The collapse of the Soviet Union marked the beginning of a new era in Russian organized crime. Spurred on by the new economic openness, the Russian mafia spread its influence and money into almost every facet of Russian society. Organized crime has been a troubling reality in Russia for the last 10 years. What is relatively new and disturbing is the entry of the security services, led by the FSB, directly into this underground world.

In the fall of 2001, the customs office initiated an investigation into two furniture companies, Grand and Tri Kita, jointly owned by Sergei Zuev and Yevgeni Zaostorvtsev. The investigation, led by Mikhail Vanin, resulted in charges that the business, using shell companies and intermediaries, had been able to evade some $8 million in customs and duties payments in 2000 alone.

When these charges came to light, Zuev contacted the prosecutor general's office, complaining that the investigations had been improperly conducted and concluded. (RUSSIAN POLITICAL MONITOR, 23 Feb 02; via ISI Emerging Markets Database)

As a direct result of those complaints, the prosecutor general's office announced in December that it was launching its own investigation into the customs service, and that the officials being investigated were to be charged with "abuse of office." (RUSSIAN POLITICAL MONITOR, 3 Dec 01; via ISI Emerging Markets Database)

The FSB's involvement in this scandal is both simple and obvious. Yevgeni Zaostorvtsev's son, Yuri, is one of FSB Director Nikolai Patrushev's deputies. He is in charge of economic counterintelligence for the agency, and presumably acted as an intermediary for Grand and Tri Kita. This case is not the first occasion on which Zaostorvtsev's name has arisen in the national press. Nezavisimaya gazeta has asserted repeatedly that he receives regular payments from Solntsevo, one of Moscow's largest criminal groups.

It is obvious that, at the very least, the FSB is corrupt at the second-highest level. But does the corruption involve Director Patrushev as well? While no allegations have been made directly by the press, Vanin, the investigating (and investigated) customs official, publicly alleged that Patrushev may be involved personally in the scandal. (RFE/RL NEWSLINE, 24 Jan 02)

This scandal is undoubtedly poor publicity for an organization that already is facing serious public scrutiny over a multitude of questionable spy cases, including that of Grigory Pasko. With the unresolved issue of Patrushev's involvement or at least cognizance in the affair, the FSB is in a no-win situation, unless of course it can squash the investigation. An article by Novaya gazeta deputy editor and Duma Deputy Yuri Schekochikhin alleges the FSB paid to have the case dropped. After that article's publication, Schekochikhin had to hire guards to protect himself due to threats of reprisal from the FSB. (NOVAYA GAZETA, 18 Feb 02)

If Patrushev -- a close friend and associate of President Vladimir Putin -- had no knowledge of the furniture affair, then his control over the FSB must be called into question. On the other hand, if Patrushev was involved in the scandal, then the corruption must be assumed to reach the very highest levels -- probably including Putin himself.

At the moment, the latter is more likely. Still, if handled adroitly, the scandal could benefit those highest levels. The prosecutor's investigation has been expanded to include General Vladimir Orlov, who was first deputy minister of the interior under Vladimir Rushailo, as well as Vanin. Since Vanin is a "remnant" of the Yel'tsin years, it is likely that the furniture scandal is being used by Putin and the FSB to oust those officials who remain from Yel'tsin's presidency.

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the original at:
http://www.bu.edu/iscip/digest/vol7/ed0704.html

The NIS Observed: An Analytical Review, Volume VII Number 4, 27 February 2002