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| Ibid. 337 Ibid. at 1-2. 338 Ibid. at 3. 339 Ibid. at 2. into be the sole supplier of gasoline in St. Petersburg. 330 It is worth noting that, according to an investigation by Newsweek, the then-owner of PTK was Vladimir Smirnov (also a member of the Ozero cooperative, who partnered with Barsukov for the gasoline business. Smirnov also once led the Russian operations of the St. Petersburg Real Estate Holding Company (SPAG), of which Putin was an advisory board member until his inauguration as president. 331 In 1999, US. and European intelligence agencies began to suspect that SPAG was involved in a money laundering scheme in Lichtenstein for Russian organized crime gangs and Colombian drug traffickers, including the Cali cocaine cartel (though SPAG denies wrongdoing and no charges were ever filed). 332 Fur- thermore, Barsukov was also reportedly aboard member of a SPAG subsidiary. 333 Alexander Litvinenko, the former spy who Putin allegedly ordered the assassination of (see Appendix B for more information, and another former KGB agent, Yuri Shvets, had compiled a report on Barsukov and the Tambov gang in 2006, and found that, as deputy mayor, Putin had provided political protection for criminal activity related to Barsukov’s gang in St. Pe- tersburg. 334 Russian security expert Mark Galeotti of the European Council on Foreign Relations, estimates that Russian-based organized crime is now responsible for one-third of Europe’s heroin supply, a large portion of the trafficking of non-European people, and most illegal weapons imports. 335 Galeotti reports that Russian-based crime groups in Europe largely operate with (and behind) indigenous European gangs. 336 They are not fighting for territory anymore, but working as brokers and facilitators for regional and international criminal activities and supply chains. One supposedly retired Russian criminal told Galeotti in 2016 that we have the best of both worlds from Russia we have strength and safety, and in Europe we have wealth and comfort.’’ 337 And, according to a Western counterintelligence officer, the strength and safety that these groups enjoy in Russia are what give the Kremlin power over them. 338 Galeotti asserts that, under Putin’s rule, connections between Russia-based organized crime groups and Russian intelligence services, including the FSB, have grown substantially. Their interconnectedness now goes well beyond the institutionalization of corruption and the growing grey area between legal and illegal activity. In effect, during Putin’s rule the state has nationalized organized crime the underworld now serves the ‘‘upperworld.’’ 339 VerDate Mar 15 2010 04:06 Jan 09, 2018 Jkt PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 S:\FULL COMMITTEE\HEARING FILES\COMMITTEE PRINT 2018\HENRY\JAN. 9 REPORT FOREI-42327 with DISTILLER 57 Andrew Rettman, Illicit Russian Money Poses Threat to EU Democracy EUobserver, Apr. 21, 2017. Oliver Bullough, Stage Hands How Western Enablers Facilitate Kleptocracy, Hudson Institute, at 2 (May 2016). 342 Dev Kar and Joseph Spanjers, Illicit Financial Flows from Developing Countries 2004- 2013,’’ Global Financial Integrity, at 8 (Dec. 2015). Organized Crime and Corruption Reporting Project, The Russian Laundromat Exposed, Mar. 20, 2017. Jake Bernstein, et al., International Committee of Investigative Journalists, All Putin’s Men Secret Records Reveal Money Network Tied to Russian Leader Apr. 3, 2016. Ed Caesar, ‘‘Deutsche Bank’s Billion Scandal The New Yorker, Aug. 29, 2016. THE EXPORT OF CORRUPTION The Kremlin has also exported economic corruption to its periphery and throughout Europe. Anton Shekhovtsov, a scholar who studies the Kremlin’s links with far-right and extremist groups, believes that the Kremlin even prefers using corruption over cultivating such groups, saying that Russia would rather destroy the EU through corruption . . . than through the support of anti-EU forces.’’ 340 In the report Stage Hands How Western Enablers Facilitate Kleptocracy journalist and author Oliver Bullough describes how Western countries are used by corrupt officials to protect their ill- gotten gains In Stage One, the kleptocrat secures his newly acquired assets by getting his money and company ownership offshore. This successfully insulates him against unexpected political changes at home. In Stage Two, the kleptocrat secures himself and his children by physically moving his family offshore. This insulates those closest to him against the consequences of the misgovernment that made him rich, while providing both them and him with a more amenable environment in which to spend his wealth. In Stage Three, the kleptocrat secures his reputation by building a network among influential people in Western countries. In simple terms, the goal of Stage Three is to make sure that a Google search returns more news stories about good deeds than about allegations of corruption and loutish- ness. 341 The scale of how much illicit money has moved out of Russia is staggering. A report by Global Financial Integrity that tracked illicit financial flows from developing countries found that, between 2004 and 2013, over $1 trillion left Russia, averaging over $100 billion a year. 342 Several recent investigations have uncovered how that illicit money flows out of Russia. An exhaustive investigation by the Organized Crime and Corruption Reporting Project (OCCRP) tracked over $20 billion in illicit money that travelled from 19 Russian banks to 5,140 companies with accounts at 732 banks in 96 countries, including nearly every country in the EU. 343 The International Committee of Investigative Journalists (ICIJ) Panama Papers probes have traced $2 billion in illicit funds linked to Vladimir Putin that were moved abroad using a Cypriot bank and a Swiss law firm. 344 Investigations of Deutsche Bank have found that it assisted Russian clients covertly transfer $10 billion to other jurisdictions. 345 In 2015, Deutsche Bank reported that $1.5 VerDate Mar 15 2010 04:06 Jan 09, 2018 Jkt PO 00000 Frm 00063 Fmt 6601 Sfmt 6601 S:\FULL COMMITTEE\HEARING FILES\COMMITTEE PRINT 2018\HENRY\JAN. 9 REPORT FOREI-42327 with DISTILLER 58 Peter Hobson, How Europe Became a Russian Gangster Playground The Moscow Times, May 12, 2016. Neil Buckley & Richard Milne, French Probe Danske Bank Link to Alleged Russian Fraud Financial Times, Oct. 12, 2017; Russian Untouchables, Attack On Hermitage, $230 Million Tax Theft June 23, 2012. Neil Buckley, ‘‘Magnitsky Fraud Cash Laundered Through Britain, MPs Hear Financial Download 0.63 Mb. Share with your friends:
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