Business as Usual: The Rise of the Russian Mafia

Photo: Jeremy Nicholl/Polaris

Russian Mafia member at the offices of a computer firm where he provides security.

Crime syndicates in the former Soviet Union are known as the Russian mafia or mob or the Red Mafiya. These criminal organizations are ruled by godfathers known as Vori v Zakone ("Thieves in Law").  But the Kremlin, which battles the public perception that the term "Russian mafia" is a tautology, simply prefers to call it "the so-called Russian mafia."

To the Kremlin's consternation, Russian mobsters–that is, Russian-speaking criminals from what was once the Soviet Union–have become movie producers' go-to villains. This cinematic typecasting has gotten so bad that American observers have even publicly sympathized with the Russian government's image problems. At a Kremlin-sponsored news conference, Alexander Vershbow, the former U.S. ambassador to Russia, commented on a 2003 opinion poll that found that many Americans view Russia as a crime-infested nation. Saying he was "saddened" by the results, Vershbow continued, "Sometimes the stereotypes reflected in this poll get reinforced by Hollywood films which often have as the bad guy somebody from the Russian Mafia."

Since Arnold Schwarzenegger starred as a Moscow cop hunting a Georgian drug dealer in Walter Hill's 1988 thriller Red Heat–a camp classic in Russia due to its pidgin Russian and crude stereotypes–there have been more than two dozen films featuring Russian mobsters as bad guys. The sub-genre includes James Gray's Little Odessa (a hit man returns home to New York's Russian community in Brighton Beach to do a "job," and see his family); Martin Campbell's James Bond re-invention GoldenEye (Russian mobsters steal a futuristic weapon); Philip Noyce's The Saint (Russian oligarchs stage a cold fusion swindle); John Landis' Blues Brothers 2000 (Dan Ackroyd seeks revenge on the Russian mafia, which burnt down his nightclub); John Frankenheimer's Ronin (Robert DeNiro plays a freelance intelligence agent hired to make sure a dangerous MacGuffin doesn't fall into the Russian mob's hands); Antoine Fuqua's Training Day (Denzel Washington must pay back a gambling debt to the Russian mafia . . .  or else); and, finally in David Cronenberg's Eastern Promises, in which Viggo Mortensen plays a mysterious up-and-comer in the Russian mafia in London.

Yes, in the years since The Godfather films, the Russian mafia has stolen film villainy from its Italian brethren. And, distressingly, in the real world, their actual crimes are even more colorful. At the Salt Lake City Winter Olympics in 2002, they bribed a French judge to ensure the Russians a gold medal in pairs figure skating. In 1997, the Russian mob attempted to sell a Colombian drug cartel a decommissioned Soviet submarine for use in drug-smuggling operations. And then there are the current fears that the Russian mob will gain access to the former Soviet Union's nuclear arsenal and sell parts of it on the black market to terrorists. Warns the FBI, "If Russian organized crime could help foreign crime networks to gain access to nuclear material or other fissile weapons then the scenario becomes truly frightening."

Tsarist Origins

Organized crime has existed in Russia since the end of the 19^th century. The Russian Revolution put a dent in its operations but did not do it in. In Soviet times, criminal syndicates ran the black market in league with corrupt government officials. Many of these syndicates were–and are–based not on family affiliation as with the Italian mafia but on networks first established in Stalin's Gulags, where gang members were identified by an elaborate system of tattoos designating syndicate affiliation, criminal specialty and, even, sexual proclivity.

Yet while the mob existed in the Soviet era, it did not thrive. Russian criminal syndicates were kept in check by those same authorities with whom they collaborated. That changed in the late '70s and '80s as the Soviet Union, burdened by a crippling military budget, a failing agricultural system and an inefficient industrial sector, began experiencing economic instability. In 1991, the Soviet Union quietly broke up, its leadership convinced that their fortunes would be better served by a switch to a free-market capitalist economy.

The Russian mafia saw an opportunity in the confusion that followed the dissolution of the Soviet state and the sudden opening of its economy. Their Soviet-era criminal networks intact, the Russian mafia soon found itself a transnational organization with operations that extended into the 15 former Soviet republics and the countries of the Eastern bloc.

Taking advantage of the endemic economic insecurity of the early '90s, the mafia were able to were able to bolster their ranks by hiring muscle–former KGB agents, special forces soldiers back from the failed war in Afghanistan, and Soviet-era athletes, like marksmen and wrestlers, who had lost their state sponsors. And mob leaders were able to vastly increase their fortunes as they bought in on the Kremlin's post-Soviet fire sale of state enterprises. Today, the mob controls vast sectors of the Russian economy.

In January, Alexander Yelin, of the Interior Ministry's department on organized crime, told the Russian daily Izvestia, "Our analysis shows that more than 2,000 industrial entities have fallen under criminal control. . . .  Criminal leaders and active operatives . . .  are aiming to put their money into business, aiming for political power." He estimates the number of Russian mafia groups at 450 with a total membership of 12,000. (Another Russian crime expert put the number of groups at 10,000 with a membership of 300,000–most of who work as private soldiers guarding mob bosses and their assets.) Those groups are part of larger regionally based crime syndicates ruled by a hierarchy of mob bosses–the Vori v Zakone–who rose to power in the Soviet Era.

Vladimir Ovchinsky, who tracked organized crime in Russia for Interpol in the late '90s, put it this way: "A very large part of the Russian economy has criminal origins and a number of former godfathers are now locomotives of the Russian economy." And in March, in a speech leaked to Novye Izvestia, the Moscow-based daily, Rashid Nurgaliyev, the head of the Interior Ministry, and as such Russia's top police official, said that Mafia-controlled industries include fuel, energy, metals, timber and fisheries.

As a result of this mob control, the Russian economy suffers from both a lack of healthy competition (it is almost impossible for Western companies to do business in Russia) and political corruption, which protects mob enterprises from state oversight. Like in the corruption-plagued nations of sub-Saharan Africa, the government is consequently unable to afford and deliver basic human services.

These mob-controlled enterprises launder their money in mob-controlled banks which then shuffle the assets to bank havens such as Switzerland. Of the 1,200 banks in Russia, about 200 are considered legitimate enterprises. The rest are thought to be criminal fronts.

All of which has made banking a shadowy, not to mention dangerous, enterprise in Russia. In 1995, at the height of what has been termed "the Russian gold rush," 13 high-ranking bankers were assassinated in Moscow alone. In fact, Russian government officials in 2003 estimated that 5,000 contract killings occurred across Russia. Gennady Gudkov, a member of the Duma (Russian parliament) security committee and a reserve officer in the FSB, put it this way: "Combating organized crime is a general social problem. Where are members of criminal groups recruited? They are recruited from unemployed youths who are ready to tear anyone apart for $500."

 

Photo: Grigory Pasko, www.robertamsterdam.com

Vladimir "Winnie the Pooh" Nikolayev being arrested

According to Interior Minister Nurgaliyev, the Mafia control almost 10 percent of Russia–particularly Moscow, St. Petersburg, Siberia and the south. In other words, the mob controls the richest and most productive areas of the largest country in the world. For example, until recently the Siberian city of Vladivostok was ruled by Mayor Vladimir "Winnie the Pooh" Nikolayev who owns some of eastern Russia's largest timber, seafood and meat processing companies. Nikolayev became mayor in 2004 after his main opponent "tripped" on a hand grenade outside his office days before the election.

The largest and most powerful Russian criminal enterprise is the Solntsevskaya bratva [brotherhood], based in the Moscow suburb of Solntsevo. A 1995 FBI report described it as the most powerful Euroasian crime group "in the world in terms of wealth, influence and financial control."

Solntsevskaya has about 5,000 members and is said to make its money from drug trafficking, prostitution, gun smuggling and racketeering. Paul Tatum, an American who was the joint owner of the Radisson-Slavyanskaya Hotel in Moscow, allegedly ran afoul of Solntsevskaya when he refused to sell his share in the hotel to his partner. In November 1996, he was shot in the Moscow subway 11 times in the face and neck. His two bodyguards stood by and let the killer get away.

The Business of Crime

Jews (or, at least, people who claim to be Jewish), Georgians and Chechens are disproportionately represented in the Russian underworld. In Soviet times, with Slavs in control of the institutions of government, the only way for non-Slavs like Jews to gain personal wealth was to operate outside the Slav-controlled legal structure. Consequently, enterprising Jews, Muslims and members of other ethnic minorities gravitated to the shadow economy, establishing criminal enterprises that then thrived in the post-Soviet free-market era. For example, the largest Chechen mafia group is called Obshina and is said to specialize in kidnapping, bank robberies and white-collar crime.

With easy emigration to Western Europe, Israel (where anyone who claimed Jewish ancestry could get a passport) and the United States, the Russian mob soon established outposts in Germany, London, Israel and the United States, where they set up headquarters in Brighton Beach, Brooklyn. Anthony Colannino, deputy district attorney for Los Angeles County, maintains that gangsters from the former Soviet Union are now the largest ethnically based crime group in the United States. He told the Guardian of London:

"The Russian mafia includes ex-KGB officers, former special forces and government officers. They're very good at computer crime, electronic balance fraud, insurance fraud, pimping, narcotics, loan sharking, racketeering.  . . .  Unlike the old Italian mob, who would send flowers to your wife after they'd killed you, they'll kill you, your wife, your children, your uncle, your cousins, your neighbors. They're bloody ruthless, they really are."

The Russian mafia deal in drugs, guns, gambling, black gold (caviar) and, most famously, sex slaves–primarily women, but also children and young men. The Vori v Zakone are said to seal their business deals by sharing their favorite prostitutes.

The market in human beings is less risky–and more profitable–than other forms of illicit trade. In 2002, the Russian mafia earned annual revenues of about $7 billion a year from trafficking in an estimated 160,000 women to China, Eastern Europe, Western Europe and the United States (via Mexico). Elena Mizulina, a member of the Russian Duma who helped pass the law that outlawed human trafficking–in 2002!–explained: "The profits of the slave trade are bigger than those from drugs."

Typically, the women are lured out of their home countries with promises of good jobs in the West. Then their passports are confiscated, and they are held as prisoners in mob-controlled brothels. Some sex slavers are said to break women of their unwillingness to work as prostitutes by bringing them in groups to watch a "show murder" of a woman who refuses to work. The captive women are further kept in line by being told that if they cooperate with law enforcement officials their whole family will be killed, which in the case of the Russian mob is not an idle threat.

Women from the former Soviet Union can sell for up to $15,000 depending on the quality of the "product." Over the years, their prices decrease and it is rumored that those women who are no longer sexually marketable are sometimes killed and their organs harvested for the illegal transplant market.

David Harrison of the Sunday Telegraph of London told the story of Irina Valinsky, a 21-year old Lithuanian who worked in London six days a week at two apartments and a massage parlor having sex with between 25 to 30 men each day. The men are charged between $300 and $800. She turns almost all of the money she makes to her Russian "owner."

Harrison wrote:

"Like most trafficked women, Irina was duped into coming to Britain and held under threat of violence to her and her family. She was "excited" when she landed a job as a waitress in London after replying to a newspaper advertisement in Vilnius.

But, once in England, she was introduced to an Albanian who took her passport and said he had paid [$8,200] for her – and that now she would be working for him as a prostitute until she had paid it all back."

"That first night he raped me, to break me in," she said. "I thought about escaping but he never let me out of his sight. He hit me in the face, and his friends raped me. I lost the will to run away." After a year Irina was sold to her current [Russian] pimp.  . . .  I ask her what would it take for her to flee this life of sexual servitude. She stares at a kitsch painting of a child on the wall and says, wearily: "I don't know. It is dangerous. They would get me or my family. What else could I do? Where could I go?"

Transnational Criminal Organizations

The reach of Russian organized crime transcends national borders, and for historic reasons is particularly strong in Eastern Europe. But above all, the Russian criminal and business elite (and the line between the two is a fine one) have gravitated to London (a.k.a. Moscow on the Thames), which has three things going for it. London has a long established Russian community, it is Europe's banking capital and it is not in the United States. When asked by ABC News why Russians flock to London rather than New York, Aliona Muchinskaya, of Red Square PR, replied, "Honestly, are you joking? It was the Cold War. America was the biggest, you know, biggest enemy."