Russian Organized Corruption Networks and their International Trajectories wwwwwwwwwwwwwwwww Serguei Cheloukhine ● M.R. Haberfeld

Russian Organized Corruption Networks and their International Trajectories Serguei Cheloukhine M.R. Haberfeld City University of New York City University of New York John Jay College of Criminal Justice John Jay College of Criminal Justice New York, NY 10019 New York, NY 10019 USA USA [email protected] [email protected]

ISBN 978-1-4419-0989-3 e-ISBN 978-1-4419-0990-9 DOI 10.1007/978-1-4419-0990-9 Springer New York Dordrecht Heidelberg London

Library of Congress Control Number: 2011924340

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Springer is part of Springer Science+Business Media (www.springer.com) To Anna and Svetlana and my parents Eugenia and Ivan Sheluhkiny - Serguei Cheloukhine

To my Parents: Dr. Lucja Sadykiewicz and Colonel (ret.) Michael Sadykiewicz - M.R. Haberfeld wwwwwwwwwwwwwwwww Acknowledgments

This book could not have been written without participation, patient assistance, and help of many people to whom I would like to express my warmest gratitude and to whom I am enormously indebted. I would like to thank The Professional Staff Congress-City University of New York (PSC-CUNY) Research Award Program and the John Jay Research Assistant Program for the grants which made possible my research in Russia. I owe a special debt of gratitude to Professors Howard Abadinsky (St. John University), James Finckenauer (Rutgers University), Vasily Larichev (MVD Scientific Institute, Russia), Garry Nichols (FINTRAC, Canada), Frank Schmalleger (University of North Carolina at Pembroke), Anatoly Kontarev and Roman Gurov (Rostov Law School, Russia), Joseph King (John Jay College of Criminal Justice, CUNY), law-enforcement officers in Russia, and all my students and colleagues who took time and effort to read my works and provided me with invaluable comments and suggestions. No acknowledgments could express my debt to my family, daughter Anna, wife Svetlana, and my parents and relatives, who supported me emotionally and spiritu- ally and helped this project become a reality.

Serguei Ivanovich Cheloukhine

I would like to thank the additional people behind this endeavor, my father, Colonel (ret.) Michael Sadykiewicz, for his enormous and insightful help with ­collecting data on the state of affairs within the Russian law-enforcement system and Matt Michaels for his scrupulous and detailed summaries of organized crime theo- ries and other related literature review. Without the help of my father and Matt, this book would have not been as rigorously researched as it is in its present shape. As always, Welmoed Spahr provided the much needed support, based on her vision of things that are not always visible to a naked eye but always reach out beyond and above any horizon. Her wonderful assistant Katherine Chabalko pro- vided the greatest administrative support and the additional members of the Springer House continuously exemplify the best of the publishing world.

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My additional gratitude is extended to my mother, Dr. Lucja Sadykiewicz, and my loyal friends who afford the framework of solid support so much needed to focus my work. Finally, a heartfelt thank you is extended to my daughters, Nellie and Mia, who are always there, in my heart, my mind, and my vision of a better world.

M.R. Haberfeld Contents

1 Introduction...... 1 Hypotheses...... 1 Problems with Data Collection...... 4 Organization of the Book...... 6

2 Modalities of Organized Crime Phenomena...... 9 Theories of Organized Crime...... 9 Social Learning Theory...... 10 Social Disorganization Theory...... 11 Social Control Theory...... 11 Social Strain...... 12 Rational Choice Theory...... 13 New Institutional Economics...... 14 Critical Theory...... 15 Medley of Generic Approaches...... 16 Russian Organized Crime Theories...... 17 Back to the General Strain Theory...... 19 References...... 20

3 Roots of Russian Organized Crime...... 23 Development of Professional Criminals: Seventeenth to Nineteenth Centuries...... 24 Soviet Period: The vory v zakone in 1920s–1990s...... 28 Substructure of Criminal Groups...... 32 Behavioral Patterns of the Criminals...... 33 The Stalin’s GULAG and Soviet System Impact...... 37 Gorbachev’s Reforms and Criminalization of the Post-Soviet Economy...... 41 References...... 51

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4 Corruption in Russia: Past, Present, and Future...... 53 Past: Corruption as a Social and Historic Phenomenon...... 54 Corruption in Soviet Times...... 57 Present: Contemporary Debates of Soviet and Post-Soviet Schools of Thoughts in Defining Corruption...... 61 Factors Promoting Corruption...... 67 Corruption and Public Service...... 69 Corruption in the State Administrative System...... 72 References...... 82

5 Organized Crime, Businesses, and Local Bureaucracy...... 85 Contours and Tendencies of Russian Organized Crime...... 85 Filling in the Void Through Organized Crime...... 89 Four Prongs in Defining (Russian) Organized Crime...... 94 Late 1990s and Beyond: Ethnic, Regional, and Transnational Dimensions...... 95 Ethnic and Regional Component of Russian Organized Crime...... 97 Organized Crime Infiltration into Regional Economic Structures...... 105 References...... 115

6 Ways to Fight OCNs: Law-Enforcement Services...... 119 Structure and Legislation...... 119 Corruption in Russia: Enemy Number One...... 120 Russian Federal Law-Enforcement Agencies...... 122 The Ministry of the Interior (Ministerstvo Vnutrennikh Del)...... 123 The Service (: )...... 125 The Internal Military Troops (Vnutrennie Voiska)...... 133 Federal Migration or Immigration Service (Federalnaya Migratsionnaya Sluzhba)...... 134 The Interior Ministry Institutions of Central Subordination...... 135 Federal Guard Service of the Russian Federation (Federalnaya Sluzhba Ockrany)...... 135 Federal Security Service (Federalnaya Sluzhba Bezopasnosti: Rossiiskoi Federatsii)...... 136 Who Is the Boss?...... 138 FSB as the Ruling Political Elite in Contemporary Russia...... 140 References...... 142 Russian Federation Official Websites...... 143 Further Readings...... 143

7 Organized Corruption Networks...... 145 Crime, State, and Economy in Russia Within Historical Context...... 145 The Study of Crime, State, and Economy in Russia...... 146 Contents xi

Defining Organized Corruption Network...... 146 Crime and Corruption in Russia: Attitudes of Law Enforcement and Businesspersons...... 151 Scale and Sectors of OCN’s National Economy Infiltration...... 152 Types and Forms of OCGs and OCNs Infiltrations and Control of the National Economy...... 155 References...... 166

8 The International Reach: Comparative Dimensions of Russian Organized Corrupted Networks...... 169 International Trajectories: Tentacles of the Organized Corrupted Networks...... 169 The Spanish Connection...... 171 Implications for the Future...... 173 References...... 176

Index...... 177 wwwwwwwwwwwwwwwww List of Tables

Table 4.1 Official corruption index in Russian Federal districts ...... 76 Table 4.2 Bribes broken by environmental factor...... 77 Table 4.3 Index of corrupt institutions...... 78 Table 5.1 Corruption and related crimes in Russia...... 104 Table 5.2 Dynamic of Registered Crimes Committed by OCG...... 105

xiii wwwwwwwwwwwwwwwww List of Charts

Chart 5.1 Structure of contemporary ROC...... 100 Chart 5.2 Russian OCG operational ...... 101 Chart 6.1 Bribes in law enforcements...... 121 Chart 7.1 OCN hierarchy ...... 149 Chart 7.2 Enterprises infiltrated by OCNs...... 156 Chart 7.3 Debt or outstanding taxes repayment ...... 158 Chart 7.4 Factors facilitating the expansion of organized crime infiltration into the economy ...... 159 Chart 7.5 Organized crime group methods of infiltration into the economy ...... 161 Chart 7.6 OCN’s methods and forms of control over territory and the economy ...... 162 Chart 7.7 Methods and forms of control over the economy...... 164

xv wwwwwwwwwwwwwwwww List of Abbreviations

CIS Commonwealth of Independent States CPSU The Communist Party of the Soviet Union CESSI Central Institute for Comparative Social Research FSB Federal security service/bureau GULAG The Chief Directorate [or Administration] of Corrective Labor Camps and Colonies GAI State Automobile Inspection GNP Gross national product GDP Gross domestic product GUBOP MVD R.F. Chief Directorate for Combating Organized Crime of the Ministry of Interior INDEM Information Science for Democracy INOP Institute for Public Projects KFKM Federal Criminal Police Committee MVD Ministry of the Interior NISR MVD R.F. Russian Federation National Institute of Scientific Research of the Ministry of the Interior NEP New Economic Policy NKVD People’s Commissariat for Internal Affairs OCN Organized corruption network OCG Organized crime group OBR Operational Investigation Bureau PTK Petersburg Fuel Company RICO Racketeer Influenced and Corrupt Organizations Act ROC Russian Organized Crime SNK Council of People’s Commissars UBOP The Regional Department for the Fight against Organized Crime

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