YEKATERINBURG, Ural Mountains ? President Boris Yeltsin used to run this town. Now the mob does.
The new tsar is a former soccer star named Konstantin Tsyganov. Police and fellow gangsters say Tsyganov's crime organization controls 60 percent of this rich industrial region, with branch operations in Moscow.
In or out of jail, Tsyganov is a man with clout. During a mob war last summer, his henchmen decided that they needed more than machine guns to battle rivals from the ferocious Chechen mafia. So they hijacked a tank from a military testing ground and parked it in the central square. The Chechens left.
Tsyganov is something of a Russian Robin Hood. His thugs allegedly extract up to one-third of the profits from businesses. Yet after he was arrested on extortion charges last spring, invalids, pensioners and the local soccer team wrote letters of protest, extolling his philanthropy and demanding his release. All said they could not survive without his largess.
Nearly three-quarters of residents believe that their city is ruled not by the government, but by the mafia, according to a 1993 survey. And 56 percent believe that the police are not fighting crime because they have been bought off.
Yekaterinburg is not unique. Organized crime and corruption have become so pervasive that they are choking the development of a free-market system in Russia, according to a chorus of officials, business people and victims.
Some believe that the problem could even threaten the Yeltsin government itself which has promised a crackdown on crime.
According to a report to the president by Pyotr Filippov, the longtime Yeltsin adviser who heads the presidential Analytical Center for Social and Economic Policy, all owners of caf?s, restaurants and retail stores are paying protection money to mobsters, as are 70 to 80 percent of privatized businesses and commercial banks. Organized crime groups are blamed for hastening the flight of Russian capital abroad. Russian officials say at least $1 billion a month is flowing into Western and offshore banks that already hold up to $40 billion in Russian deposits. Unofficial sources say the real figures are closer to double that.
Some of the dollars are ferried out of Russia by businesses anxious to protect their money against inflation, confiscatory taxes or mafia extortion.
A significant portion of the $1 billion fleeing Russia each month is believed to belong to the mob and its growing business empire. In some cases, gangsters have forced banks to transfer tainted capital abroad illegally ? and then killed the bankers who knew where the deposits were kept, according to the report. Bankers now have a high mortality rate; more than 30 were slain last year. Not all gangsters rely on physical force to collect payment. Some merely threaten to report their victims to the tax inspector.
Attempts to crack down on organized crime have failed because law enforcement has been infiltrated with mob informers, Filippov said.
In some places, local officials seem to be cowed by gangsters, while elsewhere they collaborate. Filippov said in an interview that Russia should create the equivalent of the FBI to fight crime, but with an important catch: Not one officer who has previously served in the police or the KGB should be hired for the organization.
If crime abounds in Russia, punishment is rare.
Gangsters are far more likely to be killed by rivals than arrested. The conviction of a bribe-taking bureaucrat or a corrupt cop would be sensational news, but such stories almost never appear.
Low-level officials do get nabbed, but these cases get little publicity. In 1993, the Interior Ministry logged about 13,000 crimes by government officials, ranging from abuse of power to forgery, theft and graft.
In Yekaterinburg, where Yeltsin was the Communist party chief before moving onto the national scene, police admit that Tsyganov is a well-liked man. Supporters say it is because he gave fledgling entrepreneurs what their government has been unable to provide: protection against petty criminals and other extortionists, reliable debt collection, a well-connected "friend" to run interference with meddling bureaucrats and, sometimes, financing at much lower interest rates than banks offer.
Even if much of his capital was extorted from businesses or stolen from state enterprises, Tsyganov was trying to make his 30-odd companies into a legitimate business empire, they said.
Police paint a less flattering portrait of Tsyganov, who is being held in the nearby city of Perm because the local jail is not secure enough. Tsyganov's thugs once tried to batter a businessman into signing over half of his company, said Vyacheslav Latyshev, deputy head of theYekaterinburg organized crime department. When the man stoically refused, Tsyganov allegedly poked a knitting needle in his ear until he signed.
No Yekaterinburg officials have been charged with protecting Tsyganov. Russia has no financial disclosure requirements for public servants, so it is impossible to investigate whether there are official ties to Tsyganov-owned firms.
Soviet officialdom has always been corrupt. What makes the current situation so troubling is that the state has relinquished central economic control without first dismantling state-run monopolies, safeguarding ownership rights or stripping bureaucrats of their near-absolute powers, analysts said.
Organized criminals, inside and outside the massive Soviet-era bureaucracy, have rushed in to fill the vacuum.
The new tsar is a former soccer star named Konstantin Tsyganov. Police and fellow gangsters say Tsyganov's crime organization controls 60 percent of this rich industrial region, with branch operations in Moscow.
In or out of jail, Tsyganov is a man with clout. During a mob war last summer, his henchmen decided that they needed more than machine guns to battle rivals from the ferocious Chechen mafia. So they hijacked a tank from a military testing ground and parked it in the central square. The Chechens left.
Tsyganov is something of a Russian Robin Hood. His thugs allegedly extract up to one-third of the profits from businesses. Yet after he was arrested on extortion charges last spring, invalids, pensioners and the local soccer team wrote letters of protest, extolling his philanthropy and demanding his release. All said they could not survive without his largess.
Nearly three-quarters of residents believe that their city is ruled not by the government, but by the mafia, according to a 1993 survey. And 56 percent believe that the police are not fighting crime because they have been bought off.
Yekaterinburg is not unique. Organized crime and corruption have become so pervasive that they are choking the development of a free-market system in Russia, according to a chorus of officials, business people and victims.
Some believe that the problem could even threaten the Yeltsin government itself which has promised a crackdown on crime.
According to a report to the president by Pyotr Filippov, the longtime Yeltsin adviser who heads the presidential Analytical Center for Social and Economic Policy, all owners of caf?s, restaurants and retail stores are paying protection money to mobsters, as are 70 to 80 percent of privatized businesses and commercial banks. Organized crime groups are blamed for hastening the flight of Russian capital abroad. Russian officials say at least $1 billion a month is flowing into Western and offshore banks that already hold up to $40 billion in Russian deposits. Unofficial sources say the real figures are closer to double that.
Some of the dollars are ferried out of Russia by businesses anxious to protect their money against inflation, confiscatory taxes or mafia extortion.
A significant portion of the $1 billion fleeing Russia each month is believed to belong to the mob and its growing business empire. In some cases, gangsters have forced banks to transfer tainted capital abroad illegally ? and then killed the bankers who knew where the deposits were kept, according to the report. Bankers now have a high mortality rate; more than 30 were slain last year. Not all gangsters rely on physical force to collect payment. Some merely threaten to report their victims to the tax inspector.
Attempts to crack down on organized crime have failed because law enforcement has been infiltrated with mob informers, Filippov said.
In some places, local officials seem to be cowed by gangsters, while elsewhere they collaborate. Filippov said in an interview that Russia should create the equivalent of the FBI to fight crime, but with an important catch: Not one officer who has previously served in the police or the KGB should be hired for the organization.
If crime abounds in Russia, punishment is rare.
Gangsters are far more likely to be killed by rivals than arrested. The conviction of a bribe-taking bureaucrat or a corrupt cop would be sensational news, but such stories almost never appear.
Low-level officials do get nabbed, but these cases get little publicity. In 1993, the Interior Ministry logged about 13,000 crimes by government officials, ranging from abuse of power to forgery, theft and graft.
In Yekaterinburg, where Yeltsin was the Communist party chief before moving onto the national scene, police admit that Tsyganov is a well-liked man. Supporters say it is because he gave fledgling entrepreneurs what their government has been unable to provide: protection against petty criminals and other extortionists, reliable debt collection, a well-connected "friend" to run interference with meddling bureaucrats and, sometimes, financing at much lower interest rates than banks offer.
Even if much of his capital was extorted from businesses or stolen from state enterprises, Tsyganov was trying to make his 30-odd companies into a legitimate business empire, they said.
Police paint a less flattering portrait of Tsyganov, who is being held in the nearby city of Perm because the local jail is not secure enough. Tsyganov's thugs once tried to batter a businessman into signing over half of his company, said Vyacheslav Latyshev, deputy head of theYekaterinburg organized crime department. When the man stoically refused, Tsyganov allegedly poked a knitting needle in his ear until he signed.
No Yekaterinburg officials have been charged with protecting Tsyganov. Russia has no financial disclosure requirements for public servants, so it is impossible to investigate whether there are official ties to Tsyganov-owned firms.
Soviet officialdom has always been corrupt. What makes the current situation so troubling is that the state has relinquished central economic control without first dismantling state-run monopolies, safeguarding ownership rights or stripping bureaucrats of their near-absolute powers, analysts said.
Organized criminals, inside and outside the massive Soviet-era bureaucracy, have rushed in to fill the vacuum.
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