TERRORISM and
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MONEY LAUNDERING

 

"In any Russian village people aged 5 to 85, five or six years ago could have told you the same thing we saw in the pages of the international press." Grigory Yavlinsky Russian Parliament Opposition Leader

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"It is truly impossible in many instances to differentiate between Russian organized  crime and the Russian state"

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"Russian organized crime can use its resources to corrupt institutions here in the United States. The recent case involving the Bank of New York may prove to be one such example.

 

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"Organized crime shaped the post communist Russian banking industry and now manages it."

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"Russia is the biggest mafia state in the world, the super power of crime that is devouring the state from top to bottom."


Dick Armey
House Majority Leader

"A substantial portion of the American taxpayer money to the IMF may now be financing the lavish lifestyles of Russian oligarchs"



TRADE
&
COMMERCIAL
LAWS
of the
RUSSIAN
FEDERATION

_______________

 

OFFICIAL
CODIFICATION
with
COMMENTARY

 

 


Oceana Publications, Inc.
© 1993, 1995
 

____________________

The first official English language reference source of Russian commercial laws. Compiled, translated and codified by the staff of American Russian Law Institute: Emanuel E. Zeltser, Esq., Anna Reid, LL.M., LL.D., and Alexander Fishkin, LL.D. , together with the Academy of Jurisprudence of the Ministry of Justice of Russia, and professors of the Law School of the University of Pittsburgh

 

RUSSIAN MOB vs.

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ARLI on Capitol Hill

 

Emanuel E. Zeltser, Director and General Counsel of ARLI exposes Russian mob machinations in US at the Hearing on the Bank of New York, Russian organized crime and money laundering. (House Committee on Banking and Financial Services, September 29, 1999)

 

 

 

 

 


Emanuel E. Zeltser
American Russian Law Institute


James A. Leach
House Banking Committee


"As a recognized expert on Russian banking law your  perspective on the issues to be addressed at the September 21 Hearing would be of great assistance to the Committee in fulfilling its legislative and oversight responsibilities."

James A. Leach, Chairman
House Committee on Banking and Financial Services


STATEMENT OF EMANUEL E. ZELTSER
(7 minutes 05 seconds; 1096 words)

Mr. Chairman, Esteemed Members of the Committee:

I am a New York attorney, also qualified as a lawyer in the former USSR. I represent here the American Russian Law Institute, a not-for profit legal and public policy research and advisory organization dedicated to promoting legal reform in Russia and newly independent countries of the former USSR, based upon democratic principles, market economy and rule of law.

In 1992, at the request of then Russian Minister of Justice, my colleagues and I participated in drafting of the new Russian banking legislation. In 1993, jointly with the Academy of Jurisprudence of the Ministry of Justice of Russia and the Law School of Pittsburgh University, we translated and codified the first Official English language Codification of Russian trade and commercial laws.

For the past several years my Russian and American colleagues and I have taken part in major litigations in Russia, the US and other countries, involving the Russian banks’ interaction with the Western financial system in general and with the Bank of New York in particular.

[EXHIBIT 1. PHOTOGRAPH OF 
VINOGRADOV AND GROSHEV]

The man on the left is Vladimir Viktorovich Vinogradov. Until October of last year Mr. Vinogradov was the Tsar of a realm called Inkombank, one of the largest privately owned Russian banks and the biggest Russian correspondent of the Bank of New York. The man on the right is Vladimir Groshev, a former high ranking official of the Soviet Politburo and the chairman of Inkombank’s governing board.

Prior to Inkombank’s collapse last year, Mr. Vinogradov was also one of Russia’s five foremost oligarches, reigning over a financial-industrial empire consisting of commercial concerns, state of the art military production facilities and an array of obscure offshore corporations. In the past five years Mr. Vinogradov has been implicated in massive world-wide financial frauds, currency market manipulations, financing of narcotics trafficking, laundering of illicit proceeds, contract murder and other Russian mob-related activities.

We now know that Vinogradov, one of the most notorious, powerful and dangerous Russian dons, was also most welcome and respected guest in the highest circles of financial elites in the United States and other Western countries.

[EXHIBIT 2. CHART OF INKOMBANK’S
CORRESPONDENT ACCOUNTS]

According to Inkombank’s own promotional material this mob-controlled bank had correspondent relationships with top banks in the United States, Canada, Switzerland and many other Western countries. Its representative offices and branches were licensed in Switzerland, UK, Germany and Cyprus. Illicit proceeds could flow to any point in the world at the touch of a button in Moscow. In May of 1996, the US Security and Exchange Commission approved a $10 M Inkombank/Bank of New York joint securities issue, known as ADR. The American public was given the opportunity to buy an equity stake in the world’s most profitable enterprise, Russian Organized Crime.

How could this all have happened? The answer is: easy -- because the most sophisticated security systems are ineffective when they are turned off. And who better to push the “disarm” button than those whose duty it is to respond to the alarm?

In the past several weeks the press abundantly referred to a certain letter which the former head of BONY’s Eastern European Division, Natasha Gurfinkel, forwarded to the Chairman of the Federal Reserve Board, Alan Greenspan. The letter praised Inkombank and urged the Fed Chairman to expedite approval of Inkombank’s representative office in the US. The media never mentioned however, how this letter originally surfaced.

[EXHIBIT 3. LETTER FROM GURFINKEL 
TO ALAN GREENSPAN]

The letter dated April 23, 1996, was produced by the Bank of New York itself pursuant to my subpoena in a litigation involving Inkombank.

[EXHIBIT 4. CBR AUDIT REPORT]

Ms. Gurfinkel wrote this letter to Mr. Greenspan amidst revelations that a surprise audit of Inkombank by the Central Bank of Russia uncovered multiple improprieties, indeed, criminalities and recommended severely restricting Inkombank’s license.

If I were to wonder around the Bank of New York’s headquarters on One Wall Street, I would definitely be approached and questioned by its security personnel. Not so if a BONY’s senior officers says: “this guy is with me”. We do not know at this time whether sufficient evidence will ever be uncovered to prove beyond reasonable doubt any crimes which may or may not have been committed by some of the Bank of New York officers. I do know however something which is perhaps more damaging to the banking system, possibly the American system of values. The Bank of New York brought Russian organized criminals into the US and world banking systems by-passing security because “these guys were with them”. [EX. 1, THE PHOTOGRAPH]

I want to be clear that I do not suggest that the Bank of New York bears 100% responsibility for the “he is with me” phenomenon. Rulers of Russian criminal and semi-criminal empires, loaded with billions of dollars of the monies stolen from Western creditors, including the IMF, secured the unwarranted “he is with me” endorsements from other banks, “political” law firms, major accounting firms and other power brokers. This permitted them to manipulate American banking system as well as legal system.

Zealously courted by prodigiously compensated endorsers Russian mob-bankers have been successful in subverting and delaying for years investigations and judicial proceedings relating to their machinations in the US, persuading regulators to disregard reports of whistle blowers, casting aspersions on “unfriendly” witnesses by the strategic phone calls, and removing those who could not be thoroughly defamed by intimidation, harassment and strong arm tactics -- all according them ample time to launder and secret their loot in their offshore coffers before declaring their banks insolvent. Indeed their diversionary machinations compelled the shareholders opposing Inkombank in the proceedings pending in the District Court for the Southern District of New York to request District Judge to recuse himself because of the bias in favor of Inkombank and extra-judicial communication with its principals.

The Chairman most correctly identified the issues which are before this Committee as (a) "... whether foreign theft has been facilitated by self-serving banking practices in the Western world, including the U.S."; and (b)”...with regard to the Bank of New York, the question is whether they were unwittingly duped or were willing facilitators." In the past four years my colleagues and I, with the help of several brave Russian-American news reporters, assembled significant evidence showing that regrettably the answer to the first question is yes. As regards the Bank of New York, the evidence shows that at the very least its management was willfully blind in disregarding alarming evidence that its Eastern European Division provided Russian organized crime wide access to the US and western banking systems.

The Institute was called upon by the Chairman to share this evidence with this Committee and provide our input as regards Russian banking system and laws and I will be pleased to answer the questions which the esteemed members of the Committee may have in this regard.

- END -

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