Tag Archives: Arkady Rotenburg

The Mafia Ruling Ukraine’s Mobs

Organized crime helped Putin grab Crimea, and may open the way for him to take more of Russian-speaking Ukraine.

DONETSK, Ukraine—I was talking to some young black-clad pro-Russian agitators at a checkpoint they’d set up on the outskirts of this city in eastern Ukraine when a shiny black Mercedes pulled up a few yards away. Some of the men from the group walked over and stuck their heads into the car. I couldn’t see who the capo was, couldn’t hear what orders he was giving, but the scene was like something from a movie about the mob. Nobody wanted to say who that was in the car. Nobody wanted to repeat what he’d said.Such scenes are increasingly common in this contested part of Ukraine near the Russian frontier. “Bosses are starting to appear on the fringes of the protests, they are middle-aged, older and better dressed than the younger men who are in the vanguard of the protests,” says Diana Berg, a 34-year-old graphic designer. The grassroots agitation in favor of Russia has become less spontaneous and more focused in recent days.Before and since Russia’s move to annex the Crimea, many who favor the pro-European government in Kiev have argued that these “bosses” might be provocateurs from Russia’s FSB intelligence service or Spetsnaz special forces infiltrated into Ukraine to orchestrate pro-Russian sentiment. But Berg, an organizer of the pro-Ukrainian rally last week where pro-Russian thugs stabbed a student to death, says there’s a different and in some ways more frightening explanation: the ominous hand of organized crime.A public prosecutor, who declined to be named in this article for reasons of personal safety, says local hoodlums are operating among the pro-Russian protests in the restive eastern Ukraine, helping to direct them on the instructions of Kremlin-linked organized crime groups. He points the finger specifically at the notorious Seilem mob, which has been closely tied over the years to ousted Ukraine President Viktor Yanukovych, a onetime governor of Donetsk, who is now in exile in the Russian city of Rostov-on-Don.

“We have already seen organized crime working hand-in-hand with the Russians in Crimea,” says the prosecutor. In that breakaway Black Sea peninsula, Moscow helped install former gangland lieutenant Sergei Aksyonov as prime minister, and his background is well known. Aksyonov and his Russian separatist associates share sordid pasts that mix politics, graft and extortion in equal measure and together they helped steer Crimea into the Russian Federation. Police investigations leaked to the Ukrainian press accuse Aksyonov of past involvement in contract killings. Back in January 1996, Aksyonov was himself injured after his car overturned on the Simferopol-Moscow road during a shootout.

“Why should it surprise you,” the prosecutor in Donetsk asks, “if the same dynamic [as in Crimea] is playing out here? … Maybe there are Russian intelligence agents on the ground, but Moscow through crime networks has an army of hoodlums it can use, too.”

The international media were late to pick up on Crimea’s toxic nexus of organized crime, political corruption and politics. But across post-Soviet Ukraine the three have long been regarded as interchangeable and inseparable. And the eastern and southern parts of the country are the worst of all. “Political corruption is ingrained in eastern Ukrainian political culture,” the Jamestown Foundation, a Washington-based think tank, noted in a 2012 study.

The three regions most notorious for the closest relationships between gangsters, oligarchs and politicians—Crimea, Donetsk and Odessa—were the most resistant to the Euro-Maidan revolution that led last month to the ouster of Yanukovych. And now all three regions are at the forefront of the pro-Russian fight-back against the new national leaders in Kiev.

Taras Kuzio, a research associate at the Canadian Institute of Ukrainian Studies at the University of Alberta, who wrote the Jamestown report, says the internal political turmoil in Ukraine should be viewed through the lens of the hand-in-glove relationships between politicians, mobsters and the so-called “red directors,” managers-turned-businessmen who are steeped in the ways of Soviet-style public sector corruption and deal-making.

The red directors also have their protégés: men such as billionaire Dmytro Firtash, the gas-trading mogul who was arrested by Austrian police on suspicion of mob activity earlier this month following Yanukovych ‘s ouster. Nor are the ties limited to the Ukraine. Their tentacles embrace Moscow: Firtash has joint business ventures with Russian billionaire Arkady Rotenburg and his brother, Boris, close friends and judo sparring partners of President Vladimir Putin. The Rotenburg brothers, not coincidentally, are prominent on a U.S. sanctions list announced Thursday by President Barack Obama to target  Putin cronies.

The symbiosis of politics, organized crime and unscrupulousbiznesmeni developed quickly in Ukraine after the collapse of the Soviet Union in much the same way as it did in Russia. The ambitious, the greedy and the powerful lunged for the huge profits that could be made. The state was disintegrating. The big industries – energy, mining and metals – were being privatized, and may the most ruthless man win. “Individuals such as Yanukovych, Aksyonov and their Donetsk and Crimean allies literally fought their way to the top,” says Kuzio. In Donetsk, Yanukovych as governor “integrated former and existing organized criminal leaders into his Party of Regions,” says Kuzio.

In Crimea, “every level of government was criminalized,” according to Viktor Shemchuk, who served for many years as the chief public prosecutor in the region. “It was far from unusual that a parliamentary session in Crimea would start with a minute of silence honoring one of their murdered ‘brothers,’” Shemchuk recalled in a December interview with the Organized Crime and Corruption Reporting Project, a consortium of investigators and journalists tracking developments throughout Eastern Europe.

Donetsk was no different. A March 2006 cable from the US embassy to the National Security Council – one of several on Ukraine released by WikiLeaks—noted that Yukanovych’s Party of Regions was a “haven for Donetsk-based mobsters and oligarchs” and had commenced an “extreme makeover” with the help and advice of U.S. political consultants, including “veteran K Street political tacticians” from Washington D.C. and a onetime Ronald Reagan operative, “hired to do the nipping and tucking.”

According to the cable, Yanukovych was “tapping the deep pockets of Donetsk clan godfather Rinat Akhmetov.” Now supposedly Ukraine’s wealthiest oligarch, Akhmetov has been keeping a low profile in these early post-Yanukovych days, staying out of the limelight and issuing inoffensive statements on how important it is for everybody to get along.

Another US embassy cable from then-Ambassador William Taylor in September 2007 drilled down on how Yanukovych was centralizing Donetsk crime and political and business corruption in his party – something he would go on to do on an even larger national scale when he was subsequently elected as President in 2010. After Yanukovych became president, according to Ukrainian officials, more than $20 billion of gold reserves may have been embezzled and $37 billion in loans disappeared. In the past three years, they claim, more than $70 billion was moved to offshore accounts from Ukraine’s financial system.

The Americans have sent teams of experts to Kiev to help Ukraine’s interim leaders follow the money. “We are very interested in working with the government to support its investigations of those financial crimes,” U.S. Ambassador to Ukraine Geoffrey Pyatt told reporters last week, “and we have already, on the ground here in Ukraine, experts from the FBI, the Department of Justice and the Department of Treasury who are working with their Ukrainian counterparts to support the Ukrainian investigation.”

Many of the financial crimes are likely to trail back to Moscow. Yanukovych confidant Firtash (the gas mogul picked up in Austria) admitted during a December 2008 meeting with then-US Ambassador Taylor that he had entered the energy business with the assistance of the notorious Russian crime boss Semyon Mogilevich, who, he said, worked with Kremlin leaders.

“Many Westerners do not understand what Ukraine was like after the break up of the Soviet Union,” Firtash told the ambassador. When a government cannot rule effectively, the country is ruled by “the laws of the streets,” he said.

That’s still the rule. The old order has much to fear from reform and change and will do all it can to preserve its wealth and power—and its best bet for that to happen is to look to Russia.

For precisely that reason, rights campaigners and reformers in Ukraine’s interim government are racing against time to uncover as much of the mob story as possible. An anti-corruption panel headed by Tetyana Chornovol, an investigative journalist who was nearly beaten to death in December for her reporting, is starting in earnest to recover billions of dollars of stolen money and piece together the financial crimes of the Yanukovych regime.

The Daily Beast learned something about these operations first hand when a team from the organized crime police raided a discreet boutique hotel in downtown Kiev where this correspondent was staying.  According to the police the hotel is owned by Eduard Stavitsky, Ukraine’s former energy minister. He is now believed to be in hiding in Russia. The police searched all the rooms looking for any Stavitsky documents and combing through financial records. As one of the investigating officers told me, “We need to move fast before the cover-ups start.”

Britain may broadcast Putin’s financial secrets to Russia

putin
Russian President Vladimir Putin attends a meeting with members of the government at the Kremlin in Moscow, March 4, 2015.

Britain may broadcast the financial secrets of Russia’s ruling elite as part of the information war against the Putin regime, the Foreign Secretary has indicated.

Philip Hammond said he was interested by the idea of publicising the wealth of the Russian president’s inner circle in order to embarrass them in front of their people, as part of the response to the ongoing incursion into eastern Ukraine.

The Foreign Secretary warned that Putin is rapidly modernising his armed forces, and warned Russia’s bid to destabilise eastern Europe poses “the greatest single threat” to British national security.

Mr Hammond said that Britain must now “accept” that efforts to offer Russia its “rightful place” in the post-Cold War order had been “rebuffed”.

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It marks a change in tone from the British government: David Cameron has repeated said that the door is open to Russia to normalise relations if it ended the assault on Ukraine.

He warned that Russia’s rapid rearmament is a “significant cause for concern,” and confirmed that British intelligence agencies are now recruiting Russian speakers.

British diplomats in Russia and Ukraine have regularly released photographs of Russian-supplied heavy weaponry as part of an information war, highlighting the Kremlin’s role in the conflict.

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The EU has applied asset freezes and visa bans to 151 Russian and Ukrainian people and 37 companies regarded as complicit in the seizure of Crimea and the invasion of east Ukraine.

The wealth of Putin’s court is opaque, but undoubtedly runs into tens of billions of dollars held in offshore accounts and property in London and New York. Many of his closest associates made their fortunes during the chaotic mass privatisations of state assets during the 1990s. Official statements of Putin’s wealth – a ÂŁ96,000 a year salary, a flat and three cars – are frequently met with derision.

Asked if there was a case for the “interesting” financial arrangements of members of Putin’s inner circle to be published by the British government, Mr Hammond replied: “There might be.”

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“When we talk about having further steps that we can take, increasing the pressure on Russia, one the headings that we regularly review is strategic communication: how can we message the Russian people and to people that Russia is seeking to influence about what is really going on?

“It is an interesting thought and I will make sure the Strat Comms people are thinking precisely about that.”

Mr Cameron has suggested the BBC budget should be increased to help its Russian and Ukrainian language services counter Russian television propaganda.

Mr Hammond said the “generous” attempts to integrate Russia into the post-Cold War world had failed.

Putin feels the collapse of the USSR was a humiliation, and accuses the West of seeking to neuter Russia and encroach upon its borders – provoking the incursion into Ukraine.

Mr Hammond told the Royal United Services Institute: “In the case of Russia, for two decades since the end of the Cold War, we and our allies sought to draw our old adversary into the rules-based international system. We worked in a spirit of openness, generosity and partnership, to help Russia take its rightful place, as we saw it, as a major power contributing to global stability and order. We now have to accept that those efforts have been rebuffed.

“We are now faced with a Russian leader bent not on joining the international rules-based system which which keeps the peace between nations, but on subverting it,” he said.

“President Putin’s actions – illegally annexing Crimea and now using Russian troops to destabilise eastern Ukraine – fundamentally undermine the security of sovereign nations of Eastern Europe.”

“The rapid pace with which Russia is seeking to modernise her military forces and weapons combined with the increasingly aggressive stance of the Russian military including Russian aircraft around the sovereign airspace of Nato states are all significant causes of concern.

“So we are in familiar territory for anyone over the age of about 50, with Russia’s behaviour a stark reminder that it has the potential to pose the single greatest threat to our security.”

“Continuing to gather intelligence on their capabilities and intentions will remain a vital part of our intelligence effort for the foreseeable future. It is no coincidence that all the agencies are recruiting Russian speakers again.”

Putin’s money men

The wealth of Putin’s inner circle runs to tens of billions of pounds.

Vladimir Yakunin

Vladimir Yakunin

Head of Russian Railways, the country’s biggest employer, since 2005. He has been part of Putin’s St Petersburg circle since the 1990s, and is dogged by claims from opposition activists over his wealth. He accompanies Mr Putin on overseas visit, and was in charge of construction during the Sochi Winter Olympics. He has been hit with US sanctions. His network is unknown but his official salary is $15 million.

Gennady Timchenko

Gennady Timchenko

Founder of Gunvor, the Swiss-based oil trader, he sold his stake just before being hit by US sanctions. His net worth is reckoned to be $14.5 billion, according to Forbes. Putin is said by the US to have “investments in Gunvor and may have access to Gunvor funds”. The company strongly denies that claim, and has not been subject to foreign sanctions.

Yuri Kovalchuk

Yuri Kovalchuk

Once dubbed one of Putin’s “cashiers”. He is the largest shareholder of Bank Rossiya, called by the US the “personal bank for senior officials” of Russia. He is a member of the Ozero Dacha, a community of lakeside homes of Putin and his allies. His wealth is estimated to be $1.4 billion. He is hit by US and EU sanctions.

Arkady and Boris Rotenburg

Arkady is Putin’s old judo partner, and is subject to EU sanctions.. The brothers have interests in pipelines, road construction and banking, and are presidents of Dinamo Moscow hockey and football clubs respectively. They received billions of dollars of contracts for the Sochi games. Their personal wealth is said to be $2.5 billion.

Igor Sechin
Igor Sechin

President of Rosneft, the state oil company, and the former deputy prime minister. His salary was $50 million last year. He is one of the most powerful figures in the administration, and is said to “economic interests” with Putin.

Infowars

Tweets issued by the British embassy in Ukraine highlight how heavy weaponry used by separatists in the east of the country are Russian-supplied – and have highlighted the impact of sanctions on the Russian economy.