RUSSIAN CONTROL OVER THE SALE OF NUCLEAR MATERIALS IS LESS THAN PERFECT

Russian control over the sale of nuclear materials is less than perfect

by Aleksandr Zhilin

Not only radioactive materials used for atomic energy stationsare flowing out of Russia. In recent times, Russian-prepared isotopeswith a variety of uses have been flowing out as well.

Not so long ago, a courier was stopped at the border and a collectionof stable isotopes weighing 100 grams and worth $400,000 was foundon it. That was the price for these nuclear materials on the worldmarket; the price for the courier is five years of imprisonmentwith the loss of all personal property. The courier immediatelyacknowledged that the isotopes had been stolen and that they hadbeen produced at the "Elktrokhimpribor" plant in Sverdlovsk-45.For two months, local prosecutors interviewed the man but whenthey discovered that the plant had sold more than $20 millionin such isotopes to firms on the other side of the Atlantic, thecase was quickly sent on to the Russian Federation prosecutor’soffice in Moscow.

But when that happened, no one yet suspected that the total suminvolved approached $500 million and involved a variety of peopleand countries in Russia and around the world.

Stable isotopes are the product of advanced technology. Theyare used in molecular genetics and biology, and in the manufacturingof semiconductors and advanced electronic devices needed for nuclearengineering and cosmic research. Because of these uses, they attracta high price: from $2,000 to $1 million a gram. Such high pricesand the difference between domestic and world prices for suchgoods guaranteed that at least some Russians would think aboutthe sale of stable isotopes abroad. The profit from the sale ofeven one kilogram of such sales could equal $2 million to $300million. And the ability of Russian businessmen to do this wassimplified by the fact that until the end of 1992 stable isotopeswere not subject to state licensing.

The director of the Anglo-Soviet firm "Izoflex" atthe Kurchatov Institute of Atomic Energy, Mark Pashkovsky, appearsboth law-abiding and respectable. Consequently, the true reasonfor his visit to the "Elktrokhimpribor" plant becameclear only after 50 volumes of testimony was collected concerningthe theft of stable isotopes. This evidence showed that betweenSeptember 1990 and February 1991, Pashkovsky received on the basisof false documentation approximately 500 grams of thallium-203and sold it for an extraordinary profit through his English firmAmersham and the French concern SMPS, even though he sold thegoods for far below normal world prices. (Four purchases dominatethe world market in stable isotopes: Du Pont in the US, Nihon-Mediin Japan, Mallinkrodt in the Netherlands, and Amersham in theUnited Kingdom. The "big four" are constantly competingamong themselves.)

The thallium deal was Pashkov’s only one. Soon after its completion,the representative of Izoflex in England sent a fax to Moscowin which he said that she was conducting negotiations with Amershamrepresentative Michael Howlett concerning possible future suppliesof thallium. But Howlett had told the Izoflex representative thatthey were purchasing isotopes from Aleksandr Pokidyshev via theirbranch in the United States at significantly lower prices andthat these had been agreed on for the next five years. It is curiousbut worth noting that the "mysterious" Aleksandr Pokidyshevwas at that moment a member of the Izoflex board.

Having begun his scientific career under the guidance of AcademicianLegasov, Aleksandr Pokidyshev for his work soon came to head theCenter of Stable Isotopes, to which the entire collection of stableisotopes owned by the Soviet state was transferred in 1990. Soon,a variety of commercial structures arose around the Center, andPokidyshev was inevitably a member of their leaderships. Izoflexwas one of these at the beginning, but apparently its participationwas only in the form of a trial balloon. Later, it dealt throughintermediaries. Working according to a scheme hatched by MarkPashkovsky, the satellite firms from January 1991 to October 1992sold "illegal" isotopes to the tune of more than $20million. Judging by the reports made by Tekhsnabeksport, the mainRussian government supplier of isotopes to the world market, theatomic energy ministry was also involved, and the glory of Pokidyshevwas much greater as an entrepreneur than as a scholar.

Pokidyshev’s client list also grew. Soon the retail trade ceasedto interest him. The trade in stable isotopes took on a massivecharacter, one qualitatively different than his first efforts.Virtually all the isotopes held at the Center were given a price,one guaranteed to make a profit for the sellers and to attractbuyers by virtue of its relatively small size. Thus zinc-68, whichfetches $6,000 a gram on the world market, was priced at 500 rublesa gram. More than 125 isotopes were priced this way.

However, the good times of Aleksandr Pokidyshev really arrivedwith the establishment of the firm Stabis, Ltd. The decision tocreate this firm was taken on April 29, 1992, by the then DeputyMinister of Atomic Energy Nikolai Yegorov, and among those involvedin the new firm were virtually all the producers of stable isotopesin Russia and a number of senior officials at the atomic energyministry. Pokidyshev was placed in charge of this new enterpriseand his prospects for the sale of such isotopes were practicallyunlimited.

Things might have gone along fine for him for a long time hadthe Sverdlovsk-45 plant not decided to cease using him as an intermediaryand to deal directly with foreign customers. Local racketeerssaw a profit in such direct sales and took the relevant part ofthe Sverdlovsk-45 plant under their protection. And then in thespring of 1993, the courier mentioned above was caught on theSerov-Moscow train.

Initially, these "semi-legal" isotopes left Russiain small units via small traders. But in 1992 Aleksandr Pokidyshevbecame acquainted with Leonid Rebel’skiy and Aleksandr Al’tman,two native Russians who worked for the American company Walt &Polla International. WPI turned out to be the link which attachedthe "isotope case" to foreigner purchasers. Accordingto Russian police files, WPI was one of the co-founders of oneof Pokidyshev’s satellite sales firms. But when responding toquestions about their role, Al’tman and Rebel’skiy characterizedPokidyshev as a "great scholar" and refused to assistthe Russian authorities in their effort to bring the guilty tojustice.

With this, the foreign links might have been broken, but theWPI vice president said that there was a warehouse full of isotopesin Canada and that the owner of this firm, a certain Oberon Chang,maintained contract ties with Rebel’skiy. That opened the caseup. It turned out that Oberon Chang was also the vice presidentof the "Siberian Star" company, which had been createdby the Canadian company Tevana Traders Corporation and the Soviet-Swedishenterprise "Khoros" from which the Sverdlovsk-45 workershad received their "pay" under the protection of Pokidyshev.

Thus, despite all the names involved, the entire operation ofdumping stable isotopes abroad was linked to Pokidyshev’s operation.Apparently, when the representative of Amersham Michael Howlettspoke about isotopes purchased from Pokidyshev through a branchin the US, he had in mind Rebel’skiy. One can only guess why Amersham"surrendered" the goose that laid the golden egg.

By a strange conjunction of circumstances, during the periodof the beginning of the isotope affair, the main competitor ofRussia on the world market, the Oak Ridge National Laboratory,stopped its production for three years. Russia had the opportunityto ecome the single source of such isotopes on the world market.But it was unable to exploit this opportunity. If it now couldsell all the isotopes which were illicitly exported, such a stepwould depress the world market well into the next century. Andthe price of the isotopes might drop to the level of popcorn.

The major producers of stable isotopes in the world–Oak RidgeNational Laboratory and Sverdlovsk-45–have been forced to regulatestrictly their supplies of such goods to the market in order notto undermine existing prices. The market for stable isotopes doesnot exceed $20 million in most years, but nuclear-related materialsproduced by them attract up to $300 million a year.

Approximately at the same time, the Amersham firm began to displayparticular concern about the production of stable isotopes inRussia. Understanding very well that control over the productionof stable isotopes in Russia would allow it to control a largepart of the world market in radionucleids, Amersham in 1990 establishedin Chelyabinsk-65 a firm (Rewiss) for the production of such materials.But at the same time, Amersham began to get involved with theSverdlovsk administration concerning the creation of a joint enterpriseat Sverdlovsk-45. Unfortunately for Amersham, the Russian atomicenergy ministry intervened.

The English firm was given an ultimatum: either leave Sverdlovsk-45in peace or lose Rewiss. Amersham was forced to retreat, but notfor long. Using the channels described above, it was able to concludean agreement with Sverdlovsk-45 to be the unique channel for thesale of Sverdlovsk-45 produced stable isotopes to the world.

Aleksandr Zhilin is the Editor of the Department of SecurityProblems for Moscow News