The letter from Swiss magistrate Daniel Devaud to Russian Prosecutor General Vladimir Ustinov notes, among other things, that Mercata and Mabetex are closely linked companies: Stolpovskikh, who now heads Mercata, previously headed Mabetex. Pacolli, however, is not named among the fourteen listed as having been charged. The letter also refers to another once powerful Russian official–Oleg Soskovets, who was Russia’s first deputy prime minister until 1996. According to Devaud, a search of Mabetex’s offices in Switzerland back in January 1999 turned up evidence that Borodin and Soskovets had accounts in the Union Bank of Switzerland (UBS), one of the country’s leading banks. There is no indication in the letter that Soskovets has been charged with any crime.
The letter focuses on the activities of Mercata, which, according to Devaud, received a total of US$492 million worth of business from Borodin’s office, including contracts to renovate the Kremlin Palace hall, the building housing the Audit Chamber–which, ironically, is the state watchdog agency established to monitor the spending of federal budget funds–and former President Boris Yeltsin’s airplanes. Devaud details some rather Byzantine payment schemes. In 1996, for example, Mercata concluded a US$21 million “service agreement” with an Isle of Man-based company called Lightstar Low Voltage Systems Ltd.–which, according to Devaud, is owned by Stolpovskikh. In 1997, Mercata paid out the US$21 million to Lightstar, which then, in turn, made payments into various bank accounts. These included a US$4.155 million payment that went to an account in Switzerland’s Banca del Gottardo belonging to Winsford Investment Ltd., another company owned by Stolpovskikh, and a US$10.25 million payment which made its way, via yet another middleman, to an account in the Swiss bank SBC (which later became UBS after a merger) belonging to Somos Investment, a company owned by Borodin.
Mercata concluded other “service agreements” with Lightstar in 1997-1998 worth US$18.24 million, US$11.52 million and US$11.76 million. In 1997, after Mercata received another payment from the Kremlin property department, US$5.68 million was paid into an account in United Overseas Bank (Nassau, Bahamas) belonging to a Panama-based entity called the Amadeus Foundation, belonging to Borodin. Devaud claims that other persons among the fourteen people named in the letter (including one man described by Corriere della Sera as being connected with the Nizhnevartovsk organized crime group and the “right hand” of oligarch Aleksandr Smolensky) also received payments–most of them for more than US$1 million–via Mercata and Lightstar. The total of such payments made by Mercata was US$65.52 million, more US$25 million of which went to Borodin and his relatives (Segodnya, Corriere della Sera, September 12; Moscow Times, September 13).
Devaud’s letter, besides being an interesting window on the Yeltsin-era Kremlin’s unorthodox financing methods, is significant in the context of President Vladimir Putin’s repeated promises to crack down on the Yeltsin-era oligarchs and his denunciations of their corruption. Indeed, last month the head of state blamed the tragic sinking of the Kursk submarine on the tycoons who had enriched themselves under the previous administration and built villas on the Mediterranean. Yet Borodin, who presided over perhaps the largest business empire in Russia, has somehow escaped Putin’s wrath. While Putin removed Borodin as the Kremlin’s property manager soon after assuming the presidency, he immediately proposed Borodin’s candidacy for the post of State Secretary of the Union of Russia and Belarus, in which capacity Borodin has now been working for nearly nine months (see the Monitor, January 12). According to some observers, Borodin’s new job reportedly gives him the status of an international bureaucrat and thus immunity from prosecution. Whatever the case, the Russian and Swiss authorities clearly do not see eye to eye on the issue of Borodin’s alleged sins, even though the Russian Prosecutor General’s Office is supposedly still investigating the Mabetex case (see the Monitor, January 28). In January, Geneva prosecutor Bernard Bertossa issued an international warrant for Borodin’s arrest. In June, Vladimir Kozhin, the man Putin picked to replace Borodin announced that an audit of the Kremlin property department had found that no significant abuses had occurred during Borodin’s tenure (see the Monitor, June 9).
MILITARY SAYS IT HAS PROSECUTED 300 CASES OF WAR CRIMES IN CHECHNYA.