Gazprom and the Russian mob

Sunday, June 15, 2008 at 5:21 | Posted in crime, russia | 1 Comment

I spotted (via Marko Mihkelson, MP in Estonia) an extremely interesting testimony before the US Senate Foreign Relations Committee by Roman Kupchinsky. Mr Kupchinsky testified before the committee just a couple of days ago, on 12th June 2008. He used to be the director of the Ukrainian Service of Radio Free Europe/Radio Liberty from 1989-2002. He is currently a partner in the risk analysis firm AZEast Group. He immigrated to Brooklyn, NY in 1949 from a refugee camp in Austria; served in the US Army as a rifle platoon leader in Vietnam in 1968 and has a BA in political science from Long Island University.

As Mr. Kupchinsky testified, World’s largest gas company Gazprom, owned by the Russian state, is connected to the organized crime in Russia through a large number of middle man companies. Gazprom currently supplies about 25 % of Europe’s gas. The current Russian president Dmitri Medvedev was Gazprom’s board chairman prior to being elected as the President of Russia. Former president and current Prime Minister Vladimir Putin must have been informed of Gazprom’s dubious connections.

Here is a quote of Mr. Kupchinsky’s testimony:

Some American experts downplay the lack of transparency and the dubious methods used by Russian state-owned companies to conduct business by saying “Companies in the US and Europe also do crooked things” and point to the Enron affair and recent accusations of wide scale bribery by the German company Siemens. The argument is that American “Russophobe’s” are holding Russia to a higher standard.

The difference however, is that the U.S. and Germany arrests and prosecutes criminal behavior while in Russia the crooks not only go scot free – they are awarded state medals for their actions, while individuals like Mikhail Khordokovsky, who opted to run a clean shop and refused to bow to Putin’s will, wind up prison.

One gas trading intermediary company, RosUkrEnergo, based in Zug, Switzerland, is owned 50 percent by Gazprom and 50 percent by two Ukrainian businessmen who hid their identities for years and who are alleged to be linked to Russian organized crime. This is a classic case study of how the Kremlin and Gazprom conspired to protect what was believed to be a criminal enterprise.

Russian President Vladimir Putin, was directly involved in creating this company along with former Ukrainian President Leonid Kuchma in July 2004, and has publically defended RosUkrEnergo on a number of occasions saying: “Believe me; we don’t know the identities of the hidden Ukrainian owners [of RosUkrEnergo].”
Putin’s statement raises an important issue. Is it common practice for Gazprom, the world’s largest gas company, to sign multi-billion dollar contracts with individuals whose names they do not know? How can this state-owned company possibly conduct due diligence?

To make matters worse, Gazprom vehemently denied allegations in the world press that its partners, whose names they claimed not to know, were in league with Russian organized crime figures. Later when the public evidence became overwhelming, Gazprom and Putin accused the Ukrainian government of “forcing” the Russian side to accept the Swiss-registered company into the Ukrainian-Russian gas contract signed in 2006.

Who can believe that Ukraine can force Russia to do whatever it wants!

All of the testimony as a four page pdf-file is available here.

The current and former president of Russia connected to organized crime through World’s largest gas company? Well, that is what I certainly suspected but this is the first time I am able to point at so prominent evidence to confirm it.


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  1. […] seisundit mitte ainult Venemaal vaid lausa euroturul haarama. Siinkohal juhiks tähelepanu Gazpromi seostele vene organiseeritud kuritegevusega, millelele hiljuti osundas Marko Mihkelson. Roman Kupchinsky tunnistas sel teemal 12.6.2008 USA […]

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