22 February 2008

After the fall of Trans World Commodities and its fallout

This article starts off where others have left a few loose ends, like my Red Mafia article, where the great circle of Red Mafia groups starts with a little known individual where we can ask the question: who is it that would contribute to *both* Randy "Duke" Cunningham and Hillary Rodham Clinton? That was even more interesting than: what is the connection between the incomplete Soviet CV Varyag and Hillary Rodham Clinton?

Yes, organized crime does take you in strange directions and one of the loose ends from the Red Mafia article dealt with an individual brought up in this NY Post article on the Shady 'Inn' Crowd, from 15 APR 2007:

YOU never know who owns what these days. Case in point: the Hotel Gansevoort. Arik Kislin, one of seven principals in the trendy, 187-room Meatpacking District inn, once ran a firm with ties to a suspected Moscow hit man, The Post's Dan Mangan reports. In the early 1990s, a Manhattan company called Blonde Management, of which Kislin was chairman, co-sponsored a U.S. visa sought by a Russian named Anton Malevskiy. The FBI believed Malevskiy to be a professional assassin and head of one of Moscow's leading criminal gangs, according to a 1999 article by the Center for Public Integrity, which cited an FBI report. Gansevoort flack Nancy Friedman at first denied Kislin had an ownership role in the hotel or that his name was on its liquor license, despite being told of a state agency document that shows otherwise. When we pressed for an explanation about Kislin's relationship to the hotel, Friedman said she would check with the Gansevoort's owners. But in a subsequent conversation, she suddenly clammed up, telling us, "I don't think there's going to be any response."

Last time it was Arik Kislin, and all the twists and turns of his contacts and his father's contacts and where they went to finally end up with the huge Bank of New York scandal. This time it will be the other Red Mafia suspect Anton Malevskiy and get an idea of what sort of individual Arik Kislin was trying to bring into the US. To do that I will give you a summary of a translated article at the Center for Defense Information, which came from Le Monde on 28 NOV 2002 (it is labeled for personal use only', so it will be more overview than exact quotes). It relates an interview with Dzhalol Khaydarov by Vladimir Ivanidze talking about what decided Khaydarov to break his ties with the Red Mafia in 2000.

As he was getting the OUGKM copper factories up and stable, financially, Anton Malevskiy who worked with Mikhail Chernoy and the Izmailovo group paid a visit. The Chernoy Brothers had built up the third largest aluminum production capacity in the world during the mid-1990's, only to see the structure collapse as the Brothers faced problems with the Reuben Brothers, who were running the most sophisticated set of front companies ever seen on planet Earth with all of them contained in Simon Reuben's head. That all started to come apart from the New York side as the number of transactions being processed by Peter Berlin and his wife Lucy Edwards, along with a corrupt bank manager at BoNY, started to reveal the far flung network of front companies run by Simon Reuben. This would also reveal that front companies in the US, Becs and Benex, were serving as fronts for the Semion Mogilevich YBM Magnex investment and stock market fraud system that he was running. As this started to fall apart for the Chernoys, they faced stiff competition that was buying out sections of their industrial empire. Arik Kislin, at Blond Management, was in the same office space as the Berlin couple, who would be associated with Mogilevich, but also Vyacheslav Ivankov-Yaponchik who was associated with the Solntsevskaya group and its boss Sergey Mikhaylov.

So with Malevskiy coming around, he tried to offer Khaydarov a new position with him, so he wouldn't have to associate directly with the Chernoys. Khaydarov was trying to get in contact with the FSB and MVD, but was warned about that as there had been an agreement between the Yeltsin 'family' and the Izmailovo group of the Chernoys and Roman Abramovitch. At that point in time Abramovitch and Oleg Deripaska held the majority of Izmailovo industries between them, and they were 'fronting' for the political power elite (Abramovitch) and the criminal elite (Deripaska) of Izmailovo, both working together with Yeltsin's 'group'. It is by this combination that entire files and background on criminals would 'disappear' out of the FSB and MVD archives, so as to clean out their past. By working themselves deep into the system, the criminal element becomes nearly impossible to dislodge.

Vladimir Putin, for all of his toughness, was unable to dislodge Mafia "Lieutenants" from some areas, and only if the corruption became too apparent, as with Nicholai Axionenko and the Transportation Ministry, could such a minister be dismissed. It is these 'holdovers' from the Yeltsin 'group' that were run by Abramovitch, who would also run most of the financial holdings for the group. For day-to-day work Vladimir Voloshin ran things, like oversight on Boris Berezovkiy's AVVA financial pyramid scheme, and ensured that the holdings were secured. When he couldn't Abramovitch would step in or Oleg Deripaska or Valentin Yumashev. These can be considered to be the central power of the 'Yeltsin group' as a whole, with associations to the Izmailovo group added on. Notice that Boris Yeltsin, after bringing this group together, had little to do with it and it was the group, itself, that tended to run the criminal and industrial affairs of the group.

I will extract the translation directly on the description of how money was filtered into the system:

[Ivanidze] Concretely, how is the money taken out and collected?

[Khaydarov] There are many possible systems: foreign bank accounts, stock, real estate, offshore! Everyone has their own. I set up between 50 and 100 structures for just one of us! No investigating judge can make head or tail of it. For years, my job was to get all the money to the West and into offshore companies.

[Ivanidze] Who decides to conduct a transaction in a sector or against a company?

[Khaydarov] Mikhail Chernoi, with the head of the sector in question -- Oleg Deripaska for aluminum or Iskander Makhmudov for metals -- with the involvement of local governors, like Eduard Rossel in Ekaterinburg or Aman Tuleev in Kemerovo. Then, each person carries out the plan at his particular level, as each has his own security service. For example, at Russal, you fill find a former KGB counterespionage boss, former first vice presidents of the FSB, and people who have information about state security.

This is the hand of Simon Reuben at work: the man who created 3 companies to pay his rent and had 200 people managing 300 companies across the globe in multiple countries: Dubai, Cypress, Bahamas, Grand Caymans, UK, US, Russia, Hungary, Romania, etc. This is why the BoNY investigation ground to a complete and utter halt: it was too complex to actually diagram out in a coherent manner as it was an incoherent system utilizing a coherent methodology. With multiple individuals creating their *own* groups of accounts, front companies, transfer groups, stock and real estate investment groups, etc. there is no sane or reasonable way to track how money filters through the system, but filter through it does.

By 2000 this was starting to spin apart with some of the financial infrastructure pulled up by the US, and individuals getting caught out of place, 'disappearing', allegedly dying (like Malevskiy having a sky-diving accident in S. Africa) or shifting their financial structures to more reliable systems, like Mogilevich and Firtash. After Michael Chernoy going to Israel to escape criminal prosecution, others would follow him there: Lev Levaev, Yakov Goldovskiy, Arkadi Gaydamak. But even with that, those that remain, Abramovitch, Deripaska, Firtash, Mogilevich, and others, the system itself has grown out in different and more diverse directions. Even with stiff law enforcement capabilities, the entrenched elites are very hard to dislodge and there is no guarantee that doing so will actually get them out of the way.

Now, as Oleg Deripaska is in the news, going through what he has done should prove interesting, as he is one of the richest men in Russia right now. Back over at CDI, there is a cached article from Washington Profile by Dmitry Sidorov, DEC 15 2005, looking at the trip of Aleksandr Voloshin and Oleg Deripaska to Washington. And while foreign relations were a bit on the rough side, near the end of the article comes this bit:

I received several tips from unnamed sources on how Deripaska managed to get into the country, despite the U.S.’s longtime suspicion that the owner of Russian Aluminum (RusAl) has been involved in money laundering operations, among other illegal activities.

One source, who wished to remain anonymous, said that Deripaska’s visa problems were resolved during President Putin’s 16 October meeting with President Bush. In a 55-minute-long conversation at the White House, the two leaders spent about 10 minutes discussing the oligarch.


If it were Putin and Bush who decided his fate, as my source (a member of the U.S.-Russian business community) stated, then the reason for the U.S.’s change of heart becomes a bit clearer. Namely, the source thinks that the oligarch’s sale of two Russian factories to America’s aluminum giant Alcoa for $257 million could have served as a good bet placed against his visa issue discussion.

This last observation is in complete harmony with an assessment made by a Washington expert who said that after building good relations with Moscow and Washington, Deripaska was able to get the visa and fly to Washington to promote a new image of Russian businessmen not involved in politics.

That's right, President Bush saw into Putin's soul and missed the organized crime ties. At the time Oleg Deripaska was only worth in the neighborhood of $20 billion, so a 1% loss, to him, is what we would call 'pocket change'. He would also marry a daughter of Boris Yeltsin's and start a new company, Basic Element, in an attempt to help cement his place in the Russian pecking order (Source: The Star, 11 MAY 2007). But perhaps it wasn't just President Bush and Vladimir Putin getting along well together. A Human Events article on 18 SEP 2007 by Dr. Rachel Ehrenfeld and Alyssa A. Lappen look at the other way that one can get into the good graces of the powers-that-be in DC:

The U.S. government has denied Deripaska's entry to the country for more than 10 years. In 2005, after paying $560,000 to former Senator Robert Dole and his law firm, Alston & Bird, Deripaska secured a multiple-entry visa and visited the U.S. several times. His visits ended abruptly in July2006, when the U.S. government revoked his visa.

Part of that, the reason Deripaska would have his visa pulled from the US after a court case in the UK brought by Chernoy against Deripaska revealed some of the inner workings of their holdings (Source: Mineweb). And the Human Events article expands on that reason:

The multi-billionaire Deripaska is currently embroiled in hot debate with his London investment bankers, including Goldman Sachs, J.P. Morgan, Deutsche Bank and Credit Suisse. At issue is Rusal's proposed initial public offering (IPO), which Deripaska hopes can raise at least $30 billion on the London Stock Exchange (LSE) and other European markets.

However, Rusal must first resolve the 20% ownership claim of Michael Cherney, an Israeli industrialist who has sued Deripaska in London's High Court for payment of some $6 billion -- and presented substantial evidence, including two 2001 trust agreements, signed by Deripaska, promising to pay.

Meanwhile, Deripaska has secretly circulated in London, Frankfurt and Edinburgh, unregistered and unpublished offering statements for the IPO. All traces of a private meeting on Friday, June 30 at Trinity House in the City of London, for example, were "carefully wiped, except for two umbrellas left behind with the Trinity House porter," wrote John Helmer in Mineweb. on July 3, 2007.

Although the U.K. lacks laws comparable to the U.S. racketeers Influenced and Corrupt Organizations Act (RICO), Britain's Financial Services Authority has reportedly assigned a special unit to investigate Cherney's High Court evidence against UCRusal. The FSA has yet to provide a detailed response to our inquiry.

Rusal's investment bankers have refused to comment, either declining to answer or ignoring our questions all together. But they are reportedly sniping at one another over the terms of the increasingly problematic Rusal offering.

To succeed, Rusal apparently needs a statement from outgoing Russian president Vladimir Putin, assuring investors that Russia will not repatriate the aluminum giant after the offering. That is highly unlikely considering the Putin's nationalization campaign, which has already lassoed major operations of several international companies, most recently, BP's Kovytka natural gas production field, worth an estimated $20 billion.

Ah, yes, needing to first work out that 20% ownership *and* get a guarantee from an outgoing President that the *next* President won't nationalize your investment. Little things in life, no? Still he had the consolation prize of being the richest man from Russia and a nice visit in London with Abramovich to help cement their #1 and #2 positions (Source: The Guardian (UK), 24 FEB 2007), plus having rebuilt the old Trans World Commodities aluminum business back to being the third largest after Alcoa and Alcan, under its RusAl name. And Abramovich had a 25% share in that, so it must all be going well in the money-making business (Source: Russia Blog, 26 DEC 2006). At the end of April 2007, the final merger of the Tajikistan aluminum company TadAz would be complete, making RusAl the largest aluminum producer in the world (Source: Mineweb, 28 APR 2007). By the end of 2007, the Basic Element group was looking to stand up if it could get a go-ahead from the Russian anti-monopoly bureau, which decided to put off a decision until sometime early this year (Source: Kremlin, Inc, from Dartmouth, 20 DEC 2007).

It is worth taking a look at the Mineweb article of 28 APR 2007, as it gives a bit more of a look at what the Reubens were trying to do so as to get *back* the corporate empire that they had lost to Deripaska:

The terms are all sealed, and the beneficiaries don't talk. Lawyers, public records, and sources close to Deripaska and inside Rusal confirm, however, that the Zhivilo brothers were paid about $65 million; they had controlled the Novokuznetsk smelter before Deripaska, but then failed to win jurisdiction in a US court for their claim. Anatoly Bykov, controlling shareholder of the Krasnoyarsk smelter before his ouster, was paid about $105 million, a sum ordered by an arbitration tribunal and appeals court in Zurich, which Swiss court records corroborate.

The Reuben brothers of London, who ran several trading schemes for the Russian smelters Deripaska operated, claimed $300 million; they received a sum reported to be over $100 million, after an application to a British Virgin Islands court. Details of their June 27, 2005, settlement spilled out when one of Deripaska's companies - called Bluzwed Metals -- went into the High Court in London, arguing that Trans World Metals, the Reubens' vehicle, had violated Clause 11.4 of the secret deal with Deripaska. Deripaska then sought High Court enforcement of the Reubens deal. He got his summary judgement on January 26, 2006, in a ruling by Justice Sir Andrew Morritt. One secret also spilled in the Bluzwed case was the identity of a Lebanese arranger called Joseph Karam - "K" in the court text - whose payoff and indemnity from further claims Bluzwed accused the Reubens of threatening..

Counting the latest Nazarov settlement, Deripaska has been obliged to fork out about half a billion dollars to those claimants with cases strong enough to take to foreign courts and tribunals.

If he manages to list Rusal in a London IPO at a market capitalization of $30 billion, Deripaska's 66% stake would be worth $19.8 billion. Cashing out claims that constitute a serious legal barrier to the IPO saves money, and makes business sense.

Just one UK High Court case remains -- that of Mikhail Chernoy (Michael Cherney). This was filed in the Commercial Court of Queens Bench on November 24, 2006. The sole defendant is Oleg Deripaska, who is accused of breach of trust. Mineweb has reported the details before. There has been no court hearing yet.

Well, Chernoy was on the lam from a number of police agencies, so one could excuse him for not making a good deal before he got to Israel. And Deripaska isn't out of the woods, yet, either:

Pleading that he isn't cash-rich at all, will Deripaska offer Chernoy $2 billion to tear up the March 10, 2001, agreement, and go away? Will Chernoy accept it? Chernoy isn't saying.

Deripaska must play for time, but the clock is ticking against him, so long as the Chernoy agreement of 2001 is an albatross hanging unluckily around his neck. But if the two could agree on staging payments over time, with the bulk to come from Deripaska's dividends from future Rusal earnings, this may constitute a prima facie violation of Deripaska's undertakings to the European Bank for Reconstruction and Development (EBRD), when he swore he had fully bought out Chernoy years ago. An ERBD loan to Rusal, and a matching credit from the World Bank's International Finance Corporation, depend legally on the truthfulness of Deripaska's covenants.

And there is another potential liability for the owner of the world's most important bauxite, alumina and aluminium combine. Would an ongoing financial obligation between Deripaska and Chernoy complicate Deripaska's relations with the US authorities?

If it can be authenticated, the Chernoy document is serious evidence in the Federal Bureau of Investigation's dossier on Deripaska. Now that the Nazarov case is gone, the pressure is on Deripaska to settle with Chernoy on terms that also resolve his problems with the FBI.

So if he can actually buy off Chernoy, he could make his problems 'go away'. If he can't, even though Chernoy has to legitimize his claim, Deripaska is legitimizing it by not offering the IPO (which he could do with everything *else* cleared out of the way). And if he has to go to court, then that would indicate that he knew of a pre-existing claim against RusAl when he said there weren't any, thus bollixing up his position with the EBRD and FBI. And if Chernoy has some hard feelings, which I do believe is the case, then getting paid money won't be a solution, nor will trying to *get* Chernoy as his brother, Lev, will then rally what he can against Deripaska. That would get blood ugly very, very quickly.

The only other information of note from the article is this, and do remember it was published back in April 2007:

In the latest US newspaper reports, it is disclosed that Deripaska paid $560,000 to the law firm of former Republican Senator Bob Dole to resolve the FBI's ban, and get Deripaska his 2005 visa. Washington sources report that other prominent US law firms, and at least one other prominent Republican Party official, have been retained by Deripaska over the years to surmount the visa ban, and retrieve the black ball. At one point, the source claims, he was offering a sizeable bounty for success. The sources also say there has been a long-running and spirited argument between the White House, the State Department, and the investigation agencies over this issue.

That does put a bit of a different light on the WaPo report of 25 JAN 2008 on Rick Davis, an aide to Sen. McCain, having set up a meeting with Deripaska with Sen. McCain: it was not unknown in Washington, DC circles or in the Republican Party that someone had such high level contacts. But it isn't unusual for organized crime figures from Russia to have high level lawyers connected to politics in the US, as seen from this Moscow Times article of 18 APR 2007 (Source: Ocnus cache) quoting the WSJ:

Billionaire Oleg Deripaska has retained former Senate majority leader Bob Dole since 2003 to lobby the U.S. State Department to grant him a visa, the newspaper said.

Deripaska paid Dole's law firm, Alston & Bird, $300,000 in 2003 for activities involving "U.S. Department of State visa policies and procedures," according to lobby filings with the U.S. Senate.

Deripaska had been denied a U.S. visa for several years, the paper said.

The U.S. Department of State granted Deripaska a visa in 2005, after Dole worked for two years to convince U.S. officials that Deripaska was a legitimate and transparent businessman, the newspaper said. Deripaska paid Dole's firm an additional $260,000 upon receipt of the visa, it said.


The newspaper also said former FBI chief William Sessions was acting as a lawyer to Semyon Mogilevich, the Ukrainian-born Russian who is on the FBI's most wanted list over his purported organized-crime links.

Sessions is lobbying the U.S. Department of Justice as it investigates charges of racketeering against Mogilevich for involvement in shady energy deals between Russia and Ukraine, the newspaper said.

Yes a $260,000 'bounty' to get the visa! So lovely when fine, upstanding, elderly, retired Senators start shilling for those in organized crime, isn't it? That is only topped by an ex-head of the FBI doing the same. So much for 'law and order'.

One really can't complain too much, however, as 22 FEB 2008 Sun-Sentinal ran a WaPo article to take a look at Davis' view on things:

The work of Davis' firm put him on the opposite side of Eastern European politics from McCain, who has spoken out vigorously against what he sees as Putin's attempts to subvert elections in former Soviet republics such as Ukraine.

Davis' firm provided political advice to a pro-Russian party in Ukraine during the parliamentary elections of 2006. McCain, on the other hand, backed President Viktor Yushchenko, a Western-oriented reformer who led 2004's Orange Revolution, which overturned what he and his allies considered an election stolen by the party helped by Davis's firm.

Makes it all proper and such, right? Having been at opposite ends of the Ukraine deal? In case it has been forgotten, there is something about Yuschenko that would turn out not to be all bright and cheerful, seen in a Moscow News item of 16 APR 2006, The Orange Boomerang:

An experienced politician, Yulia Tymoshenko managed not only to make the "presidential steps" but also ensured that the Ukrainian people remember to whom they owe the real improvement in their living standards. Experts believe that this is the main factor in Yushchenko's declining ratings amid the growing popularity of the "iron lady."

It is true that the Ukrainians' attitude toward their president has also been affected by the latest round of rumors and speculation that the opposition timed for the upcoming parliamentary election: e.g., when he became president, Yushchenko worked hard to hush up the investigation of his purported poisoning; that Boris Berezovsky funded his election campaign in 2004, also writing a version of his inauguration address; and that Yushchenko's mother-in-law traveled from Philadelphia to Kiev for the inauguration ceremony on a charter flight paid for by businessman Dmitry Firtash, the right-hand man of Semen Mogilevich who is on the FBI's wanted list, but recently took part in discussing the Russian-Ukrainian gas agreement in Moscow.

In short, the Orange boomerang that Yushchenko threw at corrupt officials in the form of his "All Felons Will Be Jailed!" calls never hit anyone. As it turns out, only Yushchenko was hit.

Yes, the same Dmitri Firtash that I go over in this entry detailing his dealings only about two levels down from the top. The man who was director of Highrock Holdings, owned by Mogilevich, to buy a major stake in Eural TransGas, the natural gas purchaser/reseller from Turkmenistan to Ukraine via Gazprom's pipelines. The same Firtash who would not disclose that he and another member of Mogilevich's inner cricle, Ivan Fursin, were backing a 50% stake in the company to replace ETG, RusUkrEnergo, because ETG was seen as corrupt. Mind you, ETG was replacing Itera that *also* had these exact, same links. Same Semion Mogilevich that had swindled hundreds of millions from the US and Canada by manipulating the permanent magnets market and then offering deals he had no intention of backing. Viktor Yushchenko would let the ETG to RUE deal go through with 'unknown' Ukrainian backers, all the while his older brother Peter Yuschenko was getting help by Mogilevich and Firtash in buying part ownership in a gas company in Dubai. All of this funded with money from the narcotics trade in the Golden Triangle, prostitution, money laundering, human trafficking, white slavery, bank fraud, securities fraud, and, perhaps, a spot or two of murder and assassination along the way, as well as supplying small amounts of enriched, processed nuclear material to Osama bin Laden.

While we all love the Orange Revolution as a concept and a happening, the actual individuals involved that got into power have a bit of reckoning to do. The good people of the Ukraine are being ill-served by their political class that seems to be out for *themselves* and selling off their land, resources and historical sites for cash on the barrel. Believe it or not this has been going on under 'both sides' of the Orange Revolution. What is this powerful 'difference' I am supposed to see here? That Sen. McCain supports one group of compromised politicians that more or less support the West and his aide supported those that more or less aligns with Russia?

Excuse me for a moment while I review the names of dictators and tyrants that were more aligned with the US during the Cold War that we did damned little to *clean up* and help to hold higher ideals of liberty and democracy: Ferdinand Marcos, Carlos Menem, Zia ul-Haq, Saddam Hussein, Shah of Iran. Remember these were the 'good guys' that were 'for us' and if they were awful they at least were 'on our side'. The Philippines did, finally, deal with Marcos after decades of oppression, Argentina has wavered all over the place, but do note that Menem gave one of the largest international criminals, Monzer al-Kassar, pretty much free reign on the criminal side. President Zia only continued supporting global Islamic extremists, plus the extremely nasty local sort and continued nuclear work begun during the 'democratic' period of Benazir Bhutto's father who also supplied radical Islamic terrorists with cash and training. Pakistan got lovely nuclear devices and started selling the know-how elsewhere. Saddam? Notice how he got all nice about human liberty and democracy? And just how *did* that Shah business turn out, anyways?

Just how many corrupt political movements has the US backed that never did their nation much of any good because they had problems backing the words of liberty with actions? And how many did we back that didn't mouth any such words, but at least they were 'our scoundrel'? And just why is it that the Administration and the FBI have to go at loggerheads over if it is a good idea to let a major organized crime figure into the US?

I don't particularly like Sen. Obama's Chitown mob connections through the Syrian-American Rezko. Truthfully, that stinks to high heaven.

That is only outdone by Sen. Clinton's connections to various Triads, Red Mafia, gun and narcotics groups and your basic 'where the hell did they get the money' sorts like Norman Hsu. The previous President Clinton letting Red China get missile guidance technology and advanced optics is not my idea of a fun time, nor is having an agent that gets his hands on classified CIA data and then helps on trying to get automatic weapons to gangs in Los Angeles. That pretty much makes the stink to high heaven and then piles the source all the way to heaven to make it impossible to get out.

Then having the folks in the Republican Party get a tizzy because this just might be a 'social meeting' between Sen. Squeaky Clean who supported crooked politicians with organized crime backing in Ukraine and then meeting up with a criminal for another organization while overseas in Switzerland... get a grip. It stinks. Not as bad as Obama or Clinton? Yes.

It is a matter of degree, however, not of *kind*.

I, too, wish that the Orange Revolution could actually have found the corrupt politicians and gotten them out of the system. That did not happen, however. I did not close my eyes to the problems with those individuals and who was backing them.

Just as I cannot close my eyes to the problems of each of these candidates running for President of my Nation.

Because Obama backing Odinga, Clinton supporting Kosovo with the al Qaeda backed KLA now taking power, and McCain supporting a politician tied to the Red Don and then meeting up with another Red Mafia oligarch from the same organization which has Mogilevich in it, all are of equal problem in their view of foreign affairs, liberty, and freedom. If you don't like what is being supported by the candidates you *don't* like, then take a look to make sure you aren't getting the same thing from one you *do*. Because they all look equal to me.

No comments: