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Wednesday, October 04, 2000

Democrats And The Russian Mafia

By Charles Thompson and Tony Hays

A pandemic of money laundering, prostitution, immigration fraud, murder, arson, arms dealing and other criminal activities by the Russian mob -- which has invaded 29 countries and 17 U.S. cities -- would probably never have occurred on such a frightening scale without the tacit approval of high-ranking U.S. officials, including President Bill Clinton, Vice President Al Gore and Deputy Secretary of State Strobe Talbott, according to congressional and law enforcement sources.

The rise of the Russian mob has been meteoric since the dissolution of the Soviet Union in 1991. According to law enforcement experts, the mob, which has looted the Russian treasury with the help of top government officials, spends up to 50 percent of its profits for bribes and other forms of corruption as a normal business expense. By contrast, the Italian mob considers 6 to 10 percent to be more than adequate, and the Colombians draw the line at 25 percent. Since the Russian mob annually generates about $10 billion a year in profits in America, up to $5 billion is available for corruption.

U.S. law enforcement officers also describe the Russians as being more prone to violence than the Italians or the Colombians. The Russians are more likely than any other criminal organization to murder a witness in a criminal court case or even to gun down a judge. The Russians think nothing of flying a hit man from Moscow to New York to carry out a contract murder and then jet home that very same day using another passport.

While there is no evidence that Clinton, Gore or Talbott took bribes from the Russian mob, there is abundant evidence to show that they adopted the position that it was critical to maintain normal relations with Russia while ignoring wholesale and ever-increasing corruption in Russia and a crime wave rapidly proliferating around the world.

A recently released 209-page report by a dozen senior Republican House members under the direction of Rep. Chris Cox of California, takes direct aim at Gore's stewardship of policy on Russia over the past eight years.

"After tens of billions of dollars and eight years of mismanagement by the Clinton administration, the U.S.-Russian relationship is in tatters, characterized by growing hostility and divergent perceptions of international realities and intentions," according to the report entitled "Russia's Road to Corruption." Clinton put Gore in charge of Russian policy in 1993.

The report went on to say that the Clinton administration's close identification with corrupt Russian officials has badly tarnished America's reputation in Russia and set back U.S.-Russian relations by at least a decade. The Democrats quickly called foul.

"This is a partisan report not worth the taxpayer-provided paper it's written on," Gore spokesman Douglas Hattaway said. (This was the same Douglas Hattaway who has spent considerable time recently trying to convince Tennessee media outlets not to cover WorldNetDaily's series, "Tennessee Underworld," which documents allegations of political corruption involving Al Gore and his family, close friends and supporters.)

Hattaway's condemnation of the House report was predictable, but untenable. The Clinton-Gore administration had been forewarned a year ago by a number of respected journalists, including David Ignatius of the Washington Post and Michael Waller of Insight magazine, that Gore would be held accountable for how much he knew about the looting of Russia by organized crime, and why didn't he do more to stop it.

"From the beginning," Waller wrote, "the Clinton administration was well aware of the Russian government's involvement with organized crime, but punished those who dared point it out."

Last year, front pages across the country were plastered with stories concerning the fact that a massive criminal investigation had been launched to determine how hundreds of millions of dollars of Russian mob money, including diverted international aid funds and U.S. loan money, had been laundered through the Bank of New York. At that time, Washington Post reporter Ceci Connolly wrote that the scandal would become a campaign issue for Gore. Connolly predicted that questions would be raised on the campaign trail over whether Gore had given too much support to a Russian government known to be plagued by corruption. As chairman of an ineffective commission on Russian-American relations with former Russian Prime Minister Viktor Chernomyrdin, Gore was ripe for criticism.

According to intelligence sources, Chernomyrdin accumulated more than $1 billion (some Russian journalists say as much as $5 billion) in personal assets from the systematic looting of Soviet state treasury. This occurred during the same time that Chernomyrdin shared leadership of the commission with Gore.

Former CIA officer Fritz Ermath told Congress last year that Gore returned a 1997 U.S. intelligence report about Chernomyrdin's and Yeltsin's corruption with a "barnyard" epithet scrawled across the cover page.

"The sentiment ascribed to me was a fairly accurate description of what I thought of that particular report," Gore told the Boston Globe this summer. But Gore appended a "the-dog-ate-my-homework" alibi, claiming he had not written the word "bulls--t" on the CIA report.

"Somebody may have written it on my behalf," he said.

In addition to Chernomyrdin, the most important beneficiary of illegal bribes and mob gratuities was none other than Russian President Boris Yeltsin and his family. Swiss law enforcement officials investigating Russian mob money-laundering activities in their country recently revealed that Yeltsin and his two daughters received credit cards with no spending limits from Mabatex, a Swiss construction firm making vast renovations on the Kremlin and hundreds of other lavish properties controlled by Yeltsin. Mabetex also provided one million dollars in "pocket money" for a Yeltsin family shopping spree in Hungary in 1994.

Yeltsin's favorite daughter, Tatyana Dyatchenko, blew $272,000 in a single day. Tatyana was a key member of her father's inner circle since 1996. She functioned as her father's gatekeeper. Her husband, Alexei Dyachenko, was named by law enforcement and banking officials as a key figure in several money-laundering scandals. His name came up twice during a House hearing about the Bank of New York last year.

Thomas Renyi, the bank's chief executive officer, confirmed that Dyachenko held two accounts with the bank's branch in the Cayman Islands. Dyachenko had earlier been investigated by Russian authorities for falsifying documents and evading up to $40 million in Russian export taxes annually in an oil company swindle.

Vice mayor facilitates gambling
Yeltsin's chosen successor, Vladimir Putin, a former KGB colonel, was tainted by scandal involving the issuing of licenses to gambling casinos when he was vice mayor of St. Petersburg in the early 1990s. Much like the enigmatic and alcoholic Yeltsin, since becoming president this year Putin has done little to stem corruption.

Gore's partner, Chernomyrdin, has been closely associated with a notorious Russian "businessman" Grigory Loutchansky, who owns five banks in Latvia allegedly controlling about $1.2 billion in offshore accounts for Chernomyrdin.

In 1989, Loutchansky, who had served three years of a seven-year sentence in a Soviet prison for corruption and embezzlement, established an Austrian company, Nordex, with government funds. In late 1993 and early 1994, U.S. intelligence agencies reportedly intercepted Nordex communications which suggested that Loutchansky's company was exporting nuclear bomb components to North Korea and Iran.

According to a July 8, 1996, Time magazine article written by S.C. Gwynne and Larry Gurwin, Nordex was also suspected of having shipped mobile Scud missile launchers from North Korea to Saddam Hussein in Iraq during the 1991 Gulf War. These launchers allowed the Iraqis to kill and maim American troops, to conduct a terror campaign against Israel and to delay the invasion of Iraq. Two former CIA directors, John Deutch and James Woolsey, have identified Nordex as tied to Russian criminal activity.

Al Gore's claim to being an expert on Russia rested largely on the commission he co-chaired from 1993 to 1998 with Chernomyrdin. The commission's stated function was assisting foreign business people and companies who wanted to invest in Russia and to try to bail them out if they ran afoul of bureaucrats or were victimized by gun-toting gangsters. During the life of the commission, Gore pointedly overlooked Chernomyrdin's reputation in Russia for promoting corruption.

E. Wayne Merry, a senior diplomat at the American embassy in Moscow from 1991-94, called the commission a failure in an op-ed piece he wrote for The Wall Street Journal.

"The commission became an instrument to advance the political career of the vice president. The commission served a similar purpose for Mr. Chernomyrdin," Merry said.

'Home in a box'
American businessmen found out the hard way that they couldn't count on the Gore-Chernomyrdin commission when they were muscled and threatened with murder by the Russian mob. Take the case of John Allen.

Allen, a Republican who had served in a number of key posts in both Reagan administrations, was picked in 1995 by the late Commerce Secretary Ron Brown to serve on the Gore-Chernomyrdin commission. A South Carolina native who had graduated from the Citadel and served in Vietnam as a Green Beret captain, Allen operated a pharmaceutical business in Russia and was also converting an anthrax biological warfare plant in the former Soviet Republic of Kazakstan to a pharmaceutical factory. He was one of the very few American businessmen making a go of it in Russia.

But he was not destined to be a success story very long. Russia had some antiquated pharmaceutical manufacturers, and after 1991 her normal suppliers, Poland, Bulgaria and Czechoslovakia, were unwilling to take vastly devalued rubles in exchange for prescription drugs or for the technology for making these drugs. Allen was attempting to import American generic drugs, which had already been tested and approved by the Federal Drug Administration. The Russian officials insisted on conducting their own tests and demanded bribes to speed them along.

"The standard price was $100,000 for clinical tests," Allen said. When Allen told U.S. staff members working for Vice President Gore about the pervasive bribery that was going on, they told him, "Bring us the proof."

Allen also had a thriving 28-drugstore chain in Moscow run by four Russian women, one of whose brother was an organized crime member. Allen learned that the mob had strong-armed its way into his business in 1997, and he made a personal fact-finding trip to Moscow. He was confronted at his headquarters building by three goons, who told his interpreter they were in charge and if Allen didn't leave that they would send him "home in a box." While he was arguing with these thugs, another trio of heavies arrived in a BMW.

A burly gangster, dressed in a short leather jacket and jeans, showed Allen his knuckles on one hand and informed Allen's interpreter that he had just beaten somebody to a bloody pulp and planned to do the same thing to Allen. Allen decided to retreat, but before he did so, he jotted down the BMW's license plate, descriptions of the gangsters and the names of potential witnesses. As it turned out, the gangsters were very well known by the Russian police.

The next day, Allen met with American embassy officials.

"Both Gore and Chernomyrdin said, 'Bring us evidence.' Well, here's evidence," Allen told the U.S. officials. The officials encouraged Allen to take his evidence to Gore. When he got back to Washington in July 1997, he submitted his material to Dana Marshall, who was a political adviser to Gore.

"Dana Marshall was very concerned, very compassionate about my plight and promised to get back to me," Allen said. But Allen never heard anything back from Marshall, Gore or anyone else connected with the commission.

He also never received another invitation to attend a commission meeting.

'Unwillling to do anything'
"They wanted evidence, and I gave them solid evidence, but they were unwilling to do anything," Allen said. "It was fairly obvious that Gore's people didn't want to do anything about this. They only wanted to talk about successes. The commission members repeatedly told us that the White House only wanted to talk about 'deliverables' (success stories). They didn't want bad news."

Marshall recently said he remembered the meeting with Allen, but couldn't recall any of the details or what action if any the commission took.

"I feel horrible about what happened to John," Marshall said during a three-way conference call between John Allen and Charles Thompson, one of the authors of this report.

Allen was forced to write off millions of dollars he lost after the mobsters confiscated his drug stores. According to Allen, the U.S. State and Defense Departments also permitted a former KGB colonel, an active member of the Russian mafia, to occupy the anthrax biological warfare plant, which Allen was converting to peaceful purposes, and to ship containers of the deadly virus to the Middle East. The U.S. government had set aside $10 million a year to subsidize Russian scientists who formerly worked at the plant to train them how to develop and manufacture pharmaceuticals. After the mob took over Allen's plant, the largest such facility of its kind in the world, the money disappeared and the scientists vanished.

"They probably migrated to countries such as Libya, which support worldwide terrorism, to build more biological warfare weapons," Allen said. Marshall confirmed what Allen related had indeed happened, terming it "a real tragedy." Gore's reputation for looking the other way when it concerned activities of celebrity Russian mob figures grew by leaps and bounds among law enforcement officials and knowledgeable journalists soon after he posed for pictures with three Russian-born gangsters in 1994 during a swing to San Francisco to shore up Kathleen Brown's faltering bid to become governor of California.

Only two years before this portrait taking, two of the men had been painting sidewalk curbs for a living. However, since moving to California in 1993, Andrei Kozlenok and David and Ashot Shagirian had been living high on the hog. As revealed in a 1998 article by David Kaplan and Christian Caryl in U.S. News & World Report, Kozlenok and Shagirian opened a diamond, gold and antique jewelry center in San Francisco called Golden ADA and distributed huge sums of cash to local, state and national politicians, providing a $25,000 campaign contribution to Kathleen Brown. They also forged close alliances with local law enforcement officials.

They gave the San Francisco Police Department a huge Russian Kamov (Ka-32) military transport helicopter. Although the Russian helicopter "belonged" to the police department, Golden ADA was often allowed to fly it out to San Francisco International Airport to bring back shipments of Siberian diamonds to its downtown office. Using a helicopter with police markings had its advantages, because it made U.S. Customs officials less inclined to search the shipments for contraband.

These shipments included a half-billion dollars of treasure, including thousands of diamonds (26,000 carats in all), antique jewelry, including a priceless Faberge egg created for Czar Nicholas II, and gold by the ton. Top officials in Moscow authorized Golden ADA to reprocess this booty and sell it.

The FBI opened an investigation into the company soon after it opened its doors. Kozlenok fled the U.S., was apprehended in Athens and extradited to Moscow. David and Ashot Shagirian also bolted. Ashot was deported to San Francisco from the Caribbean and pleaded guilty in 1998, while David still is a fugitive. More than $400 million in diamonds, gold and cash vanished before the police moved in.

The picture and association with Golden ADA's "management team" wasn't Al Gore's first or last encounter with men who corrupted Russia and ripped off its national treasure. When he was a boy, Gore became well acquainted with Armand Hammer, the chairman of Occidental Petroleum Corp. Hammer, who died in 1990 at age 92, had extensive business deals with the former Soviet Union for more than 70 years. A vindictive man who abhorred publicity and sued anyone who wrote unfavorably about him, Hammer mined asbestos, drilled for oil, arranged lucrative fur deals, trafficked in Czarist art and laundered millions for the KGB in sham transactions. He also helped establish the Soviet Union's overseas spy network. Lenin allegedly told Stalin that Hammer was "a path to lead the American business world" to Russia.

Part 2
Gore's, Talbott's
Red Russian roots

How they 'Hammer'-ed out
Washington-Moscow policy

Editor's note: This is the conclusion of a two-part examination of Vice President Al Gore's role in the disintegration of America's relationship with Russia since the end of the Cold War. Part 1, yesterday, documented how Gore's current campaign claim of being a "Russia expert" rests largely on his experience co-chairing a commission from 1993 to 1998 with former Russian Prime Minister Viktor Chernomyrdin. Although the commission's intended function was assisting foreign business people and companies wanting to invest in Russia and bailing them out if they ran afoul of bureaucrats or gun-toting gangsters, Gore pointedly overlooked Chernomyrdin's reputation in Russia for actually promoting corruption. In fact, E. Wayne Merry, a senior diplomat at the American embassy in Moscow from 1991-94, wrote in The Wall Street Journal, "The commission became an instrument to advance the political career of the vice president."

Today's report reveals just how deep Al Gore's roots go into pro-Russian soil, starting with his father, the late Sen. Albert Gore Sr.'s strong ties to Armand Hammer, and continuing with the blatantly pro-Russian No. 2 man in the Clinton-Gore State Department, Strobe Talbott, whose highly controversial past activities and relationships in the former Soviet Union have caused many to question just why he has been put in charge of America's Russia policy.

Armand Hammer, a notorious influence peddler and collector of politicians of all stripes, in 1950 put Al Gore's father, Albert Gore, Sr., a Democrat, on the payroll when the senior Gore was a U.S. representative from Tennessee. Hammer also set up Gore Sr. in the cattle-breeding business. FBI reports obtained under the Freedom of Information Act detail specific chores assigned to Gore Sr. by Hammer.

As the Tennessee lawmaker gained national prominence and moved up to the Senate, the cattle business became very profitable, thus allowing the Gore family to live in luxury at Washington's Fairfax Hotel. When Gore Sr. was defeated for re-election to the Senate in 1970, Hammer placed him on Occidental Petroleum's board of directors and named him chairman of an Occidental subsidiary, Island Creek Coal Co. Occidental became the Tennessee Valley Authority's coal supplier for its electrical generation plants.

These posts brought the retired senator, who died in 1998, at least $500,000 per annum. Vice President Gore also benefited through his family's association with Hammer. An Occidental Petroleum subsidiary, Occidental Minerals, negotiated a generous lease to mine zinc under Gore's 88-acre farm in Carthage, Tenn., 25 years ago. The $20,000 annual lease amounted to $227 an acre -- more than seven times the $30 per acre Occidental paid to other landowners.

Al Gore has received an estimated $450,000 from Occidental. He and his wife, Tipper, frequently attended Hammer's lavish parties in Washington and Los Angeles and had the use of the tycoon's customized Boeing 727 jet whenever they wanted.

In his capacity as "reinvent-the-government" czar, Gore made it possible for Occidental to buy up to 78 percent of the Elk Hills strategic petroleum reserve in 1998 for $3.65 billion, the largest privatization in U.S. history. Elk Hills, the huge oil field outside Bakersfield, Calif., and a similar rich reserve located in Teapot Dome, Wyo., were set aside for the Navy nearly a century ago.

A criminal investigation in 1923, which became known as "Teapot Dome," brought disgrace on two members of President Warren G. Harding's administration. These men had taken sizable bribes to lease the reserves to private concerns without competitive bids. One of these men, Secretary of the Interior Albert Fall, was convicted of accepting a bribe and was sentenced to prison. Historians considered this scandal to be the worst in U.S. history until Watergate came along a half century later.

Gore has recently been falsely claiming that he helped establish the strategic reserve program. He made the outlandish statement during the time he was persuading President Clinton to lease even more of the reserves to oil companies in order to offset the spiraling gasoline and home heating oil prices. Gore ultimately succeeded in getting Clinton to open up the reserves.

CIA sees 'appalling bad judgment'
Clinton also went along with Gore on another point -- namely, having his picture taken with Russian organized-crime figures. Grigory Loutchansky, discussed in Part 1 of this report, and linked by Interpol to the Russian mafia, money laundering, drug trafficking, nuclear smuggling and international arms trading, attended a Democratic National Committee fundraising dinner in Washington in October 1993. This occurred while Loutchansky was on the State Department's exclusion list. Loutchansky was also deported from Canada in the spring of 1993 for money laundering and for "being a major organized crime figure in Europe."

Nevertheless, he got a 10-minute meeting and a picture with Clinton. Former CIA director James Woolsey said later that an invitation to Loutchansky to meet with the president "would show a severe lack of scrutiny and appalling bad judgment."

As revealed by Jerry Seper in the Washington Times on Dec. 12, 1997, Loutchansky was the guest of and had been recommended to the DNC by Sam Domb, a New York landlord, who donated $160,000 to the DNC shortly after the dinner. During their private session, Clinton asked Loutchansky to deliver a message to Ukrainian president Leonid Kravchuck to reduce the nation's nuclear stockpile. Loutchansky agreed and asked Clinton's help in getting international financing and investors for the Magnitogorsky Iron and Steel Plant, Russian's largest such concern.

Despite his criminal background, Loutchansky was invited back to another $25,000-a-head DNC dinner on July 11, 1995, in Washington honoring President Clinton. But despite pulling strings, Loutchansky was denied entry by the State Department this time.

Clinton compromised himself again by posing with Gore for a picture withVadim Rabinovich, Loutchansky's business partner, on Sept. 19, 1995, at a fundraiser at a posh Florida hotel. This, even though the State Department had revoked Rabinovich's visa a month earlier for being "a suspected criminal." Rabinovich had been a partner with Loutchansky from 1993-95 in a Swiss firm called Ostex. When he returned to Russia, Rabinovich prominently displayed his picture with Clinton and Gore in his Kiev office to impress clients of another company he owned. Not surprisingly, this company was under State Department scrutiny for corrupt business practices.

Loutchansky's name surfaced again last year, when the Washington Post revealed that first lady Hillary Rodham Clinton's two brothers, Tony Rodham and Hugh Rodham, were involved in a $118 million scheme to grow and export hazelnuts in the former Soviet republic of Georgia. Their partner in the venture was Aslan Abashidze, who said his financial adviser was Loutchansky. Abashidze is a reputed member of a Russian organized crime family.

The Rodham brothers at first balked and then agreed to national security adviser Sandy Berger's request that they terminate their venture.

The hazelnut imbroglio wasn't the only time Tony Rodham was involved with people accused of having links with Russian criminals. While working as a consultant for a Florida hotel company hoping to do business with Russia, Rodham set up a meeting with Bill Clinton and Moscow's powerful Mayor Yuri Luzhkov in April of 1997. Luzhkov had been linked in the Russian press to mob figures, and had been involved in a bitter dispute with an American businessmen who was subsequently found murdered in Moscow.

In a March 15, 1996, White House "memorandum of conversation" between Clinton and Boris Yeltsin in Moscow, Clinton is quoted as saying he wanted everything the U.S. did to "have a positive impact, and nothing should have a negative impact" on Russia until after Yeltsin was re-elected later that year. Clinton asked Yeltsin for a quid pro quo for this indulgence -- namely, an end to the Russian ban on U.S. chicken imports. Clinton said chickens were a hot issue in Arkansas, which produced 40 percent of U.S. poultry.

Click to Coninue - - Strobe Talbott and the KGB


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