Switzerland Probes Russian Tycoon

Guardian ^ | 11/17/03 | Clare Nullis

[Tumbleweed_Connection]

GENEVA (AP) - Swiss authorities have begun a criminal investigation of Russian tycoon Boris Berezovsky, who fled corruption charges in his homeland and was granted political asylum in Britain, the federal prosecutor's office said Sunday.

The investigation is related to the corruption case in Russia, but Hansjoerg Widmer, a spokesman for the prosecutor's office, declined to provide further details.

Berezovsky is one of a number of prominent Russian business executives who made fortunes during their country's privatization of state industries in the 1990s and now face what critics of President Vladimir Putin say are politically motivated criminal charges.

Swiss prosecutors dismissed such concerns with their investigation.

``We are concerned with criminal justice not politics,'' Roschacher told the SonntagsZeitung newspaper. ``We just want to know which ones of Berezovsky's activities in Switzerland were legal and which ones might have been illegal.''

Berezovsky, an influential insider under former Russian President Boris Yeltsin, was charged with an associate of defrauding a regional government in Russia of $13 million during the mid-1990s by stealing cars from Russia's largest automaker, AvtoVaz.

Berezovsky denied wrongdoing and said his life would be in danger if he returned home. Britain granted him political asylum in September, denying Russia's bid to extradite him.

Switzerland aided Russia in a previous legal probe of Berezovsky, but this is the first time Swiss authorities launched their own investigation.

[Elkiejg]

Interesting old article connecting Marc Rich to this guy. Wonder if this is a first move to go after Bubba's buddy Rich?

[Gordon-Newspost] gangster-capitalism in Russia---and the business heads, besides being thugs, are mediocre michael gordon gordonm1@email.msn.com
Sat, 3 Mar 2001 12:31:37 -0800

By Paul Klebnikov. Mr. Klebnikov, a senior editor at Forbes, is the author of "Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia," published by Harcourt.

Big Biznis, Russian-style, functions according to some strange rules. If you have a market rival who threatens you, you can simply murder him. If you want to take over a big state-owned company, you bribe the relevant official to give it to you. Then, instead of investing in this company and growing it, you soak it of all the cash flow and park the money in your personal offshore account.

Why did Russia go wrong? How did Russians get such a warped conception of capitalism? Westerners pondering this mystery may find some answers by looking at the people who taught Russian businessmen what it means to be a capitalist.

One of their first and most important modern role models was Marc Rich. The fugitive American commodities trader -- most recently of Clinton pardon fame -- traded Soviet oil and aluminum for years. But he really hit his stride after 1989, when the Soviet Union began falling apart and corrupt Communist Party bosses and unscrupulous young traders from the Communist Youth League began staking their claims to Russia's most valuable assets.

Russian officials, including former trade minister Oleg Davydov, have asserted to me that Mr. Rich's companies set a bad example of how to set up shell companies in obscure offshore tax havens, how to open Swiss bank accounts, how to buy Russian commodities at the domestic price (5% or 10% of the world market price) and resell them abroad at a huge profit. Mr. Rich's commodity business boomed: In the early 1990s, he sold billions of dollars of Russian oil, and thanks to his purchase of Russian aluminum, he came to control a third of the world spot market of this metal.

The corruption of Russia's new business class stems from much more than one person's influence, of course. The deeper problem is that the Russians have long had a completely perverted understanding of capitalism and the West. Indeed, news of the Marc Rich pardon was received with little surprise in Russia. I suspect that the tycoons see this is as just a routine example of the corruption rampant in America.

Over the past decade, whenever I asked Russian tycoons why their market was so penetrated by organized crime, they always argued that capitalism in the United States had been violent and lawless initially too. Many Russian businessmen related to some fantasy image of modern America, too. In 1993, having heard that a dozen bank presidents had been assassinated in the mob war raging in Moscow, I asked the head of Aeroflot Bank if he was nervous being a banker. "Why should I be?" he replied. "There is nothing unusual in this. Bank managers get killed in the West all the time."

Such references can come from the most sophisticated people; even Anatoly Chubais, the architect of Russian privatization. "During the formation of capitalism in the United States, there was a phenomenal amount of killing, bloodshed and lawlessness," Mr. Chubais pontificated to me.

The difference, obviously, is that in the U.S., gangsters and criminals operated on the fringes of society and usually ended up in jail. In the new Russia, they came to dominate the nation's business and politics.

Why was the democratic government of Boris Yeltsin so deeply corrupt? In 1996, I posed the question to Boris Berezovsky, a car dealer who had acquired Russia's premier television, airline and oil companies and become the country's most influential businessman. He also offered a familiar excuse for the triumph of organized crime in Russia: "I, for one, know that a mass of people in the West are corrupted," he said. "There are incessant denunciations of high-ranking functionaries in the United States, in France . . . Mayors of major cities are being thrown in jail."

Where did the Russian oligarchs get such twisted ideas? All of Russia's big businessmen were members of the communist establishment and received the best Marxist-Leninist education the Soviet Union had to offer. This upbringing left an indelible imprint on them. Mr. Berezovsky, for instance, loves to say that he and other oligarchs are engaged in the "primary accumulation of capital." Marx used the term to describe the most primitive stage of capitalism -- the way a medieval baron would loot and pillage his way to his first fortune.

Often I tried to disabuse the biznismen of the notion America's early capitalists were simply crooks or gangsters who had made good. Their success was due to innovation, hard work and steady reinvestment in their businesses, I pointed out. They had earned their money honestly, had paid their taxes and had succeeded in a market that gave all participants an equal chance. I was met with disbelief, and smirks, by my Russian acquaintances. Surely I was smart enough to understand that any successful human endeavor was accompanied by intrigue and double-cross?

At any rate, the new Russian kapitalisty are a completely different species from the pioneers of American capitalism. The Robber Barons of the 19th century presided over the biggest economic boom the world had ever seen. Rockefeller created the world's largest oil industry. Carnegie built the world's largest steel company. J.P. Morgan mobilized American capital to fuel the country's industrial boom and made Wall Street a more honest marketplace. They all created something out of nothing.

Russia's tycoons, by contrast, are almost without exception mediocre businessmen. They have not created a single noteworthy business enterprise. The big state-owned companies they have taken over with their inside deals have almost all languished under their management. Not surprisingly, the Russian economy has been ravaged by the crony capitalism of the Yeltsin years (GDP contracted by 41% between 1990 and 1999). Russia has suffered the biggest catastrophe -- economically, socially and demographically -- since the Nazi invasion in 1941.

The tragic irony of Bill Clinton's pardon of Marc Rich is that it confirms Russians' worst suspicions of how the president of the United States colludes with the schemes of big businessmen. You can skip your high-minded principles, they say, we know that America is just a slightly more polished version of, well, Boris Yeltsin's Russia.