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Does Russian Mafia Control Lithuania?

This past week a sensational political scandal rocked Lithuania,and it is connected directly with the playing of the "Russian card" in the country's politics. The Lithuanian State Security Department accused several officials in the president's inner circle of being directly connected with international criminals. Moreover, relying on the secret services of other foreign governments, the Lithuanian secret service collected recordings of conversations of close associates of Lithuanian President Rolandas Paksas with Russian "criminal figures".

Undoubtedly, Russian secret services were also involved because the most important recordings of conversations occurred in Moscow. Lithuanian secret services made public information about a direct link connecting Paksas with the chief sponsor of his election campaign, Russian businessman Yuri Borisov. The secret service made known that it has tapes of conversations between Borisov and Lithuanian Presidential National Security Advisor Remigiyus Achas. In addition, the secret service has tapes of Borisov conversing in Moscow with figures who have for a long time been suspected of connections with international criminals. These figures include Ansor Aksentyev, who is better known by his previous last name of Kikalishvili. He was the vice president of the 21st Century Association. For some time, he shared the duty with Russian State Duma deputy and popular entertainer Josef Kobson. Several Russian mass media reports have called this association an influential criminal organization with dubious ties in the former Soviet republics. The 21st Century Association was created by notorious criminal Otari Kvantrishvili, and its members included such personalities as the so-called "thief in law" Givi Beradze and the famous criminal Vyacheslav Ivankov better known as "Yaponchik."

According to several reports, the Russian secret service suspects the association of drug trafficking, the illegal smuggling of jewels and antiques with cultural and historical significance and other crimes. According to Lithuanian sources, the recorded conversations include demands to Achas "to fulfill his election campaign promises" and also threats to Lithuanian State Security Department Chief Mecys Laurinkus.

Indeed, a major criminal and political scandal is unraveling in the corridors of power in Lithuania. Recently, urgent meetings were called of the president's state defense committee and a plenary session of the Seimas, the Lithuanian parliament, and the military chiefs of staff were also summoned. They all came out with the same statements, acknowledging a serious "threat to national security."

The large role played by Russian capital in Paksas' election victory is no secret to those that followed the campaign of Paksas, who is a former Lithuanian premier and Vilnius mayor. In fact, the millions of dollars donated by Borisov covered the lion's share of Paksas' campaign expenses. However, up till now, this was considered "clean" money donated by Russian business. Some also suspect that the money came from the Russian government, Russian political groups and secret service. Now, however, it turns out that not only did the money come from Russia but that it is "dirty" money as well!

One week before the scandal broke in parliament, the head of the state security service spoke about the interests of several businessmen who were trying to privatize strategically important properties in Lithuania with their "dirty" money.

Aksentyev's daughter's godmother is Russian pop star Alla Pugacheva and her godfather is hockey player Pavel Bure. She resides in Lithuania. Aksentyev was recently prohibited from entering Lithuania.

Deputy head of Lithuania's state security service Arvidas Potsyus recently said that Aksentyev's presence in Lithuania was a threat not only to Lithuania "but also a problem for the EU." In regard to Aksentyev and his ties to criminal organizations in Lithuania, Laurinkus said "[the organizations] are trying to participate in the privatization of strategic objects." Paksas has distanced himself from the accusations calling them "provocations." Achas, who was at the center of the scandal, has been temporarily relieved of his duties.

The scandal should get hotter in the next weeks with an urgent session of the Lithuanian parliament scheduled, investigation by the Lithuanian Prosecutor General commencing and the creation of a special parliamentary commission, which all plan to delve further into the affair. This would all seem like a political provocation if the accusations came from some newspaper and not the Lithuanian Department of State Security. Indeed, the department must possess serious facts if it has decided to undergo such a large-scale political scandal. On the other hand, all the information on this theme is secret, which is the best basis for disregarding "categorical statements" and formulating personal speculation.

However, the fact that international criminal organizations are focusing on small countries as their own estates and attempting to control the state organs of these countries by financing political leaders is not speculation, but reality. It is true, however, that we are more accustomed to seeing this happen in places like Latin America. Indeed, it seems incredible that such a thing could happen in Europe.

Of course, it is difficult to imagine that Lithuanian authorities are little more than puppets in the hands of the mafia. Yet there also seems to be much influence by and obligations to other countries and plenty of personal Lithuanian ambition at play here. Indeed, "authorities" are not pushing Lithuania to the open arms of the EU and NATO.

Nevertheless, the single fact of the extortion of the president (or members of his team) by election campaign sponsors' "payment for services" - for access to certain strategic objects - has been enough to place Lithuanian society in a condition of deep shock.

It is also important to note that, on the eve of these events, Lithuania was already agitated by the YUKOS affair in that YUKOS owns the most important strategic object in Lithuania - the Ma?eikiu Nafta oil refining complex. With the arrival of YUKOS one year ago, the business began to prosper. In fact, the oil complex, which was managed by Americans, earned its first profits after suffering major losses that had put a serious strain on the Lithuanian government budget. The news of the arrest of YUKOS shares caused a great stir in Lithuania. The country's political right wing even proposed urgently buying back the property of YUKOS in Lithuania.

And, once again, there is a new "Russian" theme in Lithuania. Now an enemy has been discovered in the very heart of the government - in the president's circle:

Perhaps, it is more than just a coincidence that the scandal surrounding Paksas and his people, who are accused of ties with the "Russian mafia," began to flare up immediately after the YUKOS affair broke in Moscow. No one knows for sure how "Paksas-Gate," which is the name given to the events by one Western news agency, will end. However, it is very clear how much and how long Lithuanians have feared Russia, and what necessarily results from those fears. It is not out of the question that someone simply decided to take advantage of the moment to achieve his political goals.

Regardless of the political outcome, it seems that Lithuanians could end up rejoicing in the openness of their society. After all, not only the president of a company, but the president of the country is equal to other citizens in that he is not above suspicion by 'competent organs' in orchestrating threats to the country's national security. Is such a thing possible, say, in Russia? Whether or not the president will be removed from his post (such a mechanism exists under the country's constitution) or be acquitted, it really doesn't matter in the long run because Lithuanian democracy will triumph in the process.

Written by Alexander Lototsky, Vilnius

Ukraine, Russia, Bulgaria, Kazakhstan, Poland, Germany, France,
Italy, Israel, USA, Canada, China, Japan, Hong Kong, etc.). The mafia
members named have links to the Solntsevo crime syndicate, which
also has a powerful presence in Ukraine and elsewhere. Recall the
"vor-v-zakone" Vyacheslav "Yaponchik" Ivankov for example. Ivankov
and the Solntsevo crime syndicate have been linked to Ludwig "Tarzan"
Fainberg and the Brighton Beach "Organizatsiya", Semion "Brainy Don"
Mogilevich, Anzor Kikalishvili, Joseph Kobzon, Joseph Grisha "The
Cannibal" Roizes, et. al.

Fainberg's accomplice in cocaine trafficking was Nelson Pablo
Yester Garrido (aka any one of about 30 other aliases) who was
featured on the TV program "America's Most Wanted", while gangster
Anzor Kikalishvili, interceded between Fainberg and other Russian
Mafia leaders. Kikalishvili named NHL superstar, Pavel Bure, to be
his president of the Twenty-First Century business enterprise, which
is a mafia front worth $100 million according to the FBI. Kikalishvili
boasted he had more than 600 mafia "soldiers" in South Florida.
Fainberg and Kikalishvili's extortion of one restaurant owner couple
was described in "Red Mafiya" by Robert I. Friedman.

Stefan Lemieszewski

"Dont make a Soviet Sinatra out of him"
Igor Sedykh Moscow News
Swiss prosecutors suspect Russias popular crooner-cum-MP Iosif Kobzon of being linked to organized crime



A police court in the Swiss town of Nyon upheld the seizure of approximately one million Swiss francs ($800,000) from the bank accounts of two Russian companies, HSM and Sodepra, on grounds that persons controlling these accounts are linked to Russian organized crime. One of the lot was Iosif Kobzon, a popular singer and deputy of the RF State Duma.
Legal Collision

Investigating judge Jean Traccani handed down an arrest and seizure ruling as long ago as 1997. At the time everyone in Switzerland was talking about the case of Sergei Mikhailov (a.k.a. Mikhas) and the Solntsevo organized crime group that he purportedly controlled; the specter of the Russian mob was seen or imagined in almost every business operation. Later on, however, the case seemed to have quietly expired. But then, six years after, it came up again because, according to Pierre-Olivier Wellauer, defense counsel for the two Russian companies, it is not so much a matter of money as that the seizure casts a shadow on the reputation of persons involved in the case.

One-judge police courts in Switzerland typically deal with minor infractions, punishable by a term of up to twelve months in prison.

Cases related to organized crime are handled by a higher court: A confiscation ruling is usually handed down in the course of a criminal trial. But in this case there was a legal collision: For the first time in judicial practice, the legitimacy of a seizure ruling handed down by an investigating judge was challen- ged, and it turned out that the Code of Criminal Procedure does not provide for this. As a result, HSM and Sodepra sued for the return of seized assets as well as for moral damages.

What was it all about? In 1997, the Nyon branch of the SBS bank (later on it merged with UBS, a major Swiss commercial bank) reported to law enforcement agencies what it saw as suspect transactions involving a series of money transfers to the companies accounts.

Formally the bank was guided by the requirements of the money laundering law obligating it to report all dubious operations. Subsequent investigation established that the persons authorized to draw from the accounts in question included Iosif Kobzon, a popular singer and deputy of the RF State Duma; and Yuri Shefler, chairman of the SPI board of directors. According to Interpol, these persons were involved with Solntsevo and Perovo organized crime groups.

Investigating judge Jean Traccani suspected a link between the bank accounts and the Moscow branch of the Swiss Hopf group that acquired a 51 percent stake in the AO Sadko-Arkada joint-stock company which was privatized in 1992. The investigator had two working theories.

According to one, the Swiss company became a target of extortion racket on the part of Shefler and his associates, and it was in fact extortion money that was wired to the Nyon accounts.

The second theory assumed that the Swiss had taken advantage of their position as a shareholding majority to enrich themselves by unscrupulous methods, that being the origin of the money on the Nyon bank accounts. Traccani sent to the RF Prosecutor Generals Office an international investigation commission, asking to question persons involved in the case and secure a briefing on relevant documents. After two years of silence, however, the PGO formally refused to carry out the commission. The refusal apparently served as a signal for persons concerned in Russia to challenge the seizure of assets.

National Hero

The hearing began with the defense lawyer trying to open the judges eyes to the compelling personality of Iosif Kobzon, one of those who was authorized to use the contentious accounts, showing a video about the stage idol-cum-MP that Pierre-Olivier Wellauer had brought from Moscow. "Look at this man: He is a national hero! Dont make him into a Soviet Sinatra," the counsel exclaimed brandishing a sheaf of CDs and a hefty, lavishly illustrated tome about the life of the national celebrity.

Not surprisingly, it was the crooners outstanding personality that ended up in the focus of the court hearing. Responding to the counsels presentation, Prosecutor General Jean-Marc Schwenter recalled that despite his immense and enduring popularity the person in question was banned from entering the United States as well as from taking residence in France. An expert on organized crime added fuel to the fire by saying that police were in possession of evidence pointing to Iosif Kobzons involvement with the Solntsevo organized crime community.

As a result, Kobzons role in the case was blown out of proportion, and the judge even chose to make a point of it in her ruling. "Crooner and political figure are not the kind of occupations that are incompatible with involvement in organized crime," she concluded, recognizing the validity of the evidence pointing to Kobzons links to organized crime. The fact that his name figures on the list of persons authorized to operate suspect accounts at the Nyon bank, the judge said, only goes to support this assumption.

Involvement of persons authorized to use bank accounts with organized crime is the necessary and sufficient grounds for seizure, the judge stressed, citing the existing law. Meanwhile, investigation established that Iosif Kobzon controlled 20 percent of stock in the two companies, registered by the Nyon trust company.

Nonetheless, the prosecutor admitted that Mr. Kobzon was not directly implicated in criminal mob operations, unlike several other persons figuring in the case, who were far better known to law enforcement agencies than to the broad public.

When news about the outcome of the hearing reached Moscow, Iosif Kobzon, in an interview with Agence France Presse, said that he had neither accounts in Swiss banks nor shares in Swiss companies. What is involved in the case in question, however, is a corporate account while Kobzon is listed not as its owner but as a person authorized to draw from it. Actually, the companies are not Swiss but Russian although, again, authority to draw from an account does not mean that Kobzon was their shareholder. It will be recalled that Pavel Borodin was authorized to draw from some Mabetex company accounts but did not hold a stake in the company.

Sadko Takeover

For his part, Yuri Shefler, a Russian vodka magnate, told the Kommersant daily that the HSM and Sodepra companies were established as part of Hopfs operations in Moscow and that he had nothing to do with them after his stake was bought out by the group while the lawsuit was purportedly brought by the Swiss. As a matter of fact, Sheflers name was on the list of those who had authority to draw from the Nyon accounts in 1997, when he took over Sadko-Arkada. But the Hopf group has since sunk into oblivion and this is the reason why its former employees were so outspoken in their depositions in the Nyon court.

The groups former chief financial officer said that Yuri Shefler tried to coerce them into selling their stake below cost. To ensure their own security they had to seek protection services, paying 50,000 francs a month (approximately $30,000) for the privilege. Yet not even that could save them from a squeeze: "On April 12, 1995, Yuri Shefler and his partners, accompanied by armed bodyguards, showed up to tell us that they would cause serious problems for us if they did not get what they wanted." The battle around Sadko even became a subject of a diplomatic scandal. Jean-Pascal Delamuraz, the then president of the confederation, sent Moscow an official letter of protest, asking it to take action to ensure that Swiss firms could operate in the country problem-free. In the end, the Swiss preferred to pay off Shefler with $1.8 million. "It was a concession to the extortionists for the privilege to work on Russian territory," the prosecutor commented.

The defense lawyers attempt to draw the judges attention to the groups price machinations at its Moscow branch was of no avail.

"This is amazing," the prosecutor exclaimed. "Are you going to say next that Christmas should be celebrated in August?" Likewise the defense counsels explanation that the money that had been wired to Nyon was in fact a loan to the two companies that had won a contract from the Moscow city government to manage the Ukraina Hotel, which they were planning to renovate, fell on deaf ears.

The prosecutor dismissed all of that as mob tricks. Investigation showed that Nyon was but a transshipment point in an intricate financial route, via Cyprus to Ireland to New York, that had been worked out to shake off the trail of dirty money which was eventually to return where it had come from - to Moscow. Jean-Marc Schwenter is convinced that such complex operations are conducted not to evade taxes but to blur the origin of ill-gotten gains.

Presumption of Innocence in Reverse

By the judges own admission, the decisive factor in her ruling was the deposition by a federal police commissar that was made behind closed doors. He told about the mob action around Sadko, citing "confidential sources" which suggested that the persons in question were linked to organized crime.

"There is no doubt here whatsoever about the existence of an organized crime group," the judge said. Commenting on the turf war around Sadko, she said it was incredible that "such gangland-style methods of doing business were used even in a country with a different set of values."

"The judge put too much credit in the police commissars testimony," Wellauer said. "The confidential information that he cited is an unacceptable form of presentation of evidence in a court of law. All of these newspaper clippings and random references to other experts prove precious little. Police conducted the investigation unsystematically and without a sense of purpose, and they have neither evidence nor witnesses."

From a legal perspective, the judge claimed, all requirements for seizure had been met. The money placed on the accounts of the former SBS bank was controlled by a criminal organization. Furthermore, it belonged to persons linked to organized crime who failed to present evidence that the assets were to be used for other purposes.

Wellauer, however, denounced the violation of the presumption of innocence, demanding that the seizure be revoked for the simple reason that the court had received no testimony from the persons authorized to operate the accounts in question. But the judge explained that the RF Prosecutor Generals Office, which was asked to carry out a corresponding commission, refused, after 26 months of silence.

On the other hand, in money laundering cases, the presumption of innocence in contemporary law is turned upside down, so should any doubts arise, defendants have to prove that they are not guilty of any wrongdoing. While agreeing with that, the defense counsel said at the end of the hearing that he is going to challenge the ruling at the appeals court of the Vaud canton and, if need be, go all the way up to a federal court.

The hearing at the Nyon police court was unique. "This is the first and last case of this kind," the prosecutor stressed. "As of next year such cases will be prosecuted on the federal level."

"Confiscation of some two million Swiss francs on the two companies bank accounts will not of course ruin their owners," the Geneva based Le Temps comments on the trials outcome. "But this ruling has a symbolic value based as it is on provisions of criminal law pertaining to organized crime whose application stirs up heated controversy."

"This is amazing, the prosecutor exclaimed. "Are you going to say next that Christmas should be celebrated in August?"