A Crackdown on Kleptocrats – The law is catching up with Russia’s corrupt oligarchs

The Spectator
Moscow’s White House is a fairly pleasing pile, at least by the standards of late Soviet architecture. Its colonnaded white stone facade enjoys handsome views over the Moscow River, and its interiors are a symphony in green malachite, light teak and gold ormolu, a mid-1990s decorating style best described as mafia rococo.

From the corner offices, now occupied by the Prime Minister, Vladimir Putin, and his deputies, one can gaze over gridlocked traffic, enlivened by the blue flashing lights of government Mercedes as they charge down the reserved central lane.

‘Do you remember Mabetex?’ I asked one of Putin’s deputy premiers a few months ago. My notebook was closed, and we sipped tea and chatted for a few minutes after the end of a formal interview. ‘Before my time – but a great job they did!’ he said, gesturing to the tastefully brown-tinted Swiss windows. ‘But what a scandal! And over, what,

30 million?’ We had a good chuckle at that.

A scandal – over such kopecks!

Mabetex was a Swiss-based, Albanianowned company contracted in 1994 to refurbish the White House and the Kremlin. But the tender process for the refurbishment was, in the opinion of Carla Del Ponte, then the Swiss prosecutor-general, opaque. Del Ponte, who went on to head the international war crimes court for former Yugoslavia, launched a money-laundering investigation, alleging that kickbacks had been paid.

In the end no one was convicted. But the affair alarmed Russia’s elite. During the five years that Del Ponte was investigating the Swiss bank accounts which she alleged were linked to top Kremlin functionaries, none of Russia’s bureaucrats and businessmen felt safe. And when Pavel Borodin, former head of the Kremlin’s property management department, was arrested in 2001 in New York on money-laundering charges, alarm escalated to near-panic. Against western justice, no amount of Russian patronage could protect you – not even that of Borodin’s protege, Vladimir Putin.

Borodin was released on a bond of five million Swiss francs; charges were dropped in 2002. But it is worth remembering the Mabetex investigation because it became a touchstone for today’s Russian elite, a nightmare to be avoided at all costs. Never again should foreign law enforcement be allowed to dig around in the mire of Moscow’s corruption.

The sums involved were tiny by the standards of today’s Russian corruption.

Last week, a financial blogger, Alexei Navalny, leaked a government report suggesting that

4 billion was stolen by insiders at Transneft, Russia’s majority-state-owned pipeline monopoly, during the construction of a pipeline to the Chinese border. The company and the Russian Audit Chamber have confirmed that the activities of Transneft’s former management are under review, but not the sums involved. Last month Moscow’s mayor, Yury Luzhkov, was fired by President Dmitry Medvedev after he showed signs of insubordination. A series of Kremlin-commissioned television documentaries paved the way by accusing him of corruption to the tune of billions of dollars.

The details of these latest cases are hotly disputed. But it’s safe to say that in general the business of Russia is corruption. Indeed, Medvedev has said as much himself, last year ordering corrupt police to stop ‘terrorising businessmen’ (the actual verb he used was koshmarit, literally ‘to inflict nightmares’).

The Moscow-based InDem Foundation estimates that bribes, backhanders, bureaucratic sweeteners and protection money paid to police and inspectors account for a third of Russia’s economic output, or

318 billion a year. It’s safe to say that much of this money does not stay in Russia. According to Transparency International, much of it ends up in Swiss banks, and much more in property and offshore companies, mostly in the West.

Which brings us back to the Mabetex nightmare. Inside Russia, justice is administered selectively. The likelihood of a top bureaucrat or businessman being prosecuted depends not on the level of his (or occasionally her) thieving, embezzlement and tax evasion – it depends on their connections. When, for instance, the oligarch Mikhail Khodorkovsky funded opposition groups in 2003, or when Yury Luzhkov illadvisedly criticised Medvedev earlier this year, their sins were produced in public and they risked jail. And in Russia, everyone is a sinner. ‘Show me the man, and I’ll show you the crime, ‘ said Felix Dzerzhinsky, the founder of the Soviet secret police. So convoluted, contradictory and badly drafted are Russia’s laws that more or less anyone who tries to do business is forced to break them;

and bureaucrats monetise their potential nuisance value, constantly threatening to close down businesses unless they are paid off. Corruption in Russia is not an aberration from an otherwise wholesome system – it is the basis of the system.

Outside Russia, however, the rules are different. Russians love to point to examples of western corruption – Britain’s parliamentary expenses scandal received extensive coverage on Russian state TV. But in much of the western world, crime is crime, regardless of the political connections of the perpetrator. A new Carla Del Ponte rooting about in Swiss bank accounts remains a grievous threat to the stability of the Russian elite.

The bad news for corrupt Russians is that their worst nightmare is starting to come true.

A new law before the US Congress threatens to ban from entry to the United States a list of 60 Russian law enforcement officials accused of helping to persecute Sergei Magnitsky, a lawyer who uncovered a

230 million tax fraud and was imprisoned when he reported it to the authorities. He died last year after months in jail awaiting trial.

Hermitage Capital, the US-owned, Moscow-based law firm for which he worked, complained to leading American politicians, notably Senator John McCain, who is one of the bill’s co-sponsors.

Getting banned from the USA is perhaps not the direst of fates, especially since there is no move inside Russia to bring the perpetrators of the

230 million fraud to justice (several of the officers involved in framing Magnitsky have been promoted).

But the Justice for Sergei Magnitsky Act, as it has been called, is an important first step in foreign jurisdictions stepping in to tackle Russian corruption. Last week, the foreign affairs committee of the European parliament recommended similar visa-blacklist action. The world’s three major banking due diligence databases, with whom banks are obliged under international laws to check new clients, have already used an earlier US State Department ruling to blacklist the individuals concerned.

The US law, if passed, will affect a handful of relatively low-grade functionaries.

But the precedent it would set would have deep repercussions for future Russian cases that affect, even in part, a western jurisdiction. What if lawyers for the western European parts of Khodorkovsky’s old company, Yukos, plundered by the state after his conviction, were to secure visa bans on the top Kremlin officials implicated, and investigate their bank accounts and offshore companies? The US established precedent for prosecuting wrongdoing by Americans abroad with its Foreign Corrupt Practices Act of 1977. The Justice for Sergei Magnitsky Act could be a similar groundbreaker.

The fruits of Russian crime are usually stashed right under our noses, and the paper trails too. Russia’s kleptocrats behave as they do because they are secure in the knowledge that their own justice system won’t bring them to book. Perhaps it’s time they started to fear that other countries’ courts will. быстрые займы онлайн hairy girl https://www.zp-pdl.com https://zp-pdl.com/apply-for-payday-loan-online.php hairy girl