<nettime> FW: RFE/RL Crime, Corruption, and Terrorism Watch No. 2, 12 November 2001

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Subject: RFE/RL Crime, Corruption, and Terrorism Watch No. 2, 12 November
2001

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC
________________________________________________________
RFE/RL Crime, Corruption, and Terrorism Watch
Vol. 1, No. 2, 12 November 2001

Reporting on Organized Crime, Corruption, and Terrorism in the former
USSR, East Europe, and the Middle East

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****************************************
HEADLINES:
    * SPOTLIGHT ON CORRUPTION IN IRAN
    * CORRUPTION IN THE RUSSIAN MVD
    * MURDER IN UKRAINE
    * MEETING THE CHALLENGE OF NBC
****************************************

SPOTLIGHT

CORRUPTION IN IRAN. Prior to the 1979 Islamic revolution, Iran had
one of the most-developed economies in the Middle East. It also
suffered from a dismal lack of social justice with most of the
wealth of the nation in the hands of the Pahlavi family. The call
for a "just society" brought the new regime to power, but corruption
soon negated these early slogans.
    By 2001, 80 percent of Iran's wealth was to be found in the
hands of 15 percent of the population; the value of the national
currency, which remains pegged to the U.S. dollar, has been devalued
to less than 1 percent of its pre-revolution value; black
marketeering in consumer goods and currency, as well as smuggling,
had become rampant by the end of 2001; corruption in high places
began flourishing.
    In April 1998, Gholamhossein Karbaschi, the 47-year-old mayor
of Tehran and a supporter of the relatively reformist President
Mohammad Khatami, was arrested on charges of corruption. He was
picked up on his way to give evidence in an investigation into the
embezzlement of public funds by Tehran city officials. Soon
afterwards, Minister of Interior Abdollah Nouri expressed grave
concern over the mayor's detention, stating that such treatment
called into question the competence of judiciary officials
investigating the case.
    Karbaschi was accused of embezzlement, fraud, and mismanagement
of public funds. As mayor of Tehran for the past eight years, he had
been credited with transforming the capital by building low-cost
housing and financing public parks. According to independent
analysts, Karbaschi might have been involved in the selling of
building contracts but the charges against him were politically
motivated. He was found guilty in May 1999, sent to prison, and
released in January 2000 after the reported intervention of former
President Ali-Akbar Hashemi-Rafsanjani. It is believed that
Karbaschi signed a pledge promising to stay out of politics for up
to five years in return for his freedom.
    This was not the first trial of a municipal official on
corruption charges. In 1997, several district mayors were detained
on charges of corruption. Some were mistreated in prison, a fact
that resulted in the arrest of a number of security officials and in
the removal in September 2000 of the security police chief,
Brigadier General Mohammad Reza Naqdi.
    Some of the major scandals in 2000-01 have centered around
charges of corruption within the Ministry of Oil. According to
Ayatollah Janati, the secretary of the Guardian Council, "In the oil
empires, millions and millions are plundered and deposited in
foreign accounts." The National Iranian Oil Company is one of major
suspects in recent months. It has been accused of selling land at
one-eighth of its value to relatives of ministers and other
officials.
    In December 2000, it was revealed that more than three dozen
Iranian judges and bailiffs were arrested in a probe of corruption
and bribery in Iran's court system.
    The scandal around the Paris branch of Sepah Bank in 2000 was
to rock the nation. Some $12 million was embezzled from the Paris
branch of that bank. Unauthorized payments of $12.4 million were
made to an individual who had a currency-exchange shop and was not a
customer of the bank, however the bank was given no collateral or
guarantees. The manager of the Paris branch fled, was found,
arrested, and sent to Iran -- but was never put on trial.
    Three Iranian customs officials were sentenced to death in July
2001. They were found guilty of having received $1.2 million each
for providing fake certifications on carpets at Tehran's Mehrabad
airport.
    The Iranian Parliament has a State Auditing Tribunal as well as
an Economic Committee that were formed to combat corruption.
However, the vice chairman of the Economic Committee says:
"According to the annual budget bills, banks, credit institutions,
and insurance companies were traditionally exempted from the state
auditing act. Our inquiries and investigations, however, show us
that big embezzlements in the banks and large-scale financial frauds
and misappropriations in insurance companies are largely due to this
exemption."
    Despite the announcement of a major anticorruption campaign in
January 2000, little seems to have changed. Press freedoms have been
stifled by the government and, without media exposure, corruption
will most likely continue unabated.

BALTIC STATES

LATVIAN JUDGE MURDERED. The chairman of the Riga Regional Court's
Criminal Case Council, Janis Laukroze, was gunned down and killed by
seven shots in the courtyard of an apartment building in central
Riga on 15 October. He had presided over the case of three Russian
National Bolsheviks who seized the steeple of Riga's St. Peter's
Church in November 2000 as well as drug-peddling and corruption
trials. A special joint task force headed by Prosecutor-General
Janis Maizitis will investigate the murder. A reward of $16,000 has
been offered for information that leads to the apprehension of the
killer or killers. ("RFE/RL Baltic States Report," 1 November 2001)

LATVIAN ANTI-CORRUPTION LAWS. The fourth working group to write a
new criminal-process law was established in Latvia at the beginning
of 2001. This has proved to be one of the greatest challenges facing
Latvian lawmakers. The government declared that the first draft of
the criminal process law was inadequate nine years after the first
working group was set up. Latvia needs this law -- along with laws
on conflict of interest, on initial declaration of property, on the
financing of political parties, and a law on the formation of an
anticorruption office -- in order to speed up its admission into the
EU. According to the Latvian newspaper "Diena" of 11 October, the
law on due process will include the principle of legal presumption
and states that those suspected of engaging in tax evasion,
corruption, or money laundering will have to prove their innocence,
instead of the state having to prove their guilt.

ESTONIAN DRUGS IN FINLAND. Estonian sales of amphetamines and
metamphetamines to Finland is big business, given the number of
tourists from Finland who come to Estonia to drink cheap vodka and
buy cheap drugs. The cost of amphetamines in Estonia is one-third to
half of that in Finland, and prices have been dropping for heroin in
the past nine months. In 1996, heroin sold for $70 per gram. By June
2000, the price had dropped to $20-30. According to "Jane's
Intelligence Review," the Estonian underground has forged relations
with Finnish and South American crime syndicates, presumably for
drugs as well as other operations. In February 2000, over 5 million
illegal cigarettes from Russia were confiscated on the Estonian
border.

LITHUANIA A TRANSIT POINT FOR HEROIN. The Lithuanian Drug Trade
Investigation Division has confirmed that heroin is entering the
country in increasing quantities. The drugs are brought in from
Kazakhstan, Tajikistan, and Afghanistan while heroin refined in
Ukraine is being exported through Lithuania to Scandinavian
countries. This is the first mention of Ukraine being used as a
refining point in the drug trade. According to RFE/RL sources in
Ukraine, much of the heroin from Central Asia is brought to Ukraine
by Crimean Tartars. Ukrainian law-enforcement agencies claim they
have no evidence of refineries in the Crimea or elsewhere in
Ukraine.

UKRAINE

KUCHMA BLAMES BALTIC BANKS. Ukrainian President Leonid Kuchma
created something of an incident when he blamed banks in the Baltic
countries of being a "corridor" for money laundering. The statement
was made at an anticorruption symposium in Kyiv in October. The
Latvian foreign minister quickly responded, expressing his
"surprise," while the Latvian Foreign Ministry issued a statement
saying that the charges are unfounded if President Leonid Kuchma had
Latvia in mind.

UKRAINIAN OFFICIAL MURDERED. Oleksa Romashko, the deputy head of the
Ukrainian Securities Commission and head of the commission's
inspections department, was found murdered in the hallway of his
apartment building on the morning of 29 October. He had been stabbed
twice and reportedly had a gunshot wound to the head. Romashko was
involved in investigating the circumstances surrounding the state
sales of Donbasenergo, Donetskoblenergo, and Luhanskoblenergo, three
regional energy-supply companies that had been scheduled for
privatization but were prevented from sale by Romashko's inspections
department. The Prosecutor's Office said it is considering the
possibility that it was a contract killing. Former Deputy Prime
Minister Yuliya Tymoshenko had made it a part of her program to
privatize those regional energy companies, but this was strongly
resisted by members of parliament from the so-called "oligarch"
factions. When Tymoshenko was forced out and arrested on corruption
charges stemming from her past role in United Energy Systems of
Ukraine, the regional energy companies were put on the block but
sold for suspiciously low prices. Romashko began an investigation
into the matter, but his death has halted the investigation, for the
time being.

PARLIAMENTARY SPEAKER'S BODYGUARD AND DRIVER FOUND DEAD. The deaths
of parliamentary Speaker Ivan Plyushch's driver, Oleksandr Skliar,
and his bodyguard, Pavlo Poteryako, were reported on 22 October.
Their bodies were found in a Kyiv park. The Russian news agency
Novosti reported that both had been shot dead, while Ukrainian
health officials stated that both men had died of either heart
attacks or alcohol poisoning. The Kyiv city morgue gave a
preliminary diagnosis of death due to heart attack. The Ukrainian
Interior Minister, Yuriy Smirnov, stated in an interview for the
daily newspaper "Fakty" that, "There is no crime there, and no need
for any investigation."

TV QUESTIONS OFFICIAL VERSION OF KILLING. Ukrainian state television
questioned the official version of the death of journalist Ihor
Oleksandrov in a 25-minute film aired on 28 October. The
government's version of the murder of Oleksandrov was presented by
Prosecutor General Mykhaylo Potebenko, who said that Oleksandrov was
murdered by a homeless man who mistook him for Oleksandrov's lawyer,
Oleksandr Omelyanov. The TV program presented the views of two
former police officers who had appeared on Oleksandrov's TV show in
the past. They believed that the murder was committed by the same
group which has committed contract killings in the region in recent
years. It was also pointed out that any compromising materials on
illegal activities in the Donetsk Region, videotapes, audio tapes,
and computer disks had disappeared from Oleksandrov's home.
Oleksandrov was known for his investigative reporting on corruption
in the Internal Ministry (MVD) of Donetsk Oblast.

RUSSIAN FEDERATION

CORRUPTION IN THE RUSSIAN MVD. By a rare, unanimous vote on 21
October the State Duma called on the Russian Prosecutor's Office to
investigate allegations of corruption by a senior official in the
Interior Ministry (MVD), Lieutenant General Aleksandr Orlov, an aide
to former Interior Minister Vladimir Rushailo. Orlov is alleged to
have provided protection to contraband traders while heading the
ministry's anticorruption crime directorate, the RUBOP. The Russian
press reported that Orlov had fled the country under an assumed name
immediately after Rushailo was removed from his post to head the
Security Council. Orlov is presumed to be living in Israel. Orlov
joined the RUBOP in 1993, and in 1996 became its deputy head. It is
alleged that he then involved the unit in business conflicts between
debtors and creditors in which the RUBOP took a 50 percent cut of
debts collected on creditors' orders. The newspaper "Moskovskii
Komsomolets" claimed that Orlov provided protection to the business
groups that seized the Kachkanar Vanadium Plant and St. Petersburg
Shipping.

RUSSIAN RAILWAYS MINISTER UNDER INVESTIGATION. Nikolai Aksenenko,
the Russian railways minister and an influential member of former
President Boris Yeltsin's inner circle, "the family," was charged by
prosecutors in mid-October with "abuse of power" and told not to
leave Moscow. The "Kommersant" newspaper said that Aksenenko was
accused of misusing state funds leading to the loss of millions of
rubles. The railroads are said to be a $10 billion-a-year operation
carrying 80 percent of the nation's cargo and accounting for 90
percent of the turnover in the Russian freight market.

OTHER MINISTERS FACE SCRUTINY IN RUSSIA. In addition to the Railways
Ministry, the state Fisheries Commission and the Customs Committee
have also come under scrutiny recently. At the Fisheries Commission,
no current officials are targets of investigation; but the former
head of the committee, Yurii Sinelnik, and his first deputy, Mikhail
Dementyev, are suspected of taking bribes for handing out fishing
quotas. The state emergencies minister and the leader of the Unity
party, Sergei Shoigu, checked into a hospital on 30 October
complaining of high blood pressure. His ministry had come under
scrutiny recently. The press minister, Mikhail Lesin, left for
vacation on 31 October after the Audit Commission began looking into
his ministry.

DUMA DEPUTY UNDER SCRUTINY. The Russian Prosecutor's Office has
asked the Duma to lift Deputy Vladimir Golovlev's parliamentary
immunity. The move came on 30 October as part of a corruption
investigation stemming from Golovlev's activities as head of the
state property committee in the Chelyabinsk Region in the early
1960s. Golovlev is the deputy chairman of the Duma's budget
committee. He is a renegade member of the Union of Right Forces
(SPS) faction and is suspected of having committed financial abuses
while in Chelyabinsk.

AGENCY CREATED TO COMBAT MONEY LAUNDERING. Deputy Tax Minister
Viktor Zubkov was appointed to head the newly created Financial
Monitoring Committee (FMC) by Russian President Putin on 31 October.
The FMC will work under the Finance Ministry and will start
activities on 1 February 2002. Its brief is to fight money
laundering and enforce compliance with a new law on money laundering
that takes effect the same day. The FMC will employ 300 people in
Moscow and 100 throughout the regions. Roughly $20 billion leaves
Russia every year, some of which is laundered criminal money and
some capital flight.

GEORGIA

GEORGIAN PROTESTS, CABINET FIRED. Georgian President Eduard
Shevardnadze fired his entire cabinet on 1 November in the wake of a
security and media scandal. Thousands of demonstrators, mostly
students, had taken to the streets demanding his resignation. Many
of the demonstrators blamed Shevardnadze for large-scale corruption
in their country. An attempted raid by 30 members of the security
service on the independent TV station Rustavi 2 earlier in the week
prompted the political showdown. Authorities said they suspected tax
evasion at the station. Rustavi 2 had become popular in Georgia for
its regular criticism of Shevardnadze's government and corruption in
the country. Parliamentary Speaker Zurab Zhvania, who also resigned
in the midst of the crisis, told Russian state network RTR that the
raid was an example of the degree to which official corruption had
infiltrated the Shevardnadze government.

KAZAKHSTAN

KOREAN BUSINESSMAN CLAIMS TO HAVE BRIBED NAZARBAEV. South Korean
businessman Choi Soon-young, former chairman of the Shindongah group
and Korean Life Insurance Company, admitted giving $10 million in
bribes to President Nursultan Nazarbaev of Kazakhstan. Choi
testified that he authorized the payment to Nazarbaev in 1996 and
that it was intended to help Shindongah's diamond processing and
other business ventures in Kazakhstan. According to the AP (6
November 2001), Choi testified before a Seoul appeals court on 26
October and said that he instructed his subordinate, Kim Jong-eun,
to deliver the money to Nazarbaev. Kim has denied any role in the
scheme and claims that Choi delivered the money himself. Lev
Tarakov, head of Nazarbaev's press service, said he was unaware of
the accusations and refused to comment.

INTERNATIONAL

UKRAINIAN, SLOVAK, AND KYRGYZ CRIMINALS SHIP ARMS TO LIBERIA. A
United Nations report released on 26 October documents in detail how
Ukrainian, Slovak, and Kyrgyz criminals continue to systematically
send huge shipments of arms to Liberia despite an arms embargo first
imposed by the UN in 1992. "The arms flow into Liberia make a
mockery of UN sanctions," said Joost Hiltermann, executive director
of the arms division of Human Rights Watch. Among others implicated
in this report is Odesa gangster Leonid Minin, presently under
arrest in Italy for selling arms to Croatia during the UN embargo in
1993; Sergei Denisenko, a Russian citizen living in the United Arab
Emirates; and Moldovan Victor Bout and his brother, Sergei. More
details on this case will appear in the next issue of "CCT Watch."

END NOTE

MEETING THE CHALLENGE OF NBC

By Roman Kupchinsky

    Nuclear, biological, and chemical (NBC) weapons have the
potential to become the single greatest threat to humanity in the
21st century. A small batch of powerful, antibiotic-resistant
biological weapons in the hands of any one of a myriad of terrorist
organizations can create havoc unheard of in modern history. These
are weapons which can be produced at relatively low cost (about $1.5
million); they are compact and can thus be distributed without ICBM
delivery systems; and they can be highly effective.
    The world's largest known stockpiles of biological weapons are
in the United States, Russia, and Iraq.
    But a strategically important stockpile with the innocuous name
of Vozrozhdeniye, or "rebirth," has been located in Uzbekistan, on
an island in the Aral Sea. That unguarded island was used as a
biological-weapons testing site for Soviet scientists. Among the
bio-weapons tested was the Soviet form of anthrax, designated as the
836 strain. This strain, according to Jonathan Tucker of the
Monterey Institute of International Studies, is highly virulent and
resistant to common antibiotics. The United States has agreed to
help Uzbekistan clean up the cache of anthrax spores buried on the
island, but this by itself is only one step in preventing such
weapons from falling into the hands of terrorists.
    According to Tucker, there are 1,500 germ banks worldwide. And
while many of them do not necessarily stockpile dangerous items, 46
are known to have stocks of anthrax bacilli. The former Soviet Union
produced about two tons of anthrax a day at its facility in
Stepanagorsk in Kazakhstan. For his part, Ukrainian President Leonid
Kuchma said on 18 October 2001, "We do not know for sure if
bacteriological weapons were stored in Ukraine during Soviet times
and, if they were, where they are now." According to the RFE/RL
Bureau in Kyiv, no biological weapons are presently stored in
Ukraine.
    But stockpiles are only part of the problem. The other great
danger comes from the illegal production of bio-weapons. Thousands
of unemployed Russian scientists who worked for Biopreparat, which
ran the Soviet Union's germ-warfare program and was disbanded in
1992, could be recruited to recreate the deadly strains. In recent
testimony to a United States congressional committee, Ken Alibek,
the deputy director of Biopreparat, stated that some 50 Russian
scientists possessing secrets about anthrax production cannot be
located.
    A former UN bio-weapons inspector, David Franz, who had served
as chief inspector in Iraq, recently stated that it is almost
impossible to gauge the extent of Iraqi and Russian germ-warfare
production today. In Iraq, bio-weapons factories are disguised as
vaccine plants. Franz reported seeing an enormous plant in Russia
which was producing liquid anthrax.
    The smuggling of nuclear materials, including enriched uranium,
has troubled law-enforcement officials ever since the collapse of
the Soviet Union. Dr. Paolo Sartori, chief of the Italian Interpol
office in Bucharest, Romania, revealed in an interview for the
Romanian press that Romania has become a transit route for nuclear
and strategic materials from the Dniester region and Moldova.
"During the last two years many traffickers of nuclear and strategic
materials, such as white mercury and cobalt, have been identified
and arrested in Romania," said Sartori. The Moldovan interior
minister, Victor Catana, has also revealed that multiple organized-
crime networks and even intelligence services from various countries
have been making arms deals in the Dniester region since August
1998. These deals include such weapons as plastic explosives and
ground-to-air Stinger missiles.
    Unconfirmed reports from Israel place the head of the so-called
"Red Mafia," Semyon Mogilevitch, as having arranged a meeting in
Marbella, Spain, between members of his organization with bin Laden
associates. According to these Israeli sources, Western intelligence
agencies are urging the Spanish police to crack down on such
activities.
    The arrest of four Georgian men with nearly four pounds of
enriched Uranium 235 in their possession in July 2001 in Batumi (see
"RFE/RL Corruption and Terrorism Watch," Vol. 1, No. 1) is an
indicator that nuclear smuggling could be shifting to Central Asia.
All indicators show that the poorly equipped and often corrupt
police forces and intelligence services in the former Soviet bloc
will not be able to handle the challenge of NBC smuggling alone.

(Compiled by Roman Kupchinsky)
*********************************************************
Copyright (c) 2001. RFE/RL, Inc. All rights reserved.

RFE/RL Crime, Corruption and Terrorism Watch is edited by Roman
Kupchinsky on the basis of a variety of sources. It is distributed
every Thursday. Direct comments to Roman Kupchinsky at
kupchinskyr@rferl.org. For information on subscriptions or reprints,
contact Paul Goble in Washington at (202) 457-6947 or at
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http://www.rferl.org/corruptionwatch/

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