An Inconvenient History - The Russian Money Laundering Pyramid [Free Republic]

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SCHLAFLY: Why Russia Is Not A Market For U.S. Goods
"Have you wondered why the White House, Congressional leadership, and the multinational corporate lobbyists are staking all their financial and political capital on trade with Communist China, but appear to lack interest in trade with Russia? Why isn't Russia a market of 146 million people eager to buy U.S. goods?

An explosive book now seeking a publisher may have the answer to that question: "Contagion: The Betrayal of Liberty -- Russia and the United States in the 1990s." The author is journalist Anne Williamson, who has divided her time between Russia and the United States for the last ten years."

As newspapers blast details regarding what will prove to be the tip of a Russian money laundering pyramid, U.S. policymakers and the West's Russian advisers are tap-dancing madly across America's editorial pages in order to stay one step ahead of public accountability. Professing to be as shocked as Claude Raines ever was by the goings on in the Russian casino that their careerism, opportunism and criminal stupidity built with taxpayers' billions, this crowd is simultaneously adopting a world weary and sophisticated attitude.

After all, everybody knew, or so they imply, that corruption is rampant in contemporary Russia. What could self-advertised market wizards or earnest public servants possibly do to restrain the Russians' destructive behavior? Conveniently -- just days before the revelations of Aug. 19 -- a profusion of well-tailored journalistic memoirs recalling seven years of Russian reform inspired by the anniversary of Russia's Aug. 17, 1998, meltdown appeared. All the big papers ran major articles. Two of these efforts in particular deserve a close look.

The Washington Post trotted out eminence grise, Robert Kaiser, the Post's Moscow bureau chief in the early 1970s, whose piece did get its headline right, "Pumping Up The Problem." The New York Times shrewdly hired the job out and imported a Brit for their write up. John Lloyd, who was the Financial Times' Moscow bureau chief from 1991-1994, delivered a drab story with no new information, a real disappointment coming as it did from one of journalism's most astute observers of Yeltsin's Russia.

Worse, the Time's story showed just how clever Western handlers were to keep their "eager young reformers" available to potentates of the self-reverential "quality press." Ironically, the one Lloyd selected for his story's bittersweet coda turned out to be none other than Konstantin Kagalovsky, a well-known opportunist and Russia's first representative to the IMF, whose connection to the $15 billion Bank of New York money laundering operation the Times was compelled to report on its front page just four days later.

Kaiser, however, being an eminence grise, did contact two now retired State Department officials, E. Wayne Merry and Thomas Graham, who reported sordid details regarding U.S. policymakers' ends over means approach to Russia. They told how cables filled with information of what was really going on in Moscow were blocked by higher-ups at the Moscow embassy and by emissaries from Washington. Lloyd reminded the public of Albert Gore's nixing of CIA reports detailing Russian corruption involving his best Russian pal, Viktor Chernomyrdin, and that Sweetheart of Harvard Yard, Anatole Chubais. Thomas Graham told Kaiser that the Gore-Chernomyrdin Commission was "Sovietized" immediately, meaning its success was declared mandatory. Diplomats, policymakers, pundits, aid consultants and contractors were told to put a happy face on all aspects of U.S. policy.

Western journalists in Moscow played along, using the government's basic methodology; any information that questioned the success of the reform effort was squelched, ignored or downplayed. Any alarming developments were massaged away by members of the "aid community" in Moscow, and by assistance/policy/government retreads stashed at various think tanks in Washington and Moscow. Journalists built their stories based on quotes and information from these active players and shapers, from whom their editors, in turn, sought their views in published editorials. Russian dissenters were tagged with the "Communist" label and dismissed. In these ways, the party line was woven into a web of almost seamless propaganda despite none of Russia's complicated reality actually corresponding to the parallel universe U.S. policymakers, Washington pundits and collaborating journalists inhabit.

But the Post's and the Times' stories were important as signals; it is now permissible to discuss U.S. failure and the collapse of the "Washington Consensus." About bloody time. Having been given many billions and years of freedom to pursue their ideas without scrutiny or accountability, Clinton's foreign policy apparat has delivered the world a debacle. But citizens should be cautious in evaluating today's increasingly unavoidable revelations; many shoes are left to drop. As one CIA man put it, "Clinton made sure they all got something and then they all stole something more, so nobody wants to get to the bottom of what really happened."

The current spin is to fob blame onto the banking oligarchy whose members the "reformers" in the Kremlin selected and whose development Western lending fed and nurtured. It's helpful too to hurry past the crime of voucher privatization, which Harvard economist Jeffrey Sachs and his team designed in cahoots with Anatole Chubais in 1992. Better to focus on the secondary stage of privatization, the loan-for-shares scheme, an insiders' feast of Russia's juiciest assets, which was cooked up mostly by the Russians themselves. Most especially, a wise memoirist skips any discussion of Russia's market in short-term government bonds, GKO instruments.

The improbable yields (290 percent on three-month paper at one point) on Russian GKOs were paid with U.S. taxpayers' money via IMF loans. Guess where all investment went? By yielding those kind of non-market returns, the bond market insured that all the country's resources and all that it was capable of attracting went to the support of the state, just as Czarism and Communism had done previously.

So lush were the bond market's rewards that dubious market participants included the Russian Central Bank itself through an off-shore firm known as Fimaco. The involvement of the Harvard Institute of International Development's (HIID) honchos in the same conflict-of-interest activities has already been admitted publicly and remains the object of a Boston grand jury's scrutiny. The Harvard Management Corporation, which invests the university's endowment, was also an avid purchaser of Russian bonds, a dubious and unsettling history since there is no legal separation of HMC and the university itself. According to the Russian Interior Ministry's Department of Organized Crime, Western employees of Russian banks, Western bankers and consultants, Russian bankers and anecdotal evidence, other likely participants include certain employees of the U.S. Treasury, of the multilateral agencies (most especially the World Bank's Moscow offices), of bilateral aid agencies, and policy and program consultants acting through accounts established in their wives' maiden names with non-U.S. reporting brokerages in Moscow. Even the Ford Foundation's Moscow office sponsored its own internal Russian bond shop for which the unthinking Russian managers once asked this reporter to drum up U.S. investors.

Unsurprisingly, it was George Bush who got the money monopoly's ball rolling in Moscow. In early 1992, the "Bankers Forum" project was wheeled into place by a former New York Fed chief, Gerald Corrigan, who at George Bush's direction sent in a group of experts from the Fed, commercial banks and the Volunteer Corps on an off-the-books mission to teach the Russians at the Central Bank the bond game. The Western banker who explained the project's background remarked, "Basically, when Corrigan asks, I guess no one turns him down, because people reacted instantaneously. It was done by private investors, who were doing a public service, who were asked by a person you can't say no to" (my emphases).

But from the first day of Clinton's presidency, the new president's administration worked aggressively to capture the political support of the financial sector, offering up heretofore unseen gobs of government favor. (A disproportionate number of firms receiving Overseas Private Investment Corporation guarantees, Export-Import bank lending, and participation from International Finance Corporation and Russian Enterprise Fund were high-dollar contributors to both Clinton campaign coffers and the DNC.) The basic formula was simple, it's not rocket science as Russia's Harvard advisers would like the public to believe: The bread and butter of all equity markets are bonds. Wall Street wanted a debt market. You build it and we'll come, they said.

The aid program delivered best it could what was in reality a flimsy contrivance, which -- in turn -- was really only an exotic venue through which to pass public funds to select Russians of the Clintons' and HIID's choosing and to Wall Street investment banks the Clintons hoped to entice permanently into their orbit of supporters and contributors. In short, the Russian bond market was influence peddling at the highest levels, not unlike the Arkansas Development Finance Authority, a public fleecing machine the Clintons built to benefit their political supporters and contributors years ago in their home state.

The Clintonites' new spin admits that many Russians have the idea their current misfortunes are the intentional work of the U.S. Allowing that the Russians' theory "is built on a certain logic," Kaiser still managed to conclude that the "catastrophe was probably made inevitable by the policies adopted by the last Soviet government, but Russians rarely grasp the subtle points of economics."

Say what? Subtle points of economics? Looting and political racketeering are hardly subtleties apt to confuse any Russian, though American taxpayers were certainly misled successfully.

The Clinton apparat is quick to whine that somebody had to keep the communists at bay. But there were no communists in Russia by late 1991, only nascent investment bankers looking to nail down a stake any which way. Communism had evaporated by late 1987, the year in which the Russian people were allowed to hold convertible foreign currencies. Overnight, the power of money displaced the power of ideology.

Bill Clinton's foreign policy is best understood not as a collection of new era efforts at "nation building," but instead as an utterly irresponsible form of colonialism. It's mind-boggling just how opportunistic U.S. economic policies were in Russia.

What a free lancing Harvard economics professor, Jeffrey Sachs, and his team of flying graduate students managed to set in motion in 1992 insured that absolutely nothing was ever going to work to the Russians' benefit no matter what they tried. The possibly intentional sabotage of Russian reform was the result of three egregiously wrong-headed policies; a forced inflation, tariff reductions and voucher privatization.

In late 1991, vast amounts of gaseous blathering were published regarding something called "the ruble overhang," describing the burden of it and the urgent necessity of doing something about it. This was all nonsense, of course, since the dreaded ruble overhang was nothing more insidious than the collective national savings held by Russian households. The Soviet economy focused almost entirely on the defense sector, leaving nothing for the people to buy. Therefore, the Russian people had accumulated a large stock of savings.

In July 1991, the Supreme Soviet passed legislation mandating the privatization of the Russians' national legacy. Despite that, the Harvard-connected advisers reasoned just months later that since there was nothing to buy immediately, the national savings -- that pesky "ruble overhang" -- would have to be eliminated. Free market types went blue in the face pointing to the national property fated for the auction block as the most useful and appropriate sponge for the people's savings, but to no avail.

Yegor Gaidar insists to this day, John Lloyd was good enough to remind us, that "he had no choice but to let prices rise to increase supply and to scrap trade barriers so that foreign commodities could begin to fill store shelves."

Say, huh? The Soviet Union was economically self-sufficient except for bananas, coffee and coconuts. Foreign commodities weren't required to fill Soviet shops. And even though the ruble was not convertible, that characteristic had nothing to do with the sudden shortages in late autumn 1991, which were only slightly worse than those normally encountered in the last sputtering years of Gorbachev's perestroika.

No one had stopped producing, so why were shops suddenly nearly empty? Producers had begun hoarding, as had fearful consumers, but why? Yeltsin did announce in November 1991 that the government intended to free prices, but he also announced the exact date on which prices would be freed. Predictably, producers withheld their product from market and rubbed their hands together like flies awaiting the coming feast which Yeltsin's newly announced policy guaranteed. Within a week of the ill-considered speech, Muscovites' needs were being rationed.

However, Gaidar really was under pressure, but the pressure was coming from the West to open Russia to unrestricted imports in return for multilateral lending. Gaidar soon delivered a trade policy that was 100 percent back-to-front, accommodating as it did the self-serving demands of both the West and Russia's nascent banking oligarchy; Russian manufacturing was to take the brunt of unrestricted foreign competition, but domestic banking was to be protected from competition! Even Russian Central Bank Chairman Viktor Gerashchenko protested, but Yeltsin's boys got what they wanted and the IMF continued lending. So much for the "leverage" foreign policy elites claim foreign assistance programs provide the U.S.

In 1991, there was no hope whatsoever that wheezebag Soviet industries could compete with the West's shiny, alluringly-packaged and, to Russians, exotic products. For decades, prices were set by Gosplan (State Ministry of Central Planning), any enterprise profits were claimed as Soviet tax revenues, all customer bases were guaranteed and therefore no enterprise had a financial incentive to compete. Without competition, there was never any need to improve quality.

How could freeing prices alone change this equation? Free prices only work to the benefit of consumers when producers compete with one another in the marketplace to satisfy customers' demands, leaving consumers positioned to reap the most benefit at the lowest price. Clearly, an equitable and transparent privatization that would have delivered property widely to Russia's many eager hands should have preceded the freeing of prices. And during privatization, native producers should have enjoyed some protectionism at least, as did developing American industry and manufacture in the 19th century.

But why was banking alone protected from foreign competition? Could it have been because the former Communist Youth League or "Komsomol" leaders who'd been selected to become the captains of Russian banking were the private-sector allies and beneficiaries of Yeltsin's "eager young reformers" and their HIID advisers?

Competent advisers would have known Russia never did develop an effective banking sector and system of credit in 1000 years of her history. The story of Russian banking -- ancient and modern -- always has the same plot, only the names and the dates change. S.Y. Borovoi's easily obtained history of 18th century banking outlines a typical episode involving a certain "Suterland, who received 2 million pounds for transfer to London, but instead lent the sums to Prince Potyomkin (800,000), Finance Minister Vyazemsky, Foreign Minister Bezborodko and even to the future emperor Pavel. The debt of these honorable people was, according to the custom, forgiven and paid by the state."

Certainly eager Western banks should have been given admission to Russia. By working initially with more developed and well-capitalized Western banks and later by competing with them, Russian banks could have developed quickly and today be mediating capital responsibly and profitably. No good economic purpose was achieved by foisting subsidized billion dollar loans onto Russia for the purchase of Western consumer goods and the sustenance of Yeltsin's Komsomol pirates and parasites.

When Chubais and his Harvard pals belatedly turned their attention to privatization, no one asked how it would be possible to privatize property in a country without property rights. (A similar error was once made by the Soviet aid establishment, which trained railroad engineers for Laos, a country with no railroads.) In fact, it wasn't possible.

There was no privatization, but instead a very expensive, exhausting and destructive program of paper title transfers. At best, a manager could gain personal control of an income stream, but he could not function as a responsible proprietor. Consequently, asset-stripping was and is rampant. And Yeltsin, a Soviet usurper masquerading as a democrat, saw to it that the paper property titles were transferred to key citizens, institutions and long-term cronies so they would have a vested interest in sustaining his power.

But what about that troublesome "ruble overhang"? Jeff Sachs let the cat out of the bag on a spring night in 1991 when he told a colleague from the Hoover Institution and his wife that it was his and Yegor Gaidar's intention to remove from the market all "competing claims," meaning the people's savings. How then to do it?

Easy. In the Soviet Union's monopolistic economy, freeing prices guaranteed that state monopolists would raise prices without restraint. On Jan. 2, 1992, Yeltsin freed prices throughout all of Russia. Poof! The subsequent 2,500 percent inflation Russians suffered in 1992 dissipated those noisome "competing claims" with an efficiency that the Russians hadn't seen since Adolf Hitler's blitzkrieg 50 years earlier. Tellingly, property auctions gained steam only in 1993.

The only investment capital of which any country can be certain is the national savings. Why then did Harvard-connected advisers set about building a market economy by first removing the only money Russians had to participate, thereby leaving foreign and Russian criminal wealth to command the new market? And why was the follow-on to put the Russian Federation's property, the legacy of the long-suffering Russian people, up for sale to a population made kopeckless by the four-digit annual inflation the Harvard advisers' first reform initiated?

Imagining the consequences isn't necessary; impoverished Russia is reeling still.

Yabloko leader Gregory Yavlinsky once mused aloud, "Any child could see what would happen. Why then didn't the Harvard professor?" Good question.

Anne Williamson has written for the Wall Street Journal, The New York Times, Spy magazine, Film Comment and Premiere. An expert on Soviet-Russian affairs, she is currently working on a book, "Contagion: How America Betrayed Russia."
[End of Transcript]

FRONTLINE
Program Search
Return of the Czar - Transcript
. Return of the Czar
. Mafia Power Play
. The Crash
. Russian Roulette
. Plague War
. Loose Nukes
. Natasha and the Wolf
. The Homecoming
. The Struggle for Russia
. After Gorbachev's USSR

Bill Clinton - "Although it is difficult to unearth facts about Clinton's pro-communist activism, enough can be documented to paint a clear picture of a zealous young socialist with dreams of rapid social progress," one driven by a desire to radically change his country along Marxist lines. We also see one who participated in Group 68 (a Soviet-sponsored, pro-communist group in London), who helped at Martha's Vineyard to plan the 1969 October moratorium and the November march on Washington, who actually organized at least two such demonstrations in England in 1969, and who disappeared behind the Iron Curtain at a time when the Soviet bloc funded and directed the North Vietnamese/Vietcong enemy with which his country was locked in deadly combat. A clear picture of a young leftist zealot emerges, one who moved in radical circles and whose closest friends were leftist activists and draft dodgers."

"One key matter that must be made clear at this point, one deliberately clouded by the major American news media is that those "anti-war" demonstrations were actually "anti-American" demonstrations. While many of the participants were sincerely working for peace and an end to the war, the events themselves were clearly anti-American and treasonous, and became progressively so as the war wore on. Those demonstrators weren't simply urging a quick end to the war---there were screaming for communist victory and American defeat."

Bill Clinton - "In happily joining with his Soviet and communist Vietnamese friends in a massive anti-American propaganda effort, one which strengthened the enemy's resolve while weakening American resolve, Bill Clinton was clearly giving aid and comfort to the enemy in time of war. This is still the definition of treason."

Organized crime and Russian politics
"Today the headlines are full of sinister financial news. The Bank of New York is being investigated for laundering over $200 million from Russia. Russian mobsters have been discovered worming their way into the banks in Switzerland and England. The news wires are full of speculation about Russian moles in Western banks. Has anyone considered what is actually going on?

Vice President Al Gore has been criticized by leading Republican presidential candidates because he sat on a reform commission with Kremlin leaders whose ties to the Russian mafia are now well known. But Gore gave the green light to assisting the mobsters in the Kremlin, agreeing that billions should be sent to them. It is well known that the CIA attempted to warn Gore about his Russian colleagues on the commission, especially about Viktor Chernomyrdin. When Gore read the CIA report on Chernomyrdin he scrawled four letter words across it and sent it back.

Gore's reaction was hardly appropriate or responsible. Nor was it very smart for President Clinton to have his picture taken with Loutchantsky, who has since openly bragged that he was bribing the U.S. president."

RUSSIAN WITH ALLEGED MOB TIES GETS VISA
"BOSTON -- A member of the Russian Parliament who had been repeatedly denied visas to enter the United States because of alleged ties to organized crime was granted approval by the State Department last week to attend a program at Harvard University's John F. Kennedy School of Government."

Does Clinton Plan To Stay? - Clinton Was Governor Of Arkansas Longer Than Constitution Allowed
"It is vital that we remember that President Clinton is extremely predictable. Those who know him best have told us to examine his past to determine his future. Clinton's past is frightening, because he served as Governor of Arkansas longer than the Arkansas Constitution allowed. He did so through an amendment to the state constitution which enabled him to run for another term.

Watch Clinton carefully. Does he look like a president on his way to retirement? He has been spending a significant amount of time building relationships with foreign powers, and much more foreign travel is planned. Is it possible that Clinton is planning to run for president again? Is it possible he could have the U.S. Constitution changed in time to permit that? The answer is an absolute yes to both questions, but even more unnerving is the fact that he has been reported to have more than one plan under way to keep him in office.

There has been a secret committee meeting in the White House on a weekly or more frequent basis with the assignment to come up with a plan of action for when the U.S. economy collapses, according to a source who does not wish to be named but who is in a position to know. That committee is not functioning on a basis of if the economy will go belly up, but when. They are not considering ways to stop that from happening, since they consider it to be inevitable. Underlying all this is their plan to keep Clinton in office because of the economic emergency.

The committee is considering all possibilities for keeping their buddy as president. Re-election for a third term is considered a very real possibility. They believe the states would ratify a change to the U.S. Constitution within one to two months and have a bill already drafted and ready for passage under the right circumstances. They are so confident this could be done that they have a Republican and a Democrat who have each prepared a bill to accomplish the change."

"What I'm trying to do is to promote a process of reorganization of the world..."
Bill Clinton - Interview With Argentine Reporters - Oct. 17, 1997.

"If the American People ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children will wake up homeless on the continent their fathers occupied. The issuing of money should be taken from the banks and restored to Congress and the people to whom it belongs."
Thomas Jefferson

I hope the pub supplies you with a hearty sandwich and a tall cool one for obviously you have earned one "on the house."

Uncle Bill has done some homework worthy of a link, perhaps, in your D.S.L. files.

Indeed! Uncle Bill has a huge collection of articles on various important subjects!!!

A.G., remember Rubin's social security plan? A little better than most. Read Wallaby's post replies. Ouch!

HAHAHAHAHA! Thank you for the quick link!!! And thanks for the memory on Rubin. What a guy! Hugs!!!

Astounding work, but then I'm kinda used to seeing it, by now. [Nod, nod, wink, wink]

He (Alexander Korzhakov, Yeltsin's former bodyguard) also claims that the deputy head of the Security Council, Boris Berezovsky, a key financial backer of Yeltsin in last year's elections, was obsessed with murdering the Moscow mayor, Yuri Lushkov, and banker Vlad Gusinsky, the boss of NTV television. And he claims that Yeltsin ordered him to deal with Gusinsky because of the anti-presidential behaviour of his TV station. Source "In post-Communist Russia, the Politburo has been replaced by a deal-making oligarchy--the dozen or so powerful, fiercely competitive businessmen who run the banks, oil companies and mass news media, and who banded together to bankroll President Boris Yeltsin's re-election," reports the New York Times from Moscow. The oligarchy's "public spokesman and chief lobbyist" is Boris Berezovsky, the tycoon Yeltsin named as deputy secretary of the presidential security council.

In addition to dressing up threadbare rumors as news, the media exhibited a mass amnesia last week about who, exactly, implements and benefits from "economic reform" in today's Russia. For years, the more inquisitive members of the Western press have served up impressive exposés showing that much of the Russian economic elite are connected to, among other unsavory things, organized crime.

The principal beneficiary of media forgetfulness last week was Boris Berezovsky, the flamboyant tycoon who once served on Yeltsin's national security team, and is one of the much-touted "seven oligarchs" that have dominated the Russian economy in the Yeltsin years. Thursday's Times printed a lengthy story detailing Berezovsky's behind-the-scenes moves to get and keep Chernomyrdin in power. On Monday, the Times called Berezovsky "a capitalist in the bloodless image of Commodore Vanderbilt."

That description is astonishingly incomplete. As Times reporters and editors know, Berezovsky was the subject of a massive 1996 investigation by Forbes, entitled "Godfather of the Kremlin?" The Forbes piece laid out in convincing detail the links between Berezovsky and several violence-for-hire outfits, a supposed criminal conviction of a close Berezovsky associate, and Berezovsky's supposed link to the murder of a well-known Russian broadcaster.

Granted, this is thorny material for journalists, because Berezovsky denies the connections and sued Forbes for libel in Great Britain in early 1997. But that suit was thrown out last fall on jurisdictional grounds--and besides, in a week when "rumors" about Yeltsin were deemed to be news, why not mention published material about Berezovsky?

One reason why Berezovsky gets such favorable treatment in the U.S. press is that, unlike Yeltsin, Berezovsky employs an American firm, Edelman Associates, to handle his public relations (the account is managed by, of all people, former Reagan aide Michael Deaver).

But another reason why some in the U.S. media tread lightly on Berezovsky is that he is fast on his way to becoming a global media player. This past July, he was invited to Rupert Murdoch's annual media mogul bash in Sun Valley, Idaho. This made sense, since--although few American newspapers took notice--this past spring Murdoch bought 38 percent of a major Russian telecommunications firm, PLD Telekom, for about $80 million, and sold half the shares to a firm controlled by Berezovsky. That an allegedly mob-tied man sits at the head of both Russian businesses and media companies speaks of widespread corruption--one major reason Yeltsin's opponents have called for renationalization of some industries. But you'd never know that from reading the U.S. press.

Another questionable outfit helped by last week's hands-off press coverage is Menatep, the seventh largest bank in Russia, headed by Mikhail Khodorkovsky, also one of the seven oligarchs. Menatep, too, has ties to the Western media. As a chart in Friday's Washington Post detailed, Menatep owns 10 percent of the company that publishes The Moscow Times and St. Petersburg Times, as well as Russian versions of Cosmopolitan, Playboy, and Good Housekeeping.

What the Post--and everyone else--neglected to say is that for at least part of this decade, it was illegal for any U.S. bank to do business with Menatep. A 1995 CIA report identified Menatep as one of the world's most corrupt banks, with close links to organized crime.

In the summer of 1994, the Russian Ministry of Internal Affairs (MVD) estimated that 25% of the Russian gross national income was derived from organized criminal activities. The MVD also believed that 5600 criminal groups were involved primarily in capital/money laundering, the drug business, and extortion. Consequently, President Yeltsin issued the Decree: "On The Urgent Measures To Defend The Population Against Gangsterism And Other Kinds Of Organized Crime," on June 14. This Decree suspended many of the existing laws that protected individual rights. The measure was controversial, but it was supported by the majority of the Russian people as a necessary evil to fight organized crime. The Russian criminal justice experts believe these laws will help control the economic criminalization caused by organized criminal associations and will encourage the development of honest business. They also hope that this Decree will mark the turning point in the fight against organized crime. Source

The Russian American mafia thinks big. For example, Ludwig Fainberg, a Russian born, Harley driving strip club owner, was planning to use a Russian military submarine to smuggle South American cocaine into the U.S. and Europe. He had other plans too. He was going to buy six Russian MI-8 helicopters (at $1 million each) for a Colombian drug cartel. Apparently, ordinary Russians are so desperate for money that they will sell off their military hardware to people like Ludwig.

The Russian mafiya, with its links to corrupt ex-Soviet officials and KGB agents has resources that the Italian and South American mafia's do not. But the various mafia's are making alliances - The Italian Mafia, Colombian cartels, and Israeli organized crime get together with the Russians.

(Ed. note- We had this story on FR, from the L A Times. Wallaby and I chased it around awhile. Here is the same story via a different source.)

There is thus an unhappy elision in the public mind between criminal activity and business. There is also an association between prominent businessmen and politics, and especially the politics of reform. In part this is because the reformers, led by Anatoly Chubais, currently one of two first deputy prime ministers, were the architects of the privatisation programme that has produced so many of the new rich. In part it is because businessmen have not been shy about getting involved in politics. Most notable are the group of seven with half the economy supposedly at their command: fearing that a Communist victory in the presidential election last year would spell disaster-for Russia and for them personally-they decided to sink their professional differences and work together for Mr Yeltsin's re-election. They not only spent about $3m on the campaign but ruthlessly exploited their control of two television channels, a radio station and several newspapers and magazines. Today, one of them, Boris Berezovsky, is deputy secretary of the country's Security Council, a top Kremlin job. Source

A Russian Financial Bubble? Those two factors are now coming together with the appointment of Boris Berezovsky, a prominent banker and head of Russian public television, to the post of deputy secretary of Russia's Security Council. Berezovsky's appointment comes on the heels of the dismissal of retired Gen. Alexander Lebed as head of the Security Council on October 17. Ostensibly, the reason for Lebed's dismissal was his insubordination. The evening before he was dismissed, Lebed was accused by his nemesis, Gen. Anatoly Kulikov, the head of the Interior Ministry and the man responsible for much of the brutality and suffering in the war in Chechnya (to which Lebed had negotiated a settlement), of attempting to create a "Russian Legion" to mount a coup. [90] The interview was conducted on NTV, which is controlled by a colleague and ally of Berezovsky. [91]

Lebed denied the accusation, and the real reason for his dismissal seems to have been that he represented a threat to the administrative-banking interests rotating around President Yeltsin's chief of staff, Anatoly Chubais. As the Journal of Commerce reported last August, "Bankers close to Mr. Chubais privately say they expect him to win and nullify Mr. Lebed's influence in the government by October." [92] Among the bankers closest to Chubais is Berezovsky. Just before Berezovsky's elevation to the Security Council, Nikolai Yegorov, a former chief of staff to President Yeltsin, observed that "everyone who was not in the orbit of Chubais, Gusinsky [head of the MOST banking group], and Berezovsky has now been purged from the president's apparatus." [93]

... The act of paying the banks, rather than teachers or soldiers, is presented by some as an effort toward fiscal responsibility. "The Yeltsin government can afford not to pay coal miners or teachers for months at a time, but according to its world view it cannot risk defaulting on its obligations to bondholders," argues Alexander Buzgalin, a political economist at Moscow University. "The International Monetary Fund and Western governments are watching, and they will punish anything they perceive as a wrong move by cutting off credit." [96]

That could explain why the government prefers to pay bankers rather than teachers, but it does not explain why it does so at rates The Economist describes as absurdly high. More to the point, it does not explain why Russian bankers are sending so much of their money overseas. The Washington Post recently reported that Russian banks have been opening branches in the Caribbean, an activity American officials regard as suspicious. "It is passing strange that large Russian banks would decide to create offshoots in Antigua," muses Jonathan Winer, deputy assistant secretary of state for narcotics and law enforcement. "What comparative advantage does Antigua have that London doesn't? The only answer that comes to mind is that its offshore banking sector is not tightly regulated or transparent for foreign, including U.S., law enforcement officials." [97] Nor is that kind of activity restricted to the Caribbean. "Powerful Russian private banks are conducting real estate transactions through intermediaries from headquarters in Gibraltar," reports Madrid's El Pais. Here again, the authorities are worried about possible criminal activity, "since the origin of the money is not known and hence possible laundering operations are suspected." [98] Source (Ed. note- From an interesting Cato article titled, "WHY SPY? The Uses and Misuses of Intelligence ")

MOSCOW - Boris Berezovsky, a Jewish entrepreneur who was appointed deputy secretary of the powerful Russian security council last month, denied Thursday that he still had Israeli citizenship. Berezovsky, quoted by the liberal daily Sevodnya, told reporters that in 1993 he had "come under strong pressure" from sources he refused to name to apply for an Israeli passport, and he had travelled to the Occupied Palestine twice. The appointment of Berezovsky to the security council was strongly criticised by the opposition to President Boris Yeltsin. Berezovsky, a chief executive in Russian ORT public television - the country's main channel - and head of the Logovaz automotive and commercial giant, gave generous support to Yeltsin's re-election campaign. Critics accuse him of having close contacts with Russian mafia groups. Source

(Ed. note- This is an excellent piece of journalism. I'm just pulling a few excepts, for space consideration)

LAST NOVEMBER Ronald Lauder, billionaire heir to the Estée Lauder cosmetics fortune, traveled to Moscow to celebrate the opening of a posh boutique on Red Square. That evening Russian and American business leaders, U.S. Ambassador Thomas Pickering and President Boris Yeltsin's wife attended a party in Lauder's honor.

The host of the lavish affair? A wealthy Russian car dealer named Boris Berezovsky...

That Berezovsky can thus play cozy with Russia's president explains a lot of what is happening in Russia these days. Russia is a bubbling cauldron of criminal organizations—Sicily on a giant scale. Last year some 40,000 people were murdered in Russia and 70,000 disappeared—probably never to be heard of again. The murder rate in Russia is three or four times higher than in New York City.

Assassination is a tool of business competition. Scores of business leaders and media personalities have been killed. Ivan Kivelidi, a banker and founder of the Russian Business Roundtable, was murdered last year by poison (an obscure nerve toxin) applied to the rim of his coffee cup. Neither this nor any other of Russia's most famous contract killings has been solved.

In this violent world Boris Berezovsky looms like a giant shadow. Berezovsky recently claimed that he and six other top businessmen control 50% of the Russian economy. He is certainly one of the country's first dollar billionaires. His base is Logovaz, Russia's largest car dealership, but this is only the most visible tip of a golden iceberg...

What is undeniable is that in addition to his auto dealership Berezovsky controls Russia's biggest national TV network. His control was solidified shortly after the first chairman of the network was assassinated gangland-style. Berezovsky was immediately fingered by the police as a key suspect, but the murder remains unsolved two years later...

Berezovsky should know. He stands close to political power. He organized Russia's most powerful bankers in support of President Yeltsin's presidential campaign earlier this year. "It is no secret that Russian businessmen played the decisive role in President Yeltsin's victory," says Berezovsky. "It was a battle for our blood interests."

Berezovsky and friends did whatever was necessary to prevent the Communists from gaining a victory. The Yeltsin campaign is facing allegations of massive financing violations. Legally, each party's campaign was limited to $3 million. The Yeltsin campaign is estimated to have spent at least $140 million...

In appearance and in background, Berezovsky is no thug. Boasting a Ph.D. in applied mathematics, the 50-year-old Berezovsky says he spent 25 years doing research on decision-making theory at the Russian Academy of Sciences. He speaks nervously, articulately, waving a hand still scarred from an assassination attempt two years ago...

...Berezovsky acquired $300 million worth of prime real estate in Moscow and St. Petersburg. He bought one of Russia's most respected newspapers, Nezavisemaia Gazeta, a popular newsmagazine and part of a new TV station called TV 6. He has acquired at least 80% of Sibneft, one of Russia's largest oil companies.

"Oil is good security for loans," he says. "Owning an oil company opens the door to acquiring other businesses." Acquire them for what? To run? Or to loot?

According to Moscow police reports, Berezovsky started his auto dealership in close collaboration with the powerful Chechen criminal gangs. Presumably they provided him with physical protection—a "roof," as it's called in Russian slang.

But two years ago the Solntsevo gang began to muscle in on the Chechens' control of the Moscow auto market. When the Russian gangsters approached Berezovsky about an alliance, he is reported by one police detective to have said: "I already have a roof. Talk to the Chechens."

The "conversation" between the Russian and the Chechen gangsters over the Moscow auto market took place outside a Logovaz showroom, near the Kazakhstan Cinema. In the ensuing gun fight, six Chechens and four Russians were killed.

Berezovsky says he remembers the 1994 shootout but doesn't know what it was about.

Shortly after, Berezovsky barely escaped death himself. He was being driven out of his office complex, sitting in the back of his Mercedes 600, with his driver and bodyguard in the front, when a remote-controlled car bomb exploded next to the car, decapitating the driver. Berezovsky got away with burns to his hands and face. A few days after that, the headquarters of Berezovsky's Obedinenyi Bank were bombed. No culprits were ever identified. They rarely are in Russia. Says Berezovsky: " I am not one of those people who seeks vengeance."...

If Boris Berezovsky, the tycoon who allegedly pulls President Boris Yeltsin's strings, ordered Monday's Kremlin re-shuffle, the newspaper he controls was being coy about it...

Next to the headline: Which Devil Misled Yeltsin?, it published a photo graph of the President with a demonic-looking Mr Berezovsky superimposed behind his shoulder. It blamed Mr Berezovsky for Monday's "coup d'etat" and said his Sunday evening television interview, in which he roundly condemned the soon-to-be-ousted government, was suspiciously prescient.

"Everyone has seen Boris Yeltsin as a monkey repeating the words of Boris Berezovsky," the paper said.

The Russian media is a key battlefield in the permanent Kremlin power struggle, and the reporting of the Government dismissal reveals how the bidders line up for the next carve-up, the sale of Russia's last big state-owned oil company, Rosneft.

Russky Telegraf, controlled by one of Mr Berezovsky's rival tycoons, Mr Vladimir Potanin, said the main reason for the sacking of the Prime Minister, Mr Victor Chernomyrdin, and his deputy, Mr Anatoly Chubais, was their rejection of the terms under which Mr Berezovsky wants the Rosneft sell-off to take place.

"He [Berezovsky] secured Chernomyrdin's resignation for his own reasons. The main one being his dislike of Chernomyrdin's conditions for the sale of Rosneft," the paper argued. After seeing Mr Chernomyrdin on Saturday and failing to get a better deal, Mr Berezovsky told Mr Yeltsin of his displeasure, the Telegraf said. By implication, Mr Potanin's prospects of winning Rosneft are now diminished. Rosneft's new owner will be able to use its wealth to bankroll a presidential candidate in 2000, when elections are due. Source

Vice President Al Gore is "furious" that Prime Minister Viktor Chernomyrdin brought a controversial tycoon with shady connections on his visit to Washington, according to Martin Sieff of the Washington Times. "Sources said diplomats at the Russian Embassy in Washington, as well as the Foreign Ministry in Moscow, are seething because Mr. Chernomyrdin has allowed [Vladimir] Gusinsky to be the driving force in orchestrating the visit." (Editor's note: Gusinsky has been in league with leaders of the old KGB internal security, including former KGB First Deputy Chairman Filip Bobkov, who created the Fifth Chief Directorate to persecute political dissidents, refuseniks, and others and who some say developed the political police for Fidel Castro in the early 1960s. Gusinsky has sued people who allege that he amassed his fortune through corrupt relations with the Moscow city government and who reported on his ties to the KGB. A 1995 CIA report lists Gusinsky's Most Bank as being tied to organized crime.)

Also said to be behind the Chernomyrdin visit is Boris Berezovsky, whom Forbes magazine recently profiled as "a powerful gangland boss and the prime suspect in Russia's most famous murder investigation."

"If you think the Indonesians have been muddying up American morality with their 'generosity' to the White House, you haven't seen anything yet," writes Georgie Anne Geyer in her syndicated column. She reports that pro-Chernomyrdin enterprises are funding American groups, and notes the presence of Gusinsky and Berezovsky in Chernomyrdin's Washington entourage. "Americans need to realize these Russians are on one level or another trying to buy security-there, but also here. In fact, they are trying to buy us. . . . This is an era, then, with a great danger from the corruption of America from abroad, whether Indonesia, Taiwan or Russia. It is time we sat back and realized that, in this shrewd and cunning new Russia, American naivete will hardly be rewarded."

What comes next? Although (George Soros') ISF has closed down its long-term and emergency grants, it is continuing its library and telecommunications programs. Its travel project will also continue, under new sponsorship. Boris Ber

"Vice President Al Gore is "furious" that Prime Minister Viktor Chernomyrdin brought a controversial tycoon with shady connections on his visit to Washington"

"Kaiser, however, being an eminence grise, did contact two now retired State Department officials, E. Wayne Merry and Thomas Graham, who reported sordid details regarding U.S. policymakers' ends over means approach to Russia. They told how cables filled with information of what was really going on in Moscow were blocked by higher-ups at the Moscow embassy and by emissaries from Washington. Lloyd reminded the public of Albert Gore's nixing of CIA reports detailing Russian corruption involving his best Russian pal, Viktor Chernomyrdin, and that Sweetheart of Harvard Yard, Anatole Chubais. Thomas Graham told Kaiser that the Gore-Chernomyrdin Commission was "Sovietized" immediately, meaning its success was declared mandatory. Diplomats, policymakers, pundits, aid consultants and contractors were told to put a happy face on all aspects of U.S. policy."

God I just scared myself I was reading Revelations...The seven headed dragon...goosebumps

Lets see now ??? Both the Bank of New York, and Goldman Sachs.....That could screw up the China trade deal.

More drug money laundering info in the footnotes to "Hear No Evil" I posted here

"I didn't know it was laundering. I was in the bathroom because I drank too much tea. Hillary was baking cookies, Bill was....uh...smoking his cigar."

bump--rb, this is one of those invaluable 'Uncle Bill' threads that are 'archived' throughout FreeRepublic.

If there is anyone more devoted to preserving the 'truth' and freedom in America, I don't know who it might be.

One of a couple 'links' that might provide 'show' inspiration re current events.

Russian Mobsters are our friends. Or so FBI director Louis Freeh wants us to believe. "Crimes by Russians or Russian groups do not threaten the domestic or national security of the United States and, compared to other crimes, are on a very low level," he said at a news conference in Russia last week, and later repeated on CNN.

Well, Russian Mobsters may be his friends but they are not ours. His FBI has invited Russian Mobsters to the U.S. and collaborated with them in illegal extradition to Russia of immigrants who threaten to expose the massive crimes conducted by a network of Mobsters, KGB officers and police officers in Russia. Just ask Alexandre Konanykhine or Jouri Nesterov, whose cases have been covered in the Washington Weekly.

Just last year, Director Freeh testified before Congress about the dangers posed by Russian Mobsters trafficking in nuclear arms. What has made him change his mind, so that he now sees Russian Mobsters as his friends and dissident American citizens who post on the Internet, visit Fort Marcy Park, witness the Oklahoma City bombing, or investigate the government, as the enemy?

"From late 1995 until 1999, as a vice
president of Bank of New York, I agreed
with my husband, Peter Berlin, and other
people and entities to set up accounts at
the Bank of New York for three entities,
Benex, BECS and Lowland, for various
purposes which were illegal under United
States law. I did so to facilitate the
movement of funds into and out of Russia, and to accomplish a
number of objects which either knew were unlawful or
deliberately closed my eyes to that I had reason to know was
unlawful activity. I personally undertook various acts in order to
further this illegal agreement... In these transactions, I acted to
benefit myself and my husband, and to develop more Russian
business for the Eastern European Division of the Bank of New
York..." (Edwards' admissions to money laundering crimes in Manhattan
Federal Court) Edwards pleaded guilty to money laundering, unlicensed
banking activity and immigration fraud, but was never sentenced."

Poor Louie, he just can't make up his mind. Besides, he must be a kook, he believes in conspiracy theories. Is Louis Freeh listed in the Project Megiddo database? He's dangerous. He must be in there. Where's the tin foil when you need it.

"I didn't know it was laundering. I was in the bathroom because I drank too much tea. Hillary was baking cookies, Bill was....uh...smoking his cigar."

The birds are coming home to roost and they are all gathered over the lintel. A hell of a mess in front of the door. Splat!

Lets not forget Mrs. Albright and Big Al.
A third classified letter, from Secretary of State Madeleine K. Albright, indicates that Russia is not living up to its promise to halt conventional arms deliveries to the Iranians.

Mrs. Albright stated in a Jan. 13 letter to Russian Foreign Minister Igor Ivanov, also labeled "secret," that "Russia's unilateral decision to continue delivering arms to Iran beyond the Dec. 31 deadline will unnecessarily complicate our relationship."

"I urge that Russia refrain from any further deliveries of those arms covered by the aide memoire; provide specific information on what has been delivered, what remains to be shipped and anticipated timing; and refrain from concluding any additional arms contracts with Iran," Mrs. Albright stated.

She added that the United States had lived up to its commitment in the 1995 Gore-Chernomyrdin aide memoire, including removing Russia from the list of nations limited by munitions-export controls.

In the "Dear Igor" letter, Mrs. Albright stated that "without the aide memoire, Russia's conventional arms sales to Iran would have been subject to sanctions based on various provisions of our laws."

May interest you:

Daley Won't Seek Ill. Governorship August 28, 2001 5:47pm CHICAGO (AP) William Daley, a former U.S. commerce secretary and the brother of Chicago's mayor, said he will not run for governor of Illinois next year.
Daley had been considered a possible favorite for the Democratic nomination.
Daley told the Chicago Sun-Times he had been overwhelmed by support for a possible bid, but he needed a break from politics. He served last year as campaign manager in former Vice President Al Gore's quest for the White House...
Daley, the brother of Mayor Richard M. Daley and son of former Mayor Richard J. Daley, also said he did not want to make the financial sacrifice to run. He recently became vice chairman and senior managing director of Evercore Partners, a New York investment banking firm...

FOR INFORMATION AND DISCUSSION PURPOSES ONLY
[From] The Standard [at www.thestandard.com]
Evercore, eCompanies Join Forces
By Jim Evans
Oct 02 2000 07:03 AM PDT
The partners have formed an investment firm to manage both companies' Web-related investments.
The Southern California incubator eCompanies has joined with New York-based Evercore Partners to form a new investment firm - eCompanies/Evercore Venture Partners - to manage both entities' new-economy venture investments.
Evercore founding partner Austin Beutner will manage the new firm. He will also become the third partner of the eCompanies incubator...
The partners are also raising a new fund, according to observers close to the combined company.
The principals say the partnership formalizes the two firms' commitment to combining the offline world with the online world. Evercore represents the offline world. Founded by Beutner and former Deputy Treasury Secretary Roger Altman, the boutique investment firm Evercore makes equity and venture investments and offers strategic corporate advice. In September 1999 it made waves by serving as principal adviser to CBS in its $37.3 billion merger with Viacom (VIA). Former Disney Internet executive Winebaum and EarthLink founder Dayton founded eCompanies in July 1999...
The idea of joining Evercore and eCompanies in some tangible way came from Beutner and Winebaum, who had met while attending Dartmouth College...
...Evercore/eCompanies plans to work more with startups, some of which would come from eCompanies' incubator.
It hasn't all been rosy so far for the incubator. Its very first company, eParties, went belly-up in June, firing its employees and selling pieces of the business to eToys (ETYS). But Beutner says he thinks the incubator is on the right track.
"We wouldn't be doing this if we didn't have confidence in the investments made by the individuals involved," Beutner says.
Evercore seems to be coming on board at the right time. Dayton and Winebaum brought virtually no venture or private equity experience to the company when they founded it last year, and Beutner was the CEO of the U.S. Russia Investment Fund...

Next, see the Aug. 25, 1999 Washington Post article by David Ignatius, "Who Robbed Russia? Did Al Gore know about the massive lootings?" [now also posted at www.russianlaw.org, which is the referenced URL] --- a few, limited excerpts from the www.russianlaw.org website:

"You can see the question rumbling toward Al Gore like a freight train in the night: What did the vice president know about the looting of Russia by organized crime, and why didn't he do more to stop it? ...
"The most dramatic revelation came last week, when the New York Times reported that investigators are exploring whether associates of a suspected Russian mobster named Semyon Mogilevich laundered up to $10 billion through the Bank of New York...
"What makes the Bank of New York case especially intriguing is that one of the bank employees who's suspected of involvement in the money-laundering scheme is married to Konstantin Kagalovsky, the man who was Russia's representative to the International Monetary Fund from 1992 to 1995. Investigators are exploring whether Bank of New York served as one of the conduits for $200 million or more that may have been diverted from IMF loans to Russia, according to the Wall Street Journal...
"Two essays this month by longtime Russia-watchers have helped frame the question. The first was a long article in the New York Times Sunday magazine two weeks ago, examining the question: "Who lost Russia?" It was written by John Lloyd, former Moscow bureau chief for the Financial Times...
"What makes the Russian case so sad is that the Clinton administration may have squandered one of the most precious assets imaginable -- which is the idealism and goodwill of the Russian people as they emerged from 70 years of Communist rule..."

Finally: Kmart: What Next?, from FoxNews / AP, Jan. 23, 2002 (posted by Salvation)

" ... Tuesday, Kmart filed for Chapter 11 bankruptcy and became the largest retailer to seek court protection from creditors... "
And elsewhere on the Internet: About the Partner Companies
NEW YORK, Dec. 15, 1999 -- Kmart Corporation (NYSE: KM) and SOFTBANK Venture Capital today jointly announced the formation of BlueLight.com, a stand-alone, e-commerce company that will launch an entirely new presence for Kmart on the Internet...
Kmart Corporation (NYSE: KM) serves America with 2,177 Kmart, Big Kmart and Super Kmart stores ... Evercore Partners served as Kmart's financial advisor on the BlueLight.com venture.

Just following the money.

Russia Says Tycoon Boris Berezovsky Aids Chechens, by Yuri Bagrov, Yahoo / AP, Jan. 25, 2002 (posted by Pericles)

Thanks for the heads up!

I see that the Russian Oligarchs and Enron were using the same illicit off-shore tax havens and scrutiny-free banking illusions. Imagine that.