See a copy of the original document in German here.

Service for Analysis and Prevention

The Swiss Federal Office of Police

Strategic Analysis Report

[Confidential]

Organised Crime and the Special Services of the Commonwealth of Independent States

June 2007

Contents

• Key points
• Organised Crime and the Special Services of Commonwealth of Independent States (CIS):

1. The historical relations between security services and criminal structures
2. Criminal groups today
3. Special services today: the FSB-isation of the country?
4. The relations between organised crime groups and the security services
5. The situation in Switzerland
6. Counter-measures

Key points

The Federal Law on Internal Security Protection Measures (BWIS) mandates the Service for Analysis and Prevention (DAP) to develop measures to promptly discern and prevent the threats of illicit operations by foreign intelligence agencies (Item 3 of Article 2).

Over the past few years, DAP has been receiving a growing number of indications that members of organised crime groups from CIS countries maintain liaisons with the intelligence services of their countries. German Intelligence even mentions a “symbiosis” between organised crime and secret services.

Since Vladimir Putin’s entry to power, the Russian security services, especially the Federal Security Service (FSB), have been significantly reinforced.

Considering Russia’s economic growth and the expansion of the country’s influence in the sphere of energy, it is necessary to examine the role of security services and organised crime within that sphere. It must also be established whether they still preserve their connections, how those connections are made, and how they function in the Swiss territory….

FSB and OC Swiss intel report

 

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### Text extracted from: https://tbcarchives.org/wp-content/uploads/FSB-and-OC-Swiss-intel-report.pdf

Service for Analysis and Prevention

The Swiss Federal Office of Police

Strategic Analysis Report

[Confidential]

Organised Crime and the Special Services of the
Commonwealth of Independent States
June 2007

Contents

• Key points
• Organised Crime and the Special Services of Commonwealth of Independent States (CIS):

1. The historical relations between security services and criminal structures
2. Criminal groups today
3. Special services today: the FSB-isation of the country?
4. The relations between organised crime groups and the security services
5. The situation in Switzerland
6. Counter-measures

Key points
The Federal Law on Internal Security Protection Measures (BWIS) mandates the Service for Analysis
and Prevention (DAP) to develop measures to promptly discern and prevent the threats of illicit
operations by foreign intelligence agencies (Item 3 of Article 2).

Over the past few years, DAP has been receiving a growing number of indications that members of
organised crime groups from CIS countries maintain liaisons with the intelligence services of their
countries. German Intelligence even mentions a “symbiosis” between organised crime and secret
services.

Since Vladimir Putin’s entry to power, the Russian security services, especially the Federal Security
Service (FSB), have been significantly reinforced.

Considering Russia’s economic growth and the expansion of the country’s influence in the sphere of
energy, it is necessary to examine the role of security services and organised crime within that sphere. It

must also be established whether they still preserve their connections, how those connections are made,
and how they function in the Swiss territory.

This report contains a brief historical overview of the relations between the KGB and organised crime
in the Soviet era and presents information on the current state of relations between organised crime
groups and the security services of former members of the USSR, especially with regard to
Switzerland.

The following questions require primary attention:

– Is there any evidence, or at least an indication, of the existence of links between organised
crime groups and the security services?

– What is the nature of their day-to-day liaison, who benefits from it, and in what way?

– Is Switzerland involved in such schemes and, if so, to what extent?

This report is based on DAP data obtained through counterespionage operations, as well as information
from foreign intelligence services and open sources. As Russia is the main source of both espionage
and organised crime, it is mentioned in the report more frequently than other CIS countries.

– Illicit schemes affect many spheres of the economy: banking and finance, which is the key
sector for money laundering, as well as the oil trade, biotechnologies, specialized trade, and transport.
We also believe that, in a number of cases firms, are established under a formal pretext specifically to
engage in illegal activities.

– Existing companies emerge again in new contexts. In particular, we observe that apparently
Swiss companies belonging to Nordex Group have been used by suspected crime groups for money
laundering.

– A number of links leading to organised crime groups and security services have been disclosed
in connection with the money laundering case at the Bank of New York. This points to the fact that, in
this case, in which approximately $7 billion was siphoned off, both sides worked together and had a
common goal.

– It has been established that many different companies are represented by the same Swiss dealers
and agents. We can assume that there is a constantly functioning network of Swiss nationals who
provide backstopping for security services and organized crime groups, facilitating their business
operations. It remains unknown whether those people have been hired by security services or by
members of organised crime groups.

– Most illegal operations imply money laundering. However, there are also indications that there
are instances of trafficking in arms, radioactive substances, women, and drugs.

– Apparently, it is not unusual for security service officers to give up their diplomatic careers to
go into business (like, for instance, persons with the initials C.R., R.D.). In such cases, it is hard to
escape a suspicion that private companies may be used for intelligence purposes. However, this is hard
to prove, even if the contacts of the former officers are revealed.

– It is impossible to establish whether the relations between security services and organised crime
groups are of a systematic character. Modern developments in Russia, especially the growing influence
of the FSB and the trend towards “state-managed capitalism”, indicate that the FSB seeks to assert total
control over all overseas economic activities of Russian citizens and businesses. Considering the spread
of corruption in the FSB, it can be assumed that leaders of criminal groups may come into favour with
the FSB or even gain its assistance in exchange for bribes.

Organised crime and CIS security services

1. History of relations between security services and crime
groups
The emergence of organised crime in the CIS is rooted in the GULAG camp culture in the Soviet
Union. In the late 1920s, due to mass repression, the number of political prisoners in prisons and forced
labour camps increased dramatically. Prisoners were detained in large compounds, where they were
largely left to their own devices. This quickly led to the appearance of a hierarchy among the prisoners,
with criminal kingpins at the top. Order in the camp was maintained, if necessary, by radical and brutal
measures.

As political prisoners were regarded as potential troublemakers, security service officers started to
collaborate with professional criminals. The latter were charged with keeping order and discipline in
the camp and received certain benefits in return. This agreement remained unsigned for a long time;
however, later, the authorities issued a decree authorising the use of common criminals against the so-
called enemies of the people, i.e. political prisoners.

Criminal kingpins started to call themselves “code-bound thieves”. They formed the criminal elite of
the USSR. They contributed to keeping order and exercised control over the criminal world. They
developed their own code of values, in which the key principles were non-interference in politics and
economy and freedom from formal employment.

After the end of the WW2, Stalin attempted to weaken the criminal elites and reduce their influence.
This led to disorder and riots in forced labour camps. The authorities had to continue collaborating with
criminals. Criminal kingpins were powerful and had extensive contacts with the world at large. Their
main sources of income were smuggling precious metals and works of art, rogue trader extortion, drug
trafficking, and plundering the produce of state-run enterprises.

In the 1980s, the destruction of Soviet power led to the spread of corruption in state structures. By the
late 1980s, the police had become the most corrupt part of the state machinery. This resulted in changes
in the criminal world: ethnic Russians, who cherished the traditions of code-bound thieves, opposed
Caucasian groups, which sought economic and political influence and wanted to minimize the rules of
the criminal world. This led to a split in the previously closely knit community. The destruction of the

state and its structures, the emergence of new countries, and the disastrous economic situation in the
early 1990s resulted in the appearance of new criminal groups.

When Russia became an independent state, according to the latest data, the KGB laid off over 100,000
of its officers. Those people, with their specialized expertise and contacts, were very attractive to the
criminal world.

This is the origin of modern organised crime consisting of career criminals, former KGB officers, and a
vast number of corrupt officials and state property managers.

2. Criminal groups today
Criminal organisations in the CIS are still very powerful. According to the information of the Russian
Ministry of Home Affairs, they have penetrated the key spheres of the economy and of industry and
control the industry across whole regions. According to Vladimir Ustinov, the former General
Prosecutor and current Minister of Justice, organised crime poses a real threat to national security.
Along with their ‘classical’ activities, like drug and arms trafficking, they have become more and more
involved in trade in natural resources and in the banking and financial sector.

Smuggling, tax evasion, and VAT fraud are among the most lucrative criminal schemes. However, their
main sources of income are state funds, which can be siphoned off in many different ways. One of
them is access to national energy and metal resources, which are purchased at domestic prices and then
sold abroad at a much higher price in circumvention of export regulations. The illegally obtained
profits are then laundered through the placement of public orders with bogus firms abroad.

Several large organised crime groups operate across the world. They penetrate deeper and deeper into
the legal economy both in their home country and overseas. They often have their own security services
and use cutting edge surveillance methods. To collect information on their competitors, they conduct
partially legal intelligence operations or surveillance.

Members of organised crime groups are often well-educated, well-aware of the political situation, and
maintain liaisons with the power structures of their home countries. They can work in difficult
situations, are highly mobile, and have an elaborate communication network. Among their preferred
methods are extortion and corruption; they have huge financial assets at their disposal. All this poses a
significant threat for economically developed countries. It is generally believed that the threat consists
of the immigration of a criminal economy and, more importantly, of the spread of corruption in
government institutions.

3. Special services today: an FSB-sation of the country?
As in all totalitarian states, the KGB (the Soviet security service) occupied a central place among other
government agencies. Although most post-Soviet countries have become freer and more open, not
much has changed in this respect in Russia.

Since Vladimir Putin came to office, security services have gained much more weight. Putin himself
had been an FSB officer for 17 years and was head of this organisation from 1998 until his election in
1999 [translator’s note: sic]. After becoming President, Putin appointed his old friend, Nikolai
Patrushev, as Head of the FSB and made this agency report directly to the President. The consequent
series of reforms kept strengthening the influence of the FSB in the country. Border security forces and
the Federal Agency for Government Communications and Information were merged with the FSB. The
“anti-terrorist” military operation in Chechnya was also among the FSB’s responsibilities.

Putin went on to place at least 150 former FSB officers in key political and economic spheres, such as
the President’s Administration, Presidential Representative Offices in the regions, federal customs
services (which serve as bountiful sources of income), the Security Council, and other positions in the
Government. The Secretary of the Permanent Committee of the Union State of Russia and Belarus, the
Secretary General of the Eurasian Economic Community, and Russia’s Permanent Representative in the
NATO are also connected with the FSB.

FSB agents are also involved in the economy, especially in the oil and gas sector: two Deputy Chairs
and one Board member of Gazprom, Vice Presidents of Rosneft, Slavneft and Sibur, Board members of
Itera and Novatech, as well as the CEOs and Deputy CEOs of Sibur. Moreover, under Putin’s
presidency, large oil concerns, Yukos and Sibneft, came under the control of government-owned
companies, Gazprom and Rosneft, and are under the influence of siloviki (the Kremlin’s powerbrokers).
Some people speak of not just “state-managed democracy”, but also of a “state-managed capitalism”,
implying that representatives of the security services and other government agencies pursue not just the
interests of the state but their own material interests.

The FSB is closely connected with all spheres of life in the country. One wonders whether the close
government oversight and state regulation in the country are explained by this strong position. In
August 2006, the Russian Government, in contradiction of the Constitution, allowed the FSB and the
Ministry of Home Affairs unlimited access to the databanks of telecom companies. Due to this, this
security service knows who spoke to whom and for how long, the location of the participants of the
conversation, etc.; i.e., they can keep surveillance on people’s private lives.

3.1. Overseas operations

Overseas, the security services of the CIS countries have switched their focus from the military to the
economic sphere. The SVR (Russian Foreign Intelligence) actively and insatiably promotes the
expansion of the Russian economy into Western markets. European intelligence agencies point out a
strong presence and a keen interest on the part of Russian security services in business in general, and

especially in such strategic sectors as energy, telecoms, and information technologies. This is especially
evident in the Baltic States and East European countries, where Russia is openly trying to restore its
former hegemony.

Security service officers work overseas disguised as diplomats and officials of international
organisations and also under business cover, as Russian companies abroad often serve as the platform
for intelligence operations.

For instance, the major oil concern Lukoil is openly using its offices in East and Southern European
countries for intelligence activities. The company seeks to recruit candidates willing to dig up
information and has its own well-equipped security service. Trade partners often fail to notice or notice
too late that Russian security service officers are working in these companies trying to obtain strategic
information on oil purchase transactions.

The conclusion that Lukoil is connected with the security services is supported by the notes of a Polish
intelligence officer. He reports that a Polish businessman backstopped a high-ranking Russian security
service officer, Vladimir Alganov, when a government-owned oil refinery plant in Gdansk was being
sold to Lukoil.

In addition, commissions and panels, consisting mainly of members of different security services, have
been set up to promote Russian overseas business. They collect strategic information and attempt to
influence important decisions.

Another increasingly popular means of collecting information is the recruiting of Russian journalists.
Since around 2003, security services have also been using their agents under journalistic cover. It is
almost impossible to discern agents among real journalists in this case. Besides, journalistic methods
are very well suited for gaining information. In Germany, the number of security service officers
disguised as journalists has apparently grown over the past years.

4. Relations between organised crime groups and security
services
It has long been suspected that government agencies, including the FSB, cover up for numerous
members of organised crime groups, like Semyon Mogilevich, one of the most powerful figures of
Russian organised crime. He has been wanted by the FBI for fraud and money laundering since 2003;
however, he enjoys safety in Russia. It is even alleged that he personally attended the Russian-
Ukrainian gas negotiations. Up to the present moment, no single organised crime kingpin has been
brought to justice in Russia, which can hardly be explained by unsuccessful investigation. On the
contrary, this indicates that crime ringleaders are granted protection at the highest level.

It is also known that some former KGB and other security service officers make their expertise,
experience, and connections available to crime groups. One may also assume that some of the former
security service officers continue to supply information to their former employers. It is very difficult to

accurately establish the form and methods of their liaison, as it is never clear whether the former agents
still work for security services or whether they are forced to continue this collaboration.

Most former officers occupy high positions in banks, security guarding service firms, and other large
companies, which are interested in good contacts with state agencies. Such companies also attract the
attention of criminal groups; therefore, they accumulate information which may be used by both sides.

Not least because of widespread corruption in their agencies and low salaries, security service officers
are prepared to sell intelligence materials to be used for blackmail by political or economic interest
groups.

Western agencies are inclined to believe that not only individual current or former officers of the
Russian security services are involved in criminal activities, but also that this agency itself is interested
in systematic relations.

There is no shortage of motives for the security services to maintain this cooperation, or at least to
establish a short term, purpose-oriented union: they are interested in using organised crime groups’
existing international networks of companies and contacts for their own purposes. In addition, they
seek to control economic activities in general, especially those of organised crime groups. Finally,
rendering services to organised crime groups or blackmailing them can yield huge profits.

The interest of organised crime groups in collaboration with security services is explained by the
immunity from police investigations and prosecution that they gain from it. In addition, mafia members
need information and the lifting of bureaucratic barriers, such as unhindered travel abroad. Moreover,
contacts with security services may be useful for improving their public image and gaining access to
key positions in the economy.

4.1 Nordex and Seabeco

After the collapse of the Soviet Union, there was speculation that the KGB had transferred abroad large
sums from funds owned by the government and the Communist Party through private companies. Part
of the money was intended for funding political activities but it was partially siphoned off for use in
business. Those schemes were often handled by people with experience in foreign trade and in
possession of networks of companies and contacts abroad, like Soviet citizens who, due to their ethnic
or religious background, were allowed to leave the USSR in the 1970s.

At the centre of all those developments were Nordex, belonging to Grigory Luchansky, and Seabeco,
belonging to Boris Birshtein.

Luchansky (born in 1945 to a Jewish family in Latvia) was recruited by the KGB and assigned to set up
an international network of companies. Following that, he founded Nordex in 1989, with headquarters
in Vienna and subsidiaries all over the world, including Switzerland. The company officially traded in
raw materials from Russia and other CIS countries.

The company was implicated in corruption liaisons, fraud, money laundering, and arms trafficking on
multiple occasions, until it finally became impossible for it to continue business operations. Moreover,
there were several pieces of evidence that suggested that Luchansky’s companies were involved in the
money laundering scheme at the Bank of New York. Luchansky, who had had a criminal record even
before founding Nordex, used his far-reaching links with politicians in Russia, Ukraine, Kazakhstan,
and Israel, and his close relations with mafia members in Russia and Latvia. Not a single investigation
was conducted against him in the CIS. According to open sources, he now lives in Moscow.

Boris Birshtein’s Seabeco Group was suspected by different security services of involvement in fraud
and state asset stripping. Birshtein (born in 1947), like Luchansky, is from the Baltic region and is of
Jewish origin. He is an ex-KGB officer and still maintains his contacts with Russian and Israeli security
services. In 1979, he immigrated to Israel and set up Seabeco Group, an international network of
companies officially dealing in oil, gold, diamonds, and chemical products.

From 1992 to 1999, one of Seabeco’s subsidiaries operated in Switzerland. Like Luchansky, Birshtein
was deeply involved in the politics of the ex-Soviet member states: among his friends were Kravchuk,
Kuchma, and Snegur, the Moldovian ex-President. At the same time, he has equally deep connections
in the criminal world.

Seabeco Group is implicated in cases of money laundering, the theft of Kyrgyz funds, non-transparent
operations through Nordex, and theft of humanitarian aid funds. It was in close contact with the
Solntsevo gang and was involved in contract killings. In the 1990s, Birshtein figured in multiple letters
rogatory, but none of the investigations conducted in Canada, Belgium, and Switzerland has led to a
conviction.

Neither Nordex nor Seabeco case can prove that the KGB stands behind the illicit financial operations.
Even if there is evidence, those who have it have no interest in disclosing it in order to re-evaluate these
events. However, both Luchansky and Birshtein maintain strong political contacts at high levels, and
the speed with which they built their fortunes on dealing in public resources suggests that they could
hardly have done it without the knowledge and consent of government agencies.

4.2. Present-day assumptions

The present-day assumptions relating to the collaboration between security services and criminal
organisations lack convincing evidence; however, there are a number of sources indicating such
systematic collaboration.

Germany has reasonably accurate information on CIS security services, as Russian troops were
deployed in Germany until the mid-1990s and the security services themselves are still active there. In
addition, numerous immigrants create a solid platform for intelligence and criminal activities.

It follows from the reports of the Bavarian Office for the Protection of the Constitution (a unit of the
Federal Office for the Protection of the Constitution) that there are Russian businessmen in German
territory who are suspected of both intelligence-related and criminal activities. They maintain contacts

with high-ranking politicians and business tycoons in Russia and economic circles in Germany. They
invest mainly in real estate and tourism.

The Office assumes that the Russian security services and criminal groups assign their agents to
established companies to be used chiefly for money laundering. Those agents often visit Bavaria
supposedly for private purposes, with the aim of develop their economic contacts.

In 2005, the Bavarian Office for the Protection of the Constitution discovered that a group of
immigrants from the CIS, who had settled in Germany and neighbouring countries, were illicitly
dealing in oil and that a greater part of those people had previously occupied top positions in military
and intelligence units in CIS countries.

Moreover, there is evidence that some security service officers infiltrate criminal groups in order to use
them for intelligence activities.

According to the information from another German federal state, while travelling abroad, acting
security service officers offer information, guard, and protection services. They have ample funds at
their disposal, they purchase real estate, set up firms and, among other business activities, deal in arms.
They maintain contacts among themselves, with headquarters in Moscow, and with the Russian
Government, as well as with the security services of their home countries. Many of them have contacts
from the elite units of the former Soviet army. According to Mark Galeotti, professor at New York
University and specialist in transnational crime, criminal organisations often perform part of the SVR’s
work in places where this agency is limited in its capacity (e.g. Latin America). In return, the SVR
assists criminal kingpins in obtaining a permit for unlimited foreign travel.

5. Situation in Switzerland
Switzerland is an attractive place for both CIS security services and criminal groups: its position in the
centre of Europe, transparent borders with other countries, and well-developed infrastructure provides
ideal conditions for both of these interest groups, while the level of competence of the national police
and security services is not at its highest. In addition, Switzerland has a strikingly loose practice of
granting visas: even identified security service officers receive a visa and accreditation, while many
other NATO countries have a much more stringent policy. Visas are also granted to people who are
allegedly associated with organised crime, although there are sufficient legal grounds to refuse visas
and work permits to them.

Security services are interested in penetrating the numerous international organisations with
headquarters in Switzerland, such as the UN, ILO, WHO, and WTO. Disguised as officials of
international organisations, security service agents combine their official duties with intelligence
activities. Frequent conferences and conventions create ideal conditions for making contacts with high-
ranking officials from different countries and sectors of economies. Moreover, Switzerland is also an
industrial and technological centre, which also attracts the interest of foreign intelligence agencies.

Their chief targets are the pharmaceutical sector, computer technologies, banking, and financial
spheres.

Criminal organisations make use of the following factors: low tax rates on business; liberal regulations
in the sphere of entrepreneurship; an efficient banking system with cutting edge services in private
banking; high standards in the sphere of services, education, and medicine. One liberal statutory
regulation allows foreign citizens to set up a business with relative ease in Switzerland. Any person
without a residence permit needs to employ just one person with such a permit as manager, pay a
registration fee, and have the charter capital.

The company opened in Switzerland serves as the base for business activities all over Europe and often
opens up the possibility of obtaining permission to hire foreign citizens. In addition, through such
companies, foreign citizens buy real estate without following the regulations on the purchase of plots of
land with property.

5.1. The operations of security services in Switzerland

Switzerland is in the focus of attention of Russian security services. This is clear from their strong
station in this country and the high ranks of officers working there. Russia has the second highest
number of staff at its Swiss station (after Germany) among West European countries. Russia’s
legitimate stations employ officers of the SVR and the GRU (Russian Military Intelligence) under
diplomatic cover (the Embassy and Trade Mission in Bern, the Consulates General in Geneva and
Bern, the Permanent Mission of the Russian Federation at the UN in Geneva) and under cover as
employees of those international organisations.

Approximately 75% of Russian security service officers work in Geneva, which is the hub of
international organisation headquarters. This leads to the conclusion that the strong presence of Russian
security service officers is explained not just by Swiss target objects but also the international
organisations based in Switzerland.

There are indications that the FSB, which is charged with fighting terrorism, organised crime, and
nuclear proliferation overseas, is also active in Switzerland. It is useful to highlight in this regard that
the Russian President’s Decrees as of November 23, 1994, and April 3, 1995, entitle the FSB to use
foreign companies for intelligence purposes. On the basis of those decrees, the FSB has expanded its
activities and is already competing with the SVR in such spheres as combatting organised crime. Like
other security officers, FSB agents work undercover as diplomats in official missions and businessmen
in private companies.

SVR agents also work in Switzerland under business cover. They are dispatched to work for a few
years in joint ventures or large Western companies, mainly in the oil, transport, or finance sectors.
Some of those officers previously worked under traditional diplomatic cover.

In general, it can be established that, by collaborating with private companies, security services
increase their influence and at the same time use their intelligence contacts in other countries. This can
be demonstrated through the case of Nord Stream, a company set up in Zug in 2005. The mission of the

company is to provide for the design, construction, and exploitation of gas pipelines in North Europe to
transport Russian gas directly to Germany.

51% of the company belongs to Gazprom; 20% to the German concerns, Winterschall AG and E.ON
AG; and another 9% to Nederlandse Gasuinie. One of the board members of Nord Stream is a Zug
lawyer, Urs Hausheer. According to information from open sources, from 1987 to 1990 he was a board
member of Asada AG, which had been in charge of procurement for the GDR Ministry of State
Security in circumvention of Co-Com restrictions. We believe that Vladimir Putin came into contact
with Hausheer when he was working in Dresden. The Nord Stream CEO is Matias Warning, a German
national. He was a Stasi major and, according to unproved information, also was in contact with Putin
in Dresden. At present, Warning is Head of the Russian office of Dresdner Bank, an important business
partner of Gazprom.

5.2. The activities of organised crime groups in Switzerland

The chief occupation of criminal groups from the CIS in Switzerland is money laundering. They have
agents who set up companies in Switzerland to conduct illicit business operations and launder money.
Most of them have strong contacts in the business milieu and with the state agencies of their countries
of origin. An illicit business is often disguised as a legitimate one, and profits are gained through
overpricing, bogus loans and interest payment on such loans, and false expense accounts. Another
popular fraudulent scheme is obtaining subsidies for interim transactions, mainly in the oil and gas
sector. The fuel is bought at subsidised internal prices and sold at a world market price (transfer
subsidies).

Their main aim is to transfer the illicitly obtained money (often siphoned off from the state budget) to
private bank accounts in Western banks. These are chiefly the funds stolen from the state through theft
and fraud. The income from trafficking (in drugs and weapons) is also laundered through these
channels.

There are around 700 firms in Switzerland controlled by Russians or with Russian nationals on the
board. 60% of these firms are based in the German-speaking part of Switzerland, and another 34% in
the western part of the country. According to the estimation of the Russian tax authorities,
approximately 15% of all Russian funds overseas are deposited in Switzerland. In 2004, the capital
outflow from Russia amounted to $8 billion; experts believe that 40% of this amount has been obtained
illegally. It is easy to calculate that the Swiss part of the recently outflown capital amounts to a lump
sum.

Members of criminal groups from CIS countries have invested in Swiss real estate, mainly near Lake
Geneva and in the canton of Ticino. Such transactions are often made in the name of legal entities,
which makes the identity of the true owner difficult or impossible to establish.

As for the investment in the Swiss economy, there is alarming evidence that members of criminal
groups from the CIS have purchased shares in strategic companies or have penetrated into the boards of

such companies. Members of criminal groups often pretend to be serious businessmen with extended
political contacts and find a cover in traditional, reputable companies. However, they do not change
their methods of conducting business: they continue to use their contacts and corruption, as they did in
their home countries.

5.3. Cooperation between security services and organised crime groups in
Switzerland

The situation in Switzerland is the same as that described above. There is no direct evidence of the
collaboration between security services and organised crime groups. However, there are numerous
private persons and companies that maintain connections with both security services and organised
crime.

Do organised crime groups launder money through intelligence agencies?

The following examples indicate that money is laundered in Switzerland through persons maintaining
contact with both organised crime groups and Russian security services.

• R., a Russian national [Translator’s note: here and in the other examples, the initials do not

correspond with the actual initials of the person] and supposedly a Russian Military Intelligence
officer, in possession of ample financial means, worked for company F. in Switzerland from
2001 to 2003. The company has entered into business relations with Nordex and maintains
constant contact with organised crime.

• E., a Russian national and security service officer, was closely associated with a company in the
canton of Zurich, which has been under investigation for fraud and embezzlement since 2002.
The company was liquidated upon the decree of the Swiss Federal Banking Commission in the
autumn of 2002 for unlicensed financial operations. The company had been engaged in opaque
currency dealings in its Moscow office with an offshore bank, which had lost tens of thousands
of dollars to a greater part of its clients. There is some evidence that this company has been used
to launder large sums of dirty money. B.E. has a criminal record and maintains contact with the
Solntsevo gang. In 2004 he was appointed as Representative of Chechnya at the Federation
Council, which allows him to travel with a diplomatic passport. He maintains business relations
with other Swiss companies [Translator’s note: the authors mean Umar Dzhabrailov].
• From 1993 until its bankruptcy in 1998, the Russian bank, D., had an office in Geneva. The

bank had been established using KGB capital and, by the early 1990s, it had become one of the
few financial institutions to be licensed by the Central Bank to deal in hard currency. Numerous
representatives of this bank and its subsidiaries in Western Europe were associated with the
KGB and were in contact with security officers while working overseas. The CEO of the Swiss
office is also a Russian Military Intelligence officer and keeps regular contact with Russian
security services in Switzerland.

The head of the Moscow subsidiary of Bank D was in contact with Nordex and other companies and
persons of this milieu. Numerous sources testify that bank D served to launder the money of organised
crime. Open data also reveals the fact that in the mid-1990s the bank came under the control of Semyon
Mogilevich. The bank maintains an extensive network across the globe, including the Bank of New
York, which was at the centre of money laundering scandals in the late 1990s. The bank was also in
contact with members of organised crime groups and with Mr Z.B., who is apparently associated with
the Solntsevo gang. Z.B. was suspected of being head of an organisation engaged in international
prostitution. Besides, he is openly associated with the Russian Military Intelligence and maintains his
contacts with other Russian intelligence agencies abroad.

•

In 1995, bank D. co-founded its subsidiary, A., in Zurich. This company had a charter capital of
2.5 million SwF and was liquidated in 1999. It was involved in cocaine trafficking, in particular,
in transferring a large batch of this drug from Columbia to Florida. One of the board members
and later the board Chair of this company was H.O. He maintained liaison with Russian security
services and was aware of the disappearance of a large part of the Russian gold and currency
reserve. Since 1994, he has been head of company C., which at present is based at a new
address belonging to a private person and engages in in trade, export, and import of a variety of
goods. H.O. has been granted Swiss citizenship. One of his relatives is in direct contact with
Grigory Luchansky, the founder of Nordex.

• Another bank registered in Switzerland and linked with both organised crime and intelligence
agencies is bank K., formerly owned by a Russian national. This bank had two subsidiaries in
Switzerland, both of which were managed by company M., with headquarters in Switzerland.
Company M. was involved in one of the money laundering episodes at the Bank of New York.
This business network in Switzerland included another five companies registered at the same
addresses. From 1997 to 2001, a suspected intelligence officer, V.P., became a member of the
boards of four of those companies and became president of one of them. Two Swiss lawyers
who represented the interests of this group had previously been involved in money laundering
cases, in particular, in the Lazarenko case.
It should also be mentioned that another Swiss lawyer working for the numerous Nordex
subsidiaries in Switzerland is associated with those companies. At present, this group has a
different name and is represented by a Geneva lawyer.

•

• Ample evidence of liaison between organised crime groups and intelligence agencies can be

found in the case of the ex-Russian citizen, R.D., who resided in Switzerland and was granted
Swiss citizenship in 2005. From 1992 to 1997 he worked for the trade mission; intelligence
agencies of several countries suspected him of working for Russian secret services. In 1994, he
became President of the Swiss office of the Russian company, B., which, according to open
data, was under strong influence from criminal groups and had embezzled the money of several
official missions. In 2002, Russia launched a probe into this embezzlement case involving
several suspects.

Some evidence suggests that R.D. was involved in prostitution business. Apparently, he invested one
million SwF in the renovation of nightclubs. According to a police probe, a subsidiary of tour operator

B headed by a Russian national is also involved in this case. The tour operator also provides for the
entry of prostitutes into the country. The head of the company, a woman, is linked with the Russian
Embassy in Bern. A board member of this company is T.K., a Swiss national, who collaborates with
other companies linked with the Russian intelligence agencies.

T.K. was also associated with company B. from the very start and served on its board. In addition, he is
a board member of another company which was suspected of providing channels for weapon-
trafficking in Libya. A search of T.K.’s house revealed that the latter had provided premises for this
company to R.D., a Russian national.

Do intelligence agents infiltrate organised crime groups?

The following example demonstrates a possible way in which intelligence agencies come into
possession of firms that were previously controlled by organised crime groups.

In January 1996, near Geneva, company U was set up to sell and transport fertiliser. The president of
this company was F.P., a Russian national [Translator’s note: Vyacheslav Moshe Kantor]. The same
person was president of another company, Y. (FIMOCHIM SA), which had a very similar business
pattern and was also engaged in selling and transporting chemical products. According to information
from Russia, F.P. was involved in a contract murder and is associated with several organised crime
groups. According to the intelligence data from one of the European countries, the mother firm, Y,
registered in Perm, Russia, is controlled by a criminal group from this city. In 2001, Russia launched a
probe into concealment of property and tax evasion by the founder of this firm.

Company U. changed its title in 1999, and F.P. left the top position in it but continued to serve on its
board with the authority to sign on behalf of two board members. By 2000, F.P. had lost his signature
authority. Three years later, the firm made another change to its name and orientation; this time it
started dealing in sailing and flying vehicles.

In February 2004, the company changed its name once again and engaged in scientific research and
services in the sphere of biotechnologies and pharmaceuticals, and started to operate, coordinate, and
control laboratories in Switzerland and other countries. In August 2004, four new members came to
serve on its board. In December 2004, the company kept regular contact with C.R., the First Secretary
of the Russian Embassy in Paris, whom the French police suspected of being an SVR officer. From
January 2006, C.R lived in Geneva and was president of company U. F.P. was officially struck off the
list of directors but he is still its chief shareholder and, apparently, one of its employees.

The exact details of the numerous backstage reshuffles in this company are unknown. However, there is
a piece of evidence suggesting that this company is controlled by the SVR. The search held at the
Russian office could have been perceived as an instrument of pressure on the company to make it
collaborate with the intelligence agencies. Obviously, the companies in Switzerland also serve
legitimate business purposes and perform legitimate operations.

Did the security officers resign or were they dismissed?

The cases below cover the alleged money laundering episodes implicating persons associated with both
organised crime and intelligence agencies. The consequent intervention by the Moscow police suggests
that those people did not act according to the assignment from the intelligence agencies. One may only
speculate as to the reasons for this: either the suspects exceeded the limits of allowed profiteering or
their concept of Western justice suggested that another liaison with intelligence agencies was
disadvantageous. In this respect, it should be taken into account that police operations, queries to
Interpol, and letters rogatory may also be intended to officially demonstrate that the state agencies have
nothing to do with those offences, and they do not necessarily lead to actual criminal prosecution.

•

In 1994, an alleged intelligence officer, O.M. [Translator’s note: the authors mean Vitaly
Kirillov, who co-founded the Russian Cultural Initiative Foundation in Geneva in alliance with
Rev. Viktor Pyankov], settled in Switzerland and started working as CEO of oil company, N.
Later he established the Foundation, which had the Russian Orthodox Church among its donors.
In 1997, the Russian Prime Minister, Viktor Chernomyrdin, mandated O.M. to repayRussia’s
debts to third countries. O.M. was also assigned to deposit Chernomyrdin’s money in
Switzerland. Apparently, he was backstopped by the Russian Consul in Switzerland, who was
an identified agent of Russian Military Intelligence.

At the time, O.M. owned a concern in Moscow comprising oil trade and insurance companies and
banks, among which was the above-mentioned company, N. This concern [Translator’s note: MES
(International Economic Cooperation CJSC) sold 7.7 million tons of oil abroad (around 8.5% of the
total Russian export of oil and petrochemicals). Its annual turnover amounted to $1 billion. In 1996,
following the Governmental Order 51-r as of January 16, 1996, MES received 4,500,000 tons of oil to
be sold abroad. This company also participated in the programme of repaying the debts of the Soviet
Union], 40% of which, apparently, belonged to the Moscow Patriarchate, was assigned by Viktor
Chernomyrdin to sell 4.5 million tons of oil and use the earnings to finance the reconstruction of the
Kremlin. Apparently, O.A. stole part of those earnings.

In 1998, the police searched the company’s offices in Geneva, Italy, and Germany as part of their
investigation into O.M.’s involvement in money laundering schemes. Apparently, the Italian firms that
were in contact with O.M. were involved in drug trafficking with drug cartels in Latin America. In
2001, the Moscow Office of Interpol conveyed its suspicion that O.M. was involved in a fraud scheme.
In 2003, Russia and Switzerland exchanged letters rogatory. In late 2002, according to the data
available, O.M. left Switzerland and fled from justice. His Swiss companies and the Foundation were
liquidated. O.M. maintains extensive contacts with top members of Russian organised crime groups.

•

In January 2005, a Russian and Israeli national, E.M., had his documents checked while
crossing the French-Swiss border. E.M., who lived in France with his wife, often visited
Switzerland, where he was President of company Q., which he had founded in 1991 (removed
from the Companies Register in 1997). E.M. was suspected of being a Russian Military
Intelligence officer and was in contact with a woman who worked for intelligence agencies. In
2000, a pre-investigation probe was held in Geneva into the involvement of both these people in

money laundering schemes. E.M.’s wife purchased property in France worth 50 million FF and
was found to have acted as an agent in a money laundering episode.

According to information from Russia, E.M. is a career criminal and a co-founder of the Lipetskaya
gang, a part of the Solntsevo gang. In 2005, he entered Switzerland in a car belonging to a Swiss
company. He maintained that he had no stake in that company but had had business negotiations with
it. The manager of this company was his business partner, I.B., who also had a money laundering crime
case initiated against him in Geneva. E.M. and I.B. had numerous business bank accounts with Geneva
banks, through which large amounts of money were transferred to private accounts.

These are just a few examples demonstrating that networks of intelligence agencies and organised
crime do exist and operate in Swiss territory. In general, it can only be stated that the alleged and
identified intelligence agents visit Switzerland several times a year with business purposes.

6. Counter-measures
Digging up information on organised crime is outside the competence of the Service for Analysis and
Prevention. In addition, it is extremely difficult to reveal the relations between organised crime and
intelligence agencies. However, the fact that many businesses are controlled by organised crime poses a
threat to the internal security of Switzerland. This threat is not alleviated by the fact that some
companies are found to be being used for intelligence purposes, as this affects such strategic sectors as
energy and the nuclear sector.

Further monitoring of the current situation is warranted. In view of the limited information input,
additional resources for analysis are required.

In particular, it is necessary to provide:

– Accurate coordination and information exchange on the operations of both intelligence and
organised crime;

– Accurate analysis of the investigation reports of the Federal Intelligence Service of Switzerland
and the exchange of information with them;

– The updating of this analytical report.

Both organised crime groups and intelligence agencies are involved in transborder operations.
Switzerland is the hub for international organisations and has a high concentration of security services,
which makes it an ideal platform for transnational operations. Exchange with other security services is
important for crime prevention; therefore, such exchange should be continued and expanded.

In many of the currently investigated criminal cases of organised crime groups from CIS, the chief
offense is money laundering. To prove money laundering in Switzerland, it is necessary to have a

proven previously committed offense in the suspect’s country of origin. Sometimes it takes a long time
to receive such evidence from those countries. After it has been established that a criminal network
consisting of lawyers, agents, and other persons is operating in Switzerland, this Swiss network should
be examined to determine whether it is linked to organised crime and intelligence agencies. This
analysis will probably set the ground for initiating a criminal investigation.

In cases when criminal proceedings involve foreign citizens, further clarification of the context is
warranted.

[Translation from German into Russian and Translator’s notes by Anastasia Kirilenko]

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