KGB Interrogation in St. Petersburg

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Timeline: February 5^th, 1994 – Visit #6

 Excerpt

I had a scheduled trip to St. Petersburg for my then employer to work on preparations for an event we were organizing in November 1994 at the LenExpo Fairgrounds. It had been arranged that the KGB, whom I spoke with by phone in January, would meet me when I arrived at Pulkovo Airport and would take me to their offices for an interview.

Like clockwork, when the plane landed and pulled up to our spot outside the main arrival terminal, the voice over the intercom asked everyone to remain seated and asked for Steven Douglas, to collect his belongings and approach the front of the aircraft which I did. The side food entrance was opened and standing at the doorway was a plain clothed officer of the KBG I had spoken to on the phone. Down a stair case was an associate and a large black Russian Volga sedan. We drove to the passenger arrival terminal. They told me I was still required to enter customs as I would have with the other passengers but I did so ahead of the rest. Once I collected my baggage I met them out in the welcome area. Leonid was waiting for me also.

 Leonid convinced them to let me go to my hotel first and unwind a bit after my long trip and that we would then meet them at their offices at 5pm that afternoon. After this was agreed to by the officers Leonid and I headed into town to my hotel where we met up with some mutual friends. After spending the day socializing with friends we headed over to Bolshoy Dom.

What eventually became a 9 hour visit to Bolshoy Dom (The Big House), started out very slowly? In fact after parking and arriving at the front door of the building we stood in a freezing cold waiting space between cracked creaking doors with an old dirty grey metal rotary-dial phone on the wall that Leonid used to call inside. We ended up waiting a good ten minutes in that drafty space before we were finally let into the lobby. In the lobby we waited at least another 15 minutes before an officer came downstairs to usher us up to the floor where I would be interviewed…..

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CIA making secret payments to members of Karzai administration

The payments are long-standing in many cases and designed to help the agency maintain a deep roster of allies within the presidential palace. Some aides function as CIA informants, but others collect stipends under more informal arrangements meant to ensure their accessibility, a U.S. official said. The CIA has continued the payments despite concerns that it is backing corrupt officials and undermining efforts to wean Afghans’ dependence on secret sources of income and graft. The U.S. official, speaking on condition of anonymity, said a significant number of officials in Karzai’s administration are on the payroll. Paul Gimigliano, a CIA spokesman, disputed that characterization, saying, “This anonymous source appears driven by ignorance, malice or both.” A former agency official said the payments were necessary because “the head of state is not going to tell you everything” and because Karzai often seems unaware of moves that members of his own government make. The disclosure comes as a corruption investigation into one of Karzai’s senior national security advisers – and an alleged agency informant – puts new strain on the already fraying relationship between Washington and Kabul. Top American officials including Secretary of State Hillary Rodham Clinton and Sen. John F. Kerry (D-Mass.) have expressed concern about Karzai’s efforts to rein in anti-corruption teams, as well as intervention in the case against the security adviser. The aide, Mohammad Zia Salehi, is accused of accepting a $10,000 car as a bribe in exchange for his assistance in quashing a wide-ranging corruption probe. The issue carries enormous stakes for the Obama administration. Concerns that the Afghan government is hopelessly corrupt have prompted a congressional panel to withhold billions of dollars in aid, and threaten to erode American support for the war. But Karzai supporters accuse their U.S. counterparts of exploiting the issue, and the Salehi arrest in particular, to humiliate the Afghan leader while ignoring more pressing priorities. In the latest sign of his vexation, Karzai said Thursday that President Obama’s timeline for withdrawing U.S. troops “has given courage to the enemies of Afghanistan,” and complained that the United States wasn’t doing enough to force Pakistan to stop supporting the Taliban. “We haven’t progressed in the war against terrorism,” Karzai said in a statement. The CIA has maintained relationships with Afghan government officials for years. But the disclosure that multiple members of Karzai’s government are on the CIA’s payroll underscores the complex nature of the American role in Afghanistan. Even as agency dollars flow in, U.S.-backed investigative units are targeting prominent Afghans in the government and trying to stem an exodus of more than $1 billion in cash annually from the country.

Russian Justice 1992: A Working “Court” System and The Rule of Law

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EXCERPT

The situation I am about to describe is a direct result of the inability of the legal system to enforce its rulings. After exhaustive research I have not been able to find any published materials about Mafia Tribunals or Mafia Court. No one can actually confirm or deny the existence of either of these phenomena except those that have been party to either of them. I therefore admit that what I will discuss in this Part is from my own personal experience having participated in two mafia tribunals and having been refused an opportunity to participate in Mafia Court.

            I was a businessman living and working in St. Petersburg, Russia between 1990 and 2000. In the early 90’s soon after the collapse of the Soviet Union, even before the official establishment of the Federal Constitution Law on Judicial System of the Russian Federation (Dec 1996) there were arbitration courts but these courts had no means to enforce decisions. For this reason the courts were not very busy. The main reasons people used courts in the early 90’s were to get decisions on subjects directly related to legal issues where the Government was somehow involved. Where the courts were not used were for arguments between commercial entities. The only place commercial entities could argue against each other with a remote chance of collecting damages, were Mafia Tribunals. Having had a Russian partner with admitted ties to the Mafia of the early 90’s I found myself in my first tribunal in early 1992.

            Soon after we started our timber export business (), my former Russian partner informed me that we were summoned to appear at a Mafia Tribunal that took place in the coffee shop of the Pulkovskaya Hotel in St. Petersburg, not too far from the Pulkovo International Airport. It was common practice for Mafia to meet at hotels in open view to public and the local police. The truth is that they felt it was less likely that someone would try to kill them in public near tourists. This would change in later years with a number of assassinations taking place in the coffee shop of the Sheraton Nevsky Palace Hotel on Nevsky Prospekt in downtown St. Petersburg.

One of our suppliers () accused my partner of not paying full price on a shipment he made to one of our buyers. My partner obtained an old acquaintance of his whom he knew for many years that represented us. Prior to our arrival at the hotel we met in two separate locations in the backs of apartment complexes to meet the necessary people who would be a part of this meeting. Only after the 2^nd rendezvous did we know where the actual meeting would take place. We then found ourselves at the Hotel.

            As we walked into the restaurant we saw at least 30 Mafia seated in the cramped area of 100 sq. ft. with three distinct groups within the overall group. The least important were the plaintiff and the defendants. Most important were our “attorneys”. The third group was their bodyguards who were sitting further away from the table watching everyone else who passed near to us. I cannot imagine that any of the tourists visiting the café had any idea of who these people were.

            The tribunal lasted approximately 2 hours. We were victorious at the tribunal and received certain compensations, which were settled with my partner. The Mafia attorney for the plaintiff (our accusers) was named “Slava” who in fact was the 2^nd most powerful Mafia boss in the City. The “judge” was dressed in a Nike sweat suit and was apparently the Godfather of the St. Petersburg Mafia. Sweat suits were a very common form of dress for the Mafia in those days. Later that year he was shot 10 times but survived the assassination attempt and moved to Germany.

Continued….

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The Games Russians Play: What you need to know

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Excerpt from A Lecture…
To look back at my Russian business experiences from 1990 – 2000, they were anything but typical for an expatriate living a working in St. Petersburg. In thanks to a Russian partner I was introduced to the underworld of Russian business, more specifically the Mafia and occasional glimpses of deep-rooted corruption in the Russian Government. With no thanks to this Russian partner I was also introduced to transnational organized crime and honored with a memorable 8-hour interrogation by the KGB in February 1994.

A top lieutenant in the Russian Mafia Tombovsky Crime Family once told me the difference between a “Good Foreigner” and a “Bad Foreigner”. A good foreigner was what they called a foreign businessperson who came to Russia but had no timeframe set as to when he/she would depart. A bad foreigner on the other hand was classified as a foreign businessperson who came on short trips or a foreigner who came to work in Russia for a short period of time with a scheduled departure date. A majority of foreigners who came to Russia in the 1990’s were considered Bad Foreigners. The foreign partner that was looked upon, as a bad foreigner, was believed not to have a long-term interest in benefiting their Russian partners. The Russian partners were over anxious to find foreign partners for the explicit reason of gaining foreign capital for their enterprises. Following the beginning of privatization, most factories were in serious debt and cash poor, thus the reason for Russia to open her arms to foreigners.

I had many opportunities to watch, and analyze, business relationship between Russians and foreign visitors between the years 1990 and 2000. Soon following the financial crises of 1998 I created and organized the Foreign Commercial Consuls Club of St. Petersburg. Membership consisted of Commercial Consuls from most foreign countries with representations in St. Petersburg. This Club gave me a direct connection to representatives of many different countries and an invaluable opportunity to discuss with them their relations and feelings about the Russian market, culture and people. In early 2002, as an executive in Washington DC, I created a new organization called the Foreign Embassy Club of Washington DC which has membership of foreign diplomats from more than 25 of the area Foreign Diplomatic Missions. This newer Club allows me to continue my research on international relations. The founding members of this Club include the Embassies of the Russian Federation, Kazakhstan and Australia.

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Russian Traffickers Entice Victims

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Russian Police Captain reveals how Russian traffickers entice victims

The first scheme is an elaborate multiple person puzzle where moneys are paid by business persons in a foreign country to an agent in St. Petersburg via the Internet. The agent hires a “receptionist” who is responsible to rent an apartment, obtain a telephone number and to advertise in local and regional newspapers. The ads offer jobs in the hospitality industry, au pair services, erotic dancers and striptease. They always note great pay; chances to travel around the world to exotic locations; no prior experience, skills or specialized education required. Girls who answer the ads call the “receptionist” in her temporary residence. Once the “receptionist” has found enough potential victims, separate private meetings take place where the girls have interviews with a second person. There are additional people involved, all hired by the agent, and none of which know one another. When girls arrived at their overseas destinations the “receptionist” was paid $50 per girl. The complexities of the management of this scheme, he believes, are something only transnational organized crime groups can organize. The police captain further explained that the interviews are carefully designed to find girls from rural areas of the country with little or no advanced education and little or no family connections in Russia that would search for them after their disappearances

Russia – Mafia Court vs Arbitration Court

GLOBAL EXPORTS TO COUNTRIES THAT LACK A STRONG RULE OF LAW: Be Weary

With the Obama Administration calling for a doubling of exports in the next 5 years, make sure that whatever country you start working on has a strong RULE OF LAW that has the ability to enforce arbitration court decisions. It also helps if there are bilateral agreements in place between our Department of Justice and their equivalent Ministry.

The reason for this, that may not be at the front of your thought process, is that once you sign a contract, make sure there is a mechanism in place that allows for legal obligations made in the contract to be litigated if something does not work according to the terms. Even the best traders in the world have problems on almost every contract or delivery order. There are people in every port, every customs office, every partnership that are looking for “their” share in your contract.

I spent 10 years doing business in Russia. Although you might not think it is possible to do business with our former Cold War nemesis, there are great opportunities. For the time I did business there, the “official” Russian court system was still very weak.

Don’t misunderstand me here. If you have a dispute with the contractual partner, you can certainly take them to court AND YOU CAN WIN, but what you can’t do in most cases is collect. The courts usually don’t have the mechanism in place that enables you to fulfill judgement (at least in arbitration courts. I am not suggesting anything regarding criminal courts) Once you find you can’t collect you then learn you have no other recourses to enforce the court’s decision. What many American and European companies do at this point is go back and sue the companies in US and European courts. This is where the bilateral agreements are so important. If you are suing an entity in a country that lacks such an agreement there is no way for your home court to get the foreign court to enforce the decisions. You may be able to restrict the foreigners from future business in the USA but this will not get you back your losses.

Freezing assets – You may want to check if their are any American banks doing business in the country you plan to export to. You may find that the local Ministry of Finance does not have a bilateral agreement with the USA allowing US banks to operate in their country.

THE DISCONNECT – Courts have judges who decide disputes. Courts are NOT collections companies or police. They can award a decision but it is usually up to you to find a means to enforce their decision if it means collecting moneys. There are bailiffs responsible for doing these things but in the case of the Arbitration Court in St. Petersburg, Russia, each bailiff had an average of 1o00 open cases to manage. With the economy as it is, I strongly double they have added more bailiffs or that their case loads are any fewer today.

I have case studies if you wish to learn more. You would be amazed who has had to learn the hard way. I don’t know if they exist anymore but in my days in Russia we did have additional “unofficial” courts called Mafia Tribunals.

One last thought, make sure your contract is in the English language. If you use two languages make sure you have YOUR attorneys check both languages to make sure they are the same. Most large firms in the USA have office in countries all over the globe.