Publication: Monitor Volume: 7 Issue: 155

The current Newsweek story essentially moves forward reports that first appeared last year in the French daily Le Monde and the Russian tabloid Sovershenno Sekretno. However, Le Monde–unlike Newsweek in its current article–claimed in its May 2000 item that German Gref, Russia’s minister of economic development and trade, who throughout the 1990s served in the St. Petersburg city government, as (among other positions) head of its privatization agency, also served as a SPAG advisor. The French paper quoted Markus Rese, SPAG’s director, as saying that both Putin and Gref served as unpaid advisors to SPAG until March 2000, and that their relationship with the company was “some kind of a patronage.” Rese, however, has now told Newsweek that while Putin was a “contact,” his presence on SPAG’s unpaid advisory board was largely an “honor” and the president-to-be had nothing to do with the activities SPAG is alleged to have engaged in.

However, Newsweek cites an unnamed former top U.S official as saying that Washington last year successfully lobbied to have Russia placed on an international moneylaundering blacklist, thanks in large measure to “a sheaf of intelligence reports linking Putin to SPAG.” Newsweek speculates that theallegations concerning SPAG and Putin could affect the international community’s decision on whether to take Russia off that list. The Financial Action Task Force (FATF), which was set up by the Group of Seven industrialized countries in 1989 to combat money laundering, will soon meet to decide which countries are in violation of international norms and standards for financial activity. Guatemala, Burma, Egypt and a number of Pacific Ocean island nations are among those expected to be on the blacklist and may be targeted for tough sanctions, including limitations on international credits. While Russia was put on the FATF blacklist last year, the State Duma passed an anti-moneylaundering law in July of this, leading some media to predict that Western governments will now opt to take Russia off (Moscow Times, May 30, 2000; Newsweek, September 3; see also the Monitor, July 16, August 6).

Whatever the case, the SPAG scandal is not the only St. Petersburg corruption scandal in which Putin is alleged to have played a role. Last year, Marina Salye, a St. Petersburg democratic activist, claimed that in 1991-1992, when she headed a working group of the St. Petersburg city council, she came across documents concerning the involvement of the St. Petersburg mayor’s office, and Putin himself, in various financial machinations. These included skimming money from the sale of Russian natural resources, the proceeds from which were supposed to be used for the purchase abroad of food supplies for the city (see the Monitor, March 16, 2000). In addition, other members of Putin’s government have allegedly maintained ties with organized crime figures. Segodnya, the now-defunct newspaper of Vladimir Gusinsky’s nearly liquidated Media-Most group, reported earlier this year that Viktor Cherkesov, a long-time Putin associate and fellow KGB veteran who is currently the presidential representative in the Northwest federal district, was using a former associate of two reputed St. Petersburg crime bosses, Kumarin-Barsukov and Aleksandr Malyshev, as one of his personal bodyguards (see the Monitor, January 10).