Bringing in-depth reporting of crime and corruption in high places
Organised crime in Russia is out of control. Criminal "brigades" own everything of value and can "acquire" any commodity in any quantity if the price is right. Ferocious criminal gangs ship out nuclear warheads with the same aplomb that they plunder train-loads of stolen bank-notes. Fearless and ingenious they even ripped-off Russia's entire gold reserves.
is a street-wise Muscovite who sells his ass to anyone for twenty
There are plenty of takers; many don't bother to pay.
Aged a mere eight years, he roams the streets, railway stations
and airport terminals of this once proud city, his small, angelic
face smeared with grime and distorted by a cigarette jutting from
his mouth. Suddenly
the granite like exterior dissolves, his bottom lip trembles and tears
track down his filthy cheeks.
"I want to go home."
But there is no home for Grigor to return to - his parents
are lost to a world of vodka in a new land of mayhem, murder and mobsters.
He is one of hundreds, perhaps thousands, of discarded children that
infest the railway stations, bus shelters and wastelands of Moscow
seeking a "quick fix" to suppress their daily misery.
Their only crime was to have been born at a time when a super-power
tottered and then fell into the yawning chasm of poverty.
Russia is a fractured society where the underworld dominates
with a Capone like ferocity.
The state has evaporated in all but name.
Corruption, always a feature of communist life, has blossomed
out of control.
The new Tsars of the nineties, dressed in sleek Armani suits
and Gucci loafers are today immensely wealthy, bloated with arrogance
and are utterly ruthless.
Within one year of Mikhael Gorbachev's ousting, over 2600 (some
estimates put it as high as
5000) "crime clans" employing over 3 million criminals
had miraculously appeared and spread like wild-fire throughout the
former Soviet empire.
Forty of them
match or out-number in size the Sicilian and American Mafias'.
Collectively they form the most powerful criminal grouping
in the world.
This lead Boris Yeltsin to warn in 1993 that "Nearly two-thirds
of Russia's commercial structure has ties to the growing criminal
Such was their alarming growth that Interior Ministry officials
warned that organised crime would control between 30-40% of the Gross
National Product "In the next few years."
This figure has probably been out-stripped already.
How these syndicates came to the fore and achieved such concentrated
power in so short a time remains mystifying.
Yet criminal gangs have been operating in the Soviet Union
The "Organizatsiya" - the organisation - dates back
to Bolshevik times where it concentrated on political assassination,
armed robbery and other juicy gang-banging enterprises.
Courted and used by Stalin for his own devious purposes the
organisation was later outlawed and a great many of its members ended
up in the abominable Gulags.
But by then they had formed a hard backbone of professional
criminals who became impervious to Stalin's cruel and whimsical treatment.
Known as "vorovskoy mir", the "world of thieves"
they secretly spread throughout the whole of the Soviet state becoming
a "corporation of underground establishments."
In the same fashion as all other criminal organisations they
were a secret society and developed strict laws that set them aside
from society at large.
Transgression of the "thieves' law" was meted out
by a "court" and was always severe.
Stealing from a fellow thief, turning state informer and a
host of other offences were punished by execution.
The worst transgression was serving in the State army and the
offending culprit could expect to suffer a bloody and excruciating
The princes of the Russian thieves were the indomitable
"vory v zakone" - "thieves-within-the-code"
who presided over national meetings and developed tactics for each
of their clans.
Imprisoned by Stalin these elite criminals were as tough as
Not only did they mete out severe punishment to their underlings
but would inflict the most exquisite pains on themselves.
Masochistic in the extreme these acts were intended to demonstrate
to their gaolers that nothing could subdue their iron wills.
One prisoner, Edward Kuznetov serving 15 years in prison, observed
some of these harrowing and perverse rituals: "I have seen convicts
sew up their lips or eyelids with thread and wire; sew rows of buttons
to their bodies; nail their scrotum to the bed... cut open the skins
of their arms or legs and peel it off as if it were a stocking..."
He also witnessed cases in which they would "... cut lumps
of flesh from their belly, roast them and eat them; or cut off their
fingers or nose or ears or penis..."
good things come to an end and it was no different for vorovsky mir,
whose rigid disciplines began to crumble in the wake of
World War 11.
By 1950 they had begun to court foreign crime syndicates, convening
a European "congress" in the small city of Lvov.
Leading Mafia's from Italy, Poland and elsewhere attended.
At home in mother Russia the thieves began re-establishing
links with the eminently corruptible communist functionaries.
Over the course of the next four decades they were irrevocably
bonded by a super-glue of self interest and greed.
Operating in quiet collaboration with the Sicilian and American
Mafia's, the Japanese Yakuza, Chinese Triads, Turkish and Balkan crime
syndicates, the Russian gangsters understood that the Soviet empire
possessed massive natural wealth.
Besides having the world's largest oil reserves, the Soviet
republics have more timber than the Amazon as well as a vast reservoir
of gold, gemstones and other mineral wealth.
In addition there was an immense stockpile of weapons waiting
to be plundered and millions of acres of additional land that could
be put to work for the already burgeoning narcotics industry.
The problem for the crime Barons was how to tap into and exploit
this vast array of riches.
With that special Russian flair for Chess, a strategy developed
that was so complex that it became practically invisible and was always
two or three moves ahead of law enforcement.
Ultimately it was to lead to the most spectacular criminal
"coup" ever devised.
Commencing with a scam that would've made Ian Fleming's "Goldfinger"
blanch in admiration, the Russian Mafia, along with outgoing Communist
Party officials, "heisted" thousands of tonnes of gold bullion
from Russia's reserves.
Valued at $35 billion, Russia's gold reserves were estimated
to be 100 million troy ounces - just under 3000 tonnes.
Then in September 1991, a palpitating Grigory Yavlinski, the
economic supremo, revealed to delegates at the Group-of-Seven industrial
countries meeting in Bangkok, that a mere 240 tons were all that was
Two months later, in November, even that had disappeared.
"Not a gram of gold remains; the vaults are empty,"
said Victor Geraschenko, chief of
Gosbank, the Russian Central Bank.
In one operation valued at $4 billion, over 300 tons were secretly
shipped to Switzerland, some of it subsequently arriving in London.
Unlike Britain, the Swiss authorities do not keep records of
gold imports which makes it a favourite centre for disguising the
point of origin - a very effective method of laundering suspicious
The bullion, some sources now believe, was used as collateral
in a secondary scam that set-out to vacuum-up all the available Rouble
bank-notes in existence at the time and sell them at knock down prices
to organised crime syndicates from around the world.
Still shrouded in fear and secrecy, 280 billion Roubles - valued
at hundreds of billion of dollars at the official commercial rate
of exchange - were being offered for sale by shady wheelers and dealers
to leading figures in the world of organised crime.
In one suspect transaction during January 1991, 140 billion
Roubles were hawked by Russian middle-men, for an estimated $7.7 billion
but was foiled by the KGB.
Six months later; just a few weeks prior to the abortive coup
that unseated Mikhail Gorbachev, a suspiciously similar transaction
for 140 billion Roubles was struck and eventually netted $4.5 billion
- demonstrating how quickly the currency had been devalued.
At about the same time another shadowy character was bidding
for "100 billion clean, clear, good, legal, bundled, counted,
verified, packed and stamped Russian Roubles" on offer from a
questionable Liechtenstein based company. Purchased at a fraction
of the true price, as low as 8 cents on the dollar, Colombian cartels,
Mafia hoods and the planet's criminal fraternities were stampeding
to snap up the banknote bargains.
In part to launder their dirty narcotic revenue and also to
reap a giant profit by repatriating the currency in exchange for bargain
basement priced commodities, the Rouble proved to be the currency
of choice during 1990 and 1991.
In another case, a massive TIR truck was driving the highways
and byways of Italy, loaded to the ceiling with Russian banknotes
looking for a hot home.
Information on this scam was gathered by phone taps authorised
by Italy's Antimafia Commission.
Santo Pasquale Morabito, a notable Italian narcotics dealer
single-handedly purchased 70 billion Roubles.
Costing a paltry $4,6 billion, Morabito stumped up cash, anticipating
a quick killing.
His agent, a member of the Turkish Mafia attempted to sell
them on but chose a Swiss undercover operator who brought the matter
to the attention of Swiss authorities.
Meanwhile, another TIR truck load of notes being transported
across Europe under the protection of KGB guards was kept under surveillance
by intelligence operatives.
Cash was draining out of Moscow at such a phenomenal rate that
it caused panic in the gold-capped spires of the Kremlin.
So great was the concern that Prime Minister Valentin Pavlov
announced to a startled world that he had uncovered a "plot by
Western banks to flood the country with roubles and topple President
Pavlov went on to claim that banks in Switzerland, Canada and
Austria were involved but could not or would not name them, but added
that this was a "financial war" and feared what would happen
as the billions of banknotes were dumped back on the market over-night
"creating hyperinflation, and destabilising the economy."
Adding that "Quite simply Mr. Gorbachev is getting in
someone's way," he outlined a scenario in which the Soviet Union
was threatened with a loss of economic independence in a kind of "annexation,
quiet and bloodless."
Largely derided in the west for his comments, the Kremlin none
the less viewed the matter seriously enough to order the recall of
all 50 and 100 Rouble notes in circulation. It is now known that reputable
western banks were involved in this shady business.
One "solid European bank" was discovered to have
offered a well-heeled and cash rich American investor a block of one
billion Roubles complete with "official letters guaranteeing
their re-entry into the Soviet market."
At the time no one could understand why the world's leading
gangsters were forming a disorderly queue to buy vast quantities of
what was in effect little more than coloured paper - with hard cash.
These were criminal entrepreneurs who possessed sharp business
minds honed by decades of greed and power, and were not known for
squandering their wealth.
We now know that behind this ploy lay an even more audacious
The Soviet Union was to be asset-stripped.
And the assets were stripped.
To the bone and back again. Gradually it became clear that
the massive quantities of exported Roubles weren't just coloured paper.
Almost worthless on the international market they were repatriated
through some of the 260 Mafia controlled banks that sprung-up around
Having gone full cycle from export through to repatriation,
the laundered Roubles, now viewed as inward "investment",
were used to capitalise and finance the explosion of crooked Joint
Venture companies that had mushroomed in the meantime.
There followed a massive spending spree that continues to this
Russia has been recently described by Italy's Antimafia Commission
as "a kind of strategic capital of
organised crime from where all the major operations are launched."
Wasting no time, the now Rouble-rich Mafia's set about plundering
Russia's abundant natural treasures.
Platinum, gemstones, oil, lumber, strategic raw materials;
non-ferrous metals, - cobalt, copper, bronze, titanium even caterpillar
tractors and other high value equipment; all went under the hidden
Transformed into a world of grab-it and prosper, Moscow began
to wilt under the bizarre influx of plundering crime Barons and opportunists.
One enterprising soul who now banks and has residence in Monte
Carlo - reputedly itself a hot-spot for money-laundering and medallion
wearing Mafiosi - was Artjom Tarasov.
With entrepreneurial flair Tarasov acquired 4 million tons
of crude oil at an equivalent price of $5.00 a ton.
On-selling at $140 a ton the deal netted a cool half a billion
dollars, less expenses, commissions, "kick-backs" and a
healthy share-out to his swindler partner, the American Marc David
Rich, the senior man of Marc Rich & Co., the giant commodities
trading firm, is currently wanted by the FBI who have posted a $750,000.00
reward for his capture.
Tarasov, meanwhile, became Russia's first multi-millionaire.
Immensely more profitable, however, is the illegal trafficking
in narcotics and weapons and with prodigious profits derived from
asset stripping and other scams, these two enterprises were set to
undergo a meteoric rise.
Russia has recently been estimated to have in excess of 2 million
drug addicts, a figure that far outstrips the rest of Europe combined.
Globally the narcotics industry is thought to generate in excess
of $1000 billion annually.
Still the biggest dope peddlers around, the Colombians have
cut an agreement with the Russian Mafias' to import Cocaine for onward
shipment to the rest of Europe - which despite the much vaunted "fortress"
label is wide open to the East.
Former Soviet colonies grow prodigious quantities of dope.
Authorities estimate that between them the CIS states produce
more hashhish than the rest of the world put together.
prolific quantities of Opium poppies are grown and harvested
under armed guard in Turmenistan, Tajikistan, Kyrgyzstan, Uzbekistan
and elsewhere, ultimately destined for world-wide distribution.
The narcotics flow through a sophisticated underground pipeline
that runs through Bulgaria and Romania and other eastern European
"portals" and onwards into the anxious hands of the Sicilian
Mafia and Chinese Triads who refine and distribute the end product.
Psychotropic drugs too, are a favourite item.
These include Amphetamines and the immensely powerful "Krokodil"
estimated to be a thousand times more powerful than Heroin.
Of far greater concern to western law enforcement and intelligence
communities is the widespread trafficking of arms, including weapons
of mass destruction.
Plundered from former Soviet arsenals - often with the willing
assistance of former KGB and senior military officers - almost any
item is up for sale.
In one operation that took place in October 1992, police retrieved
thousands of missiles, millions of rounds of ammunition, an armoured
personnel carrier as well as a Mi-8 helicopter gunship.
State industries, now run privately, have also been quick to
tread the bonanza trail and sell the latest Soviet military equipment
including Tanks - sold at $100,000 per ton weight - plus an assortment
of rocket launchers and tactical missiles and fighter aircraft.
Far more worrying though, is the trade in nuclear weapons and
A U.S. House of Representatives Republican Task Force reported
at the end of 1992 that three tactical nuclear warheads had vanished.
Priced at $14 million a throw, and with a range of sixty kilometres,
warheads were being stolen to order from army installations in Irkutsk.
Master-minded by two former intelligence operatives - one ex
KGB and the other ex GRU, the intelligence arm of the Soviet military
- they were smuggled into Yugoslavia and then were trucked to Bulgaria,
through Turkey and onwards, it is claimed, to clients in Iraq and
The same network filled an order for 32 kilo bars of plutonium
that was ripped-off from Ukranian storage depots, but were seized
by Italian police before reaching their destination, again in Iraq.
Other seizures in Europe have included quantities of Plutonium-239,
Strontium-90, Cesium-137 and highly enriched
weapons grade Uranium.
Despite these police successes it is believed that large quantities
of nuclear materials are reaching their ultimate destinations - those
countries committed to making nuclear weapons.
Meanwhile the economic devastation of Russia continues unabated,
a gruesome testimony of corruption and criminality that is largely
ignored by an introspective and unmindful west.
Growing numbers of despairing Muscovites die from hypothermia
on the snow-swept streets where they have collapsed and huddled, foetal-like,
following a mighty vodka binge.
On average twenty or so real-life "stiffs" daily
arrive at the morgue during the long winter months. Privatisation
has bequeathed Russia 100,000 millionaires and an estimated 200,000
joint venture companies that are owned lock, stock and pork-barrel
by various "entrepreneurs" - a word that nowadays has sinister
overtones and is generally used as a code-word for "criminal."
Embracing a free market economy - something the west insisted
upon if it were to grant foreign aid - has left Russia destitute.
The old communist days, as harsh and unyielding as they were,
at least provided a staple diet and free healthcare for the population.
Despite being economically wrecked, Moscow, paradoxically,
is now the most expensive business destination in Europe, overtaking
Brussels and Paris in a one-stride gallop.
Quick buck opportunities for the hard-nosed businessman have
spiralled, even while the great majority of Russian citizens now look
to a future of unyielding squalor.
And for Grigor and his friends each dawn is just another day
of bitter hustling.
Occasionally some solace is found in music.
Gathered around a smoking fire to ward off the chill, a group
of street kids pass a cigarette butt around and listen, as one of
their number strums on a stolen guitar.
It is one of those soulful Russian folk songs that speak of
pain as a way of life.
The words, sung by a sixteen year old veteran, yearn for a
day when they can look forward to wearing a "nettle-coat"
The simplicity of the song brings out a rash of goose-bumps.
Physical pain can be borne, even welcomed, but it is the emotional
pain that cannot be endured in this new gangsters paradise.
And as the band plays on, an early Reagan administration National
Security Decision Directive (NSDD) remains classified.
It is simply enitled "Prolonged Economic Warfare against
As the economist, John Maynard Keynes, once shrewdly observed
"There is no subtler, no surer means of overturning the existing
basis of society than to debauch the currency.
The Process engages all the hidden forces of economic law on
the side of destruction, and it does it in a manner which not one
man in a million is able to diagnose."
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