The Worst Gangster Most People Have Never Heard Of

December 3, 2014, 5:29 pm

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Christina Sterbenz

Semion MogilovichFBISemion Mogilevich, a known Russian mob boss

Drug trafficking, trading nuclear material, contract murders, and international prostitution — that's how the Federal Bureau of Investigation believes Semion Mogilevich, one of its top 10 most wanted fugitives, has spent his time over the last few decades.

Indicted in 2003 for countless fraud charges, Mogilevich now primarily lives in Moscow. His location allows him to maintain close ties to the Bratva, or The Brotherhood, aka the Russian mob.

The 'Boss Of Bosses'

A 5'6" and a portly chain smoker, Mogilevich is known as "boss of bosses" in one of the biggest mafia states in the world.

Born in 1946 in Kiev, Ukraine, Mogilevich once acted as the key money laundering contact for the Solntsevskaya Bratva, a super-gang based in Moscow. He has since held over 100 front companies and bank accounts in 27 different countries, all to keep the cash flowing.

In 1998, the FBI released a report naming Mogilevich as the leader of an organization with about 250 members. Only in operation only four years, the group's main activities included arms dealing, trading nuclear material, prostitution, drug trafficking, oil deals, and money laundering.

Between 1993 and 1998, however, Mogilevich caught the FBI's attention when he allegedly participated in a $150 million scheme to defraud thousands of investors in a Canadian company, YBM Magnex, based just outside Philadelphia, which supposedly made magnets. With his economics degree and clever lies, Mogilevich forged documents for the Securities and Exchange Commission that raised the company's stock price nearly 2,000%.

When asked about YBM by BBC in 2007, Mogilevich replied: "Well if they found old-fashioned hanky panky [i.e., suspicious activity], it's up to them to prove it. Unfortunately, I don't have access to FBI files."

"What makes him so dangerous is that he operates without borders," said Special Agent Peter Kowenhoven, who has worked on Mogilevich's case since 1997. "Here’s a guy who managed to defraud investors out of $150 million without ever stepping foot in the Philadelphia area."

In 1998, the Village Voice reported on hundreds of previously classified FBI and Israeli intelligence documents. They placed Mogilevich, also known as "Brainy Don," as the leader of the Red Mafia, a notorious Russian mob family infamous for its brutality. Based in Budapest, members held key posts in New York, Pennsylvania, Southern California, and even New Zealand.

"He's the most powerful mobster in the world," Monya Elison, one of Mogilevich's partners in a prostitution ring, told the Voice. He claimed he's Mogilevich's best friend.

Geopolitical Influence

Arguably one of Mogelivich's most concerning characteristics is his influence in Europe's energy sector. With only a $100,000 bounty on his head, he controls extensive natural gas pipelines in Russia and Eastern Europe.

Right now, Russia supplies about 30% of Europe's gas. Ironically, the country's largest pipeline to the rest of Europe shares a name with the mob — Bratstvo.

Europe Gas

John Wood, a senior anti-money laundering consultant at IPSA International wrote an entire report on Mogelivich. According to his research, the Ukrainian-born Russian mobster had long planned his stake in Europe's gas.

In 1991, Mogilevich started meddling in the energy sector with Arbat International. For the next five years, the company served as his primary import-export petroleum company. Then, in 2002, an Israeli lawyer named Zeev Gordon, who represented Mogilevich for more than 20 years, created Eural Trans Gas (ETG), the main intermediary between Turkmenistan and Ukraine. Some reports show that Gordon registered the company in Ukrainian oligarch Dmitry Firtash's name.

After that, Russia’s energy giant Gazprom and Ukraine's Centragas Holding AG teamed up to establish Swiss-registered RosUkrEnergo (RUE) to replace ETG. Firtash and Gazprom reportedly roughly split the ownership of RUE.

In 2010, however, then prime minister of Ukraine, Yulia Tymoshenko, said she had "documented proof that some powerful criminal structures are behind the RosUkrEnergo (RUE) company," according to WikiLeaks. Even before, the press had widely speculated about Mogilevich's ties to RUE.

Dmitry FirtashReutersDmytro Firtash, one of Ukraine's richest men, (R) and Ukrainian President Viktor Yanukovich take part in an opening ceremony of a new complex for the production of sulfuric acid in Crimea region in April 2012.

Although Firtash has repeatedly denied having any close relationship with Mogilevich, he has admitted to asking permission from the mobster before conducting business in Ukraine as early as 1986, Reuters recently reported. At the request of the FBI, Firtash was arrested in Austria for suspicion of bribery and creating a criminal organization.

Mogilevich may even have a working relationship with Russian President Vladimir Putin, according to a published conversation between Leonid Derkach, the former chief of the Ukrainian security service, and former Ukrainian president Leonid Kuchma.

"He's [Mogilevich] on good terms with Putin," Derkach reportedly said. "He and Putin have been in contact since Putin was still in Leningrad."

A Free Man

In 2007, Mogelivich told BBC that his business was selling wheat and grain.

In 2008, however, Russian police arrested Mogelivich, using one of his many pseudonyms, Sergei Schneider, in connection with tax evasion for a cosmetics company, Arbat Prestige. Mogilevich ran that company with his partner, Vladimir Nekrosov. Three years later, the charges were dropped.

Considering the US doesn't have an extradition treaty with Russia, as long as Mogilevich stays within Putin's borders, the "boss of bosses" will likely remain a free man. He's believed to have Russian, Israeli, Ukrainian, and Greek passports.

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Tattoos

December 11, 2014, 6:59 am

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Fun facts

December 11, 2014, 7:01 am

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Mob grave stones

December 11, 2014, 7:02 am

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How the Russian mob got into Missouri fish eggs

December 16, 2014, 3:47 am

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Call it criminal caviar: Undercover U.S. officials spent two years infiltrating the black market in illegal paddlefish eggs in a sleepy Missouri town.

John Sleezer

A large female paddlefish will carry upwards of nine kilograms of roe. On the black market, 100 grams sells for about $40.

Andrew Praskovsky, a 42-year-old from Colorado, made a pilgrimage to his native Russia every year. But in April 2012, his trip was cut short when U.S. federal agents descended on him at the airport to seize contraband from his luggage.

Their booty?

More than 1.8 kilograms of illegally extracted paddlefish caviar from a sleepy stretch of the Osage River, just downstream from the Harry S. Truman Dam, about a two-hour drive southeast of Kansas City. At the time, the caviar would have fetched more than $2,500 on the retail market, and exponentially more if intentionally mislabelled.

Praskovsky was charged with trafficking and will go on trial in March. He was one of eight men arrested during “Operation Roadhouse,” an investigation led by U.S. Fish and Wildlife that looked more like a high-stakes drug-ring bust, complete with undercover agents.

The operation was the largest of its kind in the U.S., focusing on an area in Warsaw, Mo., known as the Roadhouse. Federal and state investigators set up a fake paddlefish snagging operation meant to target those interested in illegally purchasing fish roe.

The two-year investigation culminated in the issuing of more than 100 state citations relating to illegal and unlicensed paddlefish exploitation. The town of Warsaw, population 2,127, is the self-proclaimed paddlefish capital of the world. It has become the unlikely centre of a black-market trade in paddlefish roe as Caspian sturgeon — the traditional source of high-grade caviar — becomes critically endangered following years of exploitation.

“When the Soviet Union crashed, organized crime groups took advantage of it and became very powerful in the region,” says Yuliya Zabyelina, an assistant professor at John Jay College of Criminal Justice in New York. The profit funded the arms trade as well as human trafficking in the region.

This unregulated exploitation, however, has led to sturgeon’s near extinction and a moratorium being placed on fishing in the Northern Caspian, forcing these groups to set their sights elsewhere.

Of the eight men arrested, seven were from out of state, and all were originally from Eastern Europe.

American paddlefish — known by locals as spoonbill — is a freshwater species that shares common ancestry with Beluga sturgeon. It occupies slow-moving sections of the Missouri and Mississippi drainage basins.

The Osage River running through Warsaw is a hot spot for poachers because spawning fish are blocked upstream by a dam, dramatically increasing the chance of snagging an egg-bearing female.

Unlike neighbouring Oklahoma, Missouri’s regulations surrounding paddlefish snagging are also more liberal. Anglers are allowed to catch two fish per day during the season and can keep the roe for personal use.

In contrast, “in Oklahoma, folks take their fish to the (conservation) agency, and the agency will harvest the eggs, but keep them and return the prepared fish to the individual fisher and then the agency will sell the eggs,” says Larry Yamnitz of the Missouri Department of Conservation, who was a chief investigator in “Operation Roadhouse.”

Poaching paddlefish for the purpose of commercialization is illegal, as is the transport of paddlefish roe across state lines with the intention of selling it.

Paddlefish roe is attractive to traffickers because it can be processed into caviar similar in colour, size and texture to the prized caviar of the Caspian.

Though paddlefish roe does not fetch much, this changes dramatically when it is processed into caviar — 100 grams sells for about $40 on the black market and retails at more than three times that price. A large female paddlefish will carry upwards of nine kilograms of roe, with a potential value starting at $4,000. This soars when paddlefish caviar is mislabelled.

“The bulk of illegally poached caviar is being exported,” says Greg Conover, a representative of the U.S. Fish and Wildlife Service.

Officials believe the traffickers repackage paddlefish roe as a higher-grade, more expensive form of caviar.

“We have gathered people with empty caviar tins that are labelled as beluga Russian caviar, so you can put two and two together,” says Yamnitz.

It is sold in the U.S. or shipped to other countries, reaping huge profits that are recycled into other black-market endeavours.

“There is potentially an even greater market for caviar in Russia and Asia than in the U.S.,” says Phaedra Doukakis-Leslie, a professor from the Scripps Institution of Oceanography at UC San Diego, who has discovered intentionally mislabelled paddlefish roe through genetic sampling.

Exploiting paddlefish in this way points to organization and a “level of sophistication beyond someone going fishing in their backyard,” she says, adding that “it’s being done by people who have thought this out, who are able to get this to the market and who are able to get a good price for it.”

“Wildlife trafficking is a very lucrative business that organized crime groups are utilizing to gain funds. I definitely think any time you have high numbers of illegal trafficking in wildlife that there are ties to some type of organized crime,” says Yamnitz

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Scot Young was hung out of a window by Russian mafia because he owed them millions, friend claims

December 23, 2014, 8:47 am

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Friends reveal how Scot Young owed millions to the mafia and was in fear for his life when he fell to his death

Scot Young, the tragic tycoon, who died falling from his fourth storey London flat, owed millions of pounds to the Russian and Turkish mafia and was hung out of a hotel window by gangsters two years ago as a warning, a friend has claimed.

The body of the 52-year-old entrepreneur was discovered impaled on railings beneath his central London apartment on Monday afternoon.

Scotland Yard said it was not treating the death as suspicious, but one of his closest associates has rejected the idea that he would have taken his own life and has said he believes Mr Young was murdered over unpaid debts.

He claimed the father of two, who became embroiled in one of Britain’s costliest and most bitter divorces, was given a warning by the Russian mafia two years ago, when he was hung out of a window at the Dorchester Hotel on Park Lane.

The source said he was warned in no uncertain terms that next time he would be dropped if he did not come up with some money.

The man, who now fears for his own safety, and asked not to be identified, told the Telegraph: “I do not believe for one minute Scot committed suicide, my heart tells me he was killed. There is no way he would have jumped to his death.

“I knew him very, very well, we have been friends for over 20 years. We are all very scared about what might happen. I believe Scot was murdered.”

He went on: “Two years ago he was hung off the balcony of a hotel room at the Dorchester by Russian mafia he owed money to, before he went to prison. He never went back there after that. He owed a lot of money to the wrong sort of people.”

Other friends claimed Mr Young had confided in them as recently as last month, that he feared for his safety.

One source told the Daily Mail: “He was very worried, he said he knew someone was following him. Many of Scot's friends aren't surprised that he died.”

Mr Young, who at his peak was worth an estimated £400 million, claimed to have lost his entire fortune when a vast property deal in Russia, known as Project Moscow, collapsed in 2006.

During his divorce battle with ex-wife Michelle, he told the court that not only had his entire fortune been wiped out, but he had also been left with debts of £30 million.

Last January Mr Young was jailed after refusing to comply with a court order demanding that he reveal the extent of his assets.

While he had been suffering from depression and had twice been sectioned under the Mental Health Act, friends claimed had found happiness in recent years with his American born girlfriend, Noelle Reno, 30.

His friend said: “He was suffering from depression but he would not have done this. He was truly in love Noelle, he had asked her to marry him and they were going to wed next year. He idolised her. She wasn't with him for the money. He would have done anything for her.”

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US Imposes Human Rights Sanctions on 4 Russians

January 2, 2015, 7:16 am

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By THE ASSOCIATED

WASHINGTON — The U.S. has imposed sanctions on four Russians under a law targeting Russian human rights violators.

The action is the latest sign of Washington's worsening relationship with Moscow. In recent months, Russia has faced hard-hitting U.S. economic sanctions over its interference in Ukraine.

The State Department said the four men included the prime minister and another senior official of Russia's Chechen Republic. They cannot enter the U.S.; any U.S. assets they have are now frozen.

The sanctions are imposed under a law named after whistle-blowing Russian lawyer Sergei Magnitsky. He pointed to massive collusion between organized crime and a Russian government official in 2008. A year later he died of untreated pancreatitis in prison at age 37.

Thirty-four Russians are now included on the U.S. government's "Magnitsky list."

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Article 0

January 16, 2015, 9:00 am

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Could the Russian Mob Take Advantage of the Eurasian Economic Union?

The new bloc could allow more than just the free flow of goods, capital and labor.

By Jan Dulac

On the eve of the Eurasian Economic Union (EEU) summit, which took place on December 23in Moscow, Belarus President Alexander Lukashenko lashed out at Russia’s policy, calling it “silly and stupid.” His anger was at restrictions Moscow had imposed on certain imports from his country, along with many other points of friction between the two “brotherly” nations.

A few days earlier, Lukashenko had ordered customs checkpoints to be reinstated on the Belarusian-Russian border, and announced that bilateral trade would be carried out in U.S. dollars. Chairman of the Party of Patriots of Kazakhstan, Gani Kassymov, in turn, called on the government of Kazakhstan to “postpone the introduction of the Eurasian Economic Union norms for a year, to a time Russia’s economic situation recovers. Kazakhstan cannot maintain economic fraternity with Russia following the latter’s economic collapse. The Russian crisis will deteriorate the economic situation in Kazakhstan and Belarus.” Kazakhstan is already feeling the chill: imports from Russia are now worth $17.7 billion, whilst Kazakh exports are worth $5.8 billion (following a 21 percent decline in Kazakh exports in the first half of 2014, compared to the same period in 2013).

All this seems bad enough, but most experts and observers, let alone the public, have failed to focus on one crucial point: the EEU won’t just allow the cross-border free flow of goods, capital and labor; Belarus and Kazakhstan will now also be exposed to Russian organized crime, penetrating the countries’ businesses and government structures, which have hitherto been under the tight control of authoritarian leaderships.

In Belarus, the common feeling is that the streets and avenues of Minsk are clean and well-kept, medical services are fine, and policemen are “real” – not like Russia’s bent cops. The concern about what might happen may explain why Lukashenko, when faced with Moscow’s ban on Belarusian meat and dairy products, bluntly questioned Putin’s ability to fight “crooks feathering their nests” off bilateral trade. Or, he assumed, perhaps Moscow was using a combination of politics, shady schemes and “internal forces” as foreign policy instruments.

Astana has a lot to lose as well. In spite of all the ups and downs of Kazakhstan’s transformation to a market economy, the nation has risen 47th place on the World Bank’s Competitiveness Index and 50th place in the Ease of Doing Business rating. Red tape is consistently being cut, thanks to the effective implementation of the e-government concept: Kazakhstan has climbed to 28th place in the UN e-government ranking. Most importantly, the mindset of the majority of Kazakh citizens is market-oriented. Kazakhstan’s entrepreneurs have already become accustomed to working under more or less civilized rules. President Nursultan Nazarbayev claims his nation is ranked among the world’s 20 most attractive countries for foreign investment.

Russian organized crime groups have long been known for taking advantage of economic and social crises and reforms to increase their influence and wealth. And any initiatives by Russian criminals to get in touch with their counterparts in Kazakhstan, to prepare the ground for the common market, may well find that the soil is fertile. While Kazakhstan gradually climbs the business and investment climate rankings, it is making much slower progress in the fight against corruption – according to Transparency International, the country ranked 126th in the Corruption Perceptions Index in 2014, compared to 140th in 2013.

By Putin’s definition, a “fifth column” means internal forces serving Western interests and undermining stability in Russia. However, popular opinion is that Russian oligarchs, merged with criminal groups, play the same role in advancing Moscow’s interests in its near abroad, as in Ukraine. Nobel Laureate Paul Krugman’s observed that “Putin’s Russia is an extreme version of crony capitalism, indeed, a kleptocracy in which loyalists get to skim off vast sums for their personal use.” Not surprisingly, then, many Belarusians and Kazakhs see and fear the political consequences of the EEU, especially against the backdrop of the Ukrainian crisis.

Jan Dulac is a freelance writer, based in Astana, Kazakhstan.

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Austrian police detain Russian suspect in multiple killings

January 20, 2015, 8:56 am

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MOSCOW, January 19 /TASS/. Aslan Gagiyev, a native of North Ossetia who has been detained in Austria, used to head an organized crime group, which is believed to stand behind the murders of Vladikavkaz Mayor Vitaly Karayev and North Ossetian Vice-Premier Kazbek Pagiyev, Vladimir Markin, a spokesperson for the Russian Investigative Committee, told TASS on Monday.

Earlier on Monday, the Austrian police reported the detention in Vienna of a native of North Ossetia whom Russia accuses of committing six murders in its territory.

“On January 17, the competent bodies of the Austrian Republic detained Aslan Gagiyev, the head of an organized crime group who was on the international wanted list,” Markin said.

“A criminal organization set up and headed by Aslan Gagiyev began its activities in 2004. It had more than 46 members who committed more than 40 murders and made encroachments and homicide attempts on law enforcers in the territories of Moscow, the Moscow region and the Republic of North Ossetia-Alaniya,” Markin stressed.

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Russian Mobster with Fake Bulgarian Passport Arrested in Vienna

January 21, 2015, 11:20 am

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Austrian police have arrested a 44-year-old Russian national wanted for six counts of murder.

Aslan G., the alleged head of a Russian organized crime ring involved in the murders of politicians and senior officials, was arrested at Vienna's main train station on Saturday, according to reports of Die Presse and Der Standard.

He did not resist arrest.

He was found to have a forged Bulgarian passport.

Aslan G., (Aslan Gagiev, according to reports of The Local Austria), faces charges of shooting dead at least six people and injuring three others in the period 2012-2013.

He is to be extradited to Russia.

Interpol Moscow had issued an international arrest warrant for him in mid-December 2014, informing the Austrian authorities that he might be living there.

The crime ring is believed to have carried out more than 40 assassinations since 2004, most of them in the region of Moscow and in the North Caucasus, according to Die Presse (Der Standard informs that the crime group is held responsible for about two dozen murders).

According to Die Presse, the crime group consisted of 46 members, 15 of whom are already serving long prison sentences, according to local police.

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Austrian police apprehend alleged Russian mafia murderer

January 23, 2015, 8:08 am

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Austrian police apprehend alleged Russian mafia murderer

Austrian investigators from the Federal Criminal Police Office arrested a Russian man accused of murdering at least six people as part of mafia activities, at the Vienna Central Station on Saturday.

The 44-year-old suspect known as "Aslan G." had been wanted by Interpol Moscow through an international arrest warrant, the Federal Criminal Police Office said in a statement over the arrest Monday.

The suspect is alleged to have been involved in mafia activities of a violent nature, taking over the leadership of his gang following the life imprisonment of his older brother, moving from expensive car theft to the illegal liquor production business in Russia.

He is accused of executing six people and leaving a further three seriously injured, including the mayor of the town of Vladikavkaz in 2008, along with other high-ranking government and security officials.

Russian police cracked down on the gang in October 2013 following public outcry, upon which they were busted, a weapons arsenal seized, and police uniforms found. It later became clear however that the gang leader had fled to Vienna.

Despite having a fake Bulgarian passport on him, the suspect, who had been surprised over the arrest but offered no resistance, admitted his true identity immediately. He was transported to prison in Josefstadt, from where he will be extradicted

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Spy murdered for threatening to expose ties between Vladimir Putin and organized crime, inquiry told

February 2, 2015, 8:32 am

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Gordon Rayner and Tom Whithead, The Telegraph

Vladimir Putin is a “common criminal dressed up as a head of state” who allegedly ordered the murder of Alexander Litvinenko to stop the former spy exposing him, the inquiry was told.

Former Russian spy Alexander Litvinenko poisoned with polonium not once, but twice, lawyers say

Former Russian agent Alexander Litvinenko was poisoned with radioactive polonium not once but twice, a British judge was told Tuesday, as an inquiry opened into the slaying one lawyer called an act of nuclear terrorism ordered by Moscow.

Ben Emmerson, attorney for Litvinenko’s widow, said the KGB spy turned Kremlin critic was the victim of an “assassination by agents of the Russian state.”

He said the 2006 killing “was an act of nuclear terrorism on the streets of a major city which put the lives of numerous other members of the public at risk.”

Litvinenko was murdered for trying to reveal Putin’s close links to organized crime and a cabal of crime lords who prop up his corrupt regime, it was claimed.

Queen’s counsel Ben Emmerson, representing the Litvinenko family, said the trail behind the “act of unspeakable barbarism” led directly to the Russian president’s door.

Emmerson said that Russia was a “Mafia state” where the “intimate relationships” between the Kremlin and Russian organized crime syndicates around the world were so close as to be “effectively indistinguishable.”

Litvinenko could even identify crimes committed or authorized by Putin personally, it was claimed.

The seeds of hatred that Putin had towards his former agent which would eventually lead to the murder were first sown in clashes more than eight years before, the inquiry was told.

Putin was a “ruthless and deadly enemy” and “we find Mr. Putin’s fingerprints as clearly as we find the traces of nuclear material in the forensic evidence,” he said.

In his opening statement, Emmerson said: “Vladimir Putin should be unmasked by this inquiry as nothing more or less than a common criminal dressed up as a head of state.”

“The startling truth which will be revealed by the evidence in this inquiry is that a significant part of Russian organized crime is organized directly from the offices of the Kremlin. Vladimir Putin’s Russia is a Mafia State.”

Litvinenko accused Putin of his murder from his deathbed in what Emmerson described as a “political assassination.” He said there was “not the slightest doubt” that he was murdered by suspects Andey Lugovoy and Dmitry Kovtun and on the orders of Putin.

“He had to be eliminated – not because he was an enemy of the Russian State itself or an enemy of the Russian people – but because he had become an enemy of the close-knit group of criminals who surround Vladimir Putin and keep his corrupt regime in power,” he said.

The history between Putin and Litvinenko began in 1997 when the latter – still a Federal Security Service (FSB) agent – was given orders to kill Russian oligarch Boris Berezovsky, Queen’s counsel Robin Tam, counsel to the inquiry said.

Litvinenko thought it “improper” and the following year met Putin – then head of the FSB – to urge him to call off the assassination.

He went on to stage a televised press conference where he revealed the story, reporting the order to kill Berezovsky and denouncing corruption in the Russian intelligence service.

Tam said: “Is it possible that Litvinenko’s actions in Moscow on that day in November 1998 led to him being poisoned in London eight years later?”

Once in Britain, Litvinenko became an outspoken critic of Putin.

He also accused the Russian president of ordering the murder of Anna Politkovskaya, a journalist.

In a direct message to Putin made from his death bed, he said: “You may succeed in silencing one man but the howl of protest from around the world will reverberate, Putin, in your ears for the rest of your life.”

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Former Russian spy Alexander Litvinenko may have been poisoned twice

February 2, 2015, 8:33 am

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By ALEXANDRA ZAVIS

Long-awaited probe into ex-KGB officer's death via radioactive poisoning gets underway in London

Former Russian spy Alexander Litvinenko 'was poisoned with polonium not once, but twice,' inquiry is told

Alexander Litvinenko was killed for trying to expose Putin's 'mafia state,' lawyer for British inquiry says

The former Russian spy Alexander Litvinenko may have survived a previous poisoning attempt before a lethal dose of polonium was slipped into his tea at a London hotel, a long-awaited judicial inquiry into his death was told Tuesday.

The former KGB officer, an outspoken critic of Russian President Vladimir Putin, was living in Britain and doing consultancy work for the British intelligence service MI-6 when he met two Russians for a drink at the Millennium Hotel in November 2006. Weeks later, he suffered an agonizing death, apparently from the effects of radiation poisoning.

The strange case soured relations between Britain and Russia for years. On his deathbed, Litvinenko claimed that he had been poisoned on Putin’s orders.

Russia has denied the claim and has refused to extradite the two men identified by Britain as the prime suspects, Dmitry Kovtun and former KGB agent Andrei Lugovoi. They have been invited to give evidence to the inquiry via video link from Russia.

On the opening day of the inquiry into Litvinenko's death, lawyer Robin Tam said evidence would be heard that the Russian dissident "was poisoned with polonium not once, but twice."

Litvinenko had complained of feeling ill around the time of another meeting with Kovtun and Lugovoi at a security company in mid-October, a couple of weeks before he was hospitalized, Tam said, according to British news reports. Tam is counsel to the inquiry.

Britain’s decision to open a public investigation led by a senior judge came after a separate official inquest into Litvinenko’s death collapsed. The judge in the earlier proceedings said that the inquest was not equipped to deal with potential issues of national security.

Ben Emmerson, a lawyer representing Litvinenko’s family at the inquiry, said that he was killed for trying to expose Putin’s “mafia state.”

“He had provided information to officials in this country, in Italy and in Spain who were investigating Russian organized crime syndicates and their relationship to the Kremlin,” Emmerson was quoted as saying Tuesday by Britain’s Telegraph newspaper. “And he had exposed a number of crimes committed or authorized by Mr. Putin personally.”

“He had to be eliminated – not because he was an enemy of the Russian state itself or an enemy of the Russian people – but because he had become an enemy of the close-knit group of criminals who surround Vladimir Putin and keep his corrupt regime in power.”

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Putin’s Polonium-Poison Revenge on ex-Spy Laid Bare in UK Inquiry

February 2, 2015, 8:33 am

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Details of the defector Alexander Litvinenko’s gruesome death in 2006 finally get aired in a public hearing. Thousands of innocents were put at risk.

LONDON — Vladimir Putin was today accused of running Russia like a reckless mob boss, ordering an international act of nuclear terrorism that risked thousands of lives as part of a personal vendetta.

The allegations against him and his murderous “Mafia state” were made at the start of a public inquiry into the death of a Russian dissident who was assassinated in London with radioactive poison.

Alexander Litvinenko, a former Russian spy who defected to Britain, died in November 2006 after drinking a cup of tea laced with Polonium-210 at an upmarket hotel near Buckingham Palace.

The High Court judge presiding over the inquiry said classified evidence had already established that there was a “prima facie case” linking the Russian state to the murder of Litvinenko, whose death after he swallowed the rare radioactive isotope was slow and agonizing.

Ben Emmerson, the lawyer representing Litvinenko’s widow, who has been granted access to secret intelligence files, said he would show that Putin and his associates had ordered the assassination of a man who was working with the British authorities.

“He had to be eliminated—not because he was an enemy of the Russian state itself or an enemy of the Russian people—but because he had become an enemy of the close-knit group of criminals who surround Vladimir Putin and keep his corrupt regime in power,” said Emmerson.

The Litvinenko family claims “Sasha”—as he was known to his friends—became a target for Putin when he quit the FSB, the renamed successor of the KGB, and began to speak out against its brutal and illegal operations. Head of the FSB at the time? Vladimir Putin.

Litvinenko’s outspoken attacks on Putin continued until he escaped Russia on a forged passport while he was awaiting trial. The U.S. reportedly turned down his attempt to defect, but he made it to London and succeeded in claiming asylum.

The poisonous trail would act “like the breadcrumbs left by Hansel and Gretel.”

From what he saw as the relative safety of London, he renewed his attacks on Putin. He wrote a book claiming that the Russian apartment bombings that presaged the Chechen War in 1999 were an FSB false flag operation, not the work of Chechen terrorists.

He claimed Putin had links to Russian organized crime, and that the president was responsible for the murder of Anna Politkovskaya, a pioneering, dissident journalist killed shortly before Litvinenko was poisoned. The claims showed no sign of slowing down until he was taken ill at the start of November 2006. He was dead three weeks later. His body was so permeated with radioactivity that he was buried inside a lead-lined coffin at Highgate cemetery, in North London (also, as it happens, the last resting place of Karl Marx).

On his death bed, Litvinenko’s accusations continued. “As I lie here I can distinctly hear the beating of wings of the angel of death,” he said. “You may succeed in silencing one man but the howl of protest from around the world will reverberate, Mr. Putin, in your ears for the rest of your life.”

Emmerson told the public inquiry that Litvinenko’s final allegation would be proved beyond doubt. “When all the open and closed evidence is considered together Mr. Litvinenko’s dying declaration will be borne out as true—the trail of polonium traces leads not only from London to Moscow but directly to the door of Mr. Putin’s office,” he said. “Vladimir Putin should be unmasked by this inquiry as nothing more or less than a common criminal dressed up as a head of state.”

The judge heard that Litvinenko began working for Britain’s foreign intelligence agency, MI6, in 2003. In exchange for information about the inner workings of Moscow and the FSB, his handler “Martin” would arrange consultancy fees to be paid into his bank account.

Before he was killed, Litvinenko had also been working with the Spanish authorities who were planning to bring a court case that would expose the links between a criminal organization known as the Tambov-Malyshev gang and the Kremlin.

“He was killed, we say, partly as an act of political revenge for speaking out, partly as a message of lethal deterrence to others, and partly in order to prevent him from giving evidence as a witness in a criminal prosecution in Spain—a prosecution that could have exposed President Putin’s link to an organized crime syndicate,” Emmerson said.

The inquiry heard that Litvinenko had survived at least two other assassination attempts including one in 2004 when his home was firebombed by two Chechen men.

The British authorities believe that Litvinenko eventually succumbed to an assassination attempt by one man named as Dmitri Kovtun and another named as Andrei Lugovoi, a former KGB bodyguard. Litvinenko met with the men in London on two occasions that fall. It emerged today that postmortem examinations of Litvinenko’s hair revealed that he was exposed to the radioactive polonium isotope on two occasions.

Robin Tam, a lawyer acting for the inquiry, said Litvinenko had remembered feeling sick at around the time of their first meeting in mid-October. “Mr. Litvinenko recalled vomiting on one occasion about two or three weeks before being hospitalized,” Tam said. “It suggests two things—attempts to poison Mr. Litvinenko were made at both meetings and that those attempts met with some success on both occasions.”

Tam said the discovery of traces of polonium at different places across London had resulted in a public safety alert. “Many thousands of members of the public, including British residents and visitors from overseas, might have been at risk from radioactivity,” he said.

The inquiry heard that the only facility in Russia where polonium-210 is produced is Avangard, a nuclear laboratory owned by the Russian Federal Atomic Agency. “This was clearly a professional assassination which was meant to leave no trace,” said Emmerson. “This was not some ham-fisted hit by a criminal gang.”

He said polonium was used because the Russians thought it would leave no trace. The radioactivity was only discovered when police acted on a hunch and called in scientists from the Atomic Weapons Establishment. Once they knew what they were looking for, the poisonous trail would act “like the breadcrumbs left by Hansel and Gretel.”

Lugovoi and Kovtun have been invited to give evidence via satellite link at the inquiry, which is scheduled to last ten weeks. Both men deny any involvement and remain in Russia, where they have become minor celebrities

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The Rise of the Russian Mafia Myth

February 2, 2015, 8:33 am

≫ Next: Poisoned KGB Agent Said Putin Has A 'Good Relationship' With One Of The World's Top Mobsters

≪ Previous: Putin’s Polonium-Poison Revenge on ex-Spy Laid Bare in UK Inquiry

By Mark Galeotti

It probably reflects the current heightened tensions between Russia and the West, a time when many are willing to believe the very worst about Russians, that I have also noticed an upswing in queries coming my way about "Russian mafiosi." How powerful are they, how closely do they work with the state, how great a threat are they abroad?

The trouble is that often these are not Russians, and very rarely can they actually be considered a mafia. The clumsy stereotypes this demonstrates also says something about how the West sometimes gets Russia wrong.

Sometimes the gangsters are Russian passport holders, to be sure, but of non-Russian ethnicity. One such was Aslan Gagiyev, the North Ossetian gang leader arrested in Vienna on Jan. 17. Often, though, they are not even that — a "Russian mafia" in the United States or Europe, for example, will often turn out to be made up of Armenians, Georgians, Ukrainians or Belarussians. The official U.S. law enforcement term is now "Eurasian organized crime," but "Russian" is still widely used as a catch-all for everyone from Azeris to

Not surprisingly, then, their relationship with the Russian authorities will also be varied and often conflicted. Russia undoubtedly has a serious problem with corruption, and the interpenetration of business, crime and politics. There is likewise evidence of, from time to time, active links between government agencies and organized crime. Many of the "self-defense forces" which cropped up in Crimea alongside the Russian "polite people" appear to have been drawn from the heavies of local gangs, for example.

Corruption is not a Russian monopoly, though. More to the point, the relationship is complex. Connections tend to be several times removed: A powerful businessman calls in a favor from a local governor, for example, on behalf of a client, who in turn is in bed with organized crime. It is not as if Russia's kingpins are lining up outside the Duma or the Kremlin with suitcases of cash and wish lists.

It also obscures the fact that law enforcement continues. Russia is not a country that can simply be characterized as a "mafia state." There are honest police officers and judges out there trying to do their jobs, even if admittedly not always in favorable conditions. The arrest of the aforementioned Gagiyev, for instance, followed a joint operation between the Russian and Austrian authorities.

Then let's consider that troubling word "mafia." There is a whole criminological literature on what distinguishes a "mafia" from other forms of organized crime, but in general use it has all kinds of implications.

A "mafia" is a close-knit gang, a ruthless hierarchy with a godfather at the top, his lieutenants below and foot soldiers at the bottom, like some underworld army. There is mistrust, but also loyalty, maybe some kind of code of behavior, honor among thieves.

Frankly, you'd be hard pressed to find this within much Western organized crime these days, but Russian organized crime is even more postmodern. The big organizations, such as the infamous and transnational Solntsevo, are loose networks of local gangs, criminal businessmen and autonomous groups that form and reform as opportunities open and close.

The days of the thieves' code, of strict adherence to the ponyatiya ("codes") are long gone. Especially among ethnic Russians, only essentially local — city, town or neighborhood — gangs retain any strong hierarchical basis.

So talk of the "Russian mafia" then says several things about how the West looks at Russia, especially now.

It tends to assume homogeneity where there is actually bewildering variety. All of Eurasia is still too often "Russia" and a range of different criminal actors, operations and subcultures are treated as one and the same.

Second, it reinforces a notion that whatever comes out of Russia and Eurasia is somehow specially and uniquely dangerous. Yes, organized crime in the region is violent and vicious, but set alongside the gangs of Mexico or Brazil, the Italian Camorra or the American MS-13, they might almost seem models of decorum.

Third, and perhaps most importantly, it sees organization and long-term strategy where there is often just anarchy and opportunism.

This is also very much a theme of Western perspectives on current policy, especially on Ukraine, where the usual cliches — such as Putin the "chess grandmaster" or the "judo black belt"— are deployed to present the Kremlin as a sinister strategist.

In the West we have no problem seeing our own leaders as hapless victims of events, grasping at ad hoc measures to avoid tough and unpopular decisions, or driven by prejudice and simplistic assumptions. Yet somehow we tend at the same time to ascribe deeper, subtler and more deliberate designs to our rivals.

At a time when there is a widening gap between Russia and the West, it is comforting to use every opportunity to demonize the other side. But just as in the West we are dismayed to see glib and inaccurate talk of "Nazis" and "imperialists" being mobilized by Russian nationalists, the idiom of talk of the "Russian mafia" demonstrates a degree of caricature on the other side, too.

Mark Galeotti is professor of global affairs at New York University.

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Poisoned KGB Agent Said Putin Has A 'Good Relationship' With One Of The World's Top Mobsters

February 2, 2015, 8:36 am

≫ Next: Spy Murder Probe Likely to Further Strain British-Russian Relations

≪ Previous: The Rise of the Russian Mafia Myth

CHRISTINA STERBENZ

Before his death by poisoning, ex-KGB spy Alexander Litvinenko, recorded a tape.

In it, he claims that Russian President Vladimir Putin had a “good relationship” with one of the most notorious mobsters in the world, a Ukrainian man named Semion Mogilevich.

The Federal Bureau of Investigation believes that Mogilevich, one of the top 10 most wanted fugitives, has spent the last few decades trafficking drugs, trading nuclear material, and orchestrating contract murders and international prostitution.

Indicted in 2003 for countless fraud charges, Mogilevich now primarily lives in Moscow. His location allows him to maintain close ties to the Bratva, or The Brotherhood, aka the Russian mob.

The ‘Boss Of Bosses’

A 5’6″ and a portly chain smoker, Mogilevich is known as “boss of bosses” in one of the biggest mafia states in the world.

In 1998, the FBI released a report naming Mogilevich as the leader of an organisation with about 250 members. Only in operation only four years, the group’s main activities included arms dealing, trading nuclear material, prostitution, drug trafficking, oil deals, and money laundering.

Between 1993 and 1998, however, Mogilevich caught the FBI’s attention when he allegedly participated in a $US150 million scheme to defraud thousands of investors in a Canadian company, YBM Magnex, based just outside Philadelphia, which supposedly made magnets. With his economics degree and clever lies, Mogilevich forged documents for the Securities and Exchange Commission that raised the company’s stock price nearly 2,000%.

When asked about YBM by BBC in 2007, Mogilevich replied: “Well if they found old-fashioned hanky panky [i.e., suspicious activity], it’s up to them to prove it. Unfortunately, I don’t have access to FBI files.”

“What makes him so dangerous is that he operates without borders,” said Special Agent Peter Kowenhoven, who has worked on Mogilevich’s case since 1997. “Here’s a guy who managed to defraud investors out of $US150 million without ever stepping foot in the Philadelphia area.”

In 1998, the Village Voice reported on hundreds of previously classified FBI and Israeli intelligence documents. They placed Mogilevich, also known as “Brainy Don,” as the leader of the Red Mafia, a notorious Russian mob family infamous for its brutality. Based in Budapest, members held key posts in New York, Pennsylvania, Southern California, and even New Zealand.

“He’s the most powerful mobster in the world,” Monya Elison, one of Mogilevich’s partners in a prostitution ring, told the Voice. He claimed he’s Mogilevich’s best friend.

Geopolitical Influence

Arguably one of Mogelivich’s most concerning characteristics is his influence in Europe’s energy sector. With only a $US100,000 bounty on his head, he controls extensive natural gas pipelines in Russia and Eastern Europe.

Right now, Russia supplies about 30% of Europe’s gas. Ironically, the country’s largest pipeline to the rest of Europe shares a name with the mob — Bratstvo.

After that, Russia’s energy giant Gazprom and Ukraine’s Centragas Holding AG teamed up to establish Swiss-registered RosUkrEnergo (RUE) to replace ETG. Firtash and Gazprom reportedly roughly split the ownership of RUE.

In 2010, however, then prime minister of Ukraine, Yulia Tymoshenko, said she had “documented proof that some powerful criminal structures are behind the RosUkrEnergo (RUE) company,” according to WikiLeaks. Even before, the press had widely speculated about Mogilevich’s ties to RUE.

“He’s [Mogilevich] on good terms with Putin,” Derkach reportedly said. “He and Putin have been in contact since Putin was still in Leningrad.”

A Free Man

In 2007, Mogelivich told BBC that his business was selling wheat and grain.

Considering the US doesn’t have an extradition treaty with Russia, as long as Mogilevich stays within Putin’s borders, the “boss of bosses” will likely remain a free man. He’s believed to have Russian, Israeli, Ukrainian, and Greek passports.

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Spy Murder Probe Likely to Further Strain British-Russian Relations

February 5, 2015, 5:25 am

≫ Next: Police Say 'Only' 8 Mob Bosses Remain in Moscow

≪ Previous: Poisoned KGB Agent Said Putin Has A 'Good Relationship' With One Of The World's Top Mobsters

Henry Ridgwell

LONDON—

With relations between Russia and the West spiraling to new lows over Ukraine, bilateral ties between London and Moscow themselves are becoming more strained as the inquest into the murder of a former Russian spy gets underway.

A judge this week began hearings into the death of Alexander Litvinenko, who died in 2006 after ingesting polonium-210, a highly radioactive isotope.

British investigators have accused two Russians of poisoning Litvinenko’s tea at a London restaurant. The two men, one of whom is now a member of Russia’s parliament, have repeatedly denied involvement. Moscow has refused British requests to extradite them, citing constitutional restrictions.

Litvinenko had fled to Britain in 2000 after making sensational accusations about terrorist bombings in Russia. On his deathbed, he accused Russian President Vladimir Putin of ordering his assassination.

Ben Emmerson, a lawyer for the Litvinenko family, told the panel earlier this week that Litvinenko’s death was an act of terrorism.

“It is and was an act of nuclear terrorism, on the streets of a major city, which put the lives of numerous other members of the public at risk,” he said.

“The startling truth which will be revealed by the evidence in this inquiry is that a significant part of Russian organized crime is organized directly from the offices of the Kremlin,” he said.

The British government originally rejected holding an inquiry, partly on the ground that it could damage relations with Russia. The inquiry will take evidence for eight weeks, and observers expect more damaging accusations to emerge against the Russian government.

Litvinenko’s widow, Marina, said Russia’s actions in Ukraine demonstrate Moscow’s willingness to order her husband’s murder.

Also this week, Royal Air Force fighter jets intercepted two Russian long-range bombers, known as Tu-95 “Bear” bombers, close to British airspace, prompting authorities to summon Moscow’s ambassador to complain.

Similar Russian flights have become more frequent, not only near Britain but also near American airspace and that of other NATO allies since the conflict erupted in Ukraine last year.

Elizabeth Quintana, an analyst with the Royal United Services Institute, said the Russian aircraft normally skirt Britain's far northern airspace. This time, the flight path was different, she said.

“They were right down on the south coast over the Channel between the UK and France. Also, they were flying without their transponders on … there was particular concern because that means they would have crossed very heavy trans-Atlantic traffic,” she said.

She said Moscow could have directed its bombers toward Britain in response to the Litvinenko inquiry.

Both the West and Russia, she said, “are probing each other’s defenses, testing how quickly they react, seeing if there are any weaknesses. And also signaling to each other, signaling discontent.”

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Police Say 'Only' 8 Mob Bosses Remain in Moscow

February 5, 2015, 3:15 pm

≫ Next: How HSBC Got Rich Off Russian Corruption

≪ Previous: Spy Murder Probe Likely to Further Strain British-Russian Relations

At least eight mob bosses currently reside in Moscow, with many of the 44 registered having been chased out of the city, a police representative said Thursday.

"Different sources offer different information about how many mob bosses are in Moscow. A total of 44 are registered, but only eight actually live on the territory of Moscow," Mikhail Gusakov, deputy head of the Interior Ministry's manhunt unit, was cited as saying by Interfax news agency on Thursday.

Some of those registered live outside of Russia or Moscow, he said, while others have already been prosecuted for their crimes, Interfax reported.

Gusakov noted that in 2014 nine mob bosses were brought to justice, Interfax reported.

In late December, the Rosbalt news agency said "several dozen" mob bosses had converged in Moscow for the largest meeting of the criminal underworld in years.

Moscow has been the scene of many high-profile mob hits, including the 1990s-style assassination of Aslan Usoyan, better known as Grandpa ("Ded") Khasan, in 2013. Usoyan was killed by a sniper in broad daylight while exiting a restaurant in central Moscow, triggering fears of a gangland war erupting in the city.

The phenomenon of "vory v zakone," or thieves-in-law, gained momentum with the fall of the Soviet Union, when the leaders of prison groups in the gulags established a flourishing black market that exploited the instability of the new government. Russia's biggest organized crime organizations comprise Georgians, Armenians and Azeri nationals.

In its heyday in the late '90s, Russia's various organized crime factions had such great reach that then-director of the FBI Louis Freeh described the Russian mafia as the greatest threat to U.S. national security, though he later retracted the claim, the BBC reported.

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How HSBC Got Rich Off Russian Corruption

February 13, 2015, 5:27 am

≫ Next: State Department offers $3 million for Russian hacker

≪ Previous: Police Say 'Only' 8 Mob Bosses Remain in Moscow

The London-based bank played both sides in the Hermitage-Gazprom showdown. Maybe it wasn’t illegal—but it certainly was scummy.

HSBC has found itself mired in international scandal after a massive leak by a former employee revealed how the London-based bank’s private Swiss subsidiary took deposits between 2005 and 2007 from warlords, arms traffickers, drug dealers, dictators and a host of politicians past and present. The exposé, published by French newspaper Le Monde and the International Consortium of Investigative Journalists (ICIJ), documents around 30,000 accounts with a collective worth of nearly $120 billion.

Highlighted in the disclosures are “the bank’s dealings with clients engaged in a spectrum of illegal behavior, especially in hiding hundreds of millions of dollars from tax authorities,” as ICIJ reported on Sunday.

There’s a prominent Russian aspect to the story as one of the named depositors is billionaire oligarch (and personal friend of Vladimir Putin) Gennady Timchenko, who was sanctioned by the United States in March 2014 for his role in providing “material or other support to” Russian government officials. (There’s a rumor that sometime in the 1990s, Putin and Timchenko, who holds Finnish citizenship, were arrested in Helsinki for drunk and disorderly conduct; a rap sheet is said to exist with the two men’s mug shots.)

Timchenko’s designation carried the blockbuster revelation that Gunvor, the Swiss commodities trader he co-founded, was itself a vehicle for Putin’s personal self-enrichment: “Putin has investments in Gunvor,” the U.S. Treasury notice stated, “and may have access to Gunvor funds.” Not long before the sanctions were announced, Timchenko, who is worth an estimated $14.1 billion, was said to have divested his stake in Gunvor. Then, in November 2014, it was announced that the U.S. Attorney’s Office for the Eastern District of New York, helped by the Justice Department, was investigating Timchenko for money laundering. In 2013, Reuters disclosed that Timchenko had hired lobby firm Patton Boggs to persuade the U.S. Export-Import Bank, the export credit agency of the U.S. government, to finance his purchase of up to 11 Gulfstream luxury jets—a deal that was eyebrow-raising at the time and is now rendered illegal by sanctions.

Timchenko wasn’t the only Russian keeping accounts with HSBC, however. As reported by the newspaper Vedomosti, Yury Kosarev, the former chairman of the Fund for Social Insurance and the deputy head of the Federal Health Care Agency, kept $2.5 million in the Swiss bank between 2006 and 2007. Pyotr Nizdelsky, Russia’s former deputy energy minister, placed deposits in the bank in 2004, the same year he quit government service. Along with his wife Lidiya Nidzelskaya, he held $11 million between 2006 and 2007, the leaked documents reveal.

The most intriguing Russian angle to the HSBC embarrassment involves Hermitage Capital, once the wealthiest investment fund in Russia and today known more for its crusading founder, Bill Browder, who has just released his memoir, Red Notice. The book details his years-long struggle with the Russian government, starting with his expulsion from the country in 2005, to the defrauding of Russian taxpayers of $230 million using stolen Hermitage companies, to the wrongful arrest and jailhouse murder of his tax attorney Sergei Magnitsky, who uncovered the theft and then fell victim to its perpetrators.

The interior and tax ministries, the Federal Security Service (FSB)—the successor to the KGB—and the Russian judiciary all joined in a conspiracy with a transnational organized crime syndicate to pull off this heist and murderous cover-up, which culminated with the posthumous “trial” of Magnitsky in 2013. (Browder was also tried in absentia and sentenced to nine years.) In 2012, Congress passed the Sergei Magnitsky Rule of Law Accountability Act, which aims to ban and freezes any stateside assets of Russian officials credibly accused of gross human-rights violations.

The Magnitsky affair is a 21st-century Kirov assassination or Reichstag fire in that it not only raised the curtain on Putin’s thermidor but seems to serve as a reference point to every major scandal or controversy involving state officials, including the sacking of former Russian defense minister Anatoly Serdyukov.

“They don’t care about the source of their money, even though in HSBC’s case, they knew quite well from Hermitage what Gazprom was up to.”

Before becoming persona non grata in Russia, as well as the target of its numerous attempts extradition attempts, Browder made a name for himself in Moscow by investigating corruption in major Russian companies—the biggest being Gazprom, the state-owned gas giant, which had sold off valuable gas fields between 1996 and 1999 for pittances. In one astonishing example, 53 percent of Sibneftegaz, a Gazprom subsidiary, was sold to a group of buyers—including the brother and nephew of Gazprom’s then-CEO Rem Vyakhirev—for 0.3 percent of its estimated cost. Browder’s discoveries not only caused a whirlwind in the financial press and markets, they also—initially—impressed Putin, who fired Vyakhirev in 2001 and replaced him with Alexei Miller, who runs Gazprom to this day.

As recounted in Red Notice, Hermitage Capital began as a partnership between Browder and Edmond Safra, the billionaire investor, in 1996. However, Safra, via his Republic National Bank, sold his stake in the fund in 1999—to HSBC, making the now embattled bank Browder’s new institutional partner as well as the administrator of Hermitage. Browder, a British citizen, leaned on Clive Bannister, the CEO of HSBC’s private bank, to help resolve his visa difficulties with Moscow. HSBC, Browder wrote, was “an enormous bureaucratic bank…wholly uninspiring when it came to moneymaking, but…world class when it came to dealing with the British establishment.” Nothing came of that effort, but it was the least the bank could do given that it would go on to recoup over $200 million from Browder’s fund in the subsequent two-year period: According toits own financial statements, HSBC made $117 million in 2006 and $108 million in 2007, all from the partial sale of Hermitage investments.

Nonetheless, during that same period, HSBC’s Swiss bank was only too happy to take deposits from Gazprom officials or their offspring. Farit Gazizullin, a company board member since 1998, was one. The former head of the Russian Ministry of State Property, he and his wife, according to Vedomosti, held $3.6 million in an HSBC account between 2006 and 2007. Vadim Sheremet, the son of Vyacheslav Sheremet, former deputy director of the management of Gazprom, “opened an account in the Swiss bank in July 2006, and from 2006-2007 maintained $10.4 million there. During the time when Gazprom was led by Rem Vyakhirev, Vadim Sheremet owned shares in several delivery and contract companies of Gazprom along with Vyakhirev’s children and then-prime minister Viktor Chernomyrdin,” the newspaper also noted.

This wasn’t illegal, it was just scummy.

“This is rather typical behavior of big banks,” said Tom Mayne, a campaigner with the London-based transparency watchdog Global Witness. “They don’t care about the source of their money, even though in HSBC’s case, they knew quite well from Hermitage what Gazprom was up to—ceding business to these mysterious intermediary companies without any reason to do so. For HSBC to then disregard that information and turn around and accept the money from the very people Hermitage was exposing seems very dubious. It’s like an arms dealer selling arms to both sides.”

Mark Galeotti, a specialist on Russia’s security services and the Russian mafia, agrees. “What this really demonstrates is that the parallel challenge to global organized crime is global organized malfeasance. There are so many activities which we would frankly think of as immoral but nonetheless a combination of laws not having caught up yet and financial institutions gleefully taking advantage of that opportunity. In the case of Russia, it’s a particular problem because what it means is for years we have complained about the opacity and corruption of the Russian system while making money off it and also facilitating it.”

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State Department offers $3 million for Russian hacker

February 26, 2015, 1:02 pm

≫ Next: In Annals Of Russian Crime, North Caucasians Remain Popular Scapegoat

≪ Previous: How HSBC Got Rich Off Russian Corruption

In a sign of the growing importance of cybersecurity to businesses and federal officials, the U.S. State Department offered up on Tuesday a massive reward for a Russian hacker already on the FBI's Cyber Most Wanted list.

Through its Transnational Organized Crime Rewards Program, State Department officials say they are offering "up to $3 million for information leading to the arrest and/or conviction of Evgeniy Mikhailovich Bogachev, a Russian national."

Officials say Bogachev goes by the online aliases "lucky12345" and "slavik."

According to their reward announcement, "Bogachev allegedly acted as an administrator in a scheme that installed malicious software on more than one million computers without authorization. The software, known as 'Zeus' and 'GameOver Zeus,' enabled contributors to the scheme to steal banking information and empty the compromised accounts, resulting in the theft of more than $100 million from U.S. businesses and consumers."

Hackers steal $1 billion from up to 100 banks

Last week, Russian security company Kaspersky Lab revealed that a hacking ring has stolen up to $1 billion from banks around the world. It is unclear if the two announcements are directly related.

The hackers involved in the larger heist have been active since at least the end of 2013 and infiltrated more than 100 banks in 30 countries, according to Kaspersky.

After gaining access to banks' computers through phishing schemes and other methods, they lurk for months to learn the banks' systems, taking screen shots and even video of employees using their computers, the company says.

Once the hackers become familiar with the banks' operations, they use that knowledge to steal money without raising suspicions, programming ATMs to dispense money at specific times or setting up fake accounts and transferring money into them, according to Kaspersky.

The hackers seem to limit their theft to about $10 million before moving on to another bank, part of the reason why the fraud was not detected earlier, Kaspersky principal security researcher Vicente Diaz said in a telephone interview with The Associated Press.

Bogachev, meanwhile, is believed to be at large in Russia.

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