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The Russian Mafia

In 1994 the CIA Director informed Congress that in a poll in Russia in response to the question "Who controls Russia?" a plurality of 23% responded "The Mafia", 22% responded with "No one", 19% responded "I don't know", and only 14% responded "President Yeltsin". President Yeltsin stated that Russia had developed into "the superpower of crime". The FBI Director identified the Russian criminal gangs as "the greatest long-term threat to the security of the United States." These statements were caused by the fact that a new monstrous social system had developed in Russia - Mafiocracy. How did it happen that this transformation has been mostly ignored by the international media? Is Mafiocracy more dangerous for the world than Communism was?

Origins

Mafiocracy is a unique social system which has developed for the first time in 1990s in Russia. This system differs greatly from Democracy and from Communism, its main features being:

1)Several powerful organized criminal groups exercise full control over national economy.

2)The corrupt government and law enforcement agencies serve as tools for organized criminal groups; the formal country leaders are unable and unwilling to fight organized crime and corruption.

3)The absence of democratic institutions and mechanisms, paralysis of the legal system.

4)Suppression of market mechanisms.

A renowned Russian writer and Nobel prize winner Alexander Solzhenitsyn wrote in November of 1996, "Russia has no semblance of democracy and is far from real market reform. Russia's present rulers are hardly better than the Communists. A stable and tight oligarchy of 150-200 people is deciding the fate of the nation. For the past 10 years, leaders have robbed their own people of national wealth, pocketing billions of dollars, impoverishing millions and possibly leading to the death of thousands. Russia's economic chaos is the result of nearly criminal reforms that have created a new class of mafia capitalists."

According to the FBI, by 1995 the Russian Mafia had taken control over 70-80% of all Russian commercial enterprises. "Russian organized crime is infiltrating practically any type of business activity," states the report the FBI submitted to the House of Representatives on January 31, 1996. "How do they accomplish this infiltration? Through the use of threats, accompanied by violence; and for what purpose? Greed," the report says.

Today it is practically impossible for a profitable business in Russia to avoid control of the Mafia and regular extortion. Any attempt of resistance to the Mafia is ruthlessly and effectively crashed by the methods, which include kidnappings, assassinations, attacks on the family members, or malicious persecution by corrupt government officials affiliated with the Mafia. For example, dozens of bankers were assassinated and kidnapped by the Mafia in 1992-1994, when Mafia was taking control over the country's financial system; victims included presidents of major Russian banks.

Having demonstrated its power to the politicians, entrepreneurs, and to the nation in whole, the Mafia in Russia now enjoys total and undisputed power. In this respect the current situation is similar to the "mild totalitarianism" of 1960s-1980s, when, having murdered millions of their political enemies in the first decades of their rule, the Communists were able to enjoy full control over the country without need to use harsh methods too often. It took the Mafia only a few years to place under its command the nation broken by the decades of the Communist terror and totalitarianism.

In 1993 Vice President of Russia Alexander Rutskoy, who chaired the State Anti-Corruption Committee, in his report to the Supreme Soviet publicly accused of corruption virtually all key members of the Yeltsin's team. The Supreme Soviet demanded the resignation of those officials and ordered Prosecutor General Stepankov and Minister of Security Barannikov to initiate criminal prosecution. As a countermove Yeltsin fired Vice President Rutskoy, Prosecutor General Stepankov and Minister of Security Barannikov, having accused them in corruption. Alexei Ilyushenko, whom Yeltsin appointed the new Prosecutor General and who for the following two years was supposed to be heading the government war on the organized crime and corruption, is now himself in jail charged with corruption. It is difficult to name a single significant official of the Russian government who has not been publicly accused of corruption, but all these accusations nowadays fail to cause an official comment, not to mention an investigation.

The political reality in Russia today practically excludes the possibility of existence of non-corrupt government officials. A bribe and/or affiliation with a powerful organized criminal group is a prerequisite to all "attractive" government appointments both on local and on national level.

The corrupt Russian government also tends to expel any non-corrupt official, because:

1)An official not implicated in the corrupt practices is viewed as potential danger by his corrupt colleagues and superiors, whereas an accomplice in corruption is not likely to testify about the corrupt practices. Immunity from corruption charges is an important consideration for Russian officials: the system once in a while chooses some officials, scapegoats for public prosecution to ease the public outcry and social tension.

2)An official not implicated in corruption is considered by corrupt Russian government officials as "foreign" and suspicious, in the same way as the Russian drunks would treat a single teetotaller at the table. Such eccentrics are forced out for psychological comfort of the rest, if for nothing else.

3)By replacing a non corrupt official with a corrupt one, the decision-maker receives a significant bribe and/or ongoing payments from the appointee, who considers these payments to be the "business cost" of the possibility to extract illegal profit.

Attempts to become a non-corrupt loner in a completely corrupt government do not occur often in Russia, because:

1)They are doomed.

2)They would endure the official to surviving on his official salary of $100-250 per month.

3)In the country, where seventy years of the Communist rule have virtually destroyed all moral and religious restrains and made the thievery somewhat of a national sport, there are not many people willing to try to take extreme hardship of hopeless war with the corrupt practices. Such a war would not be appreciated or believed in by others.

4)Most of the Russian bureaucrats had served as officials for the Communist government, for which corruption, as it is well known, was modus operandi.

Whenever the Mafia is interested in an official making a specific decision, the official often faces the "silver or lead" choice. Roughly 100% choose the former metal. After all, there is no law enforcement agency able or willing to provide any protection from the all powerful and merciless Mafia. The above listed reasons explain what prevents the government officials from being non corrupt, but in reality the corruption among Russian officials is wilful, not forced. In a poor country, where average annual income is under US$ 2500, participation in the government corruption is one of the most lucrative opportunities to make comfortable living. The government is besieged by eager and "ready-for-all" candidates who know the rules of the game and want to join it.

The political leadership of the country is deeply interested in the existence of the corruption. The highest country's officials, to whom a share of the illegal proceeds is passed up, pocket enormous amounts of money. For the President it is much easier to control corrupt officials. They are conscience free, and in exchange for the "license to steal" they are ready to serve his orders whether they are constitutional or not. Yeltsin would long since have lost his power should the government had consisted of principled men who serve not him personally, but the country. Such people, for example, might have refused to send tanks to shell the Parliament which had legally impeached Yeltsin for Constitutional violations. Should a corrupt official disobey his will, Yeltsin can easily send him to jail "for corruption." During his long career as a high-ranked Communist Party official, Boris Yeltsin mastered the virtuoso ability to manage corruption-based system of power, but he has no idea how else the government may function or be controlled.

"These are dangerous people," said Michael Gorbachev in December, 1996, of Yeltsin's administration. "They appear free of conscience and morals." Most government officials become integrated with the major organized criminal groups because such partnership is the most effective way for an official to "cash" his power and strengthen his personal positions. The Mafia, in turn, has obtained control over the government, including the law enforcement agencies, thus increasing its own power, security, and income.

By the mid-80s the Communist system in the Soviet Union had become non-viable economically and politically. Over-regulated economy was inefficient and could no longer sustain the extensive military and social services expenditures crucial for the Communists. Giving up the military parity and admitting inability to maintain full employment, low inflation and other communist achievements would be disaster the Communist Party might not have survived. Advance of communication technologies made it impossible to continue to guard the Communist ideology by political censorship. Huge 20-million strong government bureaucracy became hopelessly inefficient in managing the economy. To save the collapsing Communist system (not to build capitalism) the General Secretary of the Communist Party of the Soviet Union Michael Gorbachev started the reforms which became known to the world as Perestroika.

His goals included:

To employ some market mechanisms as auxiliary ones and to introduce financial motivation of the workers and the managers proportional to their productivity in order to increase efficiency of the economy;

1)To adjust the political system to the new state of political realities, communication technologies, and public education.

2)To solve the urgent budget deficit problem.

3)To replace elderly Party bosses in the country's leadership by younger, more capable communists.

Mafiocracy which Perestroika resulted in, indeed achieved all these goals, though not in the way Gorbachev had envisioned. Mafiocracy discarded the Communist ideology, which allowed it to cut drastically most of the government expenses, especially social programs, military and political expenditures, such as assistance to the Communist governments and Parties around the world, expenses on keeping vast empire, payments to the people because of their past services to the Communist regime, and so on. Market mechanisms, though suppressed, are now used for regulating routine economic transactions, and the employee remuneration is often proportional to the productivity. The top political and government positions are now held by people who at the dawn of Perestroika were eager mid-level Communist officials.

Mafiocracy can be considered to be the result of two processes: changes in the leadership of the ruling Communist Party, when Politburo member Boris Yeltsin took power from less viable Politburo members, and simultaneous discarding of the ideological and social ballast of Communism in order to let the Communist bureaucrats keep the power. Caught by severe political and economic crisis, the Communist lizard gave away its long tail in order to save its body.

In the end of 1991 Perestroika seemed to be a struggle between Communists and Democrats, won by the Democrats. As the later years proved, in reality the Democrats lost. The winners were the new generation of Communists, who posed as Democrats, but kept the same political credo: to remain at power for the purpose of personal enrichment, using whatever methods and rhetoric is the most effective at the moment. Remaining at the top positions in the country didn't come to the Communists without a cost: they had to share the power with the Mafia, which they initially thought would serve them as a tool in personal enrichment. The organized crime and the government in Russia are now so closely integrated, that it causes some confusion among many observers, some of whom say that the organized crime controls the government, and the others that the government officials use organized crime for illegal profiting. In reality, having the same goal illegal profiting the government officials and the organized crime formed one organism, the Russian Mafia. All its members participate in continuing criminal activity, are motivated by greed and fed by corruption and violence, though their individual functions within the Mafia may differ. Whereas some, mostly government officials and businessmen, practice exclusively white-collar crimes, others specialize in violent crime, with the Mafia bosses coordinating both categories to ensure the maximum efficiency of the continuing criminal conspiracy. All major organized criminal groups in Russia have among their members thugs, officials, and businessmen. Exact structure of each organized criminal group differ, but three types of organized criminal groups dominate.

The first type of organized criminal groups derive most of their income from business activity, with thugs and officials protecting and assisting the business. For example such a group may control an export-import business, where officials would provide licenses, cheap government funds, profitable government contracts and along with thugs, pressure the competitors and otherwise protect the interests of the group. The second type of organized criminal groups derive most of their income from traditional criminal activities, like racket, prostitution, robbery, assassination, etc. In such groups officials ensure immunity of thugs from the law enforcement agencies, and businessmen launder and manage the criminal proceeds. The third type of organized criminal groups derive most of their income through the power of their officials. Such a group, for example, may control the city administration and use it to "privatize" the city's real estate and factories for a fraction of their value, siphon funds from the city budget, and extract extortion payments from businesses located in the city. The businessmen in such a group operate a bank which manages the city budget money, and operate companies contractors through which the city funds are being siphoned away. The thugs protect the government administration and the group's bosses.

Structure

In early 1993, the Russian Ministry of Internal Affairs reported there were over 5,000 organized crime groups operating in Russia. These groups were comprised of an estimated 100,000 members with a leadership of 18,000. Although Russian authorities have currently identified over 5,000 criminal groups in that country, Russian officials believe that only approximately 300 of those have some identifiable structure. Organized crime groups in Russia are not nearly as structured as those in the U.S., such as the LCN. Knowledgeable sources within the Financial Crimes Enforcement Network (FinCEN) have provided one of the structure of groups in Russia. The principle behind this structure is to minimize contact with other cells that could lead to the identification of the entire organization.

Each boss, called a "pakhan," controls four criminal cells through an intermediary called a "brigadier." The boss employs two spies that watch over the action of the brigadier to ensure loyalty and that he does not get too powerful. At the bottom of the structure are criminal cells specializing in various types of criminal activity or functions such as drugs, prostitution, political contacts, and "enforcers." A similar structure places an elite leadership on top which is buffered by support and security personnel from the street operators who are committing the crimes. Street operators are not privy to the identity of their leadership. Strategy and planning is done only at the top echelon in  order to minimize the risk of detection. According to law enforcement sources, those structures described above would fall into the old style of Soviet criminal enterprises. It is quite possible as organized crime has changed in Russia, so has the structure of these groups.

The recipe? The very same which was developed by the Communists: employ the right kind of democratic rhetoric, use democratic facade and good KGB disinformation specialists, control the Press, the courts, and the people by the extrajudicial methods. "The system [in Russia] in just as uncontrollable, lacking any public responsibility and immune from punishment as the Communist power was," Alexandre Solzhenitsyn wrote in the end of 1996. "As much as we wish to, it cannot be called democracy." Some experts, while cognizant of the advance of Mafia in Russia, opine that it is just "a transitional problem" and that the transformation of Russia to a democratic society was made inevitable by introduction of private property and extensive privatization. These experts overlook the fact that most of the formerly private property in Russia has lost all inherent characteristics of private property, and that the market reforms and the democratization processes were reversed by Mafiocracy.

The main characteristics of private property are that it belongs to a person or an entity and may not be expropriated otherwise as in accordance with the law; the net income it generates belongs to the owner. In Russia most of the property which still appears to be private generate profit for the Mafia, not the owner, and may at any moment be (and often is) seized by organized criminal groups. Can we, for example, consider a factory to be a private property if the owner must turn all the profit to the Mafia which decides how much the "owner" may take for himself and which may appoint another "owner" on a whim? Yet, today most private proprietors in Russia are in this position. As was said in a 1996 FBI report to the House of Representatives, "Russian organized crime is predatory, it will feed on the successes of any business, perhaps destroying any chance of legitimate success in the process."

This process in Russia affects almost all businesses, from small companies to the largest national corporations. It changes the nature of economic relations, leaving little place for the market mechanisms. Just as in the Soviet Union all property belonged to the Communist government, all property in Russia nowadays is effectively the property of the Mafia, which regards the nominal "owners" of the property as own employees in managerial positions and rewards them by allowing to retain appropriate (from Mafia's point of view) amount from the property-generated income. The property in Russia may not even be considered as de-facto private property of organized criminal groups, because the control over the property depends on the relative strength of the criminal group and other factors, not related to the legal rights to own it. The Mafia as a whole took the place formerly occupied by the Communist Party which effectively owned all commercial entities and employed most of the country's population. In the same way as the Communist Party did, the Mafia motivates its employees by threats and by financial means (salaries, bonuses, share in business).

Today the "owner" of a private factory finds himself in the position, similar to the position the manager of the same government-owned factory was in the Soviet Union. Neither of them was entitled to the profit of the business, but both were financially motivated. As long as their masters (Mafia and Communist Party respectively) were satisfied, both enjoyed the privileged living, carefully adjusted according to the social status their managerial positions secured them within the Mafiocratic or Communist system. If the managed business was profitable and important enough, then both the "owner" (under Mafiocracy), and the manager (under Communism), were entitled to a limousine, big apartment downtown, a luxury dacha in a prestigious suburb, and high salary. As more than seven decades of the Communist system demonstrated, such system of administration can be stable and fairly effective, but it does not lead to the development of the market economy. Some experts welcomed the "birth of the new Russian middle class" and expressed hopes that it will be the leading force of the democratic and market reforms. This "middle class" in Russia is in no way a new phenomena, as these experts seem to think. It is identical to the class, which during the Communist years consisted of the minor Party and government officials, managers, especially in trade, service and construction sectors of the economy, and some well-paid specialists. They had everything the "new Russian middle class" has now: decent apartments, cars, and adequate income. The role of this middle class was always limited: then to the role of employees of the Communist system, now to the role of employees of the Mafiocratic system.

The market and democratic reforms in Russia have not merely stopped. They have reversed and gone the long way back. After Communism, Mafiocracy is the second social system Russia has introduced to humankind during this century. For years after the Bolshevik Revolution of 1917 most politicians and experts around the world kept denying that Communism was a separate social system, because "everyone knew feudalism had always developed only in capitalism and nothing else." Similarly, many will equally deny the existence of Mafiocracy, and the analysis contained in this article will be haughtily dismissed by them as "heresy".

In 1992 one of the authors tried to alert the President of Russia, the Secretary of the Security Council, and the Press that the Mafia, associated with the KGB, was taking control over the banks and major commercial enterprises, and that this process represented the serious threat to the national security of Russia. These warnings were disregarded at that time, but two years later the Russian and U.S. governments came to the same conclusion. Despite all dismissals, Communism, hatched out in Russia, had widespread to many countries, claimed tens of millions of lives, achieved military parity with the rest of the world, and grew into the major threat to the existence of humankind. Mafiocracy can be even more viable and dangerous than Communism.

The major criminal groups are universal. For example, Solntsevskaya organized criminal group, which initially specialized in racket, kidnappings, and assassinations, in 1992 took control over the country's largest commercial bank Russian Exchange Bank and vast number of financial and other companies. By 1994 it controlled Russian Procuracy. Besides active participants of the organized criminal groups, who, according to FBI Director Louis J. Freeh, "are found at every level of society" (Statement to Congress, 1996), there are millions who work as employees of the Mafia-operated or Mafia-controlled entities, as they worked before for the entities operated by the Communist government. They diligently execute Mafia explicit and implicit instructions as promptly as they used to follow the instructions of the Communist bosses. Effectively the Mafia employs most of the country's working population, just as the Communist Party did.

For example, the CEO of the Russian Exchange Bank, after it was taken by the Solntsevskaya organized criminal group in September of 1992, managed money-laundering, embezzlement, and other criminal activities, and undoubtedly was a high-ranking "white-collar" Mafia executive. The accountants of the bank were rather Mafia employees, and they had to "doctor" financial documentation of the bank and make other illegal actions on request of the CEO as most accountants had to do during the Communist years on request of the Communist bosses. The Russian Mafia, which has gained control over the country's economy, government, law enforcement, and the Press started its struggle for international influence. As the FBI Director stated to Congress on April 30, 1996, "Organized crime activity in Russia includes monetary speculation, manipulation of the banking system and embezzlement of state property, as well as contract murder, extortion, drug trafficking, prostitution, protection rackets, and infiltration of legitimate business activity. To make matters worse, a number of Russian/Eurasian organized criminal groups and criminal enterprises presently operate in the United States. Evidence that organized crime activity from these areas is expanding and will continue to expend to the United States is well-documented."

The Russian Mafia shares three common attributes applied to worldwide organized crime groups by academic theoreticians. The first is non-ideology, meaning that they have no political motivations or goals. Recent evidence suggests however, that the Russian Mafia is keeping close watch on the election of various governmental officials indicating a growing political sophistication. They are using their newly found political power to generate additional revenues from illicit enterprises and to suborn politicians and law enforcement.

The second attribute is hierarchy.  A typical Mafia boss controls four specialized criminal cells through a brigadier and two underbosses. The following chart illustrates the parallel structure of the Russian Mafia and traditional organized crime

The third attribute is limited membership. There are restrictions placed upon those who aspire to join the Russian Mafia. These limitations are based on ethnicity, kinship, race, criminal record, and other considerations. As with the Italian Mafia, Russian organized crime extends the bonds of membership to individuals of the same ethnic background. Outsiders find it very difficult to penetrate the ruling cadre, governed by a rigid 18-point “Thieves Code” of conduct (Vorovskoy Zakon), that if violated, is punishable by death.

Structure in the US
Although Russian organized crime activity in the United States has been expanding for the past 20 years, its most significant growth has occurred during the past five years. In August 1993, the FBI reported there were 15 organized crime groups in the United States with former Soviet ethnic origins. There is considerable debate in the law enforcement community as to the level of organization and structure of Russian organized crime groups in the United States. Additionally, many of the Russian emigres who are involved in criminal activity in this country may be career criminals specializing in crime areas having little or nothing to do with Russian organized crime groups. Current information indicates that most Russian organized crime groups are loosely organized and do not have elaborate levels of structure. These groups are often influenced by their ethnic or regional backgrounds. They have formed networks that operate in situations of mutual interest and often shift alliances to meet particular needs.

There is ample information that Russian crime groups operating on the East Coast cooperate and communicate with West Coast groups. Additionally, Russian organized crime groups in the U.S. communicate and operate with organized crime groups in Russia. FBI Director Louis Freeh stated that over 200 of Russia's 6,000-odd crime gangs operate with American counterparts in 17 U.S. cities in 14 states. According to intelligence reports, members of criminal groups in Russia are sent to reinforce and consolidate links between groups in Russia and the United States. Russian organized crime figures are also sent to this country to perform a service such as a gangland murder or extortion. According to law enforcement sources, there are approximately 300 former Soviet Union crime figures and associates in the San Francisco Bay Area, including San Jose. There are approximately 600 to 800 Russian crime figures and associates in the Los Angeles area, home to the second largest number of Russian immigrants in the United States. These figures include members of the Russian and Armenian organized crime groups.

Northern California Auto Theft Group - A Northern California auto theft group came to the attention of law enforcement personnel in Sacramento and other parts of Northern California, Oregon, and Washington State in early 1993. This group is primarily made up of blue collar type workers from the Ukraine and Western Russia. Specializing in auto theft and VIN switching, younger members of this group steal vehicles while the older members operate body shops. This group utilizes Interstate 5 to travel to Oregon and Washington to sell the stolen vehicle parts to other Ukrainian and Russian criminals. Additionally, this group is becoming involved in extortion, cellular telephone fraud, prostitution, and trafficking small amounts of narcotics. Group members have been known to carry weapons and are becoming increasingly violent. This group does not appear to have any clear cut, well defined structure, though its members appear to have formed networks and cooperate with each other in their criminal endeavours.

Odessa Mafia in the US

The Odessa Mafia is considered the dominant Russian organized crime group in the United States. This group established itself in the Brighton Beach area of New York City between 1975 to 1981. In the early 1980s the Odessa Mafia sent two sub-groups to San Francisco and Los Angeles with their leadership remaining in Brighton Beach. The San Francisco Bay Area Odessa Mafia group, unlike their southern counterpart, appear to be highly structured and well organized. Secrecy surrounds their activities and the language barrier creates additional problems for law enforcement authorities. This has resulted in very little information concerning the hierarchy, the scope of their operations, and the number of members. This crime group is believed to be involved in extortion, money laundering, fraud, loan sharking, and homicide. The Hollywood area of Los Angeles and the city of Glendale are the focal points for Armenian organized crime activity. This area has the largest Armenian population outside of the Republic of Armenia. According to law enforcement sources, several Armenian organized crime groups are becoming well organized with a structured hierarchy. There are in excess of 450 members and associates of these groups. These crime groups are involved in extortion, fuel frauds, credit card fraud, murder, kidnap, and narcotics trafficking. One group is believed to have approximately 150-200 members. Several members of this organized crime group were convicted in 1994 in Los Angeles of attempted murder, kidnapping, and extortion. This group is believed to be responsible for extorting a number of victims in the Armenian community.

Today

Amid the political uncertainty that has engulfed the former Soviet Union since the end of the Cold War nearly a decade ago, rampant, unchecked organized crime has laid waste to noteworthy democratic reforms and contributed to an economic and moral meltdown within the 15 newly independent republics. Intelligence reports emanating out of Russia peg the numerical size of the Russian Mafia (“Mafiya”) at 100,000 members owing allegiance to 8,000 stratified crime groups who control 70-80% of all private business and 40% of the nation’s wealth. The largest of these groups are the Dolgopruadnanskaya and the drug running Solntsevskaya, with 5,000 members concentrated in the Moscow suburb of Solntsevo. Vyatcheslav “Little Japanese” Ivankov, one of Russia’s deadliest and most feared career criminals founded Solntsevskaya in 1980. The current leader of this cartel is Sergei Mikhailov who is presently being detained by the authorities in Switzerland.

The most powerful ethnic minority in Russia these days appears to be the Chechens, from the Caucasus Mountains. The Chechen Obshina gang is heavily involved in kidnapping, bank robbery, and white-collar crime. During the Soviet era, the Georgians controlled much of the black market trade. Between 1992 and 1994 the Russian Mafia targeted the commercial centres of power, seizing control of the nation’s fragile banking system. At first the criminal gangs were content to merely “park” their large cash holdings in legitimate institutions, but soon they realized that the next step was the easiest of all: direct ownership of the bank itself. Banking executives, reform minded business leaders, even investigative journalists, were systematically assassinated or kidnapped. In 1993 alone, members of the eight criminal gangs that control the Moscow underworld murdered 10 local bankers. Calling themselves Thieves in Law (vory y zakone), Russian gangsters have murdered ninety-five bankers in the last five years. 

The demoralized and underpaid city police are ill equipped to curb the rising tide of violence or halt the nightly shootings. In 1993, Moscow police records show that there were more than 5,000 murders and 20,000 incidents of violent crime. Since then, conditions have only worsened. On average, 10,000 people die each year from gun violence 600 are contract killings. According to Alexandre Konanykhine, Solntsevskaya took over the Russian Exchange Bank in September 1992, allegedly replacing the accountants and financial managers with Mafia employees hired to oversee money laundering, embezzlement, and other illegal operations. Russian law enforcement has identified 360 separate forms of bank fraud. Minus regulatory controls, the Russian banking system has become one of the world’s leading centres of money-laundering, surpassing even corrupt Panama as the preferred financial centre for international criminal cartels. 

Foreign companies pay up to 20% of their profits to the Mafia as the on-going price of doing business in Russia. Ignoring shakedown threats merely invites tragedy. The 1996 slaying of Oklahoma hotel executive Paul Tatum in a Moscow subway station pierced the sense of invulnerability many U.S. citizens believed protected them as they travelled through Russia. Even though the Tatum murder was an isolated occurrence, most American firms find it necessary to hire private security guards to protect their executives from extortion threats and roving assassins. Ineffective law enforcement has spurred the rapid growth and expansion of the private security industry.  In the past seven years, 25,000 Russian security firms were established, employing between 600,000-800,000 workers. The Mafia controls at least one-sixth of them. Two-thirds avoid paying state taxes all together. The ominous implications for western companies exploring joint ventures and partnerships with emerging companies in the former Soviet Union are self evident.

With the fall of communism, ex-KGB officers, veterans of the Afghan war, and unemployed military officers formed expedient alliances with gangster thugs and black market profiteers who carried out the “heavy” work; violence, threats and intimidation. Former bureaucrats from the communist regime working quietly and with great skill suborned politicians and decision makers while cutting deals with the Sicilian Mafia to establish narcotics smuggling trade routes through central Asia. By 1995, the year of the historic “summit” meeting between Russian gangsters and Sicilian mobsters in Prague, corruption had spread into the highest levels of the Kremlin, but lawmakers were largely unconcerned. Efforts to pass anti corruption laws were consistently voted down. Bribery was always a hidden cost of doing business in the Soviet era. It is endemic to the culture, even today.

In 1993 Russian Vice President Alexander Rutskoi filed a controversial report with the Supreme Soviet identifying key members within President Boris Yeltsin’s cabinet of profiting from Mafia ties. Rutskoi, as one might expect, was branded a reactionary, accused of corruption, summarily fired and jailed for fomenting an “armed rebellion” against the government. At the same time, President Yeltsin conceded that the Mafia was destroying the economy, undermining the public morale and destabilizing Russia’s political structure. With bitter resignation he added that: “crime has become problem number one for Russians.” Narcotics, prostitution, racketeering, product diversion, and counterfeiting of popular Western goods like Levi jeans, video cassettes, and software applications are core businesses for Mafia gangs in the Russian republics. Other groups found a lucrative niche smuggling weapons and plundered art treasures to Europe and the Third World. Excess inventories of counterfeited American products lining the shelves of Russian retail stores are frequently shipped to Turkey, Jordan, Syria, and Greece. The Microsoft Corporation estimates that 98% of its products in Russia are cheaply produced imitations. 

St. Petersburg and Moscow, where the greatest number of laboratories prostitutes, and Western tourists are located, form the hub of the flourishing drug trade. In 1992, over 70 laboratories producing cheap, synthetic narcotics were uncovered. Until the dawning of perestroika (liberalization and democracy), prostitution was strictly suppressed, and narrowly viewed as a “Western vice.”  Nowadays, it is a buyer’s market in post-communist Russia and many women choose to sell themselves while others are forced into the trade. The girls who comprise the “street corner traffic” retain only 20 per cent of their earnings. Corrupt police officials and the Mafia evenly divides the other 80 per cent. The fortunate few who work as high priced call girls in the large urban centres manage a comfortable lifestyle. Airport taxi companies, which are controlled by the local Mafia, force cab drivers to charge customers double the going rate in order to pay the gangsters a “service charge.” They also collect between 10 and 20 percent of the income from private shops, restaurants, and kiosks. “Few entrepreneurs can expect to remain in business for long without being asked to pay money or provide shares in their companies to gun toting ‘protectors,” observed one insider. A movement to legalize prostitution inside Mother Russia failed, due to a conservative backlash and stepped up pressure from the Mafia who did not want to see this lucrative new venture taken over by government regulators.  

Every day, large quantities of copper, zinc, nickel, cobalt, weapons, and other “strategic materials” are shipped in unmarked trucks or military aircraft, from Central Russia to various Baltic ports. The nation’s natural resources are being purchased at subsidized domestic prices and smuggled abroad for large profits. St. Petersburg, with close proximity to the West, has become the backdoor of Russian European smuggling operations. It is under the thumb of the Tambov syndicate, led by Vladimir Gavrilenkov. Leaders of the Western democracies stood helplessly by as the Mafia tightened its grip over the distribution of profitable export commodities like aluminium and oil from Siberia. In 1995, the Mafia murdered four executives in order to wrest control of the aluminium industry. In Louisiana, far removed from the centres of Mafia power in the former Soviet bloc, U.S. Customs stopped a shipment of stolen American cars being smuggled to Russia for resale in the black market at huge mark up prices. The theft of automobiles for purposes of re-sale in Russia, Poland, and other areas of Eastern Europe, is common. In Chicago 40,000 vehicles disappear every year. Top of the line luxury cars manufactured in the U.S. and Germany but originally registered to Chicago owners, traverse the streets of Moscow every day. They are frequent targets of armed hijackers. 

There is strong evidence that the Russian Mafia has fostered ties with the Colombian drug cartels. In one brazen attempt at promoting criminal cooperation that defies all logic, one Russian gang tried to sell a Soviet-era submarine to the Colombians in order to help them smuggle dope into the U.S. The truly frightening aspect to all this is that nothing seems to faze these gangsters; certainly not public outrage or governmental crackdowns. In August of 1993 Russian gangsters hijacked a T-90 tank, drove it into the local marketplace in Nizhni Tagli, and opened fire on a Muslim criminal group who had tried to take over the local marketplace. The Mafia accused the Muslim group of stealing protection money from the vendors they claimed “belonged” to them. The problems confronting modern Russia as it struggles to free itself from the shackles of totalitarianism, crime, and corruption are hard fought battles paid for in blood, but with no easy solutions. Organized crime in the Western democracies is still mainly about satisfying public demand for illegal products and services like drugs, gambling, usurious loans, and prostitution. Gangsters regulate the Russian economy, by every indication, and the long overdue triumph of free market principles remains at best an empty illusion.    

The Law Enforcement Response

During the Brezhnev era, the KGB kept a tight lid on the Mafia and often exploited the criminal groups for their own self-interests. During one particularly violent purge occurring between 1983 and 1987, Moscow agents systematically arrested and tried hundreds of high-ranking criminals in an attempt to destabilize organized crime. Many of these leaders were convicted, shot, or committed suicide. After 1991, a number of leading KGB officials harbouring strong resentments toward the government defected to the criminal organizations they once investigated. The understaffed and demoralized Russian Ministry of Internal Affairs (MIA) lacks the technology and necessary resources to cope with a myriad of problems, though the FBI and other Western law enforcement agencies have entered into cooperative relationships and have provided law enforcement field training to the host government in order to circumvent the spread of the Russian Mafia.  In 1994, the Bureau opened its first branch office in Moscow. 

In June of that same year, President Yeltsin initiated “Operation Hurricane,” resulting in a 48 hour roundup of 2,200 known or suspected Mafiosi who were tossed in jails. It was a symbolic gesture designed to impress his Western allies but long term efforts to stem the crime wave have not been very encouraging. The city police (agencies of the MIA) are so poorly equipped that some uniformed officers are forced to pursue fleeing criminals by bus and taxi. The elite Berkut (Eagle) unit carries out highly publicized commando style raids against the Mafia, but they rarely succeed in capturing the top bosses, or pakhans. Young police recruits are paid just $200 a month and older officers earning only slightly more, are vulnerable to bribery because the abysmal pay scale barely scrapes the cost of living.  Guaranteed housing for police militias were taken away as an employee benefit after 1991, forcing these men to accept squalid communal flats in a grim struggle for survival in a country overrun with crime. Moreover, there is simply no money left in the treasury to purchase sophisticated electronic surveillance equipment, vehicles, or even functioning safety vests.

Lacking effective Western style conspiracy laws like R.I.C.O., Russian prosecutors are powerless to convict and incarcerate top leadership for running a continuing criminal enterprise. In the years preceding the downfall of communism, the Soviet Union loosened travel restrictions for its citizens, in an effort to assuage decades of criticism from Western ecumenical leaders concerning the plight of Soviet Jews.  Between 1971 and 1980, some 200,000 Russian citizens immigrated to the U.S. according to census data from the Immigration and Naturalization Service. Regrettably, a percentage of these refugees were former black market profiteers and hard core criminals released by the KGB from the Soviet Gulag. One of them was Marat Balagula a college educated black market profiteer from Odessa, who earned a fortune by evading state and federal excise taxes on gasoline by running his profits through dummy corporations on the East Coast.  Balagula’s gasoline tax scam, which made him millions of dollars by the mid-1980s, helped build the first successful alliance between the Russians and the Italian Mafia of New York. Thus, as long as street taxes were paid and territorial boundaries respected, Russian criminals were allowed free access to neighbourhood turf belonging to the traditional Mafia.

The gangsters come from every strata of Russian society and their members move freely across international borders. The Odessa group gained early prominence in the U.S. under the leadership of Evsei Agron, a Soviet émigré who extorted tens of thousands of dollars from the Russian Jews of Brighton Beach before being gunned down outside his apartment on May 4, 1985. Agron was the first important “boss” of the Russian Mafia operating inside U.S. borders, and the first to be “hit.” With the passage of the Lautenberg Amendment in 1989, 50,000 additional Russian refugees were permitted to enter the U.S. each year. Following the collapse of the Soviet system two years later, Russians, for the first time, were permitted to travel freely to other countries. Russian gangsters, posing as Jewish refugees poured into Israel to take advantage of liberal money transfer laws allowing them to launder revenues without undue fear of prosecution. In 1996, the Russians deposited between three and four billion dollars into Israeli bank accounts. Russians who sought refuge in America, primarily settled in New York, California, Washington, Illinois, Pennsylvania, Massachusetts, Maryland, New Jersey, Ohio, and Oregon.

The existence of the Russian Mafia in the U.S. became a matter of public concern in 1975, when an unscrupulous gang of con artists from the Odessa region perpetrated a nationwide swindle against Russian immigrants.  Law enforcement dubbed these scam artists the “Potato Bag Gang,” because they attempted to sell bags of worthless potatoes in place of antique gold rubles, which they had initially promised to deliver to their buyers in exchange for currency. By the mid 1980s, the Russian Mafia had attained higher levels of sophistication, and began to pose a far more lethal threat to American business than the “Gypsy cons” perfected by the Potato Bag Gang. In the first nine months of 1984, the American Express Company reported a loss of $2.7 million dollars to Russian organized crime groups. More recently, Citibank lost $10 million dollars through electronic money transfers traced back to Russian computer hackers. During those years, hundreds of millions of dollars of Russian money flowed into the U.S. banking system where it was “cleansed” and used to buy into legitimate businesses. The Russian Mafia, like their Sicilian counterparts, also understood the importance of its members penetrating American commerce.    

Over the next few years, the FBI monitored 12 Russian Mafia gangs in New York City and Brooklyn. Greater numbers of immigrant Russians live in the Brighton Beach section of Brooklyn, where local gangsters belonging to the Odessa Mafia and Malina Organizatsia carried out acts of extortion, arson, murder, burglary, fuel tax fraud and narcotics trafficking primarily aimed at neighbourhood residents. Because immigrant Russian communities such as the one in Brighton Beach are cohesive, insulated, and mistrustful of local law enforcement, it is impossible to accurately assess the full extent of the problem, but law enforcement estimates that fuel tax scams in Brooklyn and California costs federal and state government $2 billion dollars in lost tax revenues each year. Federal law enforcement considers the Odessa Mafia to be the dominant group in the U.S., with satellite operations established in San Francisco and Los Angeles. Because the traditional West Coast Mafia crime families are so weak and poorly organized, Russian gangsters from the East Coast have settled in California to escape their onerous street tax obligations imposed upon them by the five families of New York. Armenian organized crime groups are active in the communities of Hollywood and Glendale, home of the largest Armenian community outside the Republic of Armenia. Hovsep Mikaelian, described as a Russian “Godfather,” directs criminal operations and an expansive black market diesel fuel network throughout Southern California. The current strength of the gang is pegged at 450 members and associates. 

Russian organized crime has found a sanctuary in 17 U.S. cities and 14 states.  The FBI believes there are 15 separate organized crime groups and 4,000 hard core Mafia criminals from the former Soviet Union at work in the U.S. They are engaged in money laundering, automobile theft, smuggling, contract murder, loan sharking, medical insurance fraud, narcotics, and credit card and telecommunications fraud. The theft of electronic serial numbers from cellular phones and the duplication (cloning) of these PIN numbers have grown into a multi million dollar industry. Hired assassins are flown in from Russia to carry out murder and other assorted acts of violence, extortion, and fraud, then conveniently disappear. Others are sent in to “shore up” criminal operations on an “as needed” basis. Early in 1993, Vyatcheslav “Little Japanese” Ivankov, wanted for parole violations in his homeland, fled to the U.S. to stratify New York operations and unite the various ethnic gangs under one banner of unity. He settled among his friends in Brighton Beach, and within a few months had initiated contact with Russian mob figures in Miami, Los Angeles, Boston and Toronto. He was poised to become the first “Russian Godfather” until the Feds intervened. FBI Director Louis Freeh characterized Ivankov as a “very, very dangerous criminal leader, not just in the U.S. but worldwide.” In June 1995, the brainy gangster was rousted from his mistress’ bed and taken into custody by the FBI. He was charged with extortion after shaking down Summit International Corporation, a Russian-owned Wall Street investment firm to the tune of $3.5 million dollars. Only later did the Feds learn about the full extent of his connections. In a former life, Ivankov ran “combat brigades” of ex-KGB officers assigned to collect kickbacks from the global marketplace. He was convicted in November 1997.

On July 4, 1994, FBI Director Louis Freeh and then Russian Interior Minister Viktor Yerin signed a protocol providing for joint law enforcement efforts. After opening an FBI attache office in Moscow and a tour which included a visit to the KGB's notorious Lubyanka Square headquarters, Freeh exulted, "We can honestly say that our two nations have more in common than ever before...." Sergei Stepashin, who heads the Federal Security Service (FSB, successor to the KGB), celebrated the pact by declaring, "Together, we're invincible." Just as U.S. Russian military cooperation is to be the foundation of UN-mandated "peacekeeping" missions in the new world order, the FBI's alliance with the FSB and the Russian Interior Ministry (MVD) is intended to be the basis for a new global order in law enforcement. Writing in the spring 1995 issue of International Affairs, the journal of the Russian Foreign Ministry, Viktor Yerin explained: "Russia fully supports the concrete and substantive steps [taken by the UN] to promote interaction between its members in fighting crime." Yerin recommended that the UN conduct "a codified review of national legislation and practice in this field [in order] to harmonize as far as possible the approach of countries to the fight against organized crime and ensure on this basis the inevitable punishment of persons involved in this activity irrespective of the place and country where they may have committed their crimes."

The Russian regime and the Clinton Administration are already acting in complete harmony in this regard. In testimony before the Senate Judiciary Committee on April 27, 1995, Ronald Noble, the Clinton Administration's Undersecretary of the Treasury for Enforcement, declared:

With the dissolution of the Soviet Union, and the end of its centralized control over nuclear materials and associated technologies, we anticipate increased terrorist problems. Weapons procurement networks are becoming more advanced and clandestine. To combat these problems, Treasury, through the U.S. Customs Service, is increasing its liaison with the U.S. intelligence community and foreign customs and other law enforcement agencies, particularly in eastern Europe and the former Soviet Union. President Clinton touched upon the same developments in a speech to the United Nations General Assembly last October, calling for "an effective police partnership" at the global level to combat "the increasingly interconnected groups that traffic in terror, organized crime, drug smuggling, and the spread of weapons of mass destruction." In February, CIA and FBI agents stationed in Europe conducted a closed-door meeting at the U.S. embassy in Rome to continue work on the proposed global police partnership. According to the Washington Post, the Rome meeting was held to coordinate efforts to deal with the "post-Cold War threats" of "global organized crime, terrorism and international narcotics trafficking." The Post described the Rome meeting as part of a continuing effort "to iron out new, post-Cold War relationships to fight crime rather than communism."

One remarkable result of the "post-Cold War" struggle against international organized crime is the essential re-establishment of the Soviet Union's Cold War boundaries. On April 12th, a summit of representatives from the Commonwealth of Independent States (CIS), which includes all of the "ex"-Soviet Republics except for the Baltic states, approved a "Plan for Integrated Development of the Commonwealth" which envisions the essential restoration of the Soviet Union. The document calls for the re-establishment of a shared defence policy, common currency, and political integration. According to Reuters, this Soviet restoration is inspired, in large measure, by the need "to form a common front against organized crime." "Organized crime," according to Senator John Kerry (D-MA), "is the new communism, the new monolithic threat." Actually, to a significant extent, organized crime in Russia and the former Soviet empire is the old communism, and its influence is being used to advance the traditional strategic objectives pursued by Soviet communism: Subversion of the West, enrichment of the party and the Russian military-industrial complex through Western foreign aid, and eventual convergence with the U.S. on terms favourable to world socialism.

Since the "collapse" of the Soviet Union in 1991, oceans of ink have been poured into press coverage of the Russian Mafiya, and the subject has become a staple of Hollywood action fare. In his book Comrade Criminal: Russia's New Mafiya, foreign correspondent Stephen Handleman describes the penetration of the Russian mob into western Europe and even the United States in recent years. "A sinister new figure [has] suddenly appeared on the police blotters of Western countries," Handleman warns, "the post-Communist gangster." However, there is nothing novel about the activities or ambitions of the Russian mob. In an April 1994 interview published in the International Herald Tribune, Georgian mafia leader Otari Kvantrishvili boasted: "They write that I am the mafia's godfather. It was Vladimir Lenin who was the real organizer of the mafia and who set up the criminal state." In 1995, former Lithuanian Vice President Algirdas Katkus stated that although "Westerners believe that the mafia is the product of post-Communism … in reality it is organized, staffed, and controlled by the KGB."

These observations are confirmed by Yuri Maltsev, a former senior adviser to Mikhail Gorbachev, who told THE NEW AMERICAN that "Russia has become the criminal capital of the world. In Russia today, the organized mafia and the government are one and the same thing. They're two hands of the same ruling elite." This state of affairs began with the founding of the Soviet state. "The Soviet state security apparatus was essentially staffed by criminals collected from Russian prisons," Maltsev recalls. "In short, you had a criminal state using criminals to enforce what it called the law." One irony noted by Maltsev is that the Soviet state, like any totalitarian enterprise, "essentially prohibited any form of social or economic activity that didn't advance the interest of the state. In short, they criminalized everything." The "collapse" of the Soviet Union in 1991 brought "little, if any, change in the organization of the criminal justice system in Russia," Maltsev wrote in the December 1995 issue of The Freeman. "Russia's prisons, probably the worst in the world, are still filled with over 100,000 entrepreneurs, most of whom were convicted for commercial and business practices absolutely legal in civilized countries. Private production and exchange - the most natural of human activities - are still criminalized through a confiscatory tax system and monstrous regulatory mechanism."

With 111 different federal and local taxes, a tax code even more inscrutable than our own, and top rates which run as high as 140 percent of income, it should come as no surprise that there are more than 600,000 tax convictions each year in Russia. Furthermore, Maltsev points out that "ex-communists" still occupy more than 60 percent of local government and bureaucratic positions and 90 percent of all positions in the central government. Accordingly, Russians still suffer beneath the basic conditions of totalitarianism: Complete insecurity of person and property, fear of summary arrest for ill-defined or undefined offences, and an omnipresent sense of incipient violence. Lenin defined the governing philosophy of his state as "power without limit, resting directly upon force, restrained by no laws, absolutely unrestrained by rules." This remains the governing philosophy of "post-Soviet" Russia.

Soviet analyst J. Michael Waller of the American Foreign Policy Council informed THE NEW AMERICAN that "U.S. aid and trade policies with Russia have had the net effect of entrenching the nomenklatura and the KGB oligarchy at the expense of Russians sympathetic to the West." Joint U.S.-Russian law enforcement initiatives are used by the "ex"-communist elite to preserve this hegemony: "We're collaborating with the very people who created the problem of organized crime in the former Soviet Union. In part, this is because American policymakers tend to 'mirror-image' everything in our relationship with Russia. They look at Russian organized crime through the lens of our own experiences, and the Russians are only too happy to play along." Frank Cilluffo, an adviser to a Senate task force on global organized crime, told THE NEW AMERICAN, "Most of the FBI's cooperative initiatives are conducted with the MVD, which is more or less their analogue in Russia." Although Cilluffo maintains that the MVD does not have significant connections to the Russian mafia, he acknowledges that "we can't exonerate any of the [Russian] services" because of Russia's "endemic corruption." As a result, "It's almost impossible to know when we're helping the criminals."

Writing in the December 1995 issue of the Journal of Contemporary Criminal Justice, Michael Waller and fellow Soviet analyst Victor J. Yasmann observed: "When analyzing the Russian government's approach to fighting organized crime … it becomes apparent that the country's political, economic, security, and law enforcement elites fundamentally are part of the problem." This is not merely a result of runaway corruption, but rather a product of long-term strategic planning:

What is often seen as a "spontaneous" development of Russian organized crime … in many instances is a process unleashed by the communist/state security oligarchy, and in many important aspects is guided by them.... KGB guidance virtually transformed the Russian Mafiya, which only a decade ago looked underdeveloped and provincial at best. KGB officers provided the criminal chiefs with the institutional and organizational experience, professional intelligence, and tradecraft, and later shared their contacts, first domestically and later internationally. In addition to its efforts to strengthen the mob, the KGB also laid the groundwork for almost all post-Soviet joint economic ventures with the West. According to Waller and Yasmann, a KGB training and operations manual published in 1989 stated that in the era of perestroika, "'active reserve' or 'operational reserve' officers no longer needed to mask their identities when approaching foreigners; indeed, it was becoming an asset to announce one's 'former' career in the KGB because foreign businesses thought it attractive - chekists [secret policemen] could provide security and get things done like no one else." By 1992, an estimated 80 percent of all joint ventures in the Russian Federation had been infiltrated, or were controlled outright, by the KGB.

Similar measures were undertaken by the Communist Party of the Soviet Union (CPSU) to provide for its continued ascendancy even after it formally surrendered its legally mandated political monopoly in Russia. On August 23, 1990, CPSU Administrative Director Nikolai Kruchin issued a document entitled "Emergency Measures to Organize Commercial and Foreign Economic Activity for the Party," which outlined the fashion in which the Soviet nomenklatura would supervise "privatization" efforts. According to Kruchin, "confidentiality will be required and in some cases anonymous firms will have to be used disguising the direct ties to the CPSU. Obviously the final goal will be to systematically create structures of an 'invisible' party economy...." Within the "invisible party economy," party members are subject to discipline and conspiratorial control as complete as any which prevailed during the Soviet era. Dissident Russian author Lev Timofeyev writes that every "ex"-communist in charge of a "private" venture is "bound hand and foot to his social class - the apparat, the military-industrial complex, and the KGB. He is dependent on that trinity in everything he does, because he obtains his property rights from them for a price: a silent oath of loyalty. If he breaks that oath, he will not remain a property owner for long."

Nor are genuine entrepreneurs spared the rigors of party loyalty. Russian businessman Konstantin Borovoi has described the shakedown tactics jointly employed by the KGB and the Russian mob: "First [comes] the racket, strong pressure, then a KGB proposal to 'help.'" The "help" comes in the form of "penetration of KGB officers into the top leadership of the company, or the leadership of the company [must establish] close contact with the KGB, and the company [must cease] to exist as an independent commercial organization." Were the impact of the KGB organized Russian mob confined to U.S. Russian joint economic ventures, the case for disengagement would be compelling enough. However, given that the KGB's Russian mob continues to pursue traditional Soviet strategic objectives through its increasingly powerful connections in the global underworld, disengagement becomes an imperative. Russian authors Georgy Podlesskikh and Andrei Tereshonok have documented that the KGB took the leading role in "advancing and consolidating the 'horrible mutant,' the modern professional underworld," on a global basis. This has provided a new strategic avenue for Marxist ambitions: "[I]n contrast to the 'world proletariat,' about whom the Kremlin's adventurists dreamed, the criminal clans of all countries are indeed moving to the quickest unification."

Frank Cilluffo points out that "because the Russian mob has been controlled by elements of the Communist Party and the KGB, there's no question that they [the mob] have the tradecraft, techniques, contacts, and resources to pursue both personal enrichment and political designs in the post Soviet era. The KGB's still got their active networks all over the world, including their sleeper networks. Nobody knows the extent to which those networks are involved in mob activity, or are carrying out strategic designs on behalf of the Russian state and these objectives overlap, of course."

The case of Filipp Bobkov, the former First Deputy Chairman of the KGB, exemplifies the role of the mobbed-up KGB networks. Bobkov was "cashiered" from the KGB for his role in the bloody KGB-Spetnaz crackdown on the Lithuanian capital of Vilnius in 1991. As a "private" citizen, Bobkov pursued the KGB-ordained strategy of marketing his services to Western investors, and quickly assumed control of a banking group in Moscow. Bobkov swiftly assembled a collection of KGB veterans who had been stationed in Burma, Cambodia, Laos, and Korea. This was the nucleus of what has become known as the "Moscow Narco-Group," which coordinates drug-running operations in Romania, Colombia, Peru, and Cuba. Its main base of operations is the Russian naval base at Cam Ranh Bay in Vietnam - a communist regime which is next in the queue for "joint ventures" and American foreign aid. The "Moscow Narco-Group" is just one identifiable example of the role carried out by the KGB mob's global network. In her book Thieves' World: The Threat of the New Global Network of Organized Crime, the late Claire Sterling observed: "As the old geopolitical frontiers fell away, the big crime syndicates drew together, put an end to wars over turf, and declared a pax mafiosa. The world has never seen a planetwide consortium like the one that came into being with the end of the communist era." By 1993, wrote Sterling, "The big syndicates of East and West were pooling services and personnel, rapidly colonizing Western Europe and the United States, running the drug traffic up to half a trillion dollars a year, laundering and reinvesting an estimated quarter of a trillion dollars a year in legitimate enterprise."

Perhaps the most shocking aspect of the KGB-created mob network's activities is the impunity with which it conducts its affairs. A remarkable account published in the January 22nd issue of New York magazine describes how over the past two years the Russian mob has received at least $40 billion - all of it in uncirculated $100 bills still in their Federal Reserve wrappers - via Delta Flight 30, which flies from New York City to Moscow five times a week.

The Russian mob, reports New York, "has been using an unimpeded supply of freshly minted Federal Reserve notes to finance a vast and growing international crime syndicate.... The Russian mob's monstrous growth has been aided considerably by its ability to quickly and easily launder its dirty criminal proceeds into clean - and now supposedly counterfeit-proof - U.S. hundreds. Russian banks have been eager to assist, which is not surprising given that a good number are owned outright by Russian mobsters." An official at the federal Comptroller of the Currency office told New York that the laundered currency "is used to support organized crime; it's used to support black market operations.... Yet it appears that at least part of the federal government sees nothing wrong with it." In some ways, the global organized crime network represents the consummation of age-old revolutionary designs. In his study Terrorism, Walter Laqueur observes, "In some of the [19th-century] secret societies of Central Europe, such as the 'League of the Just' (which later became the Communist League), the doctrine of terror was first discussed"; a key element of the "doctrine of terror" was the mobilization of street criminals. Wilhelm Weitling, a leader of the League, discussed various means of "founding the kingdom of heaven by unleashing the furies of hell," one of which would be "to turn loose the 'thieving proletariat' on society. Weitling thought he could mobilize some 20,000 'smart and courageous' murderers and thieves."

According to Laqueur, "The idea of the alliance between the revolutionary avant-garde and the criminal underworld was to reappear from time to time in the history of nineteenth-century terrorist movements...." It was not until the advent of the Bolshevik state in Soviet Russia, however, that this alliance was fully realized. Stephen Handleman observes that the Vorovskoi Mir (Thieves' World), a thriving Russian underground which has existed since the 1600s, has always exhibited "a complex paramilitary structure whose exclusive rituals and codes of honor were often copied by the early Bolshevik conspirators.... The nomenklatura's principal attributes - a paramilitary hierarchy, hostility toward outsiders, and a propensity for illegal behavior - established its similarity with the criminal societies of the old Russian underworld. The similarity was no coincidence. The organizational model that the Bolsheviks found so attractive in the Russian criminal bands … was internalized in the modern Communist Party structure."

It was a common theme in Soviet propaganda that organized crime was an affliction to which socialist societies are immune. This illusion was disposed of in the era of perestroika in part to provide the KGB security organs with a new rationale: They were to defend "reforms" against the new "criminal element," a role that was defined in an order issued in October 1991 by then-KGB chief Vladimir Kryuchkov. Many Russians, understandably terrified by the KGB-abetted rise of organized crime, support authoritarian measures to preserve some semblance of order and domestic tranquility. One Russian who understands the larger picture is author Yevgenia Albats. In her book The State Within a State: The KGB and Its Hold on Russia - Past, Present, and Future, Albats recalls:

At the height of Perestroika, in the winter of 1990-91, the KGB announced that it was going after the Mafia's economic stranglehold, whereupon Gorbachev issued a decree granting agents the right … to "unimpeded entrance to the premises of businesses, offices, organizations" … and production spaces used by citizens for enterprises of individual labour. "The true aim of this campaign has been achieved," Albats records. "Our citizens have been reminded that whatever they do, whatever work they take up, the Chekists will be watching them." This is a particularly bitter realization for Albats. On the evening of August 21, 1991, Albats recalls, she and a few close friends held a quiet celebration as a crane removed the statue of KGB founder Felix Dzerzhinsky from its former place of prominence outside the organization's Lubyanka Square headquarters. "And yet," Albats ruefully records, "as God is my witness, on that night, we left worse Chekists in place."

The KGB-controlled Russian mob is thus used by the security organs to preserve the communist oligarchy's control. Further, the threat of the global mob network is being used as a rationale for the consolidation of police authority in the United Nations. As British Sovietologist Christopher Story observes:

[T]he "problem" of transnational crime and global terrorism is being "addressed" ever more intensively, as Governments respond to the perceived "need" for international cooperation in this area and even as the "former" Soviet Bloc states with which the West is seeking to cooperate ever more anxiously, intensify their global criminal operations. In all probability, many high-profile "international" terrorist incidents, culminating in a "nuclear accident," are planned. Urged on by agents of influence in the West and the United Nations, Western Governments are being "softened up" for "global solutions" to this "international crime" epidemic. The Clinton Administration is eagerly advancing the most corrupt and dangerous of those "global solutions" - intimate cooperation between the FBI and the worst surviving elements of the Soviet security state coupled with relentless subsidy of KGB-controlled joint ventures. In this fashion the "strategic partnership" between the U.S. and Russia is used to construct a global "robbers' state."

 

Spheres of Influence and Criminal Activity

Moscow

Controlled by Russians Chechens and Georgians. Prostitution , Gambling, Drugs, Illegal financial transactions, Protection, Usury and Contraband. 

Azerbaijan

Illegal drugs is the stock and trade of this group. Agricultural products and arms to Iran.

Chechnya

Obshina is one of the largest and most important groups of organized crime in the former Soviet Union.  It’s sphere of influence extends from Vladivostok to Vienna. Chechen gangsters are involved in all areas of crime from automobile theft,  money laundering, the trafficking of Chinese immigrants to Japan, to the illegal sale of plutonium. Dealing in nuclear material of Russian origin.  

Estonia 

Uzbeki drug trafficking to Finland.

Kazakhstan

Bribery, smuggling and bank fraud. Drug trafficking, cement and scrap iron to China.

St. Petersburg

Russian, Chechen and Uzbeki gangs divide prostitution, gambling, money changing, drug trafficking, protection, and parallel market of food.

Tambov

One of the most dangerous extortion gangs. The group is headquartered in Tambov, 200 miles from Moscow. Active in Moscow and St. Petersburg. Led by Vladimir Gavrilenkov.

Tatarstan

Oil to Serbia. Artillery for the Balkan War.

 

The Thieves' Code

There is a traditional code of conduct within this old style of organized crime in Russia called "Vory v Zakone," or thieves in law. This group existed throughout the Soviet era and continues today throughout the republics of the former Soviet Union. In this society the thieves in law live and obey the "Vorovskoy Zakon," the thieves' code. The members are bound by 18 codes and if  they are broken, the transgression is punishable by death.

Law enforcement officials in the former Soviet Union indicate that most of the organized crime groups are well organized with sophisticated technical equipment, computers, transportation, financial support, and an excellent counterintelligence network. Those groups are involved in extortion, precious metal and raw material smuggling, money laundering, fraud, weapons smuggling, narcotics trafficking, and black marketing

A thief is bound by the Code to:

1)Forsake his relatives; mother, father, brothers, sisters...

2)Not have a family of his own; no wife, no children. This does not however, preclude him from having a lover.

3)Never, under any circumstances work, no matter how much difficulty this brings, live only on means gleaned from thievery.

4)Help other thieves both by moral and material support, utilizing the commune of thieves.

5)Keep secret information about the whereabouts of accomplices (i.e. dens, districts, hideouts, safe apartments, etc.).

6)In unavoidable situations (if a thief is under investigation) to take the blame for someone else's crime; this buys the other person time of freedom.

7)Demand a convocation of inquiry for the purpose of resolving disputes in the event of a conflict between oneself and other thieves, or between thieves.

8)If necessary participate in such inquiries.

9)Carry out the punishment of the offending thief as decided by the convocation.

10)Not resist carrying out the decision of punishing the offending thief who is found guilty, with punishment determined by the convocation.

11)Have good command of the thieves' jargon ("Fehnay").

12)Not gamble without being able to cover losses.

13)Teach the trade to young beginners.

14)Have if possible informants from the rank and file of thieves.

15)Not lose your reasoning ability when using alcohol.

16)Have nothing to do with the authorities (particularly with the ITU [Correctional Labour Authority]), not participate in public activities, nor join any community organizations.

17)Not take weapons from the hands of authorities; not serve in the military.

18)Make good on promises given to other thieves.

 

Russian Street Slang

Akademiya - Russian word meaning academy; used to mean jail or prison, where the underworld receives its real education.

Babki - The name of a children’s game similar to Pick-Up-Stix, but played with old soup bones.  On the street it means money.  

Blat - Originally used to describe someone in a prison camp who received protection because of personal ties to leading criminal figures.  Now it means “clout.”

Boyevik - Mafia Soldier.

Buks - Borrowed from the English language, it is used for convertible currency such as the U.S. dollar.

Fartsofshchik - From the Russian root word for “swap”; the term used for a black marketer.

Frayeri - Common folk; used to refer to someone as a sucker.
Kidali - Meaning “throwers”; Mob jargon for a confidence man whose job is the scam.
Krestnii Otets - Godfather
Lomshchiki - Translated as “breakers”.  These criminal specialize in the sleight-of-hand during money changing deals; known in the U.S. as “short-changing” someone.
Mafiya - Widely used in the 70’s to describe the corrupt networks of party officials and black market bosses.  To an average Russian citizen the word can be applied to petty hoodlums terrorizing shopkeepers, as well as, to the greedy shopkeepers themselves; to members of crime syndicates, as well as, to the corrupt government officials cracking down on them; to people who kill for a living, as well as, to those who make a killing on the market.
Organizatsiya - Means an organization.  Used for the Russian Mafiya.
Razborka - The common word for clarification, distinction of choice; also slang for the means by which rival criminal groups settle their conflicts.
Shestyorka - Literally translated as “the sixth”; insider’s lingo for a bag man, errand boy or other mob gofer, sort of an “associate”.
Suka - The Russian word for a female dog; a derogatory term for a militia officer.  In prison it refers to anyone who cooperates with the authorities.
Utyuzhit firmu - Literally translated as “to iron the firm”.  In street slang it refers to all foreigners, who are considered members of a “firm” in need of being “ironed”, or straightened out.  In American slang “to rip off”.
Volk - Literally meaning “wolf”, a respectful slang term for a police officer or investigator.

Vorovskoi obshak - The communal fund made up of tributes to the Godfather, paid by members of the mob family and assorted racketeers under his protection.  The money is used to bribe politicians and police, support families of criminals sent to prison, and pay off prison guards so mobsters behind bars do not have to break their backs with hard labor.

 

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Dominicans Italian Mafia Jamaican Posse Mexican Mafia
Outlaw Bikers Piracy Russian Mafia Street Gangs
Terrorists Triads and Tong Vietnamese Yakuza