This should look familiar from GDF : Centragas:
- Centragas AG is a holding company which holds a 50% interest in RosUkrEnergo (RUE), a Swiss gas distribution company
- Centragas Holding AG was incorporated in Vienna in July 2004
- RUE is a 50/50 joint venture between Centragas and Russian energy company Gazprom
- RUE currently supplies circa 55 billion cubic metres of gas per year to Ukraine from the Central Asian countries of Turkmenistan, Uzbekistan and Kazakhstan
- In 2007, RUE is supplying gas to Ukraine at a price of $130 per tcm which is substantially below the contracted and spot prices elsewhere in Europe.
- Centragas, via RUE, holds 25% in UkrGasEnergo, a Ukrainian domestic gas distribution company
- Also RUE currently exports circa 11 billion cubic metres of gas to Central and Western European countries, notably Hungary and Poland
- RUE reported turnover in 2006 of $7.1 billion
- Centragas AG is headquarted in Vienna and is headed by CEO David Brown
- Centragas AG is 90% owned by GDF
GDF Group DF is The Firtash Group of Companies. To those of you who may recall, he is an individual seen as 'the right hand man' of Semion Mogilevich, or the Red Don (on the FBI Most Wanted list for dealings in the US and Canada for stock and banking fraud). I went over some of the outlines of the Red Mafia in an article some time ago, and it is proving interesting to see where those connections lead to. As can be seen the extended holdings of the Firtash Group via Centragas include a presence in Turkmenistan, which has recently shut off natural gas supplies to Iran. With that I looked at the Shockwaves of 5%, which is the amount of natural gas that Turkmenistan has in the Iranian natural gas market. And the dealings to get RosUkrEnergo are being looked at by the US (Source: St. Petersburg Times, Russia, 25 APR 2006), which has led to his arrest in Moscow (Source: Times Online, UK, 25 JAN 2008):
State television showed footage of the alleged mobster as police held him and bodyguards against their luxury cars. They also broadcast film of the rarely photographed figure in custody, wearing jeans, a cap and leather jacket.
“Sergei Schneider has been arrested. He is better known as Semyon Mogilevich. He has several names, several nationalities and has been wanted for more than 15 years,” said Anzhela Kastuyeva, a Moscow police spokeswoman.
The arrest was made in connection with an investigation into an alleged $2 million tax evasion scheme run in connection with Arbat Prestige, a successful chain of Russian cosmetic stores. Vladimir Nekrasov, the owner of Arbat-Prestizh, was arrested in the same raid.
Monya Elson, a known associate of Mr Mogilevich, claimed in an interview given ten years ago that the Ukrainian was “the most powerful mobster in the world”.
An investigation by US newspaper the Village Voice, which apparently brought a death threat for its author, cited classified FBI and Mossad documents claiming that he was responsible for trafficking nuclear materials, drugs, prostitutes, precious gems, and stolen art. He was also said to have run a series of contract hit squads operating in the US and Europe.
Mr Elson claimed Mr Mogilevich, who was born in the Ukraine, controlled everything going in and out of Moscow's Sheremetyevo International Airport, which he called a ''smugglers' paradise”.
It is interesting that the arrest is only a few weeks after Turkmenistan had 'technical difficulties' in supplying natural gas to Iran. Surely the cosmetics business is just a sidelight to one of the richest criminals on the planet (Source: BBC Panorama transcript "The Billion Dollar Don"). But, like with Al Capone, it isn't the criminal activities but the *taxes* that get you. The Business Spectator on 31 JAN 2008 has this on the connection between Mogilevich, RUE and Firtash:
Investors have long been puzzled by RosUkrEnergo, which won its monopoly in January 2006 after Russia cut off the gas to Ukraine in a price dispute that disrupted supplies to Europe, questioning why the joint venture is needed.
Ukrainian premier Tymoshenko has resumed a campaign against RosUkrEnergo amid stormy negotiations about debts owed to the firm by Ukraine's state energy firm Naftogaz.
Some analysts have speculated that the Kremlin, facing an election in March which Gazprom chairman Dmitry Medvedev is likely to win, may have decided that RosUkrEnergo's current structure and remit may no longer suit Moscow's needs.
RosUkrEnergo's Ukrainian half is largely controlled by Ukrainian businessman Dmitry Firtash, who said last week he was in no way connected with Mr Mogilevich.
And from Forbes in 2006 we get this view of Gazprom:
Whatever Gazprom turns out to be, it is today a formidable force. Though still inefficient and scandal-prone, the company provides most of the gas to former Soviet states and to central Europe, as well as 25% of the needs of western Europe. Since Miller took over in 2001, the company has increased earnings from $440 million to $7.5 billion, on $42 billion in sales. It has announced one deal after another and is discussing a pipeline to Japan and a joint venture in Iran. By 2010 it expects to send gas in liquefied state from reserves near the Barents Sea to ports in the U.S. And the company is looking eastward, too, with plans to build pipelines to China. In a decade, executives insist, Gazprom's market cap will exceed $1 trillion.
Despite his title Miller is the second-most-important figure involved with Gazprom. Number one is the 53-year-old president of the Russian Federation, Vladimir V. Putin, who takes center stage at the Group of 8 summit beginning July 15 on his home turf in St. Petersburg. He has made energy security, a subject he has long pondered, the theme of the gathering. Nine years ago, in a late-life Ph.D. dissertation, he laid out his plans for management of the country's natural resources. And when he assumed the presidency from Boris Yeltsin in 2000, he started consolidating the Kremlin's power over the nation's most valuable asset--its rich store of oil, gas and other resources. Putin has seized control of large sectors of the economy, including stakes in autos, aviation, metals and mining. As chief executive of Russia Inc., he is creating a post-Soviet, post-Yeltsin superpower whose strength comes not from warheads but from commodities.
Putin has put his stamp in particular on the nation's largest company and crown jewel, Gazprom, where he packed the board with friends from his hometown St. Petersburg, including Dmitry Medvedev, simultaneously chairman of the Gazprom board and Putin's first deputy prime minister, and installed Miller, then an unknown technocrat with little direct experience in the gas industry. Last year the government paid $7.1 billion to Gazprom subsidiaries for an additional 10.7% stake in Gazprom, giving the Kremlin a majority stake in the company. Putin's interest in energy is perhaps not just geopolitical; there are rumors he will take over Gazprom himself in 2008 when his second term is over and he is supposed to step down.
From Israel News of 27 JAN 2008, there is a small bit of insight into how Mogilevich got the money to do the RUE/Gazprom deal into Ukraine:
In the 1990's, Mogilevich was considered to be one of the main targets of Israeli intelligence, who worked closely with international police in investigating and locating Mogilevich.
Israel was recently connected with the mafia boss, however, in an affair first revealed by the Moscow Times newspaper in 2003. The paper published a report claiming that companies founded by Mogilevich in Hungary and in Romania were connected with a money-laundering scheme in a big gas deal, which was intended for Poland but was carried out with a Russian energy holding company.
Backtracking a bit to Turkmenistan, the question of how Firtash got ahold of things there is seen in this bit in Moscow News on 29 DEC 2006, when the politics of Turkmenistan where in flux and Russia wanted to see Gurbankuly Berdymuhammedov become President there:
Unexpectedly for many, the heir apparent became politically active in summer 2006 when his father the president made him the head of the Turkmen official delegation at trade and economic talks with the United Arab Emirates. The mother Muza Alexandrovna Niyazova received the order from Ashkhabad to see to the son's political education and concentrated on it. It was not difficult at all, considering that the family was not exactly impoverished and that the atmosphere of the good old Vienna facilitated studies. Tutors in the Turkmen language, international law, and political scientists were found for the heir apparent. Active consultations with partners in Israel began in August.
Eural TG is the main communications line to Murat Niyazov's inner circle. One Dmitry Firtash is the key figure there. It was Firtash who "represented" Eural TG in Turkmenistan, Uzbekistan, and Kazakhstan and who became a beneficiary of RosUkroEnergo when it was established and took over Turkmen gas export to Europe. Known for his closeness to the Niyazovs, Firtash was even involved in the Orange Revolution in Ukraine. He financed the trip of the Ukrainian president's family from the United States to the inauguration ceremony in Kiev.
Establishment of the Vienna Headquarters comprising numerous pro-Western aides and advisors leads to the conclusion that Murat Niyazov is Western democracies' key project in Turkmenistan now. In the meantime, the People's Council complicated things enormously. It amended the Constitution and removed from it the provision that banned participation in the race for acting presidents. The forum even compiled a list of six candidates for president, one of them Berdymuhammedov. The president must be at least 55, he must speak the state language and live in Turkmenistan for at least a decade preceding the election. It does not take a genius to guess who meets and these fair requirements and who will therefore be elected the president on February 11, 2007.
Firtash, by situating himself in a position to be in contact with the Niyazov's, was able to facilitate not only the Russian agenda of Putin but his own of getting his company to have a foothold in the Turkmenistan gas market, all to the approval of the West. This would put Firtash into a position of consolidating holdings and thus needing to create the DF group. The Ukrainian magazine Zerkalo Nedali would have an article on 06-12 OCT 2007 by Alla Yeremenko trying to figure out just who owns *what* in Ukraine:
The first thing is that the debt might arise during the sale of gas to municipal heating enterprises. But this question has never been directly related to Gazprom before, since Naftogaz is buying gas not directly from the Russian monopoly but from UkrGazEnergo. However, if there was a debt it wouldn’t be that big. And UkrGazEnergo along with RUE, the co-owner of which is Gazprom, would be responsible for this debt anyway.
Theoretically, there could be a debt for gas in the underground storage facilities. According to Yuriy Boyko, there is a record for the last year's amount of gas in underground storage – around 32 billion cubic meters. But, at the same time, Yevheny Bakulin, the head of national stock company Naftogaz, says that there is only 5-6 billion cubic meters of gas that belongs to Naftogaz. All the rest of the gas in the underground storage facilities belongs to UkrGazEnergo, RUE and Gazprom. Which of these companies should pay for the gas in underground storage? It is obvious that this question is not related to Ukraine.
And why doesn’t Gazprom ask its “Ukrainian colleague” Dmitry Firtash, who holds 45% of RUE and a part of UkrGazEnergo, about the debt? Especially since his recent purchases in Ukraine are for a sum of money equal to the Ukrainian debt announced by Gazprom.
According to our sources, Dmitry Firtash bought shares in 6 OblGaz’s from Oleg Bahmatyuk for USD 108 million. He also bought the shares in Mandarin Plaza shopping center for USD 300 million. He paid almost the same amount of money for the big packet of shares in so-called business centre Parus, and around USD 200 million for a piece of land in the Obolon housing district.
It is well-known that D. Firtash is transforming his assets into a new company – DF (Group of Dmitry Firtash, GDF). He also is the owner of Hungarian gas-trader Emfesz, the annual turnover of which was more than USD 779 million last year.
Besides the gas business, Dmitry Firtash is the owner of shares in chemical industries in Europe, the Russian Federation, Ukraine, Estonia and Tajikistan through the Ostchem chemical holding.
According to Wprost magazine, cable TV channels K1, K2 and Megasport as well as the Kyiv basketball club belong to Firtash too.
So, “Ukrainian colleague” of Gazprom is a wealthy person and is able to answer for the debts of his firms and even of his partners. Why should Ukraine be claimed responsible?
How did Firtash get into so many companies? That appears to be bound up in the earlier deals that would create Gazprom as the giant it is now. Hans over at Dartmouth would go through the creation of Gazprom and trace out its lineage in an article on RosUkrEnergo on 26 OCT 2007. RUE was born in talks between Russia and Ukraine in 2004 between Putin and Kuchma and would replace Eural TransGas, and Gazprom would own 50% of that through Gazprombank-owned firm ArosGas Holding AG. The *other* 50% was owned by CentraGas Holding AG which was controlled by Raiffeisen Investment, on behalf of individuals 'yet to be named' in Ukraine. The Ukrainian company, Naftogaz disclaims any involvement with the stand-up of RUE. It would turn out that the 50% share of RUE would be owned by Dmitri Firtash (45%) and Ivan Fursin (5%) due to their ownership of Centragas (90%/10% respectively). [There is a lovely pdf file at Globalpolicy.org that goes through the particulars on the RUE stand-up and the actors involved.]
Ivan Fursin, the relatively quiet individual in all of this, owns a movie theater and bank in Odessa and runs two Firtash companies out of Cypress: Highrock Holdings and Arcadea Investment Fund Ltd. In a Hudson Institute report on Ukraine and its energy security in 2006, the ownership is straightened out a bit:
Finally, on April 26, Gazprom-owned newspaper Izvestia announced that Dmytro Firtash and Ivan Fursin, two Ukrainian businessmen, are the owners of RosUkrEnergo. Holding company Centragas confirmed Izvestia’s report in a statement, saying Firtash owned a 90 percent stake in Centragas, and Ivan Fursin a 10 percent stake. Firtash is director of the Cyprus based investment company Highrock Holdings, as well as board chairman of Estonian fertilizer factory Nitrofert, according to Global Witness. Fursin owns an Odesa bank and a movie theater, and, as the Russian newspaper Izvestia reported, is also president of a branch of Highrock Holdings. The newspaper also reported that Highrock was owned by Mogilevich.
In a parliamentary debate earlier this year it was alleged that Mogilevich, a reputed organized crime boss who is on the FBI’s “most wanted” list on charges of being involved in a stock fraud, was involved in the company. Firtash was previously involved in two other gas trading firms with Zeev Gordon, an Israeli lawyer who also represents Mogilevich. Mogilevich denied any involvement in RUE; Gordon said he had not met Firtash through Mogilevich; finally, Firtash insists while he met with Mogilevich, he never had any business dealings with him. Firtash’s background was probed by Austria’s Raiffeisen Bank, which subsequently cleared him of wrongdoing. However, this verdict was not quite as important as that of the court of public opinion, in which numerous doubts still remain.
It isn't what you know, its who you know and what they are involved in... and when you start to get a constellation of individuals showing up again and again, you begin to suspect a connection between them. If you want the original Izveztia article, it is held at the American Business Center website in Odessa.
As Firtash goes back with Mogilevich to the YBM Magnex deals in the US and Canada, Firtash has needed, in turn, a Western face to help do business, and that comes from one individual, as seen in the Dartmouth post on RUE:
Shetler-Jones entered the Ukrainian business world at the age of 22, when he founded a consulting firm in 1991. He apparently met Firtash through the other partial owner of Centrgaz, Ivan Fursin (see above), and facilitated the cooperation between Firtash, the British-registered JKX Oil and Gas, and Eural-Trans-Gas. He is the managing director of RSJ Erste, which controls various Ukrainian, German and Italian chemical factories. (RSJ Erste is a subsidiary of Firtash’s GDF company, and was in the running in the recent re-privatization of the Krivorozhstal steel works.) In general, Shetler-Jones is seen as Firtash’s “Western” partner. He was removed from the direct management of RUE around June of 2005, following the “transition period” during which he was ostensibly installed to help guide the firm. Since then, however, he has apparently been reinstated and now continues to serve in a leadership position. (He also has been staying involved in Ukraine-Europe energy relations, particularly through his consulting firm Scythian Ltd.)
Yes, more companies than any one individual can keep track of, unless he is Simon Reubens! Some of this did start to hit the fan in 2005, as seen in this RFE/RL report of 05 JUL 2005:
In an interview with the newspaper "Zerkalo tyzhnya" published on 18 June, Turchynov said the SBU has been investigating the activities of two companies -- Eural Trans Gas and its successor, RosUkrEnergo -- which acted as the "operators" of Turkmen gas to Ukraine. Investigators are also probing any role that might have been played in their operations by the management of Naftohaz Ukrayiny, the Ukrainian state-owned energy monopoly.
Russia's Gazprom and Naftohaz Ukrayiny are closely linked to the activities of the two offshore companies under investigation. Turchynov charged that former high-level officials in Ukraine, together with Russia's current leaders, knew of and approved these illicit schemes, Interfax reported.
Also on 18 June, Ukrainian Gas Bank head Vadym Lyashko was arrested as he allegedly was preparing to flee the country, Ukraine's Channel 5 television reported. The Ukrainian Gas Bank was recently investigated for allegedly laundering $59 million for the Ukrainian Transportation Ministry during the administration of former President Leonid Kuchma. The bank is closely linked to Naftohaz Ukrayiny.
Lyashko's arrest and Turchynov's announcement were long-awaited steps in the realization of President Viktor Yushchenko's and Prime Minister Yuliya Tymoshenko's promise to close down highly suspect schemes in the gas-transportation business that are alleged to be have drained the Ukrainian state treasury of $1.2 billion since 2003.
Eural Trans Gas, according to the registration document filed with the Budapest business court, was of curious origin. It listed its place of business as the small village of Csabadi, outside of Budapest, and named three previously unknown Romanians as its principals.
Eural, according to a 2003 interview with Eural Director Andreas Knopp in "The Kyiv Post," was closely linked to Dmytro Firtash, a Ukrainian businessman with interests in Moldova and Turkmenistan and the owner of a number of companies in Ukraine. According to court documents provided by the Itera International group of companies, Firtash's Israeli-registered company, Highrock Properties Ltd., is being sued by Itera, which accuses him of owing them $28 million.
Hermitage Capital Management, an investment fund in Russia that campaigns for minority shareholder rights, published its report on Eural Trans Gas and Gazprom in 2003. This forced Gazprom and Naftohaz to take steps to distance themselves from Eural, a company they helped create. Eural was sold in 2004 to a group of investors and came to be headed by Cedric Brown, the former head of British Gas. Another prominent player in Eural became Robert Shetler Jones, although his exact role was not clear. He was described in "The Kyiv Post" on 16 June as a consultant to another investor in Eural, the British publicly traded firm JKX Oil and Gas, a company with substantial oil-drilling assets in Ukraine's Poltava region.
Despite these changes of ownership, Eural Trans Gas was finally replaced by RUE, which began operations on 1 January 2005.
Despite Gazprom's explanations, there was considerable speculation in the press as to the role of Raiffeisen Investment and its exact relationship, if any, to Raiffeisen Bank. Gazprom spokesmen never clarified the relationship, merely repeating that RUE is a "fully transparent" structure.
On 6 August 2004 Interfax reported: "In late July 2004, 100 percent subsidiaries of Russia's Gazprombank and Austria's Raiffeisen Bank created the RosUkrEnergoprom company for the supply of Turkmen gas to the Ukrainian market. The company, shared by the parties 50-50, will be registered in Switzerland. RosUkrEnergoprom will purchase Turkmen gas for the Ukrainian market and act as operator of the gas purchased and investor in the development of the gas-transport infrastructure required for securing the transit. The company will be run by a coordination committee including representatives of the leading officials of Gazprom, Naftohaz Ukrayiny, Gazprombank, and Raiffeisen Bank."
Research has shown that Raiffeisen Investments has no direct management connection to Raiffeisen Bank, although both companies are owned by the Austrian RZB Group.
Furthermore, Raiffeisen Investment is not ARosgas AG's partner in RUE. According to an interview with "The Kyiv Post" on 16 June, Raiffeisen Investment spokesman Wolfgang Putschek stated that the company only manages the portfolio for "a group of Ukrainian businessmen who have worked in the gas industry" and is paid a commission for managing that portfolio. When asked to name the "Ukrainian businessmen," the spokesman declined to do so, citing confidentiality agreements.
Apparently, the "Ukrainian businessmen" whose portfolio's were being managed by Raiffeisen Investment were acting as private individuals, while ARosgas was clearly connected to the Russian state and collected nearly $478 million annually for Gazprom, according to Hermitage Capital Management, a Moscow-based investment company.
The total fee paid to RUE by the Ukrainian state for transporting gas from Turkmenistan, in Gazprom's pipeline, to Ukraine is reputed to be close to $1 billion per year, paid to RUE in the form of 13 billion cubic meters of gas, which it then sells in the West through a variety of agents. This is the same fee that Ukraine paid Eural Trans Gas, according to a contract signed in Moscow in December 2002 that has been made available to RFE/RL.
Asked by Ukrainian journalists at a press conference earlier this year if Naftohaz Ukrayiny is a principal in RUE, Naftohaz Ukrayiny head Oleksiy Ivchenko replied that it is not and that Naftohaz was seeking to buy into RUE so as to have some say in its management and to receive the $478 million the unnamed businessmen are reputed to collect yearly.
Apparently the former management of Naftohaz, headed by Kuchma loyalist Yuriy Boyko, renounced its right to be a principal in RUE and reclaim the $478 million that Ukraine paid RUE for its services, giving its consent instead to a group of unnamed private "Ukrainian businessmen" to collect this money. Boyko, however, rejects any allegations of wrongdoing.
Prime Minister Tymoshenko has stated that as a consequence of the Eural Trans Gas and RUE, schemes, Ukraine lost more than $1 billion, Interfax reported on 15 June.
So $478 million/year is being collected by unnamed Ukrainian businessmen which would turn out to be Firtash and Fursin. Mind you that is transactional cash, but even a small amount of interest on it turns into decent walking around pocket money. Pocket money aided by many backers, to be sure, and one of those helpers was Mr. Shetler-Jones of the JKX firm. The Financial Times had an article looking at this from 29 APR 2006 (Cached at zawya) looking at the UK angle of this deal:
Dmytro Firtash, the Ukrainian trader who has emerged as a key player in the European natural gas market, was unfamiliar to most western business people until this week. But a small group of British businessmen have known him well for years.
When he appeared last year at a Mansion House dinner at which the Queen presented an award to Ukrainian President Viktor Yushchenko, the 40 year old Mr Firtash sat at a table hosted not by Ukrainians, but by JKX Oil and Gas, a British AIM-quoted company with interests in Ukraine.
Its chairman is Lord Peter Fraser, a former Tory trade minister, and the chief executive is Paul Davies, an oil man with extensive experience in the former Soviet Union. Mr Firtash is one of the company's biggest shareholders, controlling a 9.7 per cent stake through a holding company called Benam.
Few people beyond JKX's immediate circle were aware of Mr Firtash's significance. This week he was identified as a key shareholder in RosUkrEnergo, a trading company bringing gas from central Asia to Europe.
Half of RosUkrEnergo belongs to Gazprom, the Russian gas giant. The other half is split between Mr Firtash, with 45 per cent, and Ivan Fursin, a Ukrainian banker and associate of Mr Firtash, with 5 per cent.
Mr Firtash established his fortune by supplying food and other goods to Turkmenistan in exchange for gas for Ukraine in the 1990s.
Among his earliest contacts with British business people was Robert Shetler-Jones, whom he met through Mr Fursin. Mr Shetler-Jones lived in Kiev in the early 1990s and later in Moscow, working for a series of property companies.
Mr Shetler-Jones's contacts included Viscount Raymond Asquith, a member of JKX's board who had worked as a diplomat at the British embassy in Kiev. The contacts between Mr Firtash and Mr Shetler-Jones culminated in 2003 in a complex deal that brought together Mr Firtash and JKX.
Benam bought a stake in JKX, which acquired a small stake in Eural Trans Gas, at that time Mr Firtash's main gas-trading company. JKX credited Benam with helping it secure Ukrainian permission to export gas.
Personal loyalties seem to have mattered to both men. Mr Shetler-Jones sat next to Mr Firtash in this week's FT interview. Mr Firtash referred to the secrecy that until this week surrounded his background. He said: "I once asked Robert, 'Aren't you afraid I could embarrass you?' He said, 'No, I know you very well'."
Benam Holdings of Cyprus (Manta page here) is one of those little companies that looks to be about one piece of paper thick. This is where Eural Trans-Gas hits the big time, and it, apparently, didn't exist much before the RUE deal *either*. From the St. Petersburg Times, Russia, comes an article from 02 DEC 2003 to look at just what three Romanians in that little town in Hungary can do with just the right connections... or the right connections coming to them:
MOSCOW - "Three Romanians with no business experience and an Israeli with alleged mob ties register a trading company in a Hungarian village. Before the company is even legally formed it is granted the rights to transport billions of dollars' worth of natural gas from Central Asia, across Russia, to Ukraine."
These shareholders are, at least on paper: an actress hoping to earn money to pay her phone bill, a nurse, a computer programmer, and an alleged associate of a Ukrainian-born crime lord who is on the FBI's "most wanted" list for money laundering, racketeering and fraud.
Linked to the same mobster, according to the Russian government, is the head of the new company, Eural Trans Gas, which stands to gain about $1 billion a year in pre-tax profits that could have gone to Gazprom.
Not only has the world's biggest gas company let the little Hungarian operation take over a lucrative export channel over which it had pledged to regain control, it has also supported it with almost $300 million in loans and guarantees.
The gas giant, according to its own financial statement for the first half of 2003, is the guarantor of a $227 million loan to Eural TG from state-owned Vneshekonombank. On top of that, Gazprombank, which is 100 percent owned by Gazprom, loaded another $70 million to the company, according to a list of the bank's 10 biggest borrowers obtained by The Moscow Times.
Investors thought Gazprom management had put an end to such practices. When President Vladimir Putin put a loyal lieutenant, Alexei Miller, at the helm of the gas monopoly back in 2001, Miller vowed to liquidate the murky schemes used by former management to siphon off up to $3 billion a year from the company.
Miller regained most of those lost assets and eliminated a lot of the murky trading deals that mainly benefited Itera, an octopus-like structure based in Florida and widely believed to be tied to the old management team.
But Miller failed to retrieve one of the biggest channels - the sale of gas from Turkmenistan to Ukraine. Instead of wresting it back from Itera, as he said he would, it has been turned over to Eural TG.
Putin's crackdown on corruption and the jailing of Yukos founder Mikhail Khodorkovsky on charges of fraud and tax evasion to the tune of $1 billion are seen as part of a Kremlin campaign to gain greater control over the oil industry.
"The creation of Eural Trans Gas is comparable to what Gazprom did with Itera, which ultimately led to Putin's dismissal of the previous management team," says Vadim Kleiner, Hermitage's director of research.
Others say turning over the Turkmen-Ukrainian operation to Eural TG is even more outrageous than letting Itera take over Gazprom markets in the former Soviet Union.
"This would not be the first time Gazprom has created its own competitor," says Valery Nesterov, energy analyst at Troika Dialog. "But at least Itera is more solid, has its own reserves and extracts gas. Eural TG is just a trading firm that at best can be called shady."
According to a copy of company documents obtained by The Moscow Times, Eural TG was launched with just $12,000 in start-up capital.
Yes, with just $12k you too can join the world of international gas trading and suddenly get control over billions of dollars in revenue! Now out of investors including a struggling actress, a nurse, a computer programmer and a man linked with international organized crime stretching from the US and Canada all the way heading east across Morocco, Spain, Hungary, Romania all the way to the Golden Triangle and China, which of these apparently has financial clout?
Wouldn't you like to be in a minority holding position with a company headed by Semion Mogilevich and having $1 billion in natural gas revenue passing through it and over $300 million in loans from Russian banks? Such a deal! Hope the poor actress got her phone bills paid up...
Then there are the recurring payments in the deal. Recurring payments? Why, yes, if you get gas at below market prices and sell them at market prices you get to keep the difference. Standard capitalism of 'buy low, sell high', save that the buyer is the seller and the seller the buyer... don't believe that? Read on:
In return for its services, Ukraine is obliged to pay Eural TG 38 percent of the value of the deal, or 13.7 bcm in gas, according to Naftogaz Ukrainy, the Ukrainian gas monopoly that is paying Eural TG under the deal.
Now that Eural TG is beginning to export gas from Ukraine - it already has one contract under its belt to sell Poland 2 bcm by July 2004 - it is on track to post a pre-tax profit of more than $1 billion a year if it can export the rest of the gas Ukraine pays it, even after paying Gazprom $450 million in annual fees for the use of its pipeline network.
Gazprom says it was forced to give up the trade deal and bow to the wishes of its Ukrainian counterpart, which, it says, insisted that if Itera had to be replaced, the new agent had to be Eural TG.
Gazprom says its $227 million loan guarantee is designed to give it leverage over Eural TG's trading deals because it is collateralized with the gas Eural TG is being paid with.
But Naftogaz Ukrainy says that Eural TG is Gazprom's creation all the way. "All the agreements with Eural Trans Gas were made by Gazprom," says Naftogaz spokesman Konstantin Borodin. "It is a contractor for Gazprom."
So by getting 38% of the gas, and after paying off Gazprom for pipeline usage, you get $1 billion in profit per year *every year*. Ukraine buys it, it goes through Gazprom pipes thus selling it to Eural Trans-Gas, and then re-buys a portion of it after giving that 38% to Eural Trans-Gas. Ukraine buys it, sells it, buys and ETG gets the middle man on each of those transactions. Only a mobster could think up such a crooked deal that even the Russians get swindled by it! How? They are buying it from Turkmentistan in the *first place* from ETG to sell to Ukraine, then getting only transport cost back on the re-sale of it via Eural Trans-Gas. Someone is making a mint, here, and it isn't Gazprom, Russia or Ukraine... thus leaving Eural Trans-Gas.
And even if that is not the way it works, trying to figure it out has surely vexed the Russians and Ukrainians no end... it was set up to be hard to track and that is the point of it: obfuscation via complexity.
This is where Highrock Holdings, Furtash and Fursin come in as the money comes through *them* from Semion Mogilevich, the owner and backer of Highrock Holdings. Here is how that bit of it works:
None of these allegations could be confirmed independently, but a copy of a letter written to Interpol by Russian Interior Ministry Major General A. P. Mordovets links the head of Eural TG, former Hungarian Education Minister Andras Knopp, to Mogilevich. Mordovets told Interpol in the letter, a copy of which was obtained by The Moscow Times, that Knopp helped Mogilevich create a cigarette smuggling ring in the 1990s.
The letter, which was written in 1998 when Knopp was a vice president at major German cigarette maker Reemtsma, says Knopp supported Mogilevich's appeal for Hungarian citizenship. It says Mogilevich introduced Knopp to members of the Russian government responsible for the cigarette business. It alleges Mogilevich "threatened to kill" an individual who was disrupting their smuggling operation.
German investigators began looking into Reemstma's possible involvement in cigarette smuggling in 2000, but no charges were ever filed.
"Knopp's assistant said he could not be reached for comment, but in an interview with the Kyiv Post earlier this year, Knopp confirmed Eural TG did business with Mogilevich-linked Highrock Properties. He denied, however, any ties with Mogilevich himself."
Ah, 'plausible deniability'! Remember the Clintons didn't develop *all* of that sort of thing... and it is just this sort of deal of 'its not what you know, but who you know' that creates 'plausible deniability' by going through intermediaries and, since it is through intermediaries like Reemstma from Germany, that you can say ETG has only dealt with Highrock but not Mogilevich with respect to ETG and say *nothing* about ever having dealt with him on any matters. That is 'plausible deniability' at its finest: its not what you say but what you *don't* that matters.
The article also goes on to demonstrate how the Russian Mafia is unlike its Sicilian/Italian counterparts: the others who signed up to create ETG are still in poverty. The actress did, however get $34/month for her phone bill. So while the 'Family' approach to the mafia concept 'takes care of its own' and those who help it, the Russian one has no such high ideals: just the cash or your life.
And Gazprom was looking to *fix this* buy buying ETG and the Mogilevich response was: nuh-uh. Not outright, but how about we form a new 'partnership' and create RUE? This would bring in JKX and Benam, but things would not look brighter or better even if Gazprom got its 50% share:
In an ironic twist, Gazprom's funding of Eural TG may just fatten it up for a Western rival eyeing a way to break into Gazprom's monopoly on exports to Europe from the former Soviet Union.
British-based JKX Oil & Gas, which already has stakes in a number of Ukrainian oil ventures, has been trying to buy part of Eural TG together with a company called Benam Holdings since July, according to JKX.
JKX company has several heavy hitters behind it, including former British Trade and Industry Minister Peter Fraser and controversial Swiss tycoon Bruce Rappoport, who has close ties to the Israeli government.
JKX, for now, says it cannot say what Benam Holdings is. A web search for the company also came up with no results. Like Gazprom and Naftogaz, JKX says it is not worried about Eural TG's ownership structure, adding that any future deal will be conducted in the interests of its own shareholders.
Does the word 'snookered' come to mind here? Isn't this the exact, same thing that went on with ETG and 'can't tell you the interests behind it' sort of deal? Gazprom got hit hard on Itera, fell for it again with ETG and now, with forming RUE to get 50% of what it buys, will get it one more time from Mogilevich, Furtash and Fursin. What a sweet deal! Just give them $1 billion per year for a couple of years and they will let you in on half the action!
The reason that an intermediary company is wanted, in the first place, is that Russian gas is expensive, while that of the surrounding post-Soviet Nations of central asia is inexpensive. Euromonitor steps through this on 11 JAN 2006, and looks at how the deal does and does not work for the parties involved. Additionally Gazprom hoped that an independently financed company would be able to get payments more readily than a State owned firm. This works well when things are going well on the supply side, but recently that has changed as the problems, particularly in Turkmenistan, have caused RUE to utilize more expensive Russian gas thus effectively doubling the price of it to Ukraine. From that Russia also hoped to expand its presence in Europe to Slovakia and Poland through the Hungarian firm EMFESZ:
The figure of Dmytro Firtash is interesting in the whole story and it is related also to Slovakia. Since he is a partner in companies trading with or partly owned by Gazprom, mutual contacts between Firtash and the highest representatives of Gazprom must be above-standard.
The mechanism of RUE company enables to carry out Russian foreign energy strategy of expansion to European market through majority share of Russian state in Gazprom. RUE is already active on Hungarian and Polish markets via business organization EMFESZ, and Slovakia is mentioned as well. So far the Office for Regulation of Network Industries of Slovak Republic has no information on any companies interested in entering our gas market, yet the fact is that it does not have to be informed about it according to current legislation, because the entering should be based on a contract with an existing operator. SPP (Slovak natural gas industry) has not made a statement in relation to the issue so far.
EMFESZ is a Hungarian company trading with gas, and with the 2.8 billion cubic meters it is one of the biggest gas suppliers in the country. The official owner is Mabofi Holding seated in Cyprus . EMFESZ was founded in 2003 by Ukrainian enterpriser Dmytro Firtash, who – according to Hungarian press – is also the actual owner. In April 2006, the company by means of EMFESZ NG Polska signed contracts for supplies of 2.5 billion cubic meters of gas to Poland, and thus as the first company it took the chance to enter the up-to-then monopoly sphere of gas supplying (TPA – third party access) of industrial enterprises. EMFESZ became a regional partner of RUE, it is the only company which sells gas obtained from RUE in Hungary and which has a 10-year contract of gas deliveries signed with RUE. In the future, the company plans to enter the development of infrastructure actively by means of building their own gas pipeline from Ukraine to Hungary, as well as being active in construction of reservoirs. In the beginning of March Firtash announced that he was planning to place 25-35 % of EMFESZ shares in the stock market in Budapest, but at the same time he mentioned that a certain part would be sold to RUE company, which he owns together with Gazprom.
Beyond that, Russia has caused some artificial crises with gas supplies to Ukraine, like in JAN 2006. This was meant as pressure to Ukraine to pay more and to force a renegotiation of the previous deals made to stand up RUE. Going through that crisis the previous head of Naftohaz Ukrayiny, Oleksiy Ivchenko was interviewed by the BBC for a report published 12 NOV 2007 (Source: Zibb file cache), and he offers this perspective on the role of Firtash:
[Nayem] Is there a possibility of getting rid of RosUkrEnergo now?
[Ivchenko] Yes, it has always been there, and this should be done! But it should be understood that the Ukrainian side will be unable to do so on its own, neither technically, nor judicially, nor politically. It is just the will of the Russian side! I shall admit that if RosUkrEnergo becomes unprofitable for the Russian side for some reasons, then everything is possible... [ellipsis as published]
[Nayem] But why can RosUkrEnergo become unprofitable?
[Ivchenko] Well... [ellipsis as published] why were Itera and EuralTransGas unprofitable?
[Nayem] Let us say, EuralTransGaz was removed because of a scandal over relations with [alleged criminal Semen] Mogilevich... [ellipsis as published]
[Ivchenko] Yes, but RosUkrEnergo can be removed exactly the same way, as there are also numerous scandals surrounding it... [ellipsis as published] It is also unprofitable.
[Nayem] Do you believe that Firtash is an independent figure?
[Ivchenko] I don't believe so.
[Nayem] Do you think Firtash is linked to Mogilevich?
[Ivchenko] I don't know. I know Firtash very little. I think he is being backed by top-ranking officials from the Russian side. If it is not like this, then I think they are top-ranking officials from both Russian and Ukrainian sides.
If it is not like this, then explain me the following thing. We had a debt of 2bn dollars owing to Gazprom. Our senior officials [recently] inappropriately announced that this was state debt. All right. I believe that it is not Ukraine's debt. Formally, it is RosUkrEnergo's debt owed to Gazprom.
Then I have a question: what was [incumbent] fuel and energy minister [Yuriy Boyko] doing in Moscow, and what was [incumbent] prime minister [Viktor Yanukovych] doing there? On whose behalf were they speaking there? Did they recognize the debt and did they think over its repayment? On whose behalf?! On behalf of RosUkrEnergo?! I don't understand... [ellipsis as published]
This debt is no accident. Now, attention! A debt with exactly the same structure and origin was run up prior to 2005. And those who did this were the very same people... [ellipsis as published] This debt was formed for a second time with only purpose in mind: so as to hand over the gas transport system. But the [Orange] revolution prevented them from doing this in 2005. And this year it was due to the results of the parliamentary election [on 30 September].
Firtash, for all of his holdings, is seen from the inside by Oleksiy Ivchanko as someone who is not an independent actor but one who, at least on the gas deals, is following someone else's orders. It is time to sort out a few things on the side of who owns what, and get some firmer associations down. For that the Red Orbit site has a 09 AUG 2007 article from the Hungarian newspaper Vilaggazdasag:
Who is Firtash, the owner of 90 per cent of Centragas AG? The FBI in the US as well as the Ukrainian secret service has already tried to find the answer to this question. The primary interests of the Americans pertained to the kinds of common interests Firtash and Semion Mogilevich have, the latter believed to be a Russian Mafioso sought by the FBI, and whether Firtash is laundering money. Kiev was interested mainly in the way Firtash is linked to the Russians and to the rest of the members of the new Ukrainian elite in the post- Kuchma era, as well as in the identity of additional owners of the firm. It was revealed that the names of Mogilevich and Firtash appear together among the owners of several companies, and that Firtash, the Ukrainian businessman -who participated in the highest- level Russian-Ukrainian negotiations during last year's natural gas crisis and has also negotiated with Yushchenko -maintains three offices in Moscow, in the real centre of his economic interests.
Well-informed analysts in Vienna suspect that anyone who does business with Firtash is actually doing business with Gazprom. At this time Firtash gave an Austrian character to his most important firms, thus to Centragas and to Mabofi Holding, the company that directed EMFESZ from Cyprus so far, and further, its chemical industry, gas pipeline construction and real estate firms. One cannot tell however, between exactly who EMFESZ is acting as an intermediary; one cannot tell whether the telephone numbers shown on the websites of its businesses actually ring in the offices of Raiffeisen Investment AG?
Beyond this the Financial Times reported on Dimitry Firtash and reviewed the information it had published previously on the questions it had asked him. On 13 JUL 2006 they came out with a report by Tom Warner on the involvement of Firtash and Mogilevich over the years:
In an April interview, the Financial Times asked Dmytro Firtash about evidence from official records in Russia, Israel and Cyprus of his connections to associates of Semyon Mogilevich, an alleged crime boss. Here are his explanations and, where available, those of others involved.
■June 2003 Mr Firtash replaced Galina Telesh (a woman with whom an Israeli police report said Mr Mogilevich had been in a relationship since the early 1990s) as director of the Cyprus-registered Agatheas Trading. Later, Agatheas became direct one-third owner of Highrock Holding, another Cyprus-registered company, where Mr Firtash had been director since 2001.
According to a Hungarian intelligence report obtained by the FT, Ms Telesh and Mr Mogilevich were married in 1995.
Mr Firtash accepted that Ms Telesh beneficially owned one-third of Highrock’s shares until June 2003.
However, Mr Firtash said he never knew Ms Telesh. He said his partner in Highrock was Igor Makarov, president of Itera, a Russian gas trader. Mr Firtash said his involvement as director and one-third owner of Highrock was set up by Yelena Yargina, his lawyer, while ownership of the remainder was arranged by Itera’s lawyers. “Yelena worked with Itera’s lawyers. “We don’t know about this,” Mr Firtash said.
Mr Firtash said that after he fell out with Mr Makarov in late 2002, he took full control of Highrock and “cleaned it up”, which eventually led to him taking over as director and owner of Agatheas in June 2003.
Mr Makarov, however, who replied to written questions through a spokesman, said neither he nor Itera had ever had any economic interest in Highrock or undertaken any role in setting up Highrock or its parent companies.
The FT asked Mr Firtash to provide evidence that Mr Makarov was involved in Highrock and was later shown part of a report by Kroll, the private investigator, which said Highrock was jointly established by Itera and Mr Firtash. However, the part of the report seen by the FT did not explain why Kroll believed Itera was involved in Highrock. Mr Firtash said his bank, Raiffeisen, commissioned the Kroll report.
■November 2002 Igor Fisherman, one of three associates indicted with Mr Mogilevich in the US in April 2003, registered a car with Moscow traffic police and gave as his personal contact a telephone number that rang to Highrock’s offices in Moscow, at Novy Arbat 14.
Mr Firtash said Mr Fisherman never worked at Novy Arbat 14 or came into the office. “I don’t know why he gave that telephone number, but I can say for certain he didn’t sit there and didn’t work there.”
■March 2002 Elmstad Trading, another Cyprus-registered company owned by Mr Firtash, transferred ownership in a Russian company called Rinvey in three roughly equal parts to Ms Telesh, Ms Yargina and Olga Zhunzhurova, who is Mr Fisherman’s wife, according to the US indictment. Rinvey then acquired stakes in Moscow perfume retailers. Ms Yargina co-owned Rinvey until April 2003 and continued to work for Mr Firtash throughout this period.
Mr Firtash acknowledged that Ms Yargina had joined Rinvey at his direction but he said he could not remember why he had asked her to do so. He said he had no involvement in Rinvey, its business and no ties to its other owners. “It’s not my business. It’s obvious I couldn’t do that business,” he said.
Mr Firtash said he asked Ms Yargina to end her involvement with Rinvey “when we were cleaning up”. He said she still works for him.
■November 2001 An Israeli lawyer called Zeev Gordon helped set up a Highrock subsidiary in Israel called Highrock Properties. From December 2002 until early 2004, Mr Gordon was nominal (paper) owner of one-quarter of Eural Trans Gas, a company beneficially owned by Mr Firtash. Mr Gordon told the FT he counted Mr Mogilevich as a client and a friend.
Mr Firtash said his relationship with Mr Gordon had nothing to do with Mr Gordon’s relationship with Mr Mogilevich. Mr Firtash said Mr Gordon had many Russian- speaking clients: “When I asked Gordon, ‘Why do you have to work with Mogilevich?’ he said ‘Listen Dima, it’s my business, just like you trade in gas. I’m a criminal lawyer’.”
Mr Gordon said in a telephone interview he had been asked by Mr Firtash to help with Highrock and Eural, that Mr Mogilevich denied any involvement in Eural Trans Gas or RosUkrEnergo and that he did not know whether Mr Mogilevich was involved in Highrock.
Yes, 'plausible deniability' just happening to share common ownership with an organized crime figure and his entourage! Purely coincidental that this happens over and over, I'm sure. And it is Novy Arbat that Mogilevich was picked up for, so it is not out of the range of the possible that Mr. Firtash will also have to answer a few questions on his work with the firm. It is also interesting to note that while doing barter trades in Turkmenistan, Mr. Firtash created 'single use companies' and would never claim ownership of them, which is not a way to deal with things in a transparent fashion.
Now for some of the stranger outward bound associations that Semion Mogilevich gets attached to... like, what is his connection to the 2002 Salt Lake City Olympics? Well, if you remember the figure-skating being *fixed* by a mafia member, you are hitting in the right ballpark. From The Komisar Scoop of 06 AUG 2002, we have this connection show up:
For Alimzhan Tokhtakhunov, 53, called Taivanchik (the Taiwanese) because of his Asian features, the plot to get an Olympic gold medal for Russia’s top figure-skaters was small-time.
The Russian mafia don who was arrested July 31 for fixing skating contests at the Salt Lake City summer Olympics reminds one of Al Capone, who was put away for tax evasion, because the government couldn’t get enough evidence against him for murder, extortion and criminal racketeering.
The Russian was caught by Italian financial police tapping his phones in a money-laundering investigation. They informed the U.S., which last month secretly indicted him on charges he bribed skating judges. The U.S. now has moved to extradite him. He could get up to 10 years in U.S. prison and $500,000 in fines if convicted of the current charges: conspiracy to commit bribery and conspiracy to commit wire fraud related to a sports event. It’s a chance to lock up a man who is guilty of a lot more than simply sports competition fraud.
The FBI had cited him in an August 1996 report prepared by its Intelligence Section, Organizational Intelligence Unit, and entitled “Semion Mogilevich Organization.” The report, excerpts of which these reporters obtained, said, “The Mogilevich Organization is tied to two other major OC [organized crime] groups - the Vyacheslav Ivankov Organization and the Solntsevskaya Organization - and also to Euroasian crime figures Monya Elson and Alimzhan Tokhtakhounov. Their operations and contacts overlap in some instances, as evidenced by meetings, joint investments, and silent partnerships in firms engaged in OC activity.” (In 1995, the FBI would arrest Ivankov for extortion in New York; he was convicted and sent to federal prison for 9 years and 7 months.)
Czech police reports said that Tokhtakhounov controlled Russian crime groups active in Western Europe and acted as intermediary for newly arrived criminal bosses. The Czech police rap sheet on him includes:
1991: Departure from the USSR for Germany where he organized illegal arms deals partly from the stock of the Soviet Army;
1992: A search of his house turns up the business card of known Russian mobster Semion Mogilevich;
1993: He moves to Paris to escape German police inquiries;
1994: He meets with Ivankov and other major Russian crime leaders in Vienna to discuss division of interests in Moscow casinos; in July, he hosts representatives of Russian and Uzbek organized crime groups on his yacht Saravona in the Mediterranean Sea.
In October, Tokhtakhunov meets in Tel Aviv with Mogilevich, Gigori Loutchansky, Solntsevo mafia boss Sergei Mikhailov, and a representative of Ukrainian president Leonid Kuchma, believed by western intelligence to be involved in illegal arms trafficking. They discussed dividing spheres of influence in the export of strategic raw materials.
He represents an export division of the Association of the 21st Century, Moscow, one of whose heads is alleged crime leader Yossif Kobzon.
1995: In April, failing to get a visa extension, he is deported from France.
1996-97: Western authorities suspect him of involvement of trafficking in drugs, arms and antiquities and of participation in extortion. His Israeli citizenship is cancelled when it is proved that he obtained it illegally, through a false marriage on the basis of false documents.
Among his contacts, Czech police listed Arkady Gaydamak, object of an international arrest warrant for illegal sale of weapons to Angola.
Di Nicholas in his letter said Loutchansky, “a leader of the Russian Mafia,” controls the French company Kama Trade, a laundering-network centerpiece. He said it linked to Nordex, which Loutchansky founded in Vienna in 1989 at the behest of the Communist “Old Guard” to move cash from looted state and party assets and later from crime activities. Loutchansky said through his London attorney that he had won libel actions against such charges. “It is completely untrue that I have been involved in the mafia, in money laundering or in any other criminal activity,” he said.
The prosecutor said Mogilevich, based in Budapest, was a source of dirty money from drug trafficking, prostitution, illegal commerce of precious objects and art, extortion and money laundering. He said Mogilevich is active in Los Angeles, Miami, Philadelphia and St. Diego as well as Moscow, Prague and Tel Aviv. British authorities identified $200 million that companies or individuals linked to Mogilevich shipped through the London office of BoNY in 1998-99.
The 1996 FBI report said Mogilevich was involved in “weapons trafficking, nuclear materials trafficking, prostitution, drug trafficking, dealing in precious gems, and money laundering.” It said he was active in the U.S., as well as the Czech Republic, Austria, Russia, the Ukraine, the U.K. France, Slovakia, and Israel. The FBI said the center of his financial operations was Arigon Ltd, registered in the Channel Islands and using banks in New York, Geneva, London and Stockholm. Front companies in the U.S. were FNJ Trade Management Corp. in Los Angeles and YBM Magnex in Newtown, Pa.
Yes, how a simple Mafioso can lead to such Big Mafioso via figure skating is really quite amazing. The recently arrested Mogilevich also had dealings with al Qaeda, as seen in this Security Affairs article of Fall 2005 - #9 by Jason Freier (webarchive cache here):
Mogilevich’s activities tell a similar story. Just before the attacks of 2001, the Ukrainian mobster emerged at the center of a European investigation into the arrest of an al-Qaeda-linked group in Paris. When apprehended in August 2001, the group had in its possession a suitcase containing uranium-235.15 Subsequent investigations into the incident have determined that the group attained the uranium via Mogilevich’s Ukraine-Marbella route-a transit corridor that, prior to September 11th, had been a favorite among transnational criminals and terrorists entering Europe from the Maghreb.16
Patterns of interaction
In its study of the subject, the U.S. Library of Congress found three broad patterns connecting terrorism and transnational crime in Europe.
- Alliances for mutual benefit, in which terrorists enter agreements with transnational criminals solely to gain funding, without engaging directly in commercial activities or compromising their ideologically based mission;
- Direct involvement of terror groups in organized crime, removing the middleman but maintaining the ideological premise of their strategy, and;
- The replacement of ideology by profit as the main motive for operations.17
Al-Qaeda’s dealings with Mogilevich in Spanish Morocco and Bout in Liberia fall into the first category. In these instances, the cooperation has been based upon nothing more than mutual benefit, with neither group compromising its primary mission. The weapons traffickers, in short, view the terrorists as little more than clients, and business is business.
From the sublime to the supremely deadly in one shot, so to speak. When looking at someone like Dmitry Firtash, it is wise to remember that the money in the machine drives the entire affair, and there is a lot of money that shifts in the natural gas and other businesses that he is involved in. Thus, even as an intermediary to someone like Mogilevich makes him a very important person because of the extent of things that criminal enterprise is associated with.
When that pattern of companies having backers that don't want to be known appears time and again, this becomes an indicator that something needs to be looked at. Russia got hit by that *twice* with ETG and RUE, both, most likely, representing the exact, same individual behind Itera. This does not even begin to touch the extended holdings of Firtash or Mogilevich which stretch, cumulatively, all the way to China for Mogilevich and down to the nitty-gritty of real estate in Kiev for Firtash.
I thank my commentator cui-b0no for the posted information on Kiev, and I have been discussing with him the destruction of Kiev's historic buildings that have been surreptitiously destroyed by the likes of DF Group and others that now see 'development' ahead of preserving those things the city has designated as part of the cultural heritage of Kiev. How this happens on the small scale is *exactly* the same as on the large: corrupt officials willing to take money and look the other way while things go on. It doesn't matter if those individuals are running nuclear processing facilities or simple council members in a city, the basics are just the same.... save that the latter destroys our past and those things that connect us to it, while the former puts our future at risk. To those dealing in 'just the cash' without respect to ideology, trafficking in humans, compromised building permits, small arms and nuclear material is all equal.
When looking at the increasing economic savvy of groups like Hezbollah to compromise both 'white' and 'black' markets, the idea is that their existing power structure would not only be legitimized but expanded if something as simple as narcotics are made legal. M. Simon, also a wonderful commenter, put forward that moving such into the 'white world' was of benefit, while I put forward that it allows them to then expand further via laundering their funds to even more illicit and lucrative schemes. Russia, and the surrounding Nations coming out of the Communist Block, are the case in point, here: those running criminal enterprises have compromised large scale businesses to craft a unique and deadly system of laundering funds from some of the most profitable enterprises that one can work in. The reason that they are restricted by Nation States is that the outcomes of letting things like human slavery, narcotics trafficking and nuclear material sales go unchecked is a future made worse, not better, for the 'white world' investment in industry. With the ability to swindle $1 billion/year from a large scale gas transaction and then shift those funds across the board from real estate to other forms of trafficking, these Mafioso are not, necessarily, making a better life for those around them or the world at large.
They *are* making money, however, and truly willing to do whatever it takes to get more of that and the power that comes with it. These are not Carnegies or Rockefellers, nor even something remotely close the Gambino Family. These are ruthless thugs willing to put on suits to further some of the worst crimes imaginable on the face of the planet, and giving them legitimacy when they are willing to operate outside all bounds of Nation and law and, in fact, see themselves *above the law* puts them in a category very close to terrorism. They are not conducting Private War, but they sure, as hell, are supporting it on a global basis. This is not heading towards securing human liberty, but towards endangering it. While I do agree that things like drug use should be up to an individual to decide for themselves, I do start to draw the line at those supporting Private War through the promulgation of profits from such activities into illicit venues. As Russia and the surrounding ex-Communist Block Nations are proving: you can have lots of industrial support and still not be supporting society at *all*.
Playing upon personal vice that harms no one, is one thing.
Providing those seeking to bring down society and Nations with the means to do so is something thoroughly different.
And, currently, we are having a hard time convincing anyone that there is a difference between the two until some large number of people get killed... and then the idea is to look the other way and blame ourselves for the destructive hearts of others who are seeking our end. There is a reason I support the Law of Nations view to address this just like it did Piracy: it goes after those who support Private War as well as those who wage it. It is yet another tool in our National toolkit if we dare to find and use it.
So that we can address both those seeking to destroy our past, and our future.