterprises", became the catalysts for criminalization of the economy. The fact of the matter is that the law left intact enterprises of centralized control, but did not supply them with a legal basis for their development and existence. The officials of former state enterprises were involved in a total plundering of state property. Law enforcement bodies were helpless. In the late 1980s swindlers sentenced for economic crimes were released from prisons, and many economic crimes were just not registered. Criminals sensed that process and began to actively participate in it. Organized crime groupings started their activity and often acted as judges of the economy. Racketeers demanded money from businessmen who, instead of being the basis for a new economy, were assassinated for fictitious debts or began to serve criminals. At that time we first began hearing about assassinations that would become commonplace in Russia’s market economy.

In December 1990, when the Soviet secret services became aware of the looming chaos and collapse of the Empire, two top-ranking party members, Vladimir Ivashko and Nikolai Kruchina, with officers of the first main department of the KGB (external intelligence), organized a new department of the KGB which was to co-ordinate the transferring of a major part of Communist Party money to the bank accounts of the previously organized foreign enterprises.

Such companies as Seabeco soon became the main middlemen for transferring state properties and resources. As a rule it was done in the same way that foreign communist parties had been financed: export-import operations – fictitious companies formed by the KGB which were called in the Russian mass media "Western partners" and later "Western investors".

Then in December 1990, the KGB chief Vladimir Kruchkov ordered the organization of commercial structures aimed at concrete goals: In the event the situation should develop as it did in Eastern Germany, commercial structures could be shelters for top-ranking party or secret service authorities. The secret services were ordered to organize financing for secret service activity against "destructive elements" ready to take power, and to mobilize agents abroad and inside the country to fight phenomena "destabilizing" the country.

In one very interesting German report it was stated that in March 1991 after events in the Baltic republics and their separation from the USSR, external intelligence suggested a plan to create about 600 joint enterprises managed by KGB officers and attached to the Political Bureau of the Communist Party. Many of those joint ventures were organized in the Baltic states and in such countries as India and Israel. After the putsch in 1991, the process of organizing such enterprises was speeded up. Agents abroad were ordered "to use all contacts" to stay abroad by all means and to get job in the organized commercial structure.

Inside the country many KGB officers got positions in state managing structures, in mass media structures, etc. The example of the current Russian President Vladimir Putin is very interesting. He started working as Anatoly Sobchak’s deputy right after Kruchkov’s order. Although he had a job, Putin was still a KGB officer. [It was and still is a regular practise that important business patrons were accompanied by a ‘political officer’, a KGB agent reporting on their activities.] After Sobchak became St. Petersburg’s major, Putin became the head of the powerful Foreign Relations Committee of the city.

Formed by Kruchkov’s order, commercial enterprises financed the operations of the intelligence and developed broad foreign economic relations. Offshore zones were used to get profit from numerous financial operations.

That was the beginning of the Russian criminal economy. Like most prominent world mafia organizations, the Russian Mafia started from its loss to a stronger rival. In Russia that strong opponent was the people’s desire to live in a free democratic state. Unfortunately, many secret service officers did not immediately understand this.

The first political attempts of revenge came in 1992-93, when Skokov, Volsky and Rutskoi organized the Civil Union Movement, but society was not ready to accept the "newly born" left-centrists and so their attempt failed. After that, economic struggle began. One of the main participants of that struggle was the Union of Industrialists and Entrepreneurs headed by Volsky and Shcherbakov.

Following this same logic of political opposition, former and present officers of the KGB secretly supported leaders of the criminal world, especially those who grew out of the hooligan groupings of the early 80s rather than from the traditional criminal environment. Those groupings were able to "launder" the racket money they received through structures and banks connected with the KGB. The secret services supported organized crime, manipulated it, turned against opponents, and turned itself into organized crime.

I want to give one vivid example illustrating the mutual blending of the secret services with organized crime. "Natsionalny Kredit" Bank finances large operations involving the movement of Colombian cocaine through Russia and "laundering" criminal money. This is not just the reciting of some reports of the foreign secret services. I dedicated a great deal of time to investigating the activity of the OLBI group headed by Yeltsin’s favourite banker, Oleg Boiko. This bank, like many other companies and banks of the OLBI group, was created with the assistance of the secret services. Cocaine was not the only criminal project of the OLBI group. Various machinations including those abroad, in which officials and partners of the OLBI group were involved, reflect the economic history of Russia over the last ten years. Some of those people are still wanted by the FSB. Nevertheless, "Natsionalny Kredit" Bank financed the "Democratic party" of Yegor Gaidar and the head of the bank, Oleg Boiko, was a member of the "Kremlin family".

I want to give you an example of how public opinion and some – and not just Russian – politicians are manipulated.

This is about one of the partners of Arkady Volsky and Viktor Chernomyrdin – Grigory Luchansky. Tons of papers have been written about that man. His name is in the reports of Western secret services and most informative publications in the Western mass media. He was the head of one of the largest companies organized by Kruchkov’s order. This is a group of Nordex companies registered in Austria, Switzerland and other countries of Europe. Luchansky obtained Israeli citizenship, but three years ago a representative of Israel’s Ministry of Foreign Affairs made a statement explaining why there was an official denial of the request to prolong the term of Luchansky’s passport validity. One of the main reasons was international trade of armaments, including components of atomic weapon. The representative did not give any evidence. He simply announced the official position of the Israeli authorities.

But in my report I want to tell just one story about Luchansky.

Several years ago, after CIA director Deutsch openly announced Nordex’s relationships with Russian organized crime, Luchansky tried to penetrate the U.S. political scene. He even managed to buy a breakfast with Clinton during Clinton’s first election campaign.

Severe resistance of the US secret services made Luchansky start acting. That’s the way it was.

In May 1994, Mr. Yegorov came to the USA to participate in hearings on international organized crime operating on U.S. territory. He also made a report there, in which he mentioned the Nordex Company because a person arrested by the police in Moscow and suspected of the murder of a policeman was a Nordex authority. The suspect admitted it during interrogations. Mikhail Yegorov even mentioned his name – Umar Vokov.

Well, that was the first time that a high-ranking officer of Russian law enforcement bodies publicly revealed the criminal affairs of the Nordex company. The information immediately got into the free mass media. But several months later on December 2, 1994, Senator Sam Nunn, who was chairing the hearings, received a letter from Vienna from Grigory Luchansky.

Then Luchansky explains to the senator that Nordex is a large trading house in Vienna and has no contacts with organized crime or any other illegal activity. At the end of the letter Luchansky asks to include his letter and the official answer from the RF Interior Ministry into the official text of the hearing before it is published – "to make clear the reputation of Nordex and its partners", added Luchansky.

Grigory Emmanuilovich must have really strong nerves or contacts that enabled him to receive an answer of the Interior Ministry with apologies concerning a mistake in the English translation of the report. The Interior Ministry, in the person of General Gorchakov, the head of the International Relations Department, expressed deep regret that in the translation of Yegorov’s report into English some important words were missing which resulted in a misunderstanding of some statements.

Valery Gorchakov told Luchansky that Umar Bokov had revealed his affiliation with Nordex only during interrogations. But he was interrogated as a witness in the case of a policeman’s murder. "Expressing our regret about the mistake made, we declare that the RF Interior Ministry has no grounds and intentions to associate the Nordex company and its president Grigory Luchansky with illegal business and with international trade in particular."

Luchansky’s nerves are really strong because in the answer of the Interior Ministry the matter concerns Mr. Bokov rather than Mr. Vokov. Senator Nunn should have considered the spelling and everything might have been different. I really could not find Bokov in the Austrian constituent documents of Nordex. But according to the data of the Moscow registration chamber, Umar Bokov is a head of "BNM" company in Moscow. "BNM" company seemed to be a fictitious firm for special operations. It belongs to the Austrian company "B & N" with headquarters in Vienna at the same address as the Nordex company – Prinz Eugenstrasse 32. At that time there were no other firms at that address except for Nordex.

We may call it a mysterious coincidence, along with the fact that a firm with the same name exists in Budapest. But it has only a bank account, through which the money of the Solntsevo organized crime group was "laundered". This firm appears in other materials of the FBI concerning "Organization of Semyon Mogilyovich" and "Organization of Ivankov".

At last, as if to put an end to "coincidences", Mr. Bokov appeared in the beginning of February 1995 on Mr. Luchansky’s birthday party that was held in Israel. Among the guests were many interesting people and 150 from Russia, including some now very well known oligarchs.

The most sad or funny thing is the fact that practically at the same time as the party was being held, Senator Nunn was giving orders to include the written denials of Luchansky concerning his contacts with "Vokov" as well as the letter from the RF Interior Ministry (MVD) into the materials of the hearing on organized crime. The senator personally answered Luchansky. And he even thanked him for the letter from the MVD.

Soon after that, General Valery Gorchakov, who had done such a favour to Luchansky, became a co-founder in the "TOPAZ" security firm, 96% of which belonged to the "Scientific complex of realization of conversion projects", whose founder was the Austrian company Nordex. The most interesting fact was that "TOPAZ" was founded several days after Senator Nunn had rejected Mr. Yegorov’s statements.

By that time the FBI had an analytical report on Russian organized crime concerning the Ivankov-Yaponchik organisation. The Nordex Company was mentioned in that report 13 times, along with Otari Kvantrishvili, who had a direct connection to the OLBI group activity. That’s the reality.

The above is an episode from the history of criminalization of the Soviet-Russian secret services. There has been no improvement since the beginning of the 90s.

Finally, if Mr. Putin was appointed by the family, I would advise him to be concerned with the oligarchs joining the Russian Union of Industrialists and Entrepreneurs. If he is a member of "an operation of infiltration of the secret services into the Russian government", there is nothing to worry about. If the second version is correct, the only thing he has to do to re-establish state order is to shed lots of blood to throw off the criminal ballast of the oligarchs. Dictatorship of law will be of no use here. As far as those roguish "saviours of Russia" are concerned, it is enough to tell them something in the low and trained voice of the KGB officer. And after several years of "state control", the citizens of Russia and Belarus will "fall asleep", the country become stronger, and the world will be two poles again. There will be no corruption, and "respected thieves" will return to prisons; the bureaucrats will take bribes, but not large ones.

As far as all of us are concerned, I don’t even know what to say.

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