Publication: Monitor Volume: 6 Issue: 126

Swiss prosecutors have formally charged Bahgjet Pacolli, head of the Swiss construction-engineering firm Mabetex with paying bribes to Russian officials for lucrative contracts to refurbish government buildings. While Daniel Devaud, investigating judge in the city of Geneva, did not give details of the charges, the Interfax news agency reported that he had accused Pacolli of paying US$64 million in bribes to Russian officials. Devaud said he will also bring formal charges against Viktor Stolpovskikh, the head of Mercata Trading and Engineering, another Swiss firm which was awarded Russian contracts. Earlier this year, the Swiss authorities issued an arrest warrant for Pavel Borodin, the former head of the Kremlin’s property department, for laundering bribes in Swiss banks. Borodin, who earlier this year, on President Vladimir Putin’s recommendation, became state secretary of the Russia-Belarus Union, has repeatedly denied any wrongdoing. Pacolli this week repeated his previous denials that he paid any bribes or kickbacks to Russian officials. Meanwhile, Ruslan Tamaev, the Prosecutor General’s Office investigator in charge of the Russian investigation into the Mabetex affair, said yesterday that his office has no basis to charge either Pacolli or Borodin, and that the two are witnesses, not suspects. Prosecutor General Vladimir Ustinov said that his office had not received materials from Switzerland regarding either the Mercata or the Mabetex case (Russian agencies, Segodnya, June 27; Moscow Times, June 28). Swiss officials have complained about not receiving full cooperation from their Russian colleagues in the investigations.

Earlier this month, the Italian newspaper Corriere della Sera quoted a letter from Devaud alleging that Mabetex had paid US$4 million in bribes to Russian officials, most of it to Borodin, and that Mercata Trading and Engineering, had paid US$60 million in bribes, at least US$25 million of which went to Borodin (see the Monitor, June 13).

Meanwhile, a Russian newspaper quoted an anonymous Swiss police official and an anonymous official from the Swiss Prosecutor’s Office as saying that former Prime Minister Viktor Chernomyrdin received tens of millions of dollars from Mercata Trading and Engineering, which were deposited into a Swiss bank account. The Swiss officials also said that Swiss banks were used both as intermediate stops in the transfer of money from Russia to the Bank of New York (BONY) and as the final destination for money laundered through BONY, and that they had evidence that funds from Russian privatization and from the International Monetary Fund and the World Bank were involved. The anonymous Swiss police official claimed that he and his colleagues had managed to discover this despite “active opposition” from both Russian and U.S. officials. “Our investigation is extremely disadvantageous to them, highly unscrutinized affairs are coming to light,” the Swiss police official said. “And for the Russian authorities our investigation is similar to death.” He added that the identities of some of the Russians involved in the BONY case would soon come to light, and gave a preview by naming United Energy Systems chief and former privatization tsar Anatoly Chubais “and all of his circle from the period of active Russian privatization,” former Prime Minister Sergei Kirienko, and Kremlin insiders Boris Berezovsky and Roman Abramovich. The Russian newspaper claimed the Swiss authorities would soon bring formal charges against more than a dozen Russian VIPs, including former First Deputy Prime Minister Oleg Soskovets and Tatyana Dyachenko and Yelena Okulova, former President Boris Yeltsin’s daughters (Novaya gazeta, June 26).

According to press reports last year, Mabetex provide credit cards to Yeltsin and his daughters, and Newsweek magazine reported earlier this month that Dyachenko and Okulova would be charged in the Mabetex case (see the Monitor, June 13). Swiss officials, however, publicly denied the Newsweek report. Viktor Chernomyrdin, meanwhile, yesterday characterized the newspaper’s allegations that he received bribes and maintained a Swiss bank account as “nonsense” (NTV, June 26).