Thursday, July 20, 2006: Gangsta's Paradise

by Ştefan Cândea and Sorin Ozon, RCJI

A tiny narrow bridge connects Transnistria to the Ukraine at the border point Pervomajsk. Little traffic causes chaos on both sides. It is Sunday afternoon and traders return home from Odessa . On the other way, carriers with goods for the following day bazaar are crowding in. The two ways turned into four, while drivers favorite of the border guards are doubling the queue. Among them bikes and prams are getting through. Old men and robust women. The additional bags are carried with the prams. They are the local carriers and their means of transport. They unload the goods in “no man's land” from a vehicle, they cross it the Ukrainian border and then they hand it in 50 meters away on the road to Odessa . Then they start all over again. The taxis are waiting there too. The chaos is managed by an Ukrainian border guard. Who pays goes first, who doesn't pay has to queue. He is the first visible contact with the smuggling taking place in Transnistria. On both sides of the separatist republic, hundreds of tons of smuggled goods go every year in all directions. Everybody takes advantage of the separatist republic, from small smugglers to the organized crime groups.

Favorable Geography

Out of 800 kilometers of border, Transnistria has only half of it guarded, the Ukrainian border, since the other part is not acknowledged, hence not guarded on the Moldavian part. Here the Nistru is considered to be the border. Here, the border has traced an imaginary reverted S through two places, so that the Dubasari region is still Moldavian, even if on the other side of the Nistru, while the Benderi –Tighina region is on the right side of the river and belongs to the separatists. Due to this geographic position and to the country-side roads, one can avoid any border point on the green border. The Ukrainian part is a bit more difficult to cross, but the border guards are corruptible and the country-side roads are not guarded and there is no river either.

Carriers

For all small smugglers there are three main selling points for their smuggled goods: the bazaars in Chisinau, Odessa and Tiraspol . They are large consumer goods, food, cigarettes, alcohol liquors, but even clothing or counterfeited hoe appliances. But the main source of these goods is Transnistria, even if the most of the goods are brought in through Odessa . They just transit the Ukrainian territory, because they are imported in the separatist republic to avoid paying taxes. They go back to Ukraine , by smuggling, invading the market with a large range of cheap large consumer goods. It is the only income source for local people involved in the traffic. Some are salesmen in bazaars, some are drivers while some others are carriers. Smuggled goods arrive afterwards in Romania , Hungary and Poland . We have wandered alongside the borders with Ukraine and Moldova and there are signs of smuggling activities on both sides. On the Ukrainian side, in the border villages, there are a lot of unexplainable modified side car bikes, with a platform especially designed for carrying. In the Southern part, near the lake Cuciurgan that separates Ukraine from Transnistria, there are long roads ending at the lake. There are TIR containers in the yards, which serve as intermediary storage houses. The village of Gradenisky is the hottest spot for the smugglers. They carry on water or on land all sort of goods. They manage to cross the border by trailers, boats or buses. Further up in North, the secondary roads crossing the border avoid the border houses and they get crowded after night fall. From discussions we had with local people, we found out that normally, a trailer driver is paid with 200 dollars a month. But when carrying smuggled goods across the border, they are paid with 1,000 dollars.

Organizing

But, carriers and salesmen work for well organized networks.

According to Ukrainian officials, the smuggled goods volume from Transnistria to the Ukraine goes up to 250 million dollars every year. For example, they estimate a profit of 1,000 dollars for every ton of chicken. Chicken is imported in Transnistria through the Odessa harbor, without paying any taxes. Afterwards it returns to the Ukraine through smuggling. In most of the cases, it is re-packed in smaller packs bearing local labels. Since the beginning of the year and up to the present, Transnistria has imported in such a way 40,000 tons of chicken. Taking into consideration that there are also local farms supplying the market, it is obvious that the larger part of this quantity is destined to smuggling. The main importer of chicken meat is Sheriff. All these operations call for intermediary storage houses on both sides of the border and trucks for transportation. In this case they need acclimatized trucks. The same network works in the case of cigarettes and alcoholic liquors. According to statistics, Transnistria imports industrial quantities, that can't be possibly absorbed by the domestic market.

The Fortress

Right when we were wondering around Odessa , we have found out that local authorities made the biggest capture of smuggled chicken meat. There were 10 trailers, illegally crossing the border in the Cuciurgan area. The news was confirmed even by the European service for border monitoring, EUBAM. They didn't know whether the 10 trailers all belonged to the same person. Researching, we found out that all confiscated goods belonged to one of the members of the underworld, Nikalay Gorbatiuk. According to the Ukrainian secret service, he is running a group which activity focuses on the smuggling between Transnistria and the Ukraine . The same sources proved that Gorbatiuk bribes the local police officers for protection. Gorbatiuk can transport anything between the harbor Ilichevsk through Transnistria and back to the Ukraine or Russia . The region he uses mostly is Garadenitsky, near the Cuciurgan lake. We have checked the information by going to one of the places where he parks his trailers. The garage is out in the open near Odessa and a local border point. We claimed we wanted to relocate goods from Tiraspol to the port, without being charged custom duties for it. After the first discussions with the border guards, the latter send us to a driver who was repairing his truck in the parking. He confirmed that the Cuciurgan lake area was the best route for smugglers. Our source with the secret service describes the trailers used for such operations: “They use green Kamazes with an attached car so that they looked as carrying food products.”

We went to the nearest village to Odessa , where Gorbatiuk has the headquarters. Somewhere, as you exit the village, behind some poor houses, there is his villa. Te asphalted road ends at his gate, the rest of the village has stoned-little streets. The house is built on a hill and the hill is surrounded by a brick wall. What shows that in the basement, there are at least two floors. The whole building looks like a fortified casemate, built on the top of a storehouse. Cameras are everywhere at the access gate and on the high walls. Barbwire, big suspended lights – it looks like a border house. It is obvious that the yard is large enough for unloading large trailers.

Little Criminals

According to the official information released by Moldova , on the Transnistrian territory there are hiding at least 500 members of the Moldavian, Ukrainian and neighboring countries underworld. Some of them committed murder, others committed extortion, pandering or kidnapping. There were cases of foreign citizens visiting Moldova or The Ukraine and being kidnapped in Tiraspol or Rabnita, while the families had to pay hundreds of thousands of dollars in exchange for their freedom. Kidnapping business men for ransom or people belonging to rival groups from Russia , the Ukraine or Moldova , is done for more than 10 years. The Moldavian authorities claim that they can't have a proper activity as stipulated by their agreements with the separatists, because their officers are constantly harassed. Even if in Bender there is a Moldavian police section, the one working there are constantly harassed by the separatists. During the last three years there were more than 200 Moldavian police officers arrested on the Transnistrian territory. The last case took place in mid June, when 5 high ranking police officers from Bender were arrested in Tiraspol and accused of making illegal photographs and preparing to kidnap a Transnistrian politician. He Moldavian authorities denied the accusations, claiming that the police officers were investigating with the separatists approval, the case of the international women trafficker Alexandru Covali, also known as Salun. Covali is the head of a luxury prostitutes trafficking network. He runs from Tiraspol the trafficking of women to the Western countries, as well as to Romania , especially to the night clubs in Timisoara . His victims are underage girls, most of them from Moldova , the Ukraine and Transnistria.

The Sheriff from the Harbor

Let's take a look to more important organized crime groups. The same sources from the Ukrainian secret service have gathered evidence on the heads of Sheriff and the organized crime in Odessa .: “Their main contact here is the Angert group, because they control the harbor, so they have direct connection with Gusan”. Alexander Angert, also known as Angel, is a violent character, who spent a lot of time in the Sovietic prisons for murder in the ‘70s. At that time, Gusan was a militia major in Tiraspol . Angert travels between Odessa and London , where he registered several companies. He's associated to a group led by a former KGB officer, Alexander Zhukov. The latter was arrested several years ago for international traffic with weapons. Angert's group controls the Ilichevsk harbor and the oil trade and it is involved in commanded assassinates and extortion.

The MMZ Group

After analyzing the economical structure of the groups behind the MMZ company from Rabnita, we shall briefly talk about their connections with the organized crime groups.

Alisher Usmanov was born in Uzbekistan , but he graduated the Moscow Institute for International Relationships. His career in the underworld began before he turned 30. In the 80's he was sentenced together with a close friend to 8 years of hard labor, after being caught extorting 30 thousand rubles. He spends 6 years in a detention camp, but he claims that it was all political and that all evidence used in trial were fake. While in prison, he sets contact with underworld members. When he gets out of prison he meets another legendary figure of the Russian mafia - Sergey Michailov and the Solntsevo group in Moscow . According to the report of the foreign secret services, Usmanov began being controlled by all these groups to organize money laundry activities and to intermediate contact with the Russian secret services.

Felirio Trading is the company led by one of the cover persons for MMZ, the Cypriot Andreas Sofocleous. This company is related to another money laundry activity in Russia , the one which involved Michail Kasianov, former prime minister and finance minister, and “Putin's cashier”, Andrey Kostin. In 2000 Kasianov – also known as Misha two percent – was minister of finance and according to the Russian press he sold the right to collect a debt of about 40 million dollars (77 million German currency) of the railway ministry to the public budget. The sales was made to the off shore company belonging to the Cypriot Felirio Trading and to manager Andreas Sofocleous. The two paid with bank bonds in value of just 26 million dollars. The company from Cyprus cashed the debt of the ministry and the difference. Because the exchange German currency – dollar was prior dated, this the Cyprus company won another 800 thousand dollars for the exchange rate. The transaction was not approved by the Central bank, but by Andrey Kostin, at the time manager of the Russian Trading Bank. The debt of the railway transport ministry was immediately transferred to Felirio Trading through the MDM bank, and then the money left for a bank in the Nauru islands.

Tsitsekkos Michalis shows as cover just for one businessman in the Ukraine - Rodolphe Lucien Evangelisti. The latter at his turn uses for his companies, the Homeric Limited din Isle of Man company. This company is in fact a registration agent for the mother company - International Company Services Ltd (ICS Ltd.) from the Isle of Man. The mother company is in fact connecting two major episodes of the recent history of Russian mafia: the money laundry case involving the former Ukrainian Prime Minister Pavlo Lazarenko and another money laundry case involving the Bank of New York. ICS Ltd was used both by Lazarenko's network as well as by Peter Berlin's network from the Bank of New York, to laundry large amounts of money. In the case of Lazarenko there were 100 million dollars, while Peter Berlin got to laundry billions of dollars from Russian mafia groups, especially from the Semion Mogilevich group, as well as from the Moscow group Solntsevo.

Judah in Transnistria

At the beginning of 2005, the American company Hertz Investment Group bought the Transnistrian company of textiles from Tiraspol , Odema, for 1 million three hundred thousand dollars. According to the economists, the factory was worth much more money. Intrigued by the presence of an American company on Transnistrian land, we have researched the profile of the investor. The company belongs to Judah Hertz and has the premises in Santa Monica , California . The activity object of the company is “real estate”. Looking a bit closer in Judah Hertz's past, we discovered that he is accused of mafia activities in the USA , especially of connections with Casa Nostra families and with Israeli drug dealers.

Hertz, specialized in real estate, but tried to enter the Nevada gambling market in 2000. He had to ask for a license to buy three Reno casinos. The license was denied, so beginning with 2000, Hertz is forbidden to won any type of business enterprises with relation to gambling, within the state of Nevada . The licensing committee hired detectives to look into Hertz past and they found plenty to worry about. First of all there were 86 law suits against his companies or against himself. The committee also discovered connections with Jacob Orgad, a major figure of the ecstasy traffic. Orgad is still imprisoned at this moment under the accusation of heroin traffic with the Gambinos and the Escobars Orgad organized a large pills traffic network from Europe to the USA and he made millions of dollars.

The committee also accused Hertz of wanting to invest the money into the casinos through some men related to Orgad and to the Bachsihan clan, a forceful drug dealing organization. According to DEA Drug Enforcement Administration) the Israeli traffickers in relation with the Russian mafia, are the first smuggling source with Ecstasy to the United States .

Hertz investment in Transnistria is even more interesting when considering the fact that he doesn't advertise it in any of his web sites. Moreover, he owns no textile business. After the license episode, Hertz continued investing in the real estate exclusively, and he got to own 25% of the A class office spaces in New Orleans .

The Incapables

From what we saw on the field, the authorities from Moldova and the Ukraine can not keep hand onto the massive smuggling activity taking place in Transnistria. They couldn't do that, not even If they solved the problem of the authorities corruption. Only on the Ukrainian side, which is considered to be less permeable, there are more than secondary 1,000 roads along the 400 kilometers of border. They are there since the Soviet Union times, and they are used by the locals for dozens of years. The only efficient weapon of the Ukrainians si to dig trenches in these roads. But the locals found an efficient solution to that too. They put wooden plates that they cross on the trailers. In some cases they use them for themselves, while in some other cases, they rent them to carriers. We went along the entire Transnistrian border, from near the Cuciurgan lake and up to the North, in Timkovo. We saw only one car with Ukrainian border guards watching the border in the evening, in the place where the main road is getting farther from the border. Moreover, the measures announced by the press do not exist there. Authorities announced diggings on the border roads and installing electronic surveillance devices, especially in the area of the Cuciurgan lake. There are no signs of the wrenches and the border guards are not properly endowed to keep the area under control.

Control with a Previous Announced Program

The only hope for a situation change is international involvement. EUBAM (European Union Border Assistance Mission) has a monitoring mandate in the area, on the Transnistrian border. The head of the mission is Ferenc Banfi, the former director of the SECI center in Bucharest and he has 55 officers and 19 employees in the Odessa headquarters at his orders. “There is no Transnistria for us. Transnistria facilitates corruption, eluding customs taxes, briefly, it is a criminal organization”, says Banfi. This is the toughest speech we have heard so far from an official of the EU. Things may seem clearer from a shorter distance.

Ferenc Banfi

EUBAM doesn't have executive powers, and can operate only with local partners. At speech level, Banfi relies on local partners. He describes them as professional. When asking for details, we realize that in fact, his partners are professionals in hiding most important information. Even if a trailer convoy carrying smuggled meat had just been confiscated, and we got to know the smuggler's name, Banfi told us he had no such information. A few hours after the interview, his secretary called us asking for the smuggler's name.

Not even related to filed inspections, EUBAM aren't much more efficient. They have vehicles, labeled with the EU symbol, that can not travel in the local scenery without ringing the alarm bells. Buses and couches drivers going to the border drive slowly and ask their colleagues “Are there any Europeans at the customs?” Moreover, local offices seem not to be functional. Out of the five locations, we visited the one in the North, presumably located in Timkovo, a border village. We got there in the evening. No EUBAM officers were anywhere in sight. The railway station office was turned into EUBAM office, but it was empty. “There's no one here after six, they all stay over night in Kotovsk, 30 kilometers away from here” says a villager. Indeed, all EUBAM cars were retreating in Kotovsk when we were getting closer to the border. Right away after night fall, the country side roads get crowded. Trucks and vans registered in Rabnita appear. Local people start working.

The project "Transdniester - Revealing Europe's black hole" is an investigation of CRJI, financed by SCOOP in Danemark and SAS in Switzerland. The participants in this project are the following journalists: Vitalie Calugareanu (Chisinau), Vlad Lavrov (Kiev), Igor Boldyrev (Odessa), Alexander Bratersky (Moscova) and foto Robert Ghement.