Publication: Monitor Volume: 7 Issue: 12

Pavel Borodin, former Kremlin property manager and current state secretary of the Russia-Belarus Union, was detained at New York’s Kennedy airport on a Swiss arrest warrant for alleged money laundering. According to Russian agencies, Borodin will be arraigned in a Manhattan court today, and a district court in Brooklyn will tomorrow consider whether to extradite him to Switzerland. Geneva Prosecutor Bernard Bertossa was quoted today as saying that the Swiss authorities would indeed seek Borodin’s extradition from the United States. Borodin was reportedly on his way to attend the inauguration of U.S. President-elect George W. Bush–at the invitation of “representatives of the Republican Party,” according to NTV television. A lawyer for Borodin said that he had already sent documents to New York showing that Borodin had traveled to the United States in response to an “official” invitation to attend Bush’s inauguration (NTV, Russian agencies, January 18). The Rosbizneskonsulting (RBK) news agency quoted a source in the Prosecutor General’s Office as saying that that Borodin was traveling on a diplomatic passport. Borodin’s lawyer, however, said that the passport was an ordinary one. According to other reports, Borodin tried to get the visa on his diplomatic passport, but was unable to receive it in time, and therefore got one on his personal passport. A source in the apparatus of the Russia-Belarus union told the Interfax news agency that despite the fact that Borodin was not using a diplomat passport, he did have diplomatic immunity. His arrest was therefore “illegal” and “a violation of international treaties.” Interestingly, General-Major Vladimir Gordienko, head of the national central bureau of Interpol in Russia, said that, prior to Borodin’s arrest in New York, the Russian Interpol office had received an “inquiry” concerning Borodin. Gordienko neither provided details of that inquiry nor indicated who made it (Russian agencies, NTV, Reuters, January 18).

Almost exactly a year ago–on January 20, 2000–the Swiss authorities issued an international warrant for Borodin’s arrest for money laundering in connection with the so-called Mabetex affair, involving charges that a Swiss engineering-construction firm paid bribes to top Russian officials, including Borodin, in exchange for lucrative contracts to refurbish Russian government buildings. Earlier that month, Vladimir Putin, in one of his first acts as Russia’s new president (besides giving his predecessor immunity from prosecution) had removed Borodin from the post of Kremlin property manager but recommended that he be appointed as state secretary of the new Russia-Belarus Union. Putin had worked earlier in his career as Borodin’s deputy (see the Monitor, January 11, 28, 2000). Last December, the Prosecutor General’s Office dropped its probe of Mabetex, saying that no evidence had been uncovered that a crime was committed. The Swiss authorities said they would continue their own probe, and Geneva Prosecutor Bernard Bertossa condemned the Russian prosecutors’ decision, saying it proved that Russia’s “organs of justice” were not independent (see the Monitor, December 13, 15, 2000). The specifics of the Swiss charges against Borodin have not yet been officially revealed. NTV television reported today that Swiss prosecutors say Borodin received US$25 million in bribes from Mabetex in return for a US$300 million contract to refurbish the Kremlin palace (NTV, January 18). Receiving a bribe, however, is not in and of itself illegal in Switzerland. Money laundering is. According to a letter from Swiss magistrate Daniel Devaud to Russian Prosecutor General Vladimir Ustinov, which was leaked to the media earlier this year, Mabetex affiliate Mercata Trading and Engineering won US$492 million in contracts from Borodin’s office, after which it paid out US$65.52 million in “commissions” to various people, including more than US$25 million to Borodin and members of his family, some of which was deposited into Swiss bank accounts (see the Monitor, September 14, 2000). The Swiss are also looking into a project to refurbish former President Boris Yeltsin’s presidential jet, which was converted into a kind of “flying hospital.” Mercata brokered that refurbishment agreement. A newspaper, citing Devaud, reported today that the firm which refurbished the jet charged US$13 million for its work, but that the Kremlin property department paid out US$39 million. Afterwards, Mercata allegedly paid out “significant sums”–presumably out of the difference between the official price for the project and the actual price paid by Borodin’s office–to top Russian officials, including Borodin and then Presidential Security Service chief Aleksandr Korzhakov (Segodnya, January 18). Borodin and others named in connection with the case, including Mabetex president Behgjet Pacolli and Mercata head Viktor Stolpovskikh, have consistently denied all accusations related to the Mabetex affair.