-Caveat Lector- Organized crime becomes modern Russian success story Copyright � 1999 Nando Media Copyright � 1999 Associated Press >From Time to Time: Nando's in-depth look at the 20th century Reputed Russian mobster criticizes FBI, American politicians Bank of New York chairman defends lender By BARRY RENFREW MOSCOW (August 31, 1999 9:16 p.m. EDT http://www.nandotimes.com) - Perhaps the most successful business in Russia today is organized crime, which is spreading across the world, threatening to do more damage than Soviet spies ever dreamed of doing during the Cold War. Reports of alleged money laundering that link Russian organized crime to billions of dollars channeled through the Bank of New York could show how Russia's crime syndicates are multinational operations. Although often dubbed the "Russian mafia," organized crime in Russia does not fit the usual picture of underworld mobsters. It is far bigger and more complicated: a three-way alliance of officials, businessmen and gangsters reaching into every level of society and the economy. Organized crime and corruption reach the highest levels of the Russian government, with some analysts saying it's no longer possible to distinguish between the two. "It has been known for a long time that the entire government system is corrupt," said Konstantin Borovoi, an independent liberal member of parliament. "Corruption has drained the nation's resources beyond all imaginable limits." At its core, corrupt members of Russia's political and business elite have plundered billions of dollars in government funds and assets with the aid of criminal gangs, authorities say. The money has been sent overseas to secret bank accounts or used to create hundreds of Russian companies and banks that combine legal and criminal activities. Through these companies and other rackets, the Russian Interior Ministry estimates that organized crime controls 40 percent of the economy, although other observers say the figure is higher. Corrupt officials and gangsters work with these criminalized businesses, helping them get insider deals, avoid taxes and even kill rivals. "The situation in our country differs from Western Europe and the United States. There organized crime controls only 'criminal' activities, like prostitution, drugs and gambling. In our country, it controls all types of activity," a Russian government study of organized crime concluded. Top political and business figures, including members of President Boris Yeltsin's entourage, have repeatedly been linked to corruption allegations in the Russian media. Very few have ever been charged or convicted. Russian law enforcement agencies are seen as hopelessly incompetent or corrupt, with many prosecutors and police officers taking kickbacks. Russia's top policeman, Interior Minister Vladimir Rushailo, admits his forces are not winning the struggle. "Organized crime is occurring on an extremely dangerous scale," he said recently. About 5,700 criminal groups are thought to operate in Russia and many of them are expanding abroad, according to Russian and Western estimates. Russian criminal syndicates are burrowing into other countries, buying up legitimate businesses while also managing rackets like prostitution, gun running and sophisticated banking and computer fraud operations, Western officials say. Corruption has been a problem in Russia for centuries. It reached unprecedented levels following the collapse of the Soviet Union in 1991, when some officials and their cronies divided state assets among themselves. While the government talked of creating wealth by selling off factories and other state property and sharing the money with the Russian people, insiders skimmed off some of the most valuable assets. As a few people became fabulously wealthy, many Russians slipped into abject poverty, souring their beliefs in democracy and the market system. At the same time, insiders were getting government licenses to buy oil, diamonds and other state-owned natural resources at artificially low prices and making millions by selling them overseas, investigators say. Government funds were diverted and disappeared without a trace or were used by private banks to purchase state assets in rigged privatization deals, they say. Borovoi gave an example of how government funds are looted: If a government ministry wants funding, it must allocate up to 3 percent of the requested sum for bribes to lawmakers and officials. The lawmakers then approve the request, and the ministry must then pay up to half of the funding to the lawmakers and officials to get the money. "A corrupt official can't act alone. It's always a chain, and there is always a mob connection," he said. Working alongside the corrupt officials and businessmen are criminal gangs whose members fit the Hollywood image of ruthless killers in leather jackets and dark glasses. Their activities include drug, prostitution and protection rackets, with up to 80 percent of Russian businesses estimated to be paying for protection. Corrupt businessmen use the gangs for contract killings of rivals when there are disputes over turf and political clout. Police said there were 567 contract killings, mostly businessmen, during the first five months of 1999 - more than double the number during the same period last year. Arrests and convictions for contract killings are almost unknown. Convictions of any kind against corrupt officials or organized crime figures are very rare. DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance�not soapboxing! 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