Friday, August 30 2002: Russian Businesses With Organized Crime Links Expanding Into Romania

Report by Paul Cristian Radu
paulradu@crji.org

[FBIS Translated Text] Experts in the field of cross border organized crime say, "Today, Russia is a perfectly defined mafiosi regime." The Red Mafia, with the complicity of the KGB and GRU's [Glavnoye Razvedyvatelnoye Upravlenie, Russia's Main Intelligence Administration] former structures, and also with that of many politicians in the Kremlin, has created organized crime rings, which have long ago gone beyond the Russian frontiers, covering the whole world. The Russian roller, perceived as economic penetration, has not avoided Romania either. This article is the first information on one of the deals that some Russian companies, which have a close connection to the secret services in the country at our eastern border, are running on Romanian territory. Moreover, behind these companies the shadow of the most dangerous organized crime groups worldwide can be seen, together with a detailed plan, carefully drafted, aimed at expanding the [influence of the] Russians toward the West.

"Derutra" and Soviet Espionage

At the onset of the '20s, under the discreet patronage of the Russian espionage services, Russia and Germany set up a limited responsibility company [SRL], whose name was "Derutra GmbH, or "Deutsche Russische Transport Gesellschaft." The SRL was meant to facilitate the collaboration developed at the military level between the two countries. Until the end of the '30s, they concluded many armament deals. As a matter of fact, "Derutra" is mentioned in documents during Trotsky's time, as well as in Report 5969, dated 8 July 1925, signed by a certain M. I. Frumkin, who was a people's commissioner at that time, in charge of foreign trade issues.

Over the same interval when Derutra was established, other joint Russian-German companies were set up, such as "Derluft." Similar to the case of Derutra, the Russians also took control over Derluft. They used the two companies' military and commercial contacts to set up an elaborate espionage structure. Derutra carried out an intense espionage activity before, during, and after World War II. It was a good cover for secret agents, such as the famous Richard Sorge. In an article that analyzes Richard Sorge and other spies' activity, published on 18 June 2001, the German publication Der Spiegel mentions Derutra as being a "structure of the Soviet foreign espionage." Similarly, the Soviet company is also mentioned as being the company that transported part of the Ukrainian treasury to Russia after World War II. The Germans had stolen that part during the war. We would like to inform you about a detail on this issue, namely that the Ukrainians continue to file claims with the Russian government to this very day, asking for the complete restitution of the patrimony objects that were acquired through Derutra.

World War II ended, the cold war ended. When it ended, the communist regime was also given up for good. Nevertheless, reminiscences of the old mentality still make the law in the Eastern European countries. Moreover, the old structures of the foreign secret services have broken loose from state control. They use the infrastructure set up during the cold war and have created new rings. They associated themselves with organized crime groups and with corrupt high level politicians. Did these structures also penetrate Romanian territory? What might their interests in our country be?

Russian Ties in Romania

In the town of Slatina [southern Romania], at 93 Draganesti Street, at the headquarters of the commercial company Artrom SA [stock company], to be precise on the second floor of the building, a company named Derutra Romania SRL runs its operations. The name of this commercial company is almost identical with that of the "Derutra GmbH," the company set up in the '20s, which we mentioned. At first sight, one could say this is just a coincidence. After all, companies with curious names ave also been set up in Romania, such as "Cosa Nostra SRL." This does not mean that this company is a branch of the dreaded Italian mafiosi group. However, in the case of Derutra Romania SRL, the results of our investigations cleared away any doubt. Consequently, the Derutra Romania SRL company has the following associates: Russian citizen Vasily Makarov and a company from Cologne, Germany, mentioned in the Romanian documents as "Sinara Handel SRL." Vasily Makarov, Valeriu Mustata, and Adrian Popescu are the company's administrators. The latter is the general manager of the Artrom Company in Slatina. This company, similarly to Derutra Romania SRL, manufactures steel tubes and pipes. Artrom Company documents mention again Vasily Makarov and Adrian Popescu. In addition, two Russian citizens are mentioned as the company's administrators. They are Popkov Viatcheslav and Victor Bogdanov.

On the other hand, both Victor Bogdanov and also Vasily Makarov are associates in a number of German companies. The Sinara Handel GmbH is among them. Its headquarters is in Cologne, at 64 Mauritiuswall Street. This is the same company that is an associate in the company in Slatina, namely Derutra Romania SRL. Moreover, we have also noted that at the same address with Sinara Company, and belonging to the same group of companies, we may find the company . . . [ellipses as published] Derutra GmbH, which is carrying on the activity of the Derutra company that was set up in 1920. If we look for more details in the company's documents, we may note that in fact, in the year 2000, Derutra GmbH changed its name to Sinara Handel GmbH. As a matter of fact the so-called two companies are a sole, identical company. Of course, we find both Vasily Makarov and also Victor Bogdanov in the company known by the aforementioned two names. They are the Russians who are also present in the two Romanian companies. In practice, the company Sinara GmbH, the former Derutra GmbH, is an associate in Derutra Romania SRL.

Alongside Sinara and Derutra, the following companies can also be found at the aforementioned address in Cologne. (All of them are Russian companies and have approximately the same associates). They are Wesotra GmbH, Metwest Aussenhandel GmbH, Mioil Aussenhandel GmbH, and Trubowest Handel GmbH.

Police Raid in Cologne

Two years ago, two other characters used to lead the aforementioned companies. They are Viktor Makarov and Alexei Prikhodov. Viktor is no other than Vasily Makarov's father. The latter is the shareholder at Derutra Romania SRL, and the administrator of Artrom SA. He is 26 years old. He has been empowered with running serious businesses since he was 22, in 1998.

The employees at Artrom SA in Slatina know Vasily very well. They told us that in fact, his father, Viktor Makarov, is behind the boy. The boy's father had to withdraw officially from some businesses, because in 1999, he was arrested in Germany, together with Alexei Prikhodov. On 1 November 1999, the German police conducted a raid at the Cologne headquarters of the Sinara, Derutra, and Wesotra companies. The police detained Viktor Makarov and Alexei Prikhodov. They were charged with dodging payment of several custom taxes and with practicing dumping prices in relation to the import of some Russian metallurgical products to the European Union. At that time, the Russian media wrote the following about the arrest of the Russian businessmen: "A spokesperson for Trubowest (company that also included Alexei Prikhodov), announced that over the past three days (after the two Russian citizens' arrest -- Evenimentul Zilei editor's note), the German authorities took extraordinary security steps. They prohibited the detainees from talking to their attorneys. Moreover, the two detainees' families were not allowed either to talk to them or to send them clothes or food. The police officers who arrested the Russian businessmen explained that there is a great probability that the detainees may attempt to escape from prison." (Russian Business Monitor, 3 November 1999). You will understand later on the reasons for which such extraordinary security steps were taken by the Germans, when you see who in fact Viktor Makarov is. At the end of the quoted article, the same publication wrote, "the two executive directors' arrest brings serious damages to the oldest Russian-German company, which was set up in the '20s." Consequently, the aforementioned group is the same as the joint Russian-German companies set up at the onset of the '20s, not only by their name. This makes us go back to the mysterious Derutra Romania SRL.

"Bearing the Rocks on the Shoulder"

The Russians in the companies located in Slatina are not persons of many words. Evenimentul Zilei reporters have tried to get in touch with them both by phone and also at their headquarters in Slatina. Their representative, a certain Serghei, asked us to put down on paper the questions we wanted to ask Vasily Makarov and to send them to him, through a translator. However, Serghei has never answered to our questions. Conversely, Adrian Popescu, director of Artrom Company, phoned us and asked us to come and talk to him. Director Popescu told us he knew that "Viktor Makarov, Vasily Makarov's father, is the former commercial attaché of the USSR Embassy in Berlin, Germany. You know, he could not have held such a position, without having the rocks [nickname for military rank braids] on his shoulder. It can be noted that his son also has a KGB-type education. However, his son is an intelligent, nice guy," Adrian Popescu told us. He added that he knows that the German police had arrested Vasily's father, and that the latter was charged with fraudulent activities related to custom levies. However, according to director Popescu, Viktor Makarov does not have any involvement in the deals carried out in Slatina.

When we contacted him while he was in Cologne, at the phone number belonging to the Sinara GmbH Company, Viktor Makarov told us that he does not have any connection with the investments made in Romania by the Sinara Company. He said that only his son is involved in these activities. He added that at the moment he is working for the Wesotra Company. This is another joint Russian-German company, set up a decade ago. At the end of our conversation, Makarov acknowledged that he used to work with the USSR Embassy in Berlin. However, he said that this happened a long time ago, in the '60s and '70s.

According to director Popescu's opinion, the Russians saved the Artrom SA Company, because they granted financial support amounting to millions of US dollars to the metallic pipe factory in Slatina. They purchased Artrom's outstanding debt toward AVAB [Bank Assets Management Agency]. They paid $6 million in cash for it. Popescu told us that in practice, over the last interval, the Russians have ensured 80 percent of the functioning capital of the company. According to the director's words, so far, they received nothing in exchange. However, the time will come when they will ask for something in exchange for these invested sums.

MDM Group

Major interests of our eastern neighbors hide behind the Derutra Romania SRL deal. They lead directly to the most important oligarchies in contemporary Russia. On 21 February 2002, Sergei Popov, the director of the MDM group (Mezhregionalny Delevoi MIR - Interregional Business World) made the following statement to the Interfax news agency. "The acquisition of an industrial asset in Romania (Artrom -- Evenimentul Zilei editor's note) was finalized in accordance with the MDM group's strategy, which aims at developing pipe production [industry] both in Russia and also outside the country." In an interview granted to the Russian Business Monitor publication, on 19 August 2002, another representative of the group explained what the MDM strategy consists of. "We do not have time to do portfolio investments. We only make direct investments, provided we obtain control [over the respective companies] by purchasing stock belonging to the companies we are involved in." These declarations must be added to a whole series of articles published in the international media about the acquisition of the Artrom SA company by the MDM group.

Artrom Company's director, Adrian Popescu, winced as if lashed when we asked him about the existing ties between MDM and Artrom. He said that the Artrom Company is not part of the MDM group and that the data published by the international press or by the MDM group's representatives are not true. However, after having shown him some documents, he acknowledged that Sinara GmbH, which is the main financing body of his company, is a member of the RMK group, the iron and steel sub-branch of the MDM group. Similarly to Popescu, Viktor Makarov avoided talking about the association between Sinara and the MDM group. He only told us that his son is involved in this deal and that he is not familiar with these things. He is involved only in the activity developed by the Wesotra Transportation Company, located in Cologne. In fact, both director Popescu and also Viktor Makarov, have a good reason to be afraid of the association made between Artrom's name with that of the MDM group.

Russian Organized Crime

The MDM group has been often mentioned in a huge scandal that dealt with the alleged laundering of more than $7 billion, over 1996-1999. The money belonged to the Russian Mafia and the operation was made through the Bank of New York (BoNY). Important names were involved in this scandal, such as that of Aleksandr Mamut, chairman of MDM. (He resigned when the scandal emerged. Andrei Melnichenko replaced him). Another important name is that of Semion Moghilevich. The FBI characterizes the latter as "the most dangerous mafiosi worldwide." The BoNY scandal has brought serious damages to the MDM group. According to the Russian Business Monitor, Westerners still perceive this group as "the gangsters' money bag."

However, the MDM group's problems did not end with the BoNY deal. The group is also involved in many scandals. Among them we may mention a lawsuit in which the group and several other associates are asked to pay damages amounting to $3 billion. The lawsuit, currently under debate at the US District Court for the Southern District of New York, involves a group of Russian businessmen as plaintiffs and the MDM, Oleg Deripaska (the head of Russky Alyuminiy) and others, as defendants. The latter are charged, on the grounds of the US RICO law (Racketeering Influence and Corrupt Organizations Act), with contract murders, offering bribery, fraud, and money laundering. All the aforementioned acts were reportedly carried out to enable them get hold of all the factories or units dealing with the iron and steel industry.

Three Eastern Tycoons, in Romania

Andrei Melnichenko (the owner of the MDM group), Oleg Deripaska (the owner of Russky Alyuminiy), and Roman Abramovich (the owner of Sibneft), are, at the moment, among the most powerful businessmen in Russia. The first two have more in common than merely the lawsuit filed in New York. The fact that they run businesses in Romania is yet another connection. As we have already mentioned before, the MDM group is involved in the Artrom deal. Oleg Deripaska, through Russky Alyuminiy, in which the MDM group holds 20 percent of its stock, is involved in the Alor aluminum factory in Oradea. Similarly, Roman Abramovich joins them on Romanian territory, through his "pupil" Constantin Iavorski, about whom you could read some information, published in several recent issues of Evenimentul Zilei. Moreover, according to the Russian press, the mammoth companies led by Deripaska and Abramovich have opened their bank accounts in the same bank with Melnichenko's MDM group. This alliance of the Russian tycoons, who have directed their attention toward Romania, allows a focused move to be outlined, aimed at acquiring industrial strategic assets in Romania. Consequently, while the MDM group is involved in the Romanian production of pipes, Iavorski, educated at Abramovich's Runicom, holds the monopoly over liquid fuels and the transportation activities alongside Romania's eastern border. Russky Alyuminiy has purchased the Alor Company. It has also made attempts and is still making some moves to acquire other aluminum manufacturing companies such as Alro Slatina. All these investigations project the image of a Russian economic offensive in Romania for us. The Russian secret services back this move. It is financed with fabulous sums of money, in most cases obtained illegally. However, beyond the economic interests, a glimpse
of the possible indications that are related to the inertial strategy of an empire overrun by history can be seen. Roman Abramovich, the Tycoon of Oil.

Roman Abramovich controls the Sibneft Company (Siberian Oil Company), which is a huge company in the world of fuel businesses. In his book The Merger, which gives details on the "international conglomerate of organized crime", US author Jeffrey Robinson mentions that Abramovich is a person very close to Boris Yeltsin. He is Tatyana Diacenko's financial aide. She is the former Russian president's daughter. Moreover, he is also one of Leonid Diacenko's associates, who is Tatyana's husband. Robinson provided evidence of Russian organized crime's activities. He wrote that some time in the middle of the '90s, when Kremlin decided to sell the Omsk refinery, which had been owned by the state until then, Abramovich's Sibneft was an actor in a sinister story. In practice, the general director of the Omsk refinery opposed the idea to sell the state's stock. He ended his life "floating with his face looking downward", in a river. Then, Sibneft purchased the majority stock of the Omsk refinery. Oil sales were handled through a company with its headquarters in New York. Its name is Belka Energy. It dealt with the sale process together with a Russian company named Runicom. Runicom is the same company where Constantin Iavorski, the incumbent owner of Unicom Holding SA used to work. The latter holds the monopoly over deals in liquid fuels and the railroad industrial transportation activities carried out on Romania's eastern border.

Oleg Deripaska, Aluminum Tycoon

Oleg Deripaska, one of the most important Russian tycoons at the moment, leads the Russky Alyuminiy concern, financed by the Russian group Alfa. He is a friend and business partner of the famous Boris Berezovski, Anatoli Chiubais, and Roman Abramovich. The Cemtrade Company, a branch of the Russian Russky Alyuminiy concern, currently holds all the assets of the Alor Company in Oradea. Constantin Iavorski, his wife Larisa, and his two daughters, Olga and Irina, are the shareholders of Cemtrade Company. The Dilcor International Ltd. Company is the legal shareholder. It has its headquarters in the British Virgin Islands. The object of activity of the Cemtrade Company is "mediating activities in the trade of lumber and construction materials." The new company, set up by Russky Alyuminiy, through Iavorski, was named Alumina Oradea. Following the price increase for electricity, Alor could no longer manufacture goods under profitable conditions. It had incurred huge debts. The FPS' [State Ownership Fund] lack of interest made the factory file for bankruptcy. In May 2000, Cemtrade became the majority stockholder. Its first goal was to decrease production costs and to acquire the Alor company's main partner, namely Alro Slatina. The first variant failed because the Cemtrade Company has so far failed to obtain facilities from the Romanian State for payments for electricity and thermal energy. Iavorski's plan to acquire a thermal manufacturing unit in Oradea has also failed. (He wanted to achieve it through the Seven Trust Company, which Iavorski set up together with several directors from the former Conel [energy distribution company]). If successful, the move would have led to the curbing of energy tariffs for Alor. The drop that filled the glass was the failure to acquire Alro Slatina. That failure made the Russians restrict their activity. At the moment, Alor Oradea is involved in an ongoing liquidation process, under APAPS' [Romania's Privatization Authority -- Privatization Authority and
Management of State Shareholding] direct guidance. The Russian owner, who is currently exploiting the company's assets, operates the company at its minimum capacity. He keeps threatening his employees that he will close down the unit and will fire hundreds of workers if the state refuses to grant him the requested facilities. Alor Oradea is the sole manufacturer of tubular aluminate in Europe. Only one other manufacturer exists at the world level, the Alcoa Company, in the United States.

Andrei Melnichenko, Financial Tycoon

At the moment, Andrei Melnichenko controls the MDM group (Mezhregionalny Delevoi Mir), which includes banks, pipe and coal manufacturing companies, and chemical units. Melnichenko was appointed the MDM group's chairman after Aleksandr Mamut's resignation. The latter, who used to be the number one person at MDM, resigned due to involvement of the MDM's name in the BoNY (Bank of New York) scandal. This scandal related to the laundering of more than $7 billion by Russian organized crime rings through the Bank of New York. Besides the investments in Russia, the MDM group is also running businesses in Lithuania and in Romania. According to the declarations made by the MDM group's representatives, Melnichenko's group controls the activity carried out by Artrom SA Slatina, which manufactures metal pipes.

Dan Badea and Sorin Ozon also contributed to this report