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Dirty money: Why the Czech Republic makes an ideal haven for the Russian mafia

Posted: March 27, 2013
By Markéta Hulpachová - Staff Writer | Comments (0) | Post comment

He was once the tattooed, tough-as-nails thief who earned his stars by ascending the hostile hierarchies of Soviet-era gulags. These days, you're more likely to see him sipping limited-edition Courvoisier in deluxe Mediterranean beach resorts, moving money on his cell phone from one tax haven to the next.
The new prototype of Russian gangster has traded in his monastic principles and leg-breaking ways for business savvy and may be eying the Czech Republic as a new launch pad for his international operations.
So says New York University professor Mark Galeotti, a former adviser to the British Foreign Office and a leading expert on organized crime. As old-school Soviet criminal structures become increasingly obsolete, Galeotti is mapping the rise of a Russia-tied organized crime culture in which financial power takes precedence over thuggishness.
"These are basically gangster businessmen. They don't care about codes; they don't want to wear elaborate tattoos or anything else that makes them identifiable as criminals," he says. "The criminal entrepreneur … wants to get invited to the ambassador's reception. He wants to travel freely so he can spend his money in London or on the beaches of St. Tropez."
Balancing profit and risk, the archetypal modern Russian gangster "probably has a whole portfolio of businesses," ranging from the "essentially legal" to factories that exploit illegal migrant labor, all the way to heroin trafficking.
"He doesn't care; it's all businesses," Galeotti says. "It just depends on what makes money."
This newfound pragmatism differentiates modern criminal entrepreneurs from their Soviet predecessors, the vory v zakone. Born in Stalinist labor camps, this formerly "dissident" organization - whose name literally means "thieves within the law" - adhered to a humble lifestyle and "thievery for the sake of thievery."
"They were the judges and arbiters of the criminal world. … They had a variety of codes of practice," Galeotti says. "You would never break a deal with another criminal, never cooperate with the authorities. … Money shouldn't mean much; actually, you should lead a really simple life."
Shedding the old codes of the vory has caused Russian mobsters to lose many of the signature characteristics that set them apart from other organized crime groups. Even the classification "Russian" or "Russian-speaking" fails to account for the complexities of criminal structures operating in the increasingly diverse former Soviet world. Galeotti mentions the so-called "mountaineers" from the countries of the South Caucasus or the predatory "not to be messed with" Chechens, who will hunt and kill their target even at the cost of their own destruction. Both are culturally distinct from ethnic Russian Slavs - who rarely get a mention by the Russian Interior Ministry - but all may be linked through intricate ecosystems that defy traditional police diagrams.
The distinguishing factor for all these groups is their links to Russia and the Russian banking system, which Galeotti says is "still thoroughly corrupted." Weak rule of law, institutionalized corruption and a law protecting Russian citizens from extradition are some of the factors that make the country a "phenomenal safe haven" for money-laundering and other criminal activities. By Galeotti's own rough estimates, dirty money makes up between 20 percent and 25 percent of Russian GDP.
With the Russian system as its backbone, the mafia is able to weave a tangled web of alliances best described as "loose networks of semi-autonomous individuals." In these muddy structures, it is often impossible to determine who works for whom.
In some ways, this problem of opaque definitions reaches all the way up to the Kremlin. President Vladimir Putin surrounds himself with deeply corrupt individuals, but does that make him a criminal, a criminal protector or merely a pragmatist?
"Probably for Putin, it's incredibly difficult to say," Galeotti says.
The ambiguous role of Putin, who has pledged to fight corruption as a way to stave off mounting political opposition, is currently prominent as the international community tackles the economic crisis in Cyprus, a tax haven built largely on the deposits made by well-heeled Russians. While not all of the Russian money in Cypriot banks comes from criminal activities (though Galeotti estimates some $20 billion of it probably does), the Russian government's reaction is telling of its overall stance on organized crime.
As Cyprus awaited a decision on a 10 billion euro European Union bailout deal and large investors stood to lose vast amounts of the wealth they deposited in the country's banks, suspicions grew in Russia that the EU deal purposely targeted Russian money.
Nevertheless, Putin agreed to contribute to the bailout effort and work within its structure. Meanwhile, Cyprus' largely Russian investors are already being courted by banks in other European localities like Switzerland and Andorra, The Financial Times reported.
This tepid stance toward a popular tax haven may indicate a political will to clean house in Russia.
"[Putin] is beginning to realize the extent to which corruption actually hits the state. … It's not that he has a problem with organized crime, but there are some good political reasons why he may try to move against it," Galeotti says. "There is a sense now [in the criminal world] that Russia isn't as safe now as it was thought."
However, if the co-opted criminal entities are familiarized with the new rules of the game, a crowd-pleasing cleanup may transpire relatively smoothly.
"Let's face it: Everyone Putin ever dealt with is dirty. But he's actually done a lot to clean up the system; so at least you know whom to bribe," Galeotti says.
Green pastures
The need to operate in a stabilized but systemically corrupt environment may be luring the Russia-linked criminal entrepreneur to "places that don't look like criminal havens" - places like the Czech Republic. According to Galeotti, the country has a unique mix of favorable factors: a stable political system, dependable banking, cultural links to Russia and a relatively high perceived level of corruption.
"There is something specific about the Czech Republic" as a strategic location in Central Europe, Galeotti says. Poland has its own organized crime scene. Slovakia lacks the infrastructure, and Hungary the economic and political stability. "The Czech Republic is small enough to be vulnerable but settled and established enough to be appealing."
Becoming a target of organized crime groups from the former Soviet Union is not a new experience for the Czech Republic. In past decades, local law enforcement had been relatively successful in fighting against Russia-linked mafias looking to take control of the local underground. But the criminal entrepreneur, whose business has recently been bolstered by drug routes shifting northward from Afghanistan, has something different to offer.
"Instead of trying to take over, now they're looking to team up with existing criminal entrepreneurs and offer deals, like heroin or cocaine," Galeotti says.
The experiences of local law enforcement appear to support this theory. The most recent declassified report of the police Organized Crime Unit (ÚOOZ) notes strong links to "large supranational criminal structures," with Russian-speaking entities playing the major role.
ÚOOZ also observes a transition from open violence to "more latent criminal activity" and an expansion of "strictly economically oriented criminal activity" that involves setting up puppet companies as well as infiltrating corporate and state entities.
"One of the most significant factors supporting the development of organized crime is corruption within the public administration," the report continues. "Highly placed civil servants do not only succumb to corrupt activity; surprisingly often, they themselves initiate it."
In such an environment, fighting against Russian organized crime's newfound financial power may seem a Sisyphean task. But as Galeotti points out, money is the criminal gangster's strength as well as weakness.
The new type of Russian gangster is smarter, more educated and more entrepreneurial. But while the hardened, old-school vor gangster was dangerous because of his recklessness, the new criminal businessman is "softer." Targeting his assets works, Galeotti says.
"What's the point of being a criminal if you're not going to have vast amounts of money to buy the huge tasteless chateau, the equally tasteless mistresses, the huge, gold-encrusted Bentley? All they have is what money buys them … respect, fear, guns. Take the money away, lock it down, and they suddenly become very alone."

Markéta Hulpachová can be reached at

The rise of the new Russian – or Eurasian – gangster

By Michelle Alves de Lima | Prague Daily Monitor |
28 March 2013
Forget about the tattooed, ex-gulag Russian gangster stereotype portrayed in Hollywood films, or the vory v zakone (‘thieves within the law’) mobster elite, once considered the “judges” of the criminal world. The new type of outlaw rising in Russia as well as in other post-soviets republics is essentially the criminal entrepreneur, the avtoritet gangster businessman, according to Mark Galeotti, professor at New York University (NYU). A leading expert on Russian organized crime, and author of the blog In Moscow’s Shadows, he spoke at NYU Prague last Tuesday, March 19, on the topic of Russian Organized Crime: the Myth, the Reality, the Threat.
“The avtoritet wants to be invited to the ambassador’s reception, wants to be able to travel freely so he can spend his money in the boutiques of London or go to the beaches of Saint Tropez. He doesn't just involve himself in crimes. He probably has a whole portfolio of businesses, ranging from the essentially legal to something somewhere on the borderline,” described Galeotti, who discussed this new type of mobster through the case of the Armenian gangster Andranik Soghoyan. He was sentenced in absentia last month by the Prague Municipal Court to 22 years in jail for ordering the murder of an Armenian businessman.
According to Galeotti, although Soghoyan was a vor, he was not the old-style gangster, who was mostly a “thief for the sake of thievery.” Instead, he was typical of the new kind of outlaw, who is only interested in money, as it can buy, above all, security and respect in the criminal world.
The initial influx of gangsters from the former Soviet Union into the Czech Republic in the 1990s was largely controlled. According to Galeotti, though, there is a new wave coming, working in a new way: “Whereas they used to come as conquistadors, planning to conquer virgin territories, now they come as merchant-adventurers, offering all kinds of opportunities – heroin business, money laundering, cybercrime, contract killing – to local organized crime gangs.”
There are several reasons why the Czech Republic is an attractive destination for these emerging Eurasian gangsters, especially those who operate in and through Russia. Its central location means it can serve as a great hub for redistribution, particularly with the increasing amount of drugs heading towards Western Europe through Russia. It has a good, safe, solid and stable banking system, at a time the gangsters now fear the further collapse of the financial system. Moreover, gangsters feel the need to look for respectable places, not known as criminal havens, to stash their money.
The upside of the story is that this new avtoritet is not unbeatable. “Czech and European institutions are far stronger now than they were on the 1990s, and the nature of the challenge is much more well understood. The very changes that are taking place will make the criminals more vulnerable as well,” concluded Mark Galeotti.
The author is a student of Professor Mark Galeotti, from New York University. 

Russia to back soft power approach to dealing with organized crime

MOSCOW, February 22 - RAPSI. Russia will back the use of "soft power" in the fight against organized crime at a UN Commission on Narcotic Drugs meeting in Vienna in March, an official told RIA Novosti on Friday.

A development conference in Peru in November focused on addressing socio-economic issues as an alternative way to combat crime, Alexander Zmeyevsky, the special presidential representative for international cooperation in combating terrorism and trans-national organized crime, added.

"In March, the issue will be raised at the UN commission in Vienna, upon the initiative of Peru and Thailand," he said. "We will actively support any decisions involving the use of soft power to address new criminal challenges and threats."

The Russian Foreign Policy Concept published on the Foreign Ministry's website on February 18 defines "soft power" as "a comprehensive tool for reaching foreign political goals based on civil society potential, information and communication, and cultural and other alternatives to conventional diplomacy."

Worldwide Membership of Russian Gangs

The total membership of organized crime members in Russian gangs is estimated to be over 300,000 people worldwide.

In 2010, the United Nations Office on Drugs and Crime estimated there were 450 gangs within Russia with 12,000 members.


The Best Films Featuring Russian Mobsters

The Russian mob might not have as glamorous a Hollywood history as the classic Italian mafiosos of our time, but they've still popped up on the silver screen from time to time. Here are a few of the best Russian mobster movies ever made:

RED HEAT: Even though Russian organized crime didn't explode internationally until after the fall of the Soviet Union, Hollywood exploited the Cold War for this 1988 buddy cop movie starring Arnold Schwarzenegger (as a Russian narcotics detective) and James Belushi (as a Chicago detective). The tagline was "Moscow's toughest detective. Chicago's craziest cop. There's only one thing more dangerous than making them mad: making them partners." Include scenes of the Red Square plus a chase in Chicago, you've got glasnost at its best!

BOONDOCK SAINTS: This 1999 cult flick follows two Catholic brothers, Connor and Murphy McManus (Sean Patrick Flanery and Norman Reedus) who decide to unleash vigilante justice on all evildoing Bostonians. They try to take down a clan of Russian mobsters, getting an eccentric FBI special agent (Willem Dafoe) on their tail. The Boondock Saints got lots of flack from the critics for its depictions of unrelenting, juvenile violence, but it developed a pretty solid fan base once it was released on video, and it remains one of the strangest depictions featuring Russian gangsters to date.

GOLDENEYE: Pierce Brosnan's first time donning the Agent 007 suit, this 1995 film finds James Bond in pursuit of former KGB agent Xenia Onatopp (Famke Jansenn), 00 traitor Alec Trevelyan (Sean Bean) and nefarious Russian General Ourumov as they try to steal a Soviet nuclear space weapon for a Russian crime syndicate. GoldenEye was the first Bond film to address Europe's existence in a post-Soviet world, plus, it was Judi Dench's first turn as Agent "M", and that's reason enough to love it.

EASTERN PROMISES: A History of Violence-director David Cronenberg's 2007 thriller stars Naomi Watts as a young British midwife named Anya Khitrova who tries to uncover the story of an infant left behind by a 14-year-old mother who died in her ward. Anya finds the young mother's diary and ends up in the Russian mob world, run by Semyon (Armin Mueller-Stahl) and his son Kirill (Vincent Cassel). Viggo Mortensen dons a Russian accent in his role as Nikolai, the mob family's "cleaner" (he dumps dead bodies in the river); he leads a ferociously choreographed fight scene in a Turkish bath house that'll keep you out of steam rooms for months.

WE OWN THE NIGHT: This 2007 crime drama written and directed by James Gray stars Joaquin Phoenix as Bobby, the son of an NYPD Deputy Police Chief (Robert Duvall) and the manager of an '80s nightclub with strong ties to the Russian mafia. Bobby's brother, Joseph Grusinsky (Mark Wahlberg) is an NYPD captain who tries to take down Bobby's nightclub in an effort to catch notoroious Russian mobster Vadim Nezhinski (Alex Veadov). This leads to a chain of events that draws Bobby closer to his cop family and results in him trying to take down the gangsters.

TRAINING DAY: Denzel Washington won an Oscar for his role as the ultimate bad cop in this 2001 film, which follows an LAPD narcotics detective, Alonzo Harris (Washington), as he "trains" young officer Jake Hoyt (Ethan Hawke) on handling the LA street crime scene. Harris proves to be a rogue cop, forcing Hoyt to smoke marijuana laced with PCP and stealing from the wife of a major crack dealer. It turns out Harris owes big money to the Russian mafia, which leads him and Hoyt to a messy moral (and physical) showdown.

ROCKNROLLA: Guy Ritchie's hilarious 2008 crime film features a British mob boss Lenny Cole (played by Tom Wilkinson) who teams up with Russian gangsters on a crooked deal. Gerard Butler stars as One-Two, a crook who's ragtag gang attempts to one-up Cole, and Toby Kebell is Cole's drug-addled disappearing rockstar son Johnny, who also gets in on the game. (Honorable mention to Ritchie's SNATCH, which includes a Russian gangster among boxing promoters, violent bookmakers, incompetent amateur robbers, and supposedly Jewish jewelers.)

LORD OF WAR: Nicholas Cage plays Ukranian-American arms-dealer Yuri Orlov in this 2005 drama, who navigates the Russian mafia and the illegal gunrunning trade in the last decade of the Soviet Union's history. The movie is primarily based on real life arms-dealer Viktor Bout, who is currently serving time in the States, and it's a fast-paced look at the not-so-distant history of international gun trade.

LITTLE ODESSA: Another film written and directed by James Gray, this 1994 film focuses on a brooding Russian-Jewish hit man, Joshua Shapira (Tim Roth). Set in New York's Brighton Beach neighborhood, Shapira's return to his neighborhood means that his parallel lives—one of unflinching violence and the other of family melodrama—come to a head in this dark film.


Line phone app saves pair from Russian gangsters


One short message on the popular Line smart phone application is credited with saving the lives of two Russian bar owners on Koh Samui after they were kidnapped by Russian gangsters.

Albert Slotr said he and his friend cried tears of joy when they saw police on Monday night.

"I was allowed to use my cellphone to contact my relatives to arrange the payment of a ransom. So, I secretly sent a Line message too, to tell my relatives where exactly I was being held," Slotr told police.

The pair said they were assaulted and kidnapped earlier on Monday after they refused to pay the gangsters Bt1 million. They were being held in the Grand Hill hotel.

Slotr and his partner had already given the gangsters Bt1.67 million during the past few months but the gang pressed for more.

Three suspects were involved in the kidnapping, police said. One of them, Alexander Mashev, is on the run. Two others, Dannin Maslovski, 33, and Firdotov Sergey, 34, are in custody and are charged with extortion, physical assault and illegal detention.

According to the victims, Sergey entered their beer bar on Chaweng Beach one day and demanded 50 per cent of their business. As Sergey was running the mafia-style gang, the bar owners agreed to pay the "protection money".

However, after the gang pressed for too much, the bar owners decided to resist.

Police vowed to track down all the gangsters, who have also preyed on other Russian businesses on Samui.

Surat Thani deputy police chief Colonel Pornsak Nuannoo said yesterday that after being contacted by the victim's relatives, Koh Samui Police superintendent Colonel Jamnot Kaewkhao led a team, including Tourism Police and plainclothes officers, to the Grand Hill hotel himself.

With a search warrant in hand, police surrounded the hotel before finding Masloveski, 33, sprinting toward a Vios and arrested him there. In the vehicle was Bt70,000 in cash.

Sergey, 34, was arrested in the room where he had detained Slotr and his friend. There were signs that both victims had suffered physical abuse.

There were also guns and screwdrivers in the room.

Both Sergey and Masloveski have refused to provide any information during the interrogation.




The Meaning Behind Russian Gangster Tattoos

These days, it seems like everyone's got a Chinese symbol etched somewhere on their shoulder blades, and ink is more a badge of hipness than a marker that you've gone through the prison system. But tattoos have a long, storied gang history, and Russian mobsters have been using them for years as permanent resumes, noting rank and important events like murder and theft.

 In Eastern Promises, Viggo Mortensen's characters shows the higher-ranking gangsters his ink

Russian mafia tattoos started gaining popularity during the Soviet Union's heyday. Prisoners were put through a brutal Soviet prison system known as the "gulag"; there, they began to create their own power hierarchy based on time served and crimes committed, among others. They branded themselves with tattoos so others could see at a glance where they stood, and the various crimes they committed.

 You had to earn the tattoos you bore—gangsters caught with tattoos symbolizing false status had them brutally removed with sandpaper, glass and other abrasives, or were even killed or raped. Here are a few classic Russian gang tattoos and their meanings:

THE CATHEDRAL: A cathedral (or monastery, church, castle or fortress) tattooed on the back, hand or chest tends to denote the amount of time the bearer has been in prison, with each steeple representing a year. It can also indicate the number of times the bearer has been incarcerated, if he's served time for multiple offenses.

THE COBWEB: A spider's web, usually found on the shoulders, says the bearer has or had a drug addiction. A spider on the shoulders denotes that the bearer has a high rank.

THE CAT: Cat tattoos serve as the mark of a thief. A single cat means the thief acted alone; multiple cats say the thief was part of a bigger gang.

THE DAGGER: A dagger through the neck means that the bearer killed someone while incarcerated. It also indicates that he is available to be hired for a "hit". If there are drops of blood tattooed on the blade, those indicate the number of murders the bearer committed.

KNUCKLE DOTS: The number of dots on the bearer's knuckles correlate to the number of years the bearer served in prison.

STARS: Stars tattooed on the knees mean the bearer will bow down to no man. On the shoulders, they can mean the bearer is one of discipline, high status and tradition, or they denote that the bearer has been promoted to captain of the mafia.

THE BULL: A bull tattooed on the chest or forearm means the bearer is a hitman, and has been hired by their mafia boss to kill.

THE PIRATE: A pirate tattoo means the bearer has committed armed robbery.

THE TIGER: A tiger tattoo is usually found on the neck, arms or back. It typically signifies that the bearer has killed a law enforcement officer, like a policeman or prison guard.

Talking about Russian organized crime in Prague, March 19

 With post-Soviet (Armenian) organized crime boss Andranik Soghoyan being convicted in absentia to 22 years in prison in Prague Municipal Court, and with the commercial rivalry over the Temelin nuclear power initiative leading to inevitable dark mutterings about Russian criminal and espionage activities in the Czech Republic, I’m especially pleased to be speaking about the myths and the realities of Russian organized crime in Prague in a couple of weeks’ time. It’s a public event organized by NYU’s Prague Center and PIDEC, the Prague Institute for Democracy, Economics & Culture, and is open to all (please RSVP if you plan to attend, but the email address on the poster may not be working, in which case please use pidec.nyu@gmail.com).

I’ll cover developments in Russia a little, but mainly look at how Russian and Russia-based organized crime has — and has not — spread internationally, and what its real relationships with the intelligence services are. Considering that I think Prague and the Czech Republic risk becoming a renewed focus of their operations, it seems to be a timely opportunity to discuss these guys.