Publication: Monitor Volume: 6 Issue: 179

A legal battle is shaping up in Switzerland over the so-called Mabetex case, involving the alleged laundering of bribes paid by two affiliated Swiss construction-engineering firms, Mabetex and Mercata Trading, to top Russian government officials. On September 25, a Swiss court ordered that accounts belonging to the two firms and located in banks in Zurich, Lugano and Geneva, be unfrozen. Yesterday, however, the order was essentially countermanded by investigating magistrate Daniel Devaud, who ordered that the accounts be frozen once again in connection with unspecified “new information” which he said had come to light in connection with the Mabetex investigation (Russian agencies, September 26). Last September, Devaud had ordered that the accounts be frozen as part of the investigation into the alleged laundering of kickbacks paid by the firms to Russian officials in return for lucrative contracts to refurbish Russian government buildings. According to a July letter from Devaud to Russian Prosecutor General Vladimir Ustinov, the contents of which were recently leaked to several newspapers, the Swiss authorities have charged fourteen people, including Mercata head Viktor Stolpovskikh and former Kremlin property manager Pavel Borodin, with money laundering and participation in a criminal organization for allegedly paying out and receiving more than US$60 million in “commissions” from US$492 million that Borodin’s office paid to Mercata for several renovation contracts. According to Devaud’s letter, the commissions were paid into bank accounts in Panama, the Isle of Man and the Bahamas, and more than US$25 million out the US$65 million in payments went to Borodin and members of his family. In his letter, Devaud asked his Russian counterparts for help in gathering evidence against the fourteen suspects (see the Monitor, September 14).

In Moscow, meanwhile, several of the key targets of the Swiss probe struck back with their own accusations. Pavel Borodin, who is now serving as state secretary of the Russia-Belarus Union, told a group Swiss journalists that the accusations against him were “complete madness” and charged that both Devaud and Carla Del Ponte, the former Swiss federal prosecutor who now heads the International War Crimes Tribunal, had taken bribes. Borodin did not say who allegedly paid these bribes, or for what purpose. He has consistently denied all the charges against him and denied that he held bank accounts abroad. Asked by the Swiss newspaper Le Temps to respond to Borodin’s comments, another top Swiss official involved in investigating Russia-related corruption charges, Geneva prosecutor Bernard Bertossa, said that he did not have the habit of engaging in public polemics with figures under criminal investigation, “especially when they are saying such ridiculous things.” At the same time, Bertossa called Borodin’s accusations “a declaration of war which should not be underestimated,” because they might foretell “new pressures, threats or machinations.” Bertossa called Borodin an “influential figure of a powerful state which has never known democracy” and said it is possible that Russian officials are unable to imagine that a judicial organ could be free of corruption. Bertossa said that while officials of the Russian Prosecutor General’s Office recently promised they would respond to Devaud’s letter, they have failed to do so. Bertossa said he saw little hope that those named in Devaud’s letter would be prosecuted in Russia (Russian agencies, September 26).

For his part, Mercata chief Viktor Stolpovskikh yesterday denied that any Russian officials received US$60 million in “commissions” in return for refurbishment contracts and charged that the freezing of his company’s bank accounts since last September had cost it US$30 million in lost profits (Russian agencies, Sept 26; Vremya novostei, September 27).

In a related development, a Russian newspaper reported last week that in early 1996, the company Golden ADA Incorporated, which subsequently became the target of an investigation in Russia into the alleged illegal exportation of hundreds of millions of dollars in diamonds and precious metals, purchased eighteen plots of land near Lake Tahoe in the United States, along with automobiles and yachts, for eighteen people from then President Boris Yeltsin’s inner circle. According to the paper, two of those eighteen are also among the fourteen mentioned in Devaud’s letter to Russian Prosecutor General Ustinov. The paper noted that these purchases took place at a time when Yeltsin’s poll numbers were extremely low and it was not clear that he would win his bid for re-election in the summer of 1996. The paper, citing records from FBI investigations in San Francisco, where Golden ADA was headquartered, also reported that “commissions” from deals the company made were deposited in bank accounts in Switzerland, the Caribbean, Finland, Ireland and the United Kingdom, and that Golden Ada had transferred some US$400,000 through the Kremlin’s “Fund for Presidential Programs,” ostensibly for the publication of an American edition of “Zapiski Presidenta,” the second installment of Yeltsin’s memoirs (Moskovskie novosti, September 19).