Publication: Monitor Volume: 7 Issue: 70

Lawyers for Pavel Borodin, the Russia-Belarus union state secretary and former Kremlin property manager, have asked the Swiss authorities that he be released on bail. Borodin, who was arrested in January at New York’s JFK International Airport on a Swiss warrant and placed in a Brooklyn jail, was flown to Switzerland over the weekend after deciding to drop his efforts to resist extradition. Geneva prosecutor Bernard Bertossa indicted Borodin for laundering close to US$30 million he and members of his family allegedly received as kickbacks from two Swiss firms, Mabetex and Mercata Trading, in exchange for lucrative contracts to refurbish Russian government buildings and for membership in a criminal organization. Borodin is currently in a Geneva prison (Moscow Times, March 9; NTV, March 10; see also the Monitor, January 18-19, 22).

Borodin has hired Ralph Oswald Isenegger, a well-known Geneva lawyer, to join his defense team. Isenegger and Bertossa have faced off in the past: Three years ago, Isenegger won the acquittal of Sergei Mikhailov, the Russian businessman accused of being a top organized crime boss, who was arrested and tried in Switzerland for alleged membership in a criminal organization. The authorities in the canton of Geneva were forced to pay Mikhailov US$500,000 in damages for his more than two-year stay in a Geneva prison. Bertossa’s case against Mikhailov collapsed after he failed to receive an official confirmation from the Russian Prosecutor General’s Office that Mikhailov–also known by the moniker “Mikhas”–was head of Moscow’s powerful Solntsevo organized crime group. While the Russian side had promised such a confirmation, it sent instead a document signed by then Deputy Prosecutor General Mikhail Katyshev saying that the Russian authorities had found no incriminating evidence against Mikhailov.

Bertossa could encounter similar problems this time, given that the Russian Prosecutor General’s Office closed down its own investigation of the Mabetex affair last December, saying that it had found no proof that crimes were committed. “In order to investigate money laundering in Switzerland, there has to be an already proven crime–this is what the law demands,” Isenegger told a Russian newspaper. “It is not possible to launder clean money. A Russian court would have to have recognized Borodin as a corrupt official. The Russian Prosecutor General’s Office analyzed the material of [Geneva investigating magistrate Daniel] Devaud and found no basis on which to file criminal charges.” According to Isenegger, Devaud did not interview a single Russian official who might have been involved in awarding the government refurbishment contracts to Mabetex or its affiliate, Mercata Trading, and thus who could confirm whether Borodin played a role in the distribution of these contracts. Isenegger said that among the accused, along with Borodin, are Mabetex chief Behgjet Pacolli; Gregory Connor, a business associate of Borodin; Mercata chief Viktor Stolpovskikh; and two employees of United Bank of Switzerland (Vedomosti, April 10; see also the Monitor, March 23).

A letter from Devaud to Russian Prosecutor General Vladimir Ustinov leaked to the Russian press last year claimed that Mercata paid out more than US$60 million in commissions from Russian government refurbishment contracts worth US$492 million into various offshore bank accounts belonging to fourteen people. According to the letter, more than US$25 million went to offshore entities belonging to Borodin and members of his family (see the Monitor, September 14, 2000).