Trying to UnderstandTrying to UnderstandRussian Criminal Groups (RCGs)Russian Criminal Groups (RCGs)Russian Criminal Groups (RCGs)Russian Criminal Groups (RCGs)

РусскиеРусские//Российскые ПРоссийскые Преступнреступные Группыые Группы ((РПГыРПГы))

International Serious Organized Crime ConferenceM lb O t b 2010Melbourne, October 2010

Ethan S. Burger, Senior LecturerCentre for Transnational Crime PreventionUniversity of Wollongong – Faculty of Law

ethansb@uow edu auethansb@uow edu auethansb@uow.edu.au ethansb@uow.edu.au

Should Australians Be Concerned Should Australians Be Concerned b t D l t i R i ?b t D l t i R i ?about Developments in Russia?about Developments in Russia?

Economic Relevance: Economic Relevance: –– Australia and Russia compete for export marketsAustralia and Russia compete for export marketsAustralia and Russia compete for export markets Australia and Russia compete for export markets (coal, oil and gas, iron ore, gold, alumina, nickel & (coal, oil and gas, iron ore, gold, alumina, nickel & wheat). wheat).

National Security Concerns:National Security Concerns:Financial Crime;Financial Crime; Illegal Weapons Exports; andIllegal Weapons Exports; and-- Financial Crime; Financial Crime; -- Illegal Weapons Exports; andIllegal Weapons Exports; and

-- Cyber Crime;Cyber Crime; -- other Transnational Crime.other Transnational Crime.

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Preliminary IssuesPreliminary IssuesPreliminary IssuesPreliminary Issues

When do anecdotes about criminal groups and criminalWhen do anecdotes about criminal groups and criminalWhen do anecdotes about criminal groups and criminal When do anecdotes about criminal groups and criminal activity become “data”?activity become “data”?A troubling view: Russia is a “A troubling view: Russia is a “criminal statecriminal state” [Edward ” [Edward L d D id S tt ] th t i l d if itL d D id S tt ] th t i l d if itLucas and David Satter] that is ruled as if it were a Lucas and David Satter] that is ruled as if it were a corporation [Yuri Felshtinsky and Vladimir Pribylovsky], corporation [Yuri Felshtinsky and Vladimir Pribylovsky], where the where the silovikisiloviki and/or “ments” and/or “ments” [Lev Ponomarev] and [Lev Ponomarev] and their reliable subordinates are both the managers andtheir reliable subordinates are both the managers andtheir reliable subordinates are both the managers and their reliable subordinates are both the managers and beneficiaries of the “system” [Leonid Nikitinsky]. beneficiaries of the “system” [Leonid Nikitinsky].

MY THESISMY THESIS: : the the line dividing line dividing Russian government Russian government S SS S ee e d d ge d d g uss a go e euss a go e eofficials, leading business figures and prominent criminals officials, leading business figures and prominent criminals is dynamic and is dynamic and not readily discernablenot readily discernable. Russian . Russian criminal/business organizations/governmental bodies cast criminal/business organizations/governmental bodies cast g gg gexpand abroad presenting new challenges for foreign law expand abroad presenting new challenges for foreign law enforcement.enforcement.

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Some General BackgroundSome General BackgroundSome General BackgroundSome General Background

In December 1991, the USSR disintegrates. Angry, idle former In December 1991, the USSR disintegrates. Angry, idle former soldiers and industrial workers contribute to a dramatic increase in soldiers and industrial workers contribute to a dramatic increase in economic and violent crime.economic and violent crime.

Large numbers of prisoners were suddenly released from Large numbers of prisoners were suddenly released from penitentiaries. penitentiaries. Annually 100,000 individuals Annually 100,000 individuals presently “graduate” presently “graduate” from crime school to refrom crime school to re--enter Russian society.enter Russian society.

Existing institutions collapsed, most people were not prepared for Existing institutions collapsed, most people were not prepared for the disappearance of the Soviet life style. Contemporary Russian the disappearance of the Soviet life style. Contemporary Russian youth were attracted to opportunities to make money quickly as youth were attracted to opportunities to make money quickly as y pp y q yy pp y q ysocietal ethics declined.societal ethics declined.

Many aggressive/ambitious government officials and Many aggressive/ambitious government officials and entrepreneurial take advantage of opportunities to obtain formerentrepreneurial take advantage of opportunities to obtain formerentrepreneurial take advantage of opportunities to obtain former entrepreneurial take advantage of opportunities to obtain former state assets, government contracts or property rights on VERY state assets, government contracts or property rights on VERY favorable terms. favorable terms. Those with the “right” contacts, ties to foreign Those with the “right” contacts, ties to foreign business entities and foreign language skills were the most business entities and foreign language skills were the most

f l i th i df l i th i dsuccessful in their endeavorssuccessful in their endeavors..44

The Disorderly Yeltsin YearsThe Disorderly Yeltsin YearsThe Disorderly Yeltsin YearsThe Disorderly Yeltsin Years

Widespread corruption makes the population more cynicalWidespread corruption makes the population more cynical and distrusting of law enforcement. Roughly 80% of businesses paid “protection” money to their “krysha” (roofs). Regular militia [police] deteriorates or is “privatized.”g [p ] p

Contract killings, bombings, and street crime become commonplace – such cases were rarely solved. Wage arrears situation leads to dramatic increase in loan-sharkingsituation leads to dramatic increase in loan sharking.

Criminals acquire most private banks and insurance companies using them to raise funds to acquire assets during privatization and to facilitate financial fraudsprivatization and to facilitate financial frauds.

Soviet era “thieves-in-law” [воры в законе, vory v zakone ] who were “Gulag” tested and trained products who were

l d i t th R i i t i RCG l kreleased into the new Russian society; emerging RCGs lack their “code of ethics”.

Contrast today where sophisticated RCGs recruit the “best y pand the brightest” and retained respected accounting and law firms. 55

The Myth of the Russian Mafia The Myth of the Russian Mafia (( фф ))((мафиямафия) )

Some “specialists” viewed RCGs either through the prism of p g porganized crime models or as a new manifestation of a “national security” threat.

In Russia the term “mafiya” [мафия] is used in every dayIn Russia, the term mafiya [мафия] is used in every day language to refer to the members of the country’s ruling/business elite (previously, it meant Communist party officials). Also used for criminal groups is “Bratva” [Братва] --l f "b th h d“slang for "brotherhood“.

In 1993, the Russian Ministry for Internal Affairs (MVD) estimated there were 5,000 RCGs in the country the , ymembership of which was believed to be approximately 100,000. Their members largely operated locally, although some engaged in int’l financial crimes and killings abroad.

March 2010, a story appearing in the journal “Nasha Versiya” stated that there were approximately 300,000 RCG members operating abroad – although others put the figure at closer to 500 000 Q h i d i th ti d h i b i500,000. Query: who is doing the counting and whom is being counted? 66

FBI TEN MOST WANTED FUGITIVEFBI TEN MOST WANTED FUGITIVEFBI TEN MOST WANTED FUGITIVEFBI TEN MOST WANTED FUGITIVE

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RCGs in AustraliaRCGs in Australia

Oleg Deripaska seeks larger stake in Australian the bauxite business g p gcustomers (17 April 2010, Weekend Australian (Finance).

The Federal Police says the majority of cyber crime committed in Australia is driven by Russian organized crime gang. For example,Australia is driven by Russian organized crime gang. For example, Cyber attacks of Multibet website and cyber extortion via Telstra's Alice Springs network (17 August 2009, ABC Transcript and (9 September 2009, ABC Premium News).Money laundering through real estate apparently on Gold coast (22 April 2008, The Australian).

Of th 200 l A t li d N Z l d i ti dOf the 200 large Australian and New Zealand organizations surveyed, 43% ranked cyber risks as their greatest worry, ahead of traditional crimes, terrorism and natural disasters combined. (25 February 2008, Canberra Times).Canberra Times).

Credit card fraud traced to Russian mobsters is on the rise (9 September 2007, The Sunday Mail).

Fed: The Russian mafia is Australia’s biggest security threat (22 November 2000, AAP General News (Australia)). Is there too much hype?

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Some RCGs Some RCGs TypologizedTypologized in the ‘90sin the ‘90syp gyp g

Solntsevskaya GroupSolntsevskaya Group –– now globally active although based andnow globally active although based andSolntsevskaya Group Solntsevskaya Group now globally active, although based and now globally active, although based and active in Moscow (primarily consisting of ethnic Russians). active in Moscow (primarily consisting of ethnic Russians).

Izmailovskaya Group Izmailovskaya Group –– also originally based in Moscow, but not also originally based in Moscow, but not active in Berlin Paris Miami New York Tel Aviv and Toronto; Itactive in Berlin Paris Miami New York Tel Aviv and Toronto; Itactive in Berlin, Paris, Miami, New York, Tel Aviv and Toronto; It active in Berlin, Paris, Miami, New York, Tel Aviv and Toronto; It engages in a range of activities including contract killing, extortion engages in a range of activities including contract killing, extortion and takeover of other businesses.and takeover of other businesses.

T b GT b G d i t t ti k t i St P t b Itd i t t ti k t i St P t b ItTambov Group Tambov Group ---- dominant protection racket in St. Petersburg. It dominant protection racket in St. Petersburg. It is involved in real estateis involved in real estate--related crimes, money laundering and related crimes, money laundering and some foreign crime activities.some foreign crime activities.

ObshinaObshina (Society) (Society) –– a hybrid criminala hybrid criminal--political entity, which used political entity, which used illegal proceeds to finance and arm Chechen separatists illegal proceeds to finance and arm Chechen separatists –– it is it is heavily involved in the drug trade.heavily involved in the drug trade.

Over time, these groups found “friends” in the federal, regional or Over time, these groups found “friends” in the federal, regional or local governments and frequently formed “connections” with local governments and frequently formed “connections” with foreigners (shills, shams & money laundering) to create the foreigners (shills, shams & money laundering) to create the

f l itif l itiappearance of legitimacy.appearance of legitimacy.

Organized Crime & the Financial SectorOrganized Crime & the Financial Sectorgg

In 2008, bank specialists estimated that there were only about 300 “real banks”In 2008, bank specialists estimated that there were only about 300 “real banks”In 2008, bank specialists estimated that there were only about 300 real banks In 2008, bank specialists estimated that there were only about 300 real banks out of a total of 1,200 licensed banks. Most “little more than treasuries for big out of a total of 1,200 licensed banks. Most “little more than treasuries for big businessmen or entities engaged in criminal activity such as money laundering” businessmen or entities engaged in criminal activity such as money laundering” (e.g. Bank of New York’s local partners). Some “banks” engage in loan(e.g. Bank of New York’s local partners). Some “banks” engage in loan--sharkingsharkingsharking. sharking.

Rapid changes in the Russian stock market and the absence of insider trading Rapid changes in the Russian stock market and the absence of insider trading rules often necessitates the involvement of organized crime to launder money rules often necessitates the involvement of organized crime to launder money or raise money for crimes.or raise money for crimes.

Major changes in commodities is often attributable to Russian gaming in the Major changes in commodities is often attributable to Russian gaming in the futures marketfutures market again another opportunity for criminal banksagain another opportunity for criminal banksfutures market futures market –– again another opportunity for criminal banks.again another opportunity for criminal banks.

The vast majority of Russian entities with leasing licenses are actually not The vast majority of Russian entities with leasing licenses are actually not involved in legitimate commercial activity suggesting they are fronts for money involved in legitimate commercial activity suggesting they are fronts for money g y gg g y yg y gg g y ylaundering operations.laundering operations.

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RCG Transactional & Corporate CharacterRCG Transactional & Corporate Characterpp

S RCG ‘ l d’ i t t ti l titiS RCG ‘ l d’ i t t ti l titi Th “b tt f d ” i htTh “b tt f d ” i htSome RCGs ‘evolved’ into transnational entitiesSome RCGs ‘evolved’ into transnational entities. The “bottom feeders” might . The “bottom feeders” might operate locally engaged in car theft rings, extortion, human trafficking, and operate locally engaged in car theft rings, extortion, human trafficking, and murder; more sophisticated RCGs learned the art of murder; more sophisticated RCGs learned the art of money laundering, drug money laundering, drug trafficking, industrial espionage, various forms of fraud (e.g. credit card fraud, trafficking, industrial espionage, various forms of fraud (e.g. credit card fraud,

f f )f f )embezzlement from corporations and countries, identity theft), and embezzlement from corporations and countries, identity theft), and selling/transporting conventional weapons. selling/transporting conventional weapons. THE BIG FEARTHE BIG FEAR: Russia’s inability : Russia’s inability to secure its biological, chemical and nuclear materials.to secure its biological, chemical and nuclear materials.

RCG i ht t i t fRCG i ht t i t f d h b id h b i S tiS tiRCGs might operate in corporate forms or on an RCGs might operate in corporate forms or on an ad hoc basis. ad hoc basis. Sometimes Sometimes they developed relationships with state officials or sothey developed relationships with state officials or so--called “called “oligarchsoligarchs.” Their .” Their “services” involved huge sums of money, either laundered or used to take “services” involved huge sums of money, either laundered or used to take control of Russian assets by various means.control of Russian assets by various means.

RCGs included as members RCGs included as members manymany professionals (e.g. accountants, bankers, professionals (e.g. accountants, bankers, computer specialists and lawyers). Individuals with intelligence backgrounds computer specialists and lawyers). Individuals with intelligence backgrounds or had the skills or had the skills necessary to work abroad often in collaboration with foreign necessary to work abroad often in collaboration with foreign

i i l hi hl l di i l hi hl l dcriminal groups were highly valuedcriminal groups were highly valued. .

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Formal Models May Be MisleadingFormal Models May Be MisleadingFormal Models May Be MisleadingFormal Models May Be Misleading

At the top of each criminal group was a "pakhan“ At the top of each criminal group was a "pakhan“ [boss] who oversaw four criminal cells through [boss] who oversaw four criminal cells through an intermediary known as the “brigadier.”an intermediary known as the “brigadier.”y gy g

The Pakhan used two spies to monitor each The Pakhan used two spies to monitor each brigadier (KGB motif) to ensure loyalty.brigadier (KGB motif) to ensure loyalty.g ( ) y yg ( ) y y

Criminal cells tended to specialize in activities Criminal cells tended to specialize in activities such as narcotics, prostitution, and racketeering.such as narcotics, prostitution, and racketeering.

A less formal model also emerged where a A less formal model also emerged where a leadership group would use support and security leadership group would use support and security

l d hl d hpersonnel as intermediaries, who in turn oversee personnel as intermediaries, who in turn oversee street operators “working the street.” Those street operators “working the street.” Those working at the bottom of this structure did not working at the bottom of this structure did not know the members of the leadership groupsknow the members of the leadership groupsknow the members of the leadership groups.know the members of the leadership groups.

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UNODC Pilot Study:UNODC Pilot Study:P t ti ll U f l T l i ?P t ti ll U f l T l i ?Potentially Useful Typologies ?Potentially Useful Typologies ?Rigid hierarchyRigid hierarchy –– single boss with strong internal disciplinesingle boss with strong internal disciplineRigid hierarchy Rigid hierarchy single boss with strong internal discipline single boss with strong internal discipline within several divisionswithin several divisions..Devolved hierarchy Devolved hierarchy –– regional structures, each with its own regional structures, each with its own hi h d d f thi h d d f thierarchy and degree of autonomyhierarchy and degree of autonomy..Hierarchical conglomerate Hierarchical conglomerate –– a loose or umbrella association a loose or umbrella association of otherwise separate organized criminal groupsof otherwise separate organized criminal groupsof otherwise separate organized criminal groups.of otherwise separate organized criminal groups.Core criminal group Core criminal group –– a horizontal structure of core individuals a horizontal structure of core individuals who describe themselves as working for the same who describe themselves as working for the same organization.organization.Organized criminal networks Organized criminal networks –– individuals engaged in criminal individuals engaged in criminal activity in shifting alliances not necessarily affiliated with anyactivity in shifting alliances not necessarily affiliated with anyactivity in shifting alliances, not necessarily affiliated with any activity in shifting alliances, not necessarily affiliated with any crime group, but according to skills they possess to carry out crime group, but according to skills they possess to carry out the illicit activity.the illicit activity.htt // d / df/ i / bli ti /Pil t dfhtt // d / df/ i / bli ti /Pil t dfhttp://www.unodc.org/pdf/crime/publications/Pilot_survey.pdfhttp://www.unodc.org/pdf/crime/publications/Pilot_survey.pdf

International Computer HackingInternational Computer Hackingp gp g

U.S. Secret Service arrests 27U.S. Secret Service arrests 27--year old Vladislavyear old VladislavU.S. Secret Service arrests 27U.S. Secret Service arrests 27 year old Vladislav year old Vladislav Horohorin in France (Ukrainian/Israeli national living Horohorin in France (Ukrainian/Israeli national living in Moscow). “BadB” faces 12 years in jail & $500K in Moscow). “BadB” faces 12 years in jail & $500K in fines. Why did not US authorities think of seeking in fines. Why did not US authorities think of seeking the cooperation of the Russian “colleagues”?the cooperation of the Russian “colleagues”?

Russian Government/Armed Forces appreciate use Russian Government/Armed Forces appreciate use of cyber attacks (Britain, Estonia, Georgia) of cyber attacks (Britain, Estonia, Georgia) –– new new “US establishes Cyberspace Command.“US establishes Cyberspace Command.

7 of 10 top spammers based in Russia.7 of 10 top spammers based in Russia.7 of 10 top spammers based in Russia.7 of 10 top spammers based in Russia.

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RCGs Thrive in Conflict AreasRCGs Thrive in Conflict AreasRCGs Thrive in Conflict AreasRCGs Thrive in Conflict Areas

L l if i lL l if i l ll i li l l d tl d tLocales rife in largeLocales rife in large--scale scale violenceviolence leads to leads to scarcity and opportunities scarcity and opportunities for for RCGsRCGs..

The level of violence while variable has been a The level of violence while variable has been a constant in the Caucasus for 10 years constant in the Caucasus for 10 years (Chechnya, Dagestan, Ingushetia, Ossetia, (Chechnya, Dagestan, Ingushetia, Ossetia, etc.).etc.).

Complex dynamic produced as a result of Complex dynamic produced as a result of narcotics traffickers separatists religiousnarcotics traffickers separatists religiousnarcotics traffickers, separatists, religious narcotics traffickers, separatists, religious extremists (both local and foreign), RCGs extremists (both local and foreign), RCGs in in cultures where violence is commoncultures where violence is common..cultures where violence is commoncultures where violence is common..

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Russia’s 5 Richest MenRussia’s 5 Richest MenRussia s 5 Richest MenRussia s 5 Richest Men

Name Name Rank Rank Born Born Billions Initial ActivityBillions Initial ActivityVladimir Vladimir LisinLisin 32 32 ‘56 ‘56 $15.8 Steel$15.8 SteelMikhail Prokhorov Mikhail Prokhorov 39 39 ‘65 ‘65 $13.4 $13.4 InvestmentsInvestmentsMikhail Mikhail FrydmanFrydman 42 42 ‘64 ‘64 $12.7 Oil$12.7 OilRomanRoman AbramovichAbramovich 5050 ‘66‘66 $11 2 Steel$11 2 SteelRoman Roman AbramovichAbramovich 50 50 66 66 $11.2 Steel$11.2 SteelOleg Oleg DeripaskaDeripaska 57 57 ‘68 ‘68 $10.7 Aluminum $10.7 Aluminum

All of the above individuals areAll of the above individuals are “self“self--made”made” and comparedand comparedAll of the above individuals are All of the above individuals are selfself made made and comparedand comparedwith billionaires from other countries rather young. with billionaires from other countries rather young. How reliable can such data be? How reliable can such data be?

See See Forbes 2010. Forbes 2010.

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The InterThe Inter--relationship Among Business, RCG relationship Among Business, RCG and Government (usually regional/;local)and Government (usually regional/;local)( y g ; )( y g ; )

Joint Responsibility/Circular ControlJoint Responsibility/Circular Control

Кругая пргукаКругая пргука [[KrugoiaKrugoia pogukapoguka]]

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The Code of Conduct for “Business”The Code of Conduct for “Business”(Whil i R i )(Whil i R i )(While in Russia . . .)(While in Russia . . .)

Work together without showing a profit.Work together without showing a profit.

K d bl b kK d bl b kKeep double books.Keep double books.Share profits through payouts.Share profits through payouts.Respect the informal order.Respect the informal order.Make and keep friends.Make and keep friends.ppAvoid formal institutions resolve conflict through Avoid formal institutions resolve conflict through intermediaries.intermediaries.

SeeSee Professor Alena Ledebeva’s “How Russia Really Works.Professor Alena Ledebeva’s “How Russia Really Works.

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RCGs Examined in UNODC RCGs Examined in UNODC Pil t P j tPil t P j tPilot Project Pilot Project

S k G S b d i il i l d i dSyzranskaya Group – Samara-based, primarily involved in drug trafficking drugs (heroin, cannabis and opium). Hierarchically organized and sought local monopoly.

Group “21” - based in Northern Caucasus also involved in drug in trafficking. Possessed a relatively strong ethnic identity and a hierarchically structured organization.

Ziberman Group – Kaliningrad-based; involved primarily in smuggling of cigarettes and alcohol, car theft and gambling. Composed of 6 criminal groups, Sought political influence th h ti ffi i lthrough corrupting officials.

Group 22 – Hierarchical structure, though organized in cells, each with specialized tasks such as purchasing of raw material, p p g ,sending it to clandestine laboratories, the transportation and finally the distribution of the end product. The core group consists of 11 members, mainly Italian and Russian nationals. Makes use of professionalsMakes use of professionals.

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International Legal FrameworkInternational Legal Framework

United Nations Convention against Transnational Organized Crime g gand its Protocols;

Protocol to Prevent, Suppress and Punish Trafficking in Persons, pp gEspecially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime;

Protocol against the Smuggling of Migrants by Land, Air and Sea, supplementing the United Nations Convention against Transnational Organized Crime; and

Protocol against the Illicit Manufacturing and Trafficking in Firearms, Their Parts and Components and Ammunition, supplementing the United Nations Convention against Transnational Organized CrimeUnited Nations Convention against Transnational Organized Crime.

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Definitions Are Critical (Part 1 of 2)Definitions Are Critical (Part 1 of 2)Definitions Are Critical (Part 1 of 2)Definitions Are Critical (Part 1 of 2)

(a) “Organized criminal group” shall mean a structured(a) Organized criminal group shall mean a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes or offences established in

d ith thi C ti i d t bt iaccordance with this Convention, in order to obtain, directly or indirectly, a financial or other material benefit;

(b) “Serious crime” shall mean conduct constituting an ( ) goffence punishable by a maximum deprivation of liberty of at least four years or a more serious penalty;

(c) “Structured group” shall mean a group that is not(c) Structured group shall mean a group that is not randomly formed for the immediate commission of an offence and that does not need to have formally defined roles for its members, continuity of its membership or a d l d t tdeveloped structure;

(d) “Property” shall mean assets of every kind, whether corporeal or incorporeal, movable or immovable, tangible p p gor intangible, and legal documents or instruments evidencing title to, or interest in, such assets; 2121

Definitions Are Critical (Part 2 of 2)Definitions Are Critical (Part 2 of 2)Definitions Are Critical (Part 2 of 2)Definitions Are Critical (Part 2 of 2)

(e) “Proceeds of crime” shall mean any property derived from or obtained, directly or indirectly, through the commission of an offence;

(f) “Freezing” or “seizure” shall mean temporarily prohibiting the transfer, conversion, disposition or movement of property or temporarily assuming custody or control of property on the p y g y p p ybasis of an order issued by a court or other competent authority;

(g) “Confiscation” which includes forfeiture where applicable(g) Confiscation , which includes forfeiture where applicable, shall mean the permanent deprivation of property by order of a court or other competent authority; and

(h) “P di t ff ” h ll ff lt f(h) “Predicate offence” shall mean any offence as a result of which proceeds have been generated that may become the subject of an offence as defined in article 6 of this Convention.

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Largest Russian Companies (FT 500 List)Largest Russian Companies (FT 500 List)http://media.ft.com/cms/66ce3362http://media.ft.com/cms/66ce3362--68b968b9--11df11df--96f196f1--00144feab49a.pdf (July 2010)00144feab49a.pdf (July 2010)

Gazprom, Global Rank 33, energy.Gazprom, Global Rank 33, energy.Rosneft,Global Rank 62, energy,Rosneft,Global Rank 62, energy,Sberbank, Global Rank 86, banking.Sberbank, Global Rank 86, banking., , g, , gLukoil, Global Rank 140, energy.Lukoil, Global Rank 140, energy.Surgetneftegaz, Global Rank 174, energy.Surgetneftegaz, Global Rank 174, energy.Norilsk Nickel, Global Rank 207, metals.Norilsk Nickel, Global Rank 207, metals.VYB Bank, Global Rank 263, bankingVYB Bank, Global Rank 263, bankingNovolipetsk, Global Rank 383, metals.Novolipetsk, Global Rank 383, metals.Novotek, Global Rank 394, energy.Novotek, Global Rank 394, energy.Mobile Telesystems, Global Rank 470, telecom.Mobile Telesystems, Global Rank 470, telecom.Vimpelcom, Global Rank 493, telecom.Vimpelcom, Global Rank 493, telecom.

QUERYQUERY N ti lit f tit b fi i lN ti lit f tit b fi i lQUERY:QUERY: Nationality of entity vs. beneficial owners;Nationality of entity vs. beneficial owners;Shills and subsidiaries.Shills and subsidiaries.Data collection Data collection –– how reliable?how reliable?

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Gazprom’s International WebGazprom’s International WebGazprom s International WebGazprom s International Web

Use of nonUse of non--transparent “trading” and “financial leasing” transparent “trading” and “financial leasing” companies organized in Austria, Cyprus, Lichtenstein, Russia, companies organized in Austria, Cyprus, Lichtenstein, Russia, Switzerland, Ukraine and elsewhere.Switzerland, Ukraine and elsewhere.

Involvement of middlemen linked to organized crime (e.g., Involvement of middlemen linked to organized crime (e.g., Massimo Ciancimio, Dmitro Firtash, Igor Fisherman [Massimo Ciancimio, Dmitro Firtash, Igor Fisherman [ties to ties to Semion MogilevichSemion Mogilevich], shady business people (e.g. Dariga ], shady business people (e.g. Dariga Nazerbayeva Bruno Graneli Howard Wilson) and politiciansNazerbayeva Bruno Graneli Howard Wilson) and politiciansNazerbayeva, Bruno Graneli, Howard Wilson) and politicians Nazerbayeva, Bruno Graneli, Howard Wilson) and politicians (e.g. Silvio Berlesconi, Leonid Kuchma, Romano Prodi, Vladimir (e.g. Silvio Berlesconi, Leonid Kuchma, Romano Prodi, Vladimir Putin, Gerhard Schröder) from Russia, Ukraine, Kazakhstan Putin, Gerhard Schröder) from Russia, Ukraine, Kazakhstan Hungary, Israel, Italy and Germany, as well as the Russian Hungary, Israel, Italy and Germany, as well as the Russian Government and its officials/favoritesGovernment and its officials/favoritesGovernment and its officials/favorites.Government and its officials/favorites.

Dealings with RosUkrEnergo, ARosgas, Centrex, CEEGAG, Dealings with RosUkrEnergo, ARosgas, Centrex, CEEGAG, Itera. ETG, MDM, Itera. ETG, MDM, Raiffeisen Raiffeisen Investments, EniNeftegaz (buyer Investments, EniNeftegaz (buyer f Y k ’ t th ld tf Y k ’ t th ld t G ft) G b kG ft) G b kof Yukos’ assets then sold to of Yukos’ assets then sold to Gazpromneft), Gazprombank, Gazpromneft), Gazprombank,

GazpromexportGazpromexport, etc., involving , etc., involving BILLIONS OF DOLLARS ! ! !BILLIONS OF DOLLARS ! ! !

How closely is the law enforcement and intelligence How closely is the law enforcement and intelligence iti it i thi it ti ? G d ititi it i thi it ti ? G d itcommunities monitoring this situation? Gazprom spreads its communities monitoring this situation? Gazprom spreads its

tentacles. The liquid natural gas (LNG) market is next.tentacles. The liquid natural gas (LNG) market is next. 2424

Rosoboronexport and RussianRosoboronexport and RussianW S lW S lWeapons SalesWeapons SalesAccording to its Federal MilitaryAccording to its Federal Military--Technical Cooperation Technical Cooperation g yg y ppService, Russia expects to export $9 billion worth of Service, Russia expects to export $9 billion worth of arms and military hardware to foreign clients in 2010.arms and military hardware to foreign clients in 2010.Largest purchasers seem to be Algeria China IndiaLargest purchasers seem to be Algeria China IndiaLargest purchasers seem to be Algeria, China India, Largest purchasers seem to be Algeria, China India, Libya, Malaysia, Syria, Venezuela, and Viet Nam.Libya, Malaysia, Syria, Venezuela, and Viet Nam.Transhipments through 3Transhipments through 3rdrd--party countries party countries like Belarus like Belarus p gp g p yp yand other mechanisms to avoid reporting to U.N. and other mechanisms to avoid reporting to U.N. Registry for Conventional Arms .Registry for Conventional Arms .“Private” military exporters (e g“Private” military exporters (e g Victor Bout (formerVictor Bout (formerPrivate military exporters (e.g. Private military exporters (e.g. Victor Bout (former Victor Bout (former Soviet GRU officer Soviet GRU officer –– both Taliban & U.S. before arrest in both Taliban & U.S. before arrest in Thailand) and Thailand) and private military forces (PMFs) private military forces (PMFs) –– e.g. e.g. Gorandel Trading LimitedGorandel Trading LimitedGorandel Trading Limited. Gorandel Trading Limited.

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Russia’s Wealthiest Individual?Russia’s Wealthiest Individual?Russia s Wealthiest Individual?Russia s Wealthiest Individual?

Vl di i P ti i t dl th $40 billiVl di i P ti i t dl th $40 billi ththVladimir Putin is reportedly worth $40 billionVladimir Putin is reportedly worth $40 billion, as the , as the beneficial owner of 37% of Surgutneftegaz ($18 billionbeneficial owner of 37% of Surgutneftegaz ($18 billion), ), 4.5% of Gazprom ($13 billion) 4.5% of Gazprom ($13 billion) and half of a Swissand half of a Swiss--% p ($ )% p ($ )based oil trading company, based oil trading company, Gunvor ($10 billion) Gunvor ($10 billion) –– his his official financial disclosure forms do not reflect these official financial disclosure forms do not reflect these assets He has the power and authority to protect hisassets He has the power and authority to protect hisassets. He has the power and authority to protect his assets. He has the power and authority to protect his people. people. Foreign governments will not challenge him.Foreign governments will not challenge him.

If th ll ti t thi f t ld kIf th ll ti t thi f t ld kIf these allegations are true, this fortune would make If these allegations are true, this fortune would make him the him the richest person in Europe and one of the ten richest person in Europe and one of the ten wealthiest in the world. In a world of shell companies wealthiest in the world. In a world of shell companies ppand shills, how can one know?and shills, how can one know?

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Presidential ImmunityPresidential Immunityyy

Russian Constitution Article 91 Russian Constitution Article 91 merely states that the merely states that the yypresident “possesses immunity.” Exact scope unclear. president “possesses immunity.” Exact scope unclear. In 2001, thenIn 2001, then--Acting President Putin’s Edict No. 1763 granted Acting President Putin’s Edict No. 1763 granted former President Yeltsin and his family. The “Family” was former President Yeltsin and his family. The “Family” was y yy yrenowned for its lavish lifestyles and corruption. It gains renowned for its lavish lifestyles and corruption. It gains immunity from criminal prosecution, administrative sanction, immunity from criminal prosecution, administrative sanction, arrest, detention and interrogation for life. arrest, detention and interrogation for life. On July 24, 2007, the Federal Law 12On July 24, 2007, the Federal Law 12--FZ “On Guarantees to FZ “On Guarantees to the President of the Russian President having Ceased using the President of the Russian President having Ceased using his Powers and to Members of His Family” was amended so his Powers and to Members of His Family” was amended so that the process by which a former president could bethat the process by which a former president could bethat the process by which a former president could be that the process by which a former president could be stripped of his immunity could only be initiated by the General stripped of his immunity could only be initiated by the General Procuracy’s Investigative Committee’s Chairman.Procuracy’s Investigative Committee’s Chairman.Will M d d k P ti ff h t f ?Will M d d k P ti ff h t f ?Will Medvedev make Putin an offer he cannot refuse? Will Medvedev make Putin an offer he cannot refuse?

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