Nearly a decade after the fall of the Soviet Union, the line between Russian organized crime and government corruption is disappearing. The impact of such infiltration could extend far beyond the Kremlin’s walls: U.S. officials this week are meeting with officials from European and Eurasian nations to plan a counterattack against the Russian gangsters, who pose a “profound danger” to the young democracies in the region, an FBI official said.
Today, Russian mobsters are as ubiquitous in Moscow as they are in exclusive tax havens like Cyprus and Switzerland. But while they frequent nightclubs and bars and other typical gangster hideouts, it is their presence in the corridors of power that most concerns international law enforcement agencies.
Such high-level cover, they believe, could allow the mobsters — many of whom are former Communist Party officials and ex-KGB agents — to “rape the country twice,” in the words of one expert, and endanger the democratic institutions built in the wake of the Soviet Union’s collapse.
“That really is the goal of everybody coming to this … to make sure that organized crime doesn’t make inroads into the democratic systems, into the banking systems and so forth, in a way that can corrupt the institutions that they are building,” said M.E. Bowman, the FBI’s associate general counsel, referring to this week’s high-level conference in Garmisch-Partenkirchen, Germany.
Bowman, in an interview with MSNBC before the beginning of the conference on Tuesday, said the Russian gangs pose a “profound danger” to the region’s democratic institutions.
“The Russian police have told us that 50 percent of their banks were corrupted by organized crime,” he said. “We’ve seen instances of politicians in other countries have been indicted … for accepting bribes. We’ve understood from sources that a significant percentage of organized crime profits go to bribing foreign officials.”
The conference, sponsored by the FBI and the George C. Marshall Center for Security Studies and attended by high-level representatives of 21 European and Eurasian nations, is a good - but belated - beginning, according to Frank Ciluffo, an organized crime expert with the Center for Strategic and International Studies, a Washington think tank.
“We’ve been long on nouns and short on verbs (in responding to the growth of organized crime),” Ciluffo told MSNBC. “While we’ve discussed the threat … what we’ve actually done to this stage is open to debate.”
The Russian mobsters — a term generically applied to mobs from all the former Soviet republics and satellites — also have shown themselves to be remarkably adaptive elsewhere. Russian-speaking organized crime is believed to be the fastest-growing criminal sector in the world, with thousands of separate factions operating in at least 58 countries.
Concerns about the involvement of high-level Russian officials have bee heightened by the discovery that billions of dollars were allegedly laundered through the Bank of New York in thousands of transactions between October 1998 and March 1999.
The huge sums involved - more than $6 billion total - were said by investigators to have been laundered through the account of a company with ties to Russian organized crime. U.S. Investigators suspect that government officials and politically connected businessmen who had access to billions in International Monetary Fund loans to Russia may have cooperated with Russian organized crime groups to spirit huge transfers out of the country.
In August, the IMF released an emergency loan to Russia that will total $4.5 billion, leaving many to speculate that only a fraction of the West’s giant cash infusions to the Kremlin actually end up in legitimate use.
Even Russia’s highest official, President Boris Yeltsin, has been linked directly to suspected corruption. Swiss officials are investigating a handful of Kremlin officials who have bank accounts in Switzerland. A construction company that carried out lucrative contracts for the Kremlin recently said it set up a Hungary-based bank account with $1 million that the first family used to pay credit card bills. Yeltsin’s daughter, Tatyana Dyatchenko, his closest adviser, is also implicated.
And two key elections in the next 12 months, for parliament in December and for president next July, figure to only increase the maneuvering for political and financial alliances - key components of Russia’s emerging democracy. Government officials are eager to position themselves for victories or influence in Russia’s next cabinet. Russia’s oligarchs, who control a lion’s share of the country’s wealth, are only too happy to line up behind those who can promise them sweetheart business deals in the future.
Russia’s organized crime and corruption is not always so high-flying. The country’s Interior Ministry estimates that that 70 percent to 80 percent of private businesses and commercial banks are forced to pay either extortionists or protection rackets.
The collapse of the ruble in August 1998, which ended a massive speculative boom in Russian stocks and bonds, has done nothing to slow Russian organized crime. The resulting economic chaos, similar to that which ensued during the last days of the Soviet Union, has helped racketeers amass even larger fortunes.
The Russian gangs have diverse constituents, ranging from former KGB officials possessing worldwide contacts to longtime habitués of the Soviet prisons, the Gulags. Many of the former prisoners have taken an oath known as the “Thieves’ code,” under which they agree to be bound by 18 rules that, if broken, are punishable by death. Among them: Forsake all relatives; help other thieves; and never, under any circumstances, work. Many also bear tattoos that describe their particular craft, such as assassin, pickpocket or burglar.
In the United States and other affluent nations, Russian gangs are best known to operate in health-care fraud, insurance scams, stock frauds, antiquities swindles, forgery and gas-tax evasion schemes. Russian gangsters also are blamed for some of organized crime’s first forays into computer crime, including a band of hackers led by Vladimir Levin who in 1995 gained unauthorized access to the computer network of New York’s Citibank Corp. and helped themselves to $12 million.
Despite their penchant for white-collar crime, U.S. law enforcement officials say the Russians are opportunists, and also are known to have been involved in car-theft rings, extortion, narcotics trafficking and, occasionally, murder, usually of their countrymen.
“They’ve established footholds in the East, West, Midwest and in Florida … and have displayed a particular penchant for violent retribution when they’ve been crossed,” said Lee Seglem of the New Jersey Commission on Investigation. “So far they’re focusing on their own kind, but experience in the Soviet Union shows that they have to compunction about going after police officers, elected officials, or whoever.”
A subset of Russian organized crime is known as YACS, an acronym for Yugoslavian, Albanian, Croatian and Serbian gangsters.
The Albanians, in particular, are emerging as a force to be reckoned with, said Ciluffo, the think tank expert. They were strengthened by the Kosovo crisis and have virtually cornered the smuggling route that runs from Asia Minor through the Balkans and into Europe, where they are running large numbers of humans as well as heroin and opium, he said.
In the United States, the YACS are active in sophisticated burglary and auto-theft rings and are renowned for a series of supermarket robberies in which they gained entry through the roof.
MSNBC’s Mike Brunker contributed to this report.