by Lucy Komisar
American Reporter Correspondent
New York, N.Y.
March 11, 2002
MONEY LAUNDERER GETS OFF EASY IN SWISS COURT by Lucy Komisar
NEW YORK -- Just a few days after top Swiss law enforcement officials came to Washington to assure Attorney General John Ashcroft they were serious about cracking down on money laundering, a Geneva judge has handed themildest possible slap on the wrist to one Russian culprit and declinedto indict several others who laundered $60 million through Swiss banksin scam known as "Russiagate."
The fine is less than a third of one percent of the total stolen.The elected judge's action, which reflects strong political pressures, sends the wrong message to money launderers and ought to worry Americans.
Geneva judge Bernard Bertossa on Monday (March 4) announced his judgmentagainst Pavel Borodin, the Boris Yeltsin-era official who, according toevidence gathered by a Geneva examining magistrate, organized the laundering of $60 million in Russian kickbacks through Swiss banks and pocketed more than $22 million of it for himself. Bertossa fined Borodin$177,000, a very good deal for Borodin and his colleagues and a message to prospective clients that the going rate for money laundering in Switzerland is quite reasonable.
There was no trial. In Switzerland, prosecutors can pass sentences incases involving offenses not considered very grave. Obviously, stealing and laundering $60 million is not "grave." There is some irony is JudgeBertossa's complaint last week in an interview in the Swiss newspaper,"La Regione Ticino," that the Mabetex inquiry "was blocked in Russia forreasons purely political, not judicial." He could be talking about Switzerland.
The Swiss had plenty of proof. Swiss judge Daniel Devaud,who handled the investigation, spoke confidently to me last October of the wealth of evidence he had collected. He recommended at that time tohis superiors that Borodin be prosecuted for money laundering.
Borodin, who was the Kremlin property manager, had collaborated with Begjet Pacolli, an Albanian who set up Mabetex Project Engineering, andRussian Viktor Solposkikh, who established Mercata Trading, both in Lugano, Switzerland. They arranged padded contracts to renovate the Kremlin and the Russian presidential plane and, after their cuts, kicked back money to then-President Boris Yeltsin and his daughters, and toother top Russian officials, according to Devaud.
The Swiss extradition request details some of the money flows between1994 and 98. It notes, for example, that seven transfers totaling more than $10 million in "commissions" passed through Lugano's Banca del Gottardo accounts for four shell companies - Winsford Investments, Rubens Investment Ltd., Amati Trading Corp and Peak Trading - all ownedby Solposkikh, a member of the presidium of Russia's former prime minister Viktor Chernomyrdin. Borodin also had an account at the bank.
But as the months dragged on, it was obvious that there would be no trial. Swiss authorities don't want a court proceeding that would expose politically influential individuals and institutions and might even dissuade problematic clients from using Swiss accounts. The owner of Mabetex, Pacolli, had as board member of his Acquarossa Wellness Center Lugano mayor Giorgi Giudici, who is vice-president of the local ruling Liberal Radicals. Another party vice-president is Banca del Gottardopresident Claudio Generali, minister of finance of Ticino from 1983 to 1987.
The U.S. has strong interests in this case and in the behavior of Swiss justice. It has an interest in promoting the rule of law and fighting corruption in Russia because organized crime spills across borders. And the U.S. depends on the integrity of courts in countries that deal with cases involving terrorists, drug traffickers and others who threaten theAmerican security.
On Friday, March 1, Swiss Justice and Police Minister Ruth Metzler and federal prosecutor Valentine Roschacher met with Attorney General John Ashcroft in Washington to discuss co-operation and mutual legal assistance in the fight against international terrorism, including the role of Swiss financial institutions in moving money for terrorists.
At a lunch with Congressional staffers on Feb. 27, Roschacher said that "our own criminal investigation is an example of the determination and the commitment of Switzerland to join the international efforts in the fight against terrorism."
What will Swiss justice authorities do to find out what happened to some of the padded Kremlin payments that went to Pacolli, who they have declined to indict for his role in the Borodin kickback case? Pacolli owns the virulent propaganda newspaper "Bota Sot" (World Today), based in Zurich. It was condemned by the head of the Organization for Security and Cooperation in Europe's mission to Kosovo for sowing "hate, intolerance and strife."
It supports the UCK -- the Kosovo Liberation Army (known in the West as the KLA) -- that is linked to drug and weapons trafficking, prostitution, and illegal immigration. Robert Gelbard, whowas America's special envoy to Bosnia, said the UCK were "Islamic terrorists."
Under Swiss law, Borodin can reject the prosecutor's decision andrequest a trial. He has not indicated his decision. But with $22 millionminus $177,000 in his offshore accounts, he has nothing to complainabout. Americans, however, should protest very loudly.
Lucy Komisar is a New York journalist who writes about offshore bank andcorporate secrecy.