Bernard Bertossa, the state prosecutor in the Swiss city of Geneva, announced yesterday that he had found Pavel Borodin, the former Kremlin property manager who is now state secretary of the Russia-Belarus Union, guilty of laundering 38 million Swiss francs (US$22.4 million) in Switzerland. Bertossa said that Borodin had been informed of the verdict on March 4 and ordered to pay a fine of 300,000 Swiss francs (US$175,000). Borodin has fourteen days–until March 14–to accept the verdict or appeal. If he chooses the latter, there will be a “public trial,” Bertossa told the Moscow Times. Under Swiss law, a state prosecutor can end an investigation being carried out by his office, render a verdict and levy a fine. (Kommersant, Moscow Times, March 7).
The charges against Borodin, a long-time associate of former President Boris Yeltsin and the former boss of Yeltsin’s successor, Vladimir Putin, stem from the so-called Mabetex case. That case involved allegations that two affiliated Swiss construction and engineering companies, Mabetex and Mercata Trading and Engineering, paid multimillion-dollar kickbacks to high-level Russian officials in exchange for lucrative contracts to renovate Russian government buildings, including Boris Yeltsin’s offices in the Kremlin. Specifically, Swiss investigator Daniel Devaud wrote to Russian Prosecutor General Vladimir Ustinov in July 2000 asking for help in collecting additional evidence against fourteen people whom the Swiss authorities had charged with money laundering and participation in a criminal organization. Among those named in the letter were Borodin, his daughter Yekaterina Siletskaya and her husband, Andrei Siletsky, and Mercata chief Viktor Stolpovskikh. Devaud claimed in the letter that the Kremlin property department had paid US$492 million to Mercata for renovations, and that Mercata, in turn, had concluded more than US$65 million worth of “service agreements” with various offshore companies and foundations, more than US$25 million of which went to Borodin and his relatives (see the Monitor, September 14, 2000).
Borodin was detained in New York on a Swiss arrest warrant in January 2001 while on his way to the inauguration of U.S. President George W. Bush. He remained in a Brooklyn jail until April of last year, when he agreed to be flown to Switzerland rather than remain imprisoned while fighting the Swiss extradition request. The Swiss authorities, however, agreed to release him after the Russian government paid 5 million Swiss francs (US$3 million) in bail and Borodin agreed to return to Geneva for questioning. Borodin returned for questioning a number of times, but each time refused to cooperate with the Swiss investigators, availing himself of his right to remain silent (see the Monitor, January 18-19, 22; March 5, 9, 16, 23; April 10; May 4, 18, 2001).
Yesterday, Borodin, who was in Minsk for meetings with Belarusian President Alyaksandr Lukashenka concerning upcoming sessions of the Russia-Belarus union’s Council of Ministers and the High State Council, said that while he had not seen Bertossa’s ruling and could not comment on it specifically, he continued to believe that there had never been a case against him and that the charges had been “pure politics” and were “ordered up” by “certain political forces” in Russia (Regions.ru, RIA Novosti, March 6). In an interview published today, Borodin’s lawyers, Eleonora Sergeyeva and Ralph Oswald Isenegger, questioned whether Bertossa had the right to declare Borodin guilty, given that, in their words, “in the entire world only a court can declare a person guilty.” Bertossa, the two lawyers claimed, had “only expressed the opinion” that Borodin had violated the law but essentially admitted that there was no proof of Borodin’s guilt. The two lawyers said their client had not yet decided whether to appeal Bertossa’s guilty verdict, given that were he to appeal, Borodin might have to travel back and forth to Geneva for another two or three years. For his part, Bertossa said that the fact he had ended the Mabetex investigation did not signify that it had been a failure. “I was ready to represent the interests of the prosecutor’s office in court,” Bertossa said. “At the same time, I rate highly the work done by investigative magistrate Daniel Devaud. He, unfortunately, ran into insurmountable barriers, connected above all with the obstacles placed in his way by the Russian authorities.” Devaud said it is impossible to win a conviction for money laundering carried out in Switzerland if the money that was laundered was made from crimes committed in Russia (Kommersant, March 7).
While the Mabetex scandal has all but entered the historical archives, a new scandal involving alleged Russian money laundering appears to be brewing in Switzerland. The Swiss newspaper Le Temps reported this week that Swiss prosecutors are looking into whether government officials of Russia and Angola deposited in Swiss banks more than US$750 million earned from operations involving the sale and purchase of Angola’s debt to the former Soviet Union. The paper quoted Bernard Bertossa as refusing to comment about the reported probe, except to say that “figures known to us” were involved in the Angolan debt scheme. Le Temps itself reported that among those who participated in the scheme were Vitaly Malkin, former head of Bank Rossissky Kredit, which was once Russia’s sixth-largest bank but virtually collapsed with the August 1998 financial crisis, and Andrei Vavilov, who reportedly represented the Russian side in debt negotiations with the Angolan government in 1995-1996, when he was still a first deputy finance minister.
The paper reported that Malkin had proxy control over an account opened in the United Bank of Switzerland by a front company called Abalone Investment Ltd. Funds from Angolan debt payment operations were placed in this bank account and then transferred to various individuals through “complex operations.” According to the paper, Swiss observers believe that Malkin was a co-owner of Abalone Investment Ltd., along with two other players in these deals–Pierre Falcone, a French arms dealer, and Arkady Gaydamak, a Russian-born billionaire. Gaydamak originally lived in Paris but fled to Israel in late 2000, after the French authorities tied him to illegal arms sales to the Angolan government along with Jean-Christophe Mitterrand, son of the former French president who died in 1996. Le Temps, citing one unnamed source familiar with the case, reported that some of the funds from the Angolan debt scheme might have gone to finance Yeltsin’s 1996 presidential election campaign.
The author of the Le Temps piece, Sylvain Besson, told NTV television that the “Angola-gate” investigation in Switzerland would undoubtedly be pursued, given that the Swiss federal prosecutor’s office had experienced several “defeats” in the recent past, including the case against Borodin (NTV.ru, March 6; National Post [Canada], December 30, 2000).
JAVAKHETI–ANOTHER PROBLEM AREA IN GEORGIA?