Transnational Crime_Russian OC and Intl Cooperation

Transnational Crime_Russian OC and Intl Cooperation -...

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Unformatted text preview: Transnational Crime: The Case of Russian Organized Crime and the Role of International Cooperation in Law Enforcement LOUISE SHELLEY I n the twenty-first century, the handling of transnational crime will become a more important element of international foreign policy. With the end of super— power conflicts at the close of the cold war, international relations are increas— ingly being affected by the crime issue—whether it be trafficking in drugs, arms, or people or international money laundering.‘ The militarization of the antidrug war, the increasing intelligence emphasis on analysis of nonstate actors such as criminal organizations, and the staffing of embassies with a range of law enforce- ment personnel all point to this shift in foreign policy.2 The Russian-American foreign policy dialogue is still very much focused on nuclear and military questions, but since the latter half of the 19903, the crime issue has become increasingly important.3 The Russian—American law enforce- ment relationship is much more complicated than it appears at first glance. It is not simply an American reaction to the globalization of Russian organized crime. It involves a paradigm shift in the conduct of foreign policy requiring attention to new issues that diplomats have not been trained to address. Their focus is still on traditional security issues. Furthermore, combating transnational crime requires much more informal cooperation than the bilateral relationships of the cold war era. This different approach is very difficult for many traditional diplo— mats to accept. Congress has pressured the American ambassador to accept more law enforce- ment personnel within the American embassy in Moscow. The House Interna- tional Relations Committee has sought to increase the number of FBI agents in Moscow and expand the capacity of the Moscow mission to conduct investiga- tions.4 The government has authorized and spent millions to help train Russian law enforcement personnel in criminal investigative techniques in Russia, at the International Law Enforcement Academy in Budapest; and in the United States.5 Louise Shelley is a professor and director of the Transnational Crime and Corruption Cen- ter at American University, in Washington, DC. 49 50 DEMOKRATIZATSIYA The purpose of the training sessions is not only to impart information but to estab- lish the cooperative relations that are so crucial to effective international law enforcement. With serious differences in the legal systems and capacities and in the financial resources available to fight crime, personal connections in interna- tional crime fighting assume increased importance. Criminals have developed strong cross-border cooperation, and the law enforcers need to mirror that.6 The growth of a Russian-American law enforcement relationship reflects the broader development by the United States of bilateral law enforcement relation— ships with many countries since the 19805. Initially, this was a response to drug trafficking, but the agenda has broadened to include counterfeiting, arms traf- ficking, money laundering, and many other organized crime—related offenses.7 Liaisons from many US. law enforcement agencies have been posted in many embassies overseas. The United States has created a complex variety of legal, pol- icy, and operational structures to guide police and prosecutorial cooperation with foreign countries.8 Just as the military issues of the cold war era were characterized by distrust, issues of verification of information, and lengthy negotiations over treaties, so is the Russian—American relationship in dealing with crime affected by the same problems. Addressing strategic military questions in a bilateral manner requires formal negotiations and routinized inspection trips. Some of the cooperation on the crime issue requires the same formal procedures, such as negotiations over mutual legal assistance agreements and requests for case and bank information. Yet cooperation rather than rivalry is needed to address transnational crime. Many Russian officials are pressured not to cooperate with foreign law enforce— ment on key cases involving high-level officials. Therefore, the same problems exist as inpthe military arena, including unreliability of information, issues of corruption, and problems verifying crucial evidence. Misinformation in the press in both countries has distorted perceptions of cooperation in crime fight- ing. Some articles are a result of , deliberate disinformation fedto journalists in both countries.9 Problems in both countries have affected the advancement of legal coopera— tion. These problems include the political pressures applied to Russian investi- gators, the diversity of agencies on both the Russian and American sides involved in the investigative process, the fear by American law enforcement that criminal cases are being initiated as political vendettas and that members of eth- nic minorities are being singled out for prosecution disproportionately. The fail- ure of both Russian and American, law ”enforcement professionals to fully under- stand the ,laws and,,the procedures of their counterparts makes cooperation more difficult.10 Because of seriouscorruption on the Russian, side, cases involving Russian organized crime are more dependent than others on well-run American investigations. _ The Americans more.than...the.Busgiéns,h.%¥§,.h¢:t§l€1§fi,Engfiults.Of theses? eration, a situation explained by the retention of large amounts of Russ1an capi- tal within the United States and the failure to repatriate many of Russia’s stolen assets. The implication of many Russian officials in the criminal investigations Russian Organized Crime 51 has created extraordinary sensitivity in Russia and highlighted the centrality of the crime issue to the legitimacy of state governance. Globalization of Crime and the Russian-American Relationship The globalization of crime, flowing particularly from the former Soviet Union, has important implications for the development of the Russian state and the image of Russia in the international community.11 Many in Russia believe that its image as a superpower and a source of great intellectual activity has been‘overtaken by the perception of Russia as the source of the international scourge known as “the Russian mafia.” The politicization of the crime issue has made many Russians believe that the Russian mafia threat has replaced the communist threat in the eyes of many former cold warriors. Many influential Russians'aISO believe that the West has exploited the crime issue for political gain, yet at the same time West— ern institutions benefit enormously from the billions in Russian assets laundered and stored in the West.12 The distribution of Russia’s assets in financial banking centers and offshore havens throughout the world have brought a truly international dimension to investigation of Russian money laundering.13 In the Bank of New York case, the assets in the investigated accounts had moved or would move through approxi— mately forty different countries.:4 Ironically, Russia’s criminals and ex—nomenklatura members have been most successful in capitalizing on the globalization of the world’s financial markets.” Through their perfection of the vehicles of front companies, trust agreements, and other mechanisms used to hide wealth, they have been the major beneficiaries of the expansion of safe havens in the globalized economy. Many of those involved in these complex financial operations are former KGB personnel who moved funds abroad during the Soviet era. The proficiency of the international lawyers they have hired to craft the trust agreements for the obscure locales where they park their money have made tracing their sheltered assets extremely difficult.16 Russians are also at the forefront of usingtechnology to exploit the glObalized offshore economy. The European Union Bank, an offshore bank in Antigua oper- ated totally through the Internet, was established by a Russian. The bank was closed before the Anti guan regulators were ever able to inspect its records. The depositors remained anonymous because the files were encrypted with such sophistication that they could not be opened by American law enforcement. Moreover, none of the depositors has Come forth to file a complaint because the sources of their funds or their intentions wereprobably not legitimate.‘7 The discourse on the spread of the Russian mafia has obscured the fact that there is Western complicity in Russian organized crime. The billions laundered through the Bank of New York could not have passed through this institution with— out the assistance of high-level bank employees. More0ver, Western criminals have exploited the lack of legal norrns and well-trained law enforcement in the former Soviet states to commit numerous crimes in Russia. Of the hundreds of cases presently being investigated by the FBI in Moscow, the majority of them involve crimes perpetrated by Americans on Russian territory.18 52 DEMOKRATIZATSIYA Methodology Very little has been written on the problem of international law enforcement coop- eration in general and even less on the problem in relationship to the countries of the former Soviet Union. Part of this is explained by the fact that there is little information available in public documents. Members of the law enforcement apparatus are reluctant to discuss their investigative work because they do not want to jeopardize ongoing and future investigations. I have relied on a variety of sources to obtain information for this article. The open source materials I have used include information presented at congres- sional hearings and the testimony of government witnesses. Apart from that, the majority of my information comes from my extensive “Cooperation with the United States work with law enforcement is crucial for the Russian state agencies in the United States, because billions in Russian assets RUSS”, and EuroPe' 1 balls are parked in American financial Span} hundreds 0f hours dls‘ . . . ,, cussmg the problems of post— institutions. Soviet organized crime with American and Russian prose- cutors, law enforcement per- sonnel, and even some attor- neys retained by criminals from the former Soviet Union. These in—depth interviews provide the basis of this article. In addition, I have participated in numerous information-sharing meetings in the United States, Western Europe, and the former Soviet Union that have brought together law enforcement personnel from different countries.19 The Transnational Crime and Corruption Center in Washington, DC, with sup- port from the Department of Justice, has helped organize meetings and work— shops in different parts of Russia to bring together law enforcement personnel from different agencies in the United States and their counterparts in Russia, thus providing greater insights into the actual dynamics of Russian-American cooperation. The information presented at these meetings on such specific topics as money laundering, trafficking in women, and corruption, as well as the more general problems of securing law enforcement cooperation, has allowed me to observe the development of this problem over the last six years in both a bilateral and multilateral context. Informal and formal exchanges with law enforcement par— ticipants have proved invaluable in assessing the problems of corruption within the cooperative relationship and the serious problems posed by significantly dif— ferent legal codes and procedural norms.20 Work as an expert witness, for the defense and the federal government in immi- gration cases in the United States, Canada, and Europe has given me an unprece- dented opportunity to view the problems of cooperation outside the sphere of tra— ditional criminal investigations.“ Those cases have placed American-Russian anticrime efforts in a comparative perspective. Russian Organized Crime 53 In the article I make limited use of the media because many of the press reports in this area are problematic. Particularly good journalism has been done in the United States on Golden Ada and the Bank of New York, two major money laun- dering cases. The stakes are so high in these cases that traditional Soviet—era meth- ods are often used to derail investigations. Reporters covering the Bank of New York case revealed in an article that they had been deliberately misled by a source.22 Because Russian newspapers are controlled by oligarchs and regional officials who often use journalists under their control to get at organized crime groups affiliated with their rivals, there may be deliberate distortion of crime reports. A vivid illustration of this was a recent front-page story in Izvestiya, pub- lished at the time of a law enforcement meeting in Ekaterinburg, that identified a Department of Justice representative and an American University scholar as FBI agents coming to investigate the ties of major American criminal cases to the Urals. The lengthy article did not represent a distortion of the facts but instead was a total misrepresentation of information. The prominence given to the article suggests a deliberate intention to undermine efforts to curtail high-level corruption. Without access to full—length investigative records and lacking information on many cases in which there has been Russian—American cooperation, it is difficult to provide a comprehensive View of the cooperation. Therefore, my observations are derived only from a sampling of cases involving the FBI, Customs, INS, and organized crime strike forces. I will address a range of cases, including a tradi- tional organized crime case, a crime facilitated by computers, and a complex money laundering case. The Nature and Quality of American-Russian Law Enforcement Cooperation Cooperation with the United‘States is crucial for the Russian state because bil— lions in Russian assets, now needed for the country’s reconstruction, are parked in American financial institutions.23 The presence of this illicit capital is a sig— nificant concern to the Department of Justice, which has a responsibility to pro— tect the integrity of the American banking system.24 The laundering of money through American banks provides the working capital for criminal penetration into the American economy. But cooperation is inhibited by many different factors. Many American law enforcement personnel are unaccustomed and untrained to operate in the inter- national arena. Communication between the Department of Justice and the FBI is limited and there is insufficient communication among the different field offices working on similar and related cases.25 The domestic problems are com- pounded by the need to operate overseas, particularly in Russia, where there is limited technical capacity, widespread diStrUSt of foreigners, in particular the FBI, and pervasive corruption. Such problems undermine the possibilities for collab- oration. Russian law enforcement officials, investigators, and prosecutors feel frustrated by the legal safeguards and the lack of coordination among different US. federal agencies, which produce interminable delays and prevent the return of looted Russian assets. 54 DEMOKRATIZATSIYA In the absence of formalized legal agreements, Russian—American cooperation is highly dependent on personal and institutional cooperative relationships. There is no extradition agreement, which has made it difficult for the United States to secure the return of criminals who have fled to Russia to escape prosecution in the United States.26 Likewise, the absence of extradition has left the Russians unable to place individuals on trial in Russia who have obtained green cards or have sought political asylum. In several notable cases in the United States, crim- inals wanted in Russia and other Soviet successor states have appealed success- fully to immigration judges on the grounds that they faced persecution at home. Requests for information on both sides have resulted in lengthy delays. Amer- ican prosecutors, in interviews, admit that international requests for assistance may fall to the bottom of the to-do pile. Americans likewise complain of both inadvertent and deliberate delays from Russian colleagues. To overcome many problems of cooperation, the United States recently concluded a mutual legal assistance agreement with Russia that encourages but does not require (as would a mutual legal assistance treaty) mutual legal assistance in obtaining information and evidence. Training has become a pillar of American law enforcement engagement with Russia, a means to develop cooperative relationships.” Without an understand- ing of the procedures needed to submit legally admissible documents, months of Russian investigative work will bring no results in American courts. Much train- ing has not been effective, however, because of institutional rivalries among American law enforcement agencies, the failure to prepare trainers for the con- ditions they would encounter in Russia, and the tendency of trainers to fly in and out without really engaging their Russian colleagues. In a notable example of American corruption, the Justice Department’s International Criminal Investiga- tive Assistance Program office was searched and sealed by the FBI in 1997. A major general investigation of the office continued for several years, examining misuse of training funds and other abuses by personnel employed in the office.28 A completely new staff had to be brought in to develop and implement effective training programs. FBI and Ministry of Interior Cooperation Leadership in the cooperative relationship with Russia began with the FBI. The State Department was much slower to move in the law enforcement arena and is generally assuming a coordination rather than a leadership role in combating crime. Millions of dollars in foreign assistance money now moves through the Bureau for International Narcotics and Law Enforcement AffairsbofthewState _ Department to provide training and other programs to combat a wide range of organized crime activities. Yet the impetus for the major training initiative in Budapest, the International Law Enforcement Academy, came from the FBI.29 Louis Freeh, the director of the FBI, has been at the forefront of moving the FBI into the international arena andaddressing the transnational dimensions of crime. The mystique of the FBI has allowed it the autonomy to assume leader- ship in the international arena when other law enforcement branches of the gov— Russian Organized Crime 55 ernrnent could not. Other federal agencies are more hampered by the federal gov- ernment bureaucracy and lack such a strong constituency in Congress.30 The Russian FBI initiative followed from a larger international initiative with— in the FBI to globalize its activities and place personnel in countries with large domestic criminal organizations, such as Italy or Hong Kong. Therefore, the FBI office in Moscow was opened by an agent who had previously worked in Hong Kong. The basis for the global expansion is the underlying belief that a network of close working contacts is essential to successful investigations. In Russia, the FBI is willing to cultivate a variety of relationships with dif- ferent actors in the law enforcement apparatus because they believe they will remain their present and future partners in investigations, despite oscillations in American—Russian relations. The pragmatism of the FBI and its encompassing approach reveal a very different conduct of policy than that of traditional diplo- mats. In the late 1990s, State Department officials were interacting almost exclu— sively with the Yeltsin circle, whereas the FBI continued to maintain contact with ousted law enforcement professionals with whom they had developed good working relationships. Their pragmatic approach made them not want to “put all their eggs in one basket.” The power of the FBI has given them leeway to bypass the ambassador and even the White Hou...
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