Publication: Monitor Volume: 7 Issue: 58

In an article published this week, the Italian newspaper La Repubblica claimed that U.S. Secretary of State Colin Powell has become personally involved in the Swiss law enforcement authorities’ request to extradite Pavel Borodin, the Russia-Belarus union state secretary and former Kremlin property manager, who was jailed in Brooklyn this past January on a Swiss warrant. The Swiss want to question Borodin about accusations of money laundering and membership in a criminal group stemming from the so-called Mabetex case, involving charges that Russian officials, including Borodin, received multimillion-dollar bribes from two affiliated Swiss construction-engineering firms, Mabetex and Mercata Trading, in return for lucrative contracts to refurbish Russian government buildings and other objects.

According to La Repubblica, information provided by Geneva magistrate Daniel Devaud to U.S. federal prosecutor Thomas Firestone, along with “diplomatic correspondence” between Powell and U.S. Magistrate Viktor Pohorelsky, “is more than enough to extinguish any hope for [Borodin’s] quick return to freedom and departure for safe Moscow.” On March 9, Pohorelsky denied Borodin’s request to be freed on bail, after which the Russia-Belarus Union state secretary was taken to a Brooklyn hospital with suspected heart problems. On March 16, Borodin’s lawyers appealed the decision to deny him bail, but this week U.S. Federal Judge Eugene Nickerson upheld Pohorelsky’s decision denying bail. Meanwhile tensions between Moscow and Washington over Borodin’s detention have been rising (Russian agencies, March 22; see also the Monitor, March 9, 16). A court hearing on the Swiss extradition request is scheduled for April 2. La Repubblica also claimed that the information Devaud provided to Firestone was accompanied by a letter from the U.S. consul general in Berne, Switzerland. The paper, however, neither specified what the letter contained, nor included a response from Powell or the State Department.

Judging by the La Repubblica article, its author Carlo Bonini was privy to the documents on Borodin that the Swiss authorities sent to the United States along with their extradition request. His article provided new details about one set of accusations–those involving the contract awarded to Mercata Trading to refurbish Boris Yeltsin’s presidential jet. According to the article, Borodin in 1995 signed a contract with Mercata worth US$37,072,000 to refurbish the presidential jet. Mercata, in turn, subcontracted the work out to Jet Aviation, a Basel, Switzerland-based firm, for US$12,750,000. Mercata’s chief, Viktor Stolpovskikh, then allegedly split the difference between the two contracts–some US$25 million–keeping US$10.7 million for himself, depositing some US$5 million into accounts belonging to unknown persons in the Banco del Gottardo Bahamas, transferring another US$6.2 million to a citizen of Kazakhstan named Mingaleeva (described as an “old acquaintance” of Mabetex chief Behgjet Pacolli) and some US$2 million to two Swiss citizens, Carlo Mahler and Agim Gjinali. According to La Repubblica, Mahler headed a company called Seagas which was connected to Mercata and is named in the Swiss documents as one of the creators of the financial mechanism for laundering “commissions” received from Kremlin refurbishment contracts. Gjinali, the paper reported, was previously a partner of Stolpovskikh and emigrated to Switzerland from the Yugoslav region of Kosovo in 1991 with the help of Pacolli, a fellow Kosovar Albanian. La Repubblica quoted Gjinali denying any knowledge of the US$2 million transfer, but reported that Devaud has documentary evidence of how the US$25 million was divvied up, the result of a Geneva police raid on the office of Gregory Connor, described as a business associate of Borodin and Stolpovskikh (La Repubblica, March 20).

La Repubblica, it should be noted, was one of the first newspapers to report details of a Swiss investigation into allegations that a US$4.8 billion credit from the International Monetary Fund to Russian in the summer of 1998 was diverted and laundered through various banks, including Swiss banks (see the Monitor, July 15, 17, 21, 2000).

A letter from Devaud, the Swiss magistrate, to Russian Prosecutor General Vladimir Ustinov that was written last year and later leaked to the Russian press alleged that Mercata Trading had received US$492 million in refurbishment contracts from Borodin’s Kremlin property department, and that the firm had paid out a total of US$65 million in “commissions” from these contracts. According to Devaud’s letter, Borodin and members of his family received more than US$25 million in such “commissions” (see the Monitor, September 14, 2000).