Publication: Monitor Volume: 6 Issue: 37

Semen Mogilevich, the reputed Russian organized crime boss who allegedly laundered money through the Bank of New York (BONY), has given an interview to a leading Russian weekly. In it, he claims that he has been connected to the scandal only because one of his firms, coincidentally, has the word “Benex” in its name. Benex is the name of one of the companies set by Peter Berlin, who, along with his wife, former BONY employee Lucy Edwards, pleaded guilty in New York last week to money laundering and lesser charges (Moskovskie novosti, February 22). Investigators believe that nearly US$7 billion from Russia passed through Benex and other fund-transfer companies set up and operated by Berlin and Edwards into BONY. The couple, who are both Russian emigres, have apparently copped a plea and are cooperating with the U.S. authorities. According to a report this week, an organized crime group allegedly headed by Mogilevich and based in Budapest used the Edwards-Berlin channel to launder at least US$500 million (Newsweek, February 28).

In his interview, Mogilevich claimed that neither a special Russian parliamentary commission nor Russia’s special services nor its tax police had received any evidence of his involvement in the BONY scandal. He also said that the U.S. law enforcement agencies had sent their counterparts in other countries a “dossier” accusing him of selling–among other things–arms obtained in Germany to Iraq and Iran, narcotics, art forgeries, human organs and prostitutes, and involvement in murder. Mogilevich claimed to have been in the United States more than ten times without once being detained or questioned. Asked whether he had Russian/Israeli dual-citizenship, Mogilevich was evasive, saying that he had “several offshore companies” which were “absolutely legally” registered. Asked about his current line of business, he answered: “I trade wheat” (Moskovskie novosti, February 22).

In the BONY case, Lucy Edwards has thus far named two Russian banks which she said were involved in money laundering–the Depositarno-Kliringovy Bank (DKB) and Flamingo Bank–whom, she said, she helped set up branches in the United States without obtaining licenses from the Federal Reserve Bank. An official of the Depositarno-Kliringovy Bank has denied Edwards’ accusations (Moscow Times, February 17-18, 22; ORT, February 19). According to some Russian media, another bank, MDM, was involved in the BONY money laundering scheme. One of MDM’s top officials is Aleksandr Mamut, who is reportedly close to two other Kremlin insiders–the tycoon Boris Berezovsky and Sibneft chief Roman Abramovich (Versiya, February 22). Last October, NTV television alleged that the Kremlin administration was the “krysha” (roof, meaning protection) for a scheme to launder money illegally abroad in which MDM, among others, was involved (see the Monitor, October 11, 1999). Meanwhile, Swiss investigators last week formally asked the United States for assistance in their own investigation into a Swiss connection to the BONY case. Swiss investigators have also been probing alleged kickbacks from Swiss firms to top Russian government officials and the alleged embezzlement of funds from Aeroflot, Russia’s state airlines, through Swiss companies allegedly set up by Berezovsky (Reuters, February 17). There is reason to believe that there is overlap between these two cases and the BONY case.