Organized crime meets in Tel Aviv
Mr Birshtein hosted a summit meeting of Russian organised crime figures at his office in Tel Aviv from October 10-19, 1995.
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Saturday October 30 1999
World News / Europe
UKRAINE: Questions over Kuchma's adviser cast shadows
The Ukrainian president's administration is facing serious
allegations ahead of polls this weekend, writes Charles
Few people in Kiev will speak openly about Olexander
Volkov, a top adviser to President Leonid Kuchma and
manager of his campaign for re-election at polls to be
held on Sunday. One well known journalist will not even
say his name out loud, preferring to write it on a scrap of
paper. He is a powerful man.
Mr Volkov, however, has become an issue in the
campaign. The president's opponents claim that Mr
Kuchma's 5-year-old administration has been shot
through with corruption and they place Mr Volkov at the
heart of it.
In fact, they claim that with the help of Mr Volkov,
Ukraine's industry has been carved up among
sometimes unsavoury insiders connected to the Kuchma
administration. If Mr Kuchma wins a second term, these
concerns are likely to escalate.
Mr Volkov's influence in the Kuchma camp is great. After
joining Mr Kuchma's successful 1994 presidential
election campaign, he served as an official adviser to the
new president from 1995-96. In September 1998, he was
appointed vice-chair of the Co-ordinating Committee for
Domestic Policy, headed by Mr Kuchma, which currently
functions as Mr Kuchma's election committee.
But concerns about Mr Volkov's business connections
have persisted, including from abroad. Two years ago, in
response to a legal assistance request from Switzerland,
a Belgian judge froze $3m in Mr Volkov's bank accounts
in Belgium. The prosecutor's office launched an
What they found was that $15m had transited Mr
Volkov's Belgian accounts from 1993-97, and that he
also had bank accounts in the UK, Germany, Monaco,
Luxembourg, Switzerland, and the US.
Mr Volkov declined to be interviewed for this article.
No charges have been filed against Mr Volkov, but the
Belgians have asked to come to Ukraine and conduct
interviews to determine the source of some of the money
transiting Mr Volkov's accounts. Since July, they have
been waiting for visas but so far in vain.
"Until now, we have had no co-operation at all from the
Ukrainian side," said an official from the Belgian
prosecutor's office. "To be honest, I would say this is due
to deliberate obstruction from a very high level."
The Belgian investigation has revealed Mr Volkov's
commercial ties to figures who western law-enforcement
agencies say are associated with a Russian organised
crime syndicate, the Solntsevskaya mafia, whose
influence in Ukraine has grown dramatically since 1994.
Belgian prosecutors confirm that at least $5m of the
transfers to Mr Volkov, starting in September 1994 and
ending in January 1996, came from companies owned by
Boris Birshtein or by associates of Mr Birshtein. It is Mr
Volkov's connection with Mr Birshtein that primarily
interests Mr Kuchma's political rivals — and also
international law enforcement authorities. A Russian
émigré financier and businessman, Mr Birshtein is
currently being investigated by Antwerp police for
Mr Birshtein is known to have contributed funds to Mr
Kuchma's 1994 election campaign, and has developed
business interests in the Ukraine. He could not be
reached for comment for this article.
The Belgian probe found that of the $5m transferred to Mr
Volkov's Belgian bank account, Mr Birshtein's company
Seabeco transferred $2m, while Mr Birshtein's
associates transferred $3m.
Mr Volkov first came to the attention of European law
enforcement organisations as part of a Swiss
investigation into Mr Birshtein's business partner, Sergei
Mikhailov. Mr Birshtein and Mr Mikhailov jointly control at
least one company, MAB International, registered in
Belgium, according to Swiss police.
In a fax to the Geneva prosecutor on December 6, 1996,
the Russian interior ministry identified Mr Mikhailov as
the "leader of the Solntsevskaya criminal syndicate". Mr
Mikhailov was arrested in Geneva in October 1996. He
was charged and tried for alleged money-laundering and
for being a member of an organised crime organisation
but was acquitted in December 1998 for lack of evidence.
During the Swiss investigation of Mr Mikhailov,
prosecutors found a wire transfer from a trading company
named Fearnley — owned by an associate of Mr Mikhailov — to Mr Volkov's account in a Belgian bank in September
1994. It was this transfer that led to the opening of the
Belgian file on Mr Volkov.
Jurgen Roth, a German writer and researcher, claims in
his latest book on Russian organised crime, The Grey
Eminence, published last month, that as early as
November 1994, Mr Birshtein was given a leading role in
organising the distribution of energy supplies in Ukraine.
Mr Roth cites a report by the US Federal Bureau of
Investigation dated August 1996, and obtained by the FT,
which says Mr Birshtein hosted "a summit meeting of
Russian OC [organised crime] figures" at his office in Tel
Aviv from October 10-19, 1995. The FBI confirmed the
authenticity of the report.
Participants in the meeting included Mr Mikhailov and
Semion Mogilevich, who is currently one of the suspects
of the money-laundering investigation involving Bank of
New York that became public last August.
According to the FBI report: "The subject of the meeting
was the sharing of interests in Ukraine."
According to Volodymyr Malinkovitch, who was one of
Mr Kuchma's key advisers for his successful 1994
presidential bid, campaign finance came from Birshtein's
company Seabeco, after Mr Volkov joined the campaign
in February 1994.
These transfers are cited as evidence by Mr Kuchma's
political opponents that Mr Volkov has acted as Mr
Birshtein's representative in dealings with Mr Kuchma
earlier in his presidency.
Mr Malinkovitch was unwilling to talk about the reasons
for which Mr Birshtein might have contributed to the 1994
Kuchma campaign. "I don't want to go into the details,
because I am afraid if I did, the western countries would
categorically refuse to give us credits," he said.
Insiders in the Ukrainian security services say any
contacts there may have been between Mr Kuchma and
Mr Birshtein would have ended after January 1997, when
Mr Birshtein's visa to Ukraine was revoked.
But even if the links between the Ukrainian government
and Mr Birshtein have now been severed, the questions it
has raised about Mr Kuchma's first term in office are
casting shadows over the second, which most observers
believe he has an even chance of winning this weekend.