THE RUSSIAN CONNECTION • PUTIN’S MODERATE FASCIST STATE American Interest Policy, Politics & Culture Vol. XII, No. 4 | March/April 2017 STRATEGIC CHOICES IN THE AGE OF TRUMP

THE ART OF THE DEAL: FIVE EASY PIECES Philip Zelikow

TRUMP’S NEW WORLD ORDER Niall Ferguson

SAME WORLD, LONELY WORLD, COLD WORLD Adam Garfinkle A LETTER FROM THE EDITOR

A Case of Schizophrenic Fear s Inauguration Day approaches on Friday as I write, I sense that most Ameri- cans (and probably others) are resigned to the fact that Donald Trump is A about to become President of the United States, and, cognitive dissonance being what it is, many have figured out ways to discount the potential downside of that onrushing reality. Fine; people do what they need to do. Some take comfort in the fact that several of Trump’s cabinet choices are not as scary as he is, but what is anyone to make of the fact that the better choices flat out disagree with the Presi- dent’s own high-profile policy pronouncements? Some take comfort in assuming the strength of American’s institutions, legal and otherwise, in preventing an unfit man from running the ship of state aground. Others just pray in very general terms. But here’s the problem for at least a few of us: If you know how cognitive disso- nance works, then you become self-conscious of the much-historically-rehearsed pro- cess of delusional fear abatement—and then it no longer works. That’s my problem: too much post-grad psych and history reading. Alas, truth does not always set you free; it’s as likely to help deplete your single malt stock. No matter how hard I try, I cannot make myself forget about the palliating blather so many American, British, and other intellectuals mouthed about Mussolini, Hitler, and Stalin in the interwar period—not that Donald Trump is a serious enough man to measure up potentially to quite that scale of evil. But the underlying similarity re- mains: Dishonest or simply mad speech is the smoke indicating the fire of dishonest and mad acts past and prospective. So I am afraid, but my fear is oddly schizophrenic. On the one hand, I am afraid that Trump will blunder in ways that make the long-term damage to the reputation of American institutions already done by his mere election (remember Watergate?) much worse. He could further emaciate America’s ever-anemic social idea, worsen class, racial, and ethnic tensions, inadvertently harm the economy, further derange a skittish international security environment, and even cause a major war. So when mentally surface-dwelling people, mostly Republicans, say they “want Trump to suc- ceed” because a “failed presidency” is bad for the nation, I immediately think of Simone Weil’s observation that “it is better to fail than to succeed in doing harm.” On the other hand, there is plenty of low-hanging fruit that any non-Democratic Administration could have picked, some of which even a Hillary Clinton Adminis- tration might have picked. So many areas of American public policy are dysfunction- al—some because of plutocratic abuses long plied by the elites of both major parties, others thanks to the legacy politically correct manias of market fundamentalists to the one side and progressive social authoritarian engineers to the other—that vast im- provements can be had with relative ease now that one party controls the Oval Office and both houses of Congress. If Donald Trump et al. can reduce the extortionary tax burdens that middle-class Americans and small businesses suffer, radically simplify the rest of the tax code so as to force huge hordes of parasitic lawyers and accountants to get productive jobs, stop insulting the native intelligence and sentiments of less- than-college-educated people, and manage to avoid a nuclear war—whatever other nefarious things they do—they can probably get re-elected forever. And in a cold- blooded political way they would deserve to. In short, I’m afraid that a Trump Administration might succeed well enough in some ways to fail disastrously in others. Now, where is that bottle?

2 THE AMERICAN INTEREST CONTENTS 4(%!-%2)#!.).4%2%34s6/,5-%8)) .5-"%2 302).'-!2#(!02), 

RUSSIA

6 Trump’s Russians by James S. Henry Did the near-criminal neglect of the mainstream media’s investiga- tive journalism obligation enable Americans to elect a very “well- connected” man as their 45th President?

28 Russia’s Fascist Regime? by Vladislav L. Inozemtsev By standard scholarly definition, Russia today is not an illiberal 6 democracy: It is an early-stage fascist state. TRUMPIAN STRATEGY OPTIONS

36 Donald Trump’s New World Order by Niall Ferguson It’s wrong to depict President Trump’s strategic choices as being either liberal internationalism or unilateralist neo-isolationism. There is a third, venerable tradition of strategic craftsmanship that may suit him well.

48 The Art of the Deal: Five Easy Pieces by Philip Zelikow 36 If Donald Trump wants to practice the “art of the deal” as Presi- dent in a turbulent world, he has options—if he is careful about how he pursues them.

62 Same World, Lonely World, Cold World by Adam Garfinkle The basic strategic direction of the Trump Administration, which still remains unknown, will establish a decisional architecture for every state in the international system, whether they like it or not.

POLICY SHOP 74 74 The National Security Act, Seventy Years On by Richard K. Betts Some observers blame poor decisional outcomes of recent years on U.S. government structure, but there’s nothing wrong with the present set-up that a major reform will probably not make worse.

SPRING (MARCH/APRIL) 2017 3 85 The Coming ISIS Diaspora and What to Do About It by James Howcroft More than 15 years and many intelligence community reforms after 9/11, we still do an inadequate job of sharing intelligence on terror- ist threats within and among partner states. Here’s how to do better.

90 Training Wreck by Justin R. Reynolds EXECUTIVE COMMITTEE U.S. military assistance programs have their place, but they cannot Francis Fukuyama, chairman do what Congress and others are asking them to do: Win wars. Charles Davidson, publisher & CEO Walter Russell Mead, editor-at-large & director, The American Interest Online 100 Risk Cascades and How to Manage Them Josef Joffe by Seth D. Kaplan The dangers posed by weak states are immense but conceptually Adam Garfinkle, editor misconstrued: The proper metric is not an isolated weak-state crisis Daniel Kennelly, senior managing editor Rachel Hostyk, associate editor but a risk cascade emanating from it. Damir Marusic, associate publisher Richard Aldous, contributing editor R. Jay Magill, Jr., illustrator cover design by Damir Marusic REVIEWS cover image, Getty Images

EDITORIAL BOARD 110 America’s Village Atheists Anne Applebaum, Peter Berger, by Crawford Gribben Zbigniew Brzezinski, Eliot Cohen, At least as far as public discourse goes, American believers and Tyler Cowen, Robert H. Frank, atheists have historically been less opposites than twins: They put William A. Galston, Owen Harries, G. John Ikenberry, Stephen D. Krasner, words in each others’ mouths. Bernard-Henri Lévy, Sebastian Mallaby, Michael Mandelbaum, C. Raja Mohan, 116 More Able Than Kane: Ana Palacio, Itamar Rabinovich, The Endless Genius of Orson Welles Lilia Shevtsova, Hiro Aida, by Colin Fleming Mario Vargas Llosa, Wang Jisi, Ruth Wedgwood Yes, Citizen Kane is great, but that’s not the half of it. The more Orson Welles was forced to improvise and budget down, the better ADVERTISING & SYNDICATION he got. Damir Marusic [email protected] 120 Hollywood’s Afghanistan (202) 223-4408 by Todd Greentree Whiskey Tango Foxtrot is a lot better than one might have thought website it could be, given its SNL-origin small-screen “signature.” But war www.the-american-interest.com movies can only be as serious as the wars they depict, and as we Americans are about them. Subscriptions: Call (800) 362-8433 or visit www. the-american-interest.com. One year (6 issues): $39 print; $19 online; $49 for both. Two years (12 issues): $69 print; 125 I Should Have Talked to the Hand $38 online; $98 for both. Please add $14 per year for print-subscription delivery to Canada and $33 per year for by Carolyn Stewart delivery to addresses outside the United States and Canada. The plague of rudeness and insular, fact-free political condescen- Postmaster and subscribers, send subscription orders and changes of address to: The American Interest, P.O. Box sion that social media has let loose in recent years, and that made 15115, North Hollywood, CA 91615. The American Interest (ISSN 1556-5777) is published six times a year by The Donald Trump’s coarse reality-TV campaign rhetoric seem normal American Interest LLC. Printed by Fry Communications, to so many people, was predicted by a prophet of sorts. Inc. Postage paid in Mechanicsburg, Pennsylvania. ©2017, The American Interest LLC. Application for mailing at periodical pricing is pending in Washington, DC, and ad- ditional mailing offices. Editorial offices: 1730 Rhode Island Ave. NW, Suite 707, Washington, DC 20036. Tel.: (202) 223-4408. Fax: (202) 223-4489.

Russia

Did the near-criminal neglect of the mainstream media’s investigative journalism obligation enable Americans to elect a very “well-connected” man as their 45th President?

Trump’s Russians James S. Henry

“Tell me who you walk with and I’ll tell you election, but it did nothing to resolve the allega- who you are.” tions about Putin. Even now, after the CIA has —Cervantes disclosed an abstract of its own still-secret in- vestigation, it is fair to say that we still lack the “I’ve always been blessed with a kind of in- cyberspace equivalent of a smoking gun. tuition about people that allows me to sense Fortunately, however, for those of us who who the sleazy guys are, and I stay far away.” have been and remain curious about Trump’s —Donald Trump, Surviving at the Top Russian connections, there is another read- ily accessible body of material that has so far ven before the November 8 election, received surprisingly little attention. This sug- many leading Democrats were vocifer- gests that whatever the nature of President Eously demanding that the FBI disclose Donald Trump’s relationship with President the fruits of its investigations into Putin-backed Putin, he has certainly managed to accumu- Russian hackers. Instead, FBI Director Comey late direct and indirect connections with a decided to temporarily revive his zombie-like far-flung private Russian/former Soviet Union ALEXANDER NEMENOV/AFP/Getty Images NEMENOV/AFP/Getty ALEXANDER investigation of Hillary’s emails. That decision (FSU) network of outright mobsters, oligarchs, may well have had an important impact on the fraudsters, and kleptocrats. Any one of these connections might have James S. Henry is an investigative economist and occurred at random. But the overall pattern is a lawyer who has written widely about offshore and veritable Star Wars bar scene of unsavory char- onshore tax havens, kleptocracy, and pirate bank- acters, with Donald Trump seated right in the ing. He is the author of The Blood Bankers (Basic middle. The analytical challenge is to map this Books, 2003, 2005), an investigation of where the network—a task that most journalists and law money went that was loaned to key debtor coun- enforcement agencies, focused on individual tries in the 1970s-1990s. He is a senior fellow at cases, have failed to do. the Columbia University’s Center on Sustainable Of course, to label this network “private” Investment, a Global Justice Fellow at Yale, a senior may be a stretch, given that in Putin’s Russia advisor at the Tax Justice Network, and a member even the toughest mobsters learn the hard way of the New York Bar. to maintain a respectful relationship with the

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“New Czar.” But here the central question per- of the world’s gas reserves, was sold for $230 tains to our new Czar. Did the American peo- million; Russia’s entire national electric grid ple really know they were putting such a “well- was privatized for $630 million; ZiL, Russia’s connected” guy in the White House? largest auto company, went for about $4 mil- lion; ports, ships, oil, iron and steel, aluminum, much of the high-tech arms and airlines indus- Kleptocracy and Capital Flight tries, the world’s largest diamond mines, and most of Russia’s banking system also went for few of Donald Trump’s connections to a song. A oligarchs and assorted thugs have already From 1994 to 1996, under the infamous received sporadic press attention—for exam- “loans-for-shares” program, Russia privatized ple, former Trump campaign manager Paul 150 state-owned companies for just $12 billion, Manafort’s reported relationship with exiled most of which was loaned to a handful of well- Ukrainian oligarch Dmytro Firtash. But before connected buyers by the state—and indirectly November 8 no one pulled the connections by the World Bank and the IMF. The princi- together, used them to identify still more rela- pal beneficiaries of this “privatization”—actu- tionships, or developed an image of the overall ally, cartelization—were initially just 25 or so patterns. budding oligarchs with the insider connections Nor did anyone related these cases to one to buy these properties and the muscle to hold of the most central facts about modern Russia: onto them.2 The happy few who made personal its emergence since the 1990s as a world-class fortunes from this feeding frenzy—in a sense, kleptocracy, second only to China as a source of the very first of the new kleptocrats—not only illicit capital and criminal loot, with more than included numerous Russian officials, but also $1.3 trillion of net offshore “flight wealth” as leading gringo investors/advisers, Harvard pro- of 2016.1 fessors, USAID advisers, and bankers at Credit This tidal wave of illicit capital is hardly just Suisse First Boston and other Wall Street in- Putin’s doing. It is in fact a symptom of one vestment banks. As the renowned development of the most epic failures in modern political economist Alex Gerschenkron, an authority on economy—one for which the West bears a great Russian development, once said, “If we were in deal of responsibility. This is the failure, in the Vienna, we would have said, ‘We wish we could wake of the Soviet Union’s collapse in the late play it on the piano!’” 1980s, to ensure that Russia acquired the kind For the vast majority of ordinary Rus- of strong, middle-class-centric economic and sian citizens, this extreme re-concentration political base that is required for democratic of wealth coincided with nothing less than a capitalism, the rule of law, and stable, peaceful full-scale 1930s-type depression. “Shock ther- relationships with its neighbors. apy” induced a rise in domestic price levels Instead, from 1992 to the Russian debt crisis that wiped out the private savings of millions, of August 1998, the West in general—and the bred rampant lawlessness, a public health cri- U.S. Treasury, USAID, the State Department, sis, and a sharp decline in life expectancy and the IMF/World Bank, the EBRD, and many birth rates. leading economists in particular—actively pro- Sadly, this forced neoliberal “market re- moted and, indeed, helped to finance one of the form” policy package that was introduced most massive transfers of public wealth into pri- between 1992 to late 1998 was not only con- vate hands that the world has ever seen. doned but partly designed and financed by For example, Russia’s 1992 “voucher privati- senior Clinton Administration officials, neo- zation” program permitted a tiny elite of former liberal economists, and innumerable USAID, state-owned company managers and party ap- World Bank, and IMF officials. The few dis- paratchiks to acquire control over a vast num- senting voices included some of the West’s best ber of public enterprises, often with the help of economic brains—Nobel laureates like James outright mobsters. A majority of Gazprom, the Tobin, Kenneth Arrow, Lawrence Klein, and state energy company that controlled a third Joseph Stiglitz. They also included Moscow

8 THE AMERICAN INTEREST TRUMP’S RUSSIANS

University’s Sergei Glaziev, who now serves as failed. As Donald Trump, Jr., executive vice President Putin’s chief economic adviser.3 Un- president of development and acquisitions for fortunately, they were no match for the folks the Trump Organization, told the “Bridging with the cash. U.S. and Emerging Markets Real Estate” con- Or with the political chops. In January 1996 ference in Manhattan in September 2008 (on a secret team of professional U.S. political con- the basis, he said, of his own “half-dozen trips sultants arrived in Moscow to discover that, as to Russia in 18 months”): CNN put it back then, “The only thing vot- ers like less than Boris Yeltsin is the prospect of [I]n terms of high-end product influx into upheaval.” The experts’ solution was one of the the United States, Russians make up a pret- earliest “our brand is crisis” campaign strate- ty disproportionate cross-section of a lot of gies, in which Yeltsin was “spun” as the only al- our assets; say in Dubai, and certainly with ternative to “chaos.” To support him, in March our project in SoHo and anywhere in New 1996 the IMF also pitched in with $10.1 billion York. We see a lot of money pouring in from of new loans, on top of $17.3 billion of IMF/ Russia. World Bank loans that had already been made. With all this outside help, plus ample con- All this helps to explain one of the most in- tributions from Russia’s new elite, Yeltsin went triguing puzzles about Donald Trump’s long, from just 8 percent approval in the January 1996 turbulent business career: how he managed to polls to a 54-41 percent victory over the Com- keep financing it, despite a dismal track record munist Party candidate, Gennady Zyuganov, of failed projects.4 According to the “official in the second round of the July 1996 election. story,” this was due to a combination of bril- At the time, mainstream media like Time and liant deal-making, Trump’s gold-plated brand, the New York Times were delighted. Very few and raw animal spirits—with $916 million of outside Russia questioned the wisdom of this creative tax-dodging added in as a kicker. But blatant intervention in post-Soviet Russia’s first this official story is hokum. The truth is that, democratic election. since the late 1990s, Trump was also greatly as- By the late 1990s the actual chaos that sisted by these abundant new sources of global resulted from Yeltsin’s warped policies had laid finance, especially from “submerging markets” the foundations for a strong counterrevolution, like Russia. including the rise of ex-KGB officer Putin and This suggests that neither Trump nor Putin a massive outpouring of oligarchic capital that is an “uncaused cause.” They are not evil twins, has continued up to the present. For ordinary exactly, but they are both byproducts of the Russians, as noted, this was disastrous. But for same neoliberal policy scams that were peddled many banks, private bankers, hedge funds, law to Russia’s struggling new democracy. One is firms, and accounting firms, and for leading the yin and the other is the yang of an episode oil companies like ExxonMobil and BP, as in political economy derangement the last of well as for needy borrowers like the Trump which we may not see in our lifetimes. Organization, the opportunity to feed on post- Soviet spoils was a godsend. This was vulture capitalism at its rawest. A Guided Tour of Trump’s The nine-lived Trump, in particular, had just suffered a string of six successive Russian/FSU Connections bankruptcies. So the massive illicit outflows he following roundup of Trump’s Russo- that began in the mid-1990s from Russia TSoviet business connections is based on and oil-rich FSU members like Kazakhstan published sources, interviews with former law and Azerbaijan provided precisely the kind of enforcement staff and other experts in the Unit- undiscriminating investors he needed. These ed States, the United Kingdom, and Iceland, outflows arrived at just the right time to fund searches of online corporate registries,5 and a several of Trump’s post-2000 high-risk real detailed analysis of offshore company data from estate and casino ventures—most of which the Panama Papers.6 Given the sheer scope of

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Trump’s activities, there are undoubtedly other reportedly had more than $2 billion of Trump- worthy cases not mentioned here, but our inter- branded deals in the works. But most of these est is in overall patterns. either never materialized or were miserable fail- Note that none of the activities and business ures, for reasons that will soon become obvious. connections related below necessarily involved Bayrock’s “white elephants” included the criminal conduct. While several key players 46-story Trump SoHo condo-hotel on Spring do have criminal records, few of their prolific Street in New York City, for which the principle business dealings have been thoroughly inves- developer was a partnership formed by Bayrock tigated, and of course they all deserve the pre- and FL Group, an Icelandic investment com- sumption of innocence. Furthermore, several of pany. Completed in 2010, the SoHo soon be- these players reside in countries where activities came the subject of prolonged civil litigation like bribery, tax dodging, and other forms of by disgruntled condo buyers. The building financial chicanery are either not illegal or are was foreclosed by creditors and resold in 2014 rarely prosecuted. As former British Chancellor after more than $3 million of customer down of the Exchequer Denis Healey once said, the payments had to be refunded. Similarly, Bay- difference between “legal” and “illegal” is often rock’s Trump International Hotel & Tower in just “the width of a prison wall.” Fort Lauderdale was foreclosed and resold in So why collect and review material that ei- 2012, while at least three other Trump-branded ther doesn’t point to anything illegal or, in some properties in the United States, plus many other cases, may be impossible to verify? Because “project concepts” that Bayrock had contem- when it comes to evaluating the probity of se- plated, from Istanbul and Kiev to Moscow and nior public officials, the public has the right to Warsaw, also never happened. know about any material allegations—true, Carelessness about due diligence with re- false, or, most commonly, unprovable—about spect to potential partners and associates is one their business partners and associates, so long as of Donald Trump’s more predictable qualities. this information is clearly labeled as unverified. Flying by the seat of the pants, he hooked up Furthermore, the individual case-based ap- with Bayrock rather quickly in 2005, becoming proach to investigations employed by most inves- an 18 percent minority equity partner in the tigative journalists and law enforcement agencies Trump SoHo, and agreeing to license his brand often misses the bigger picture: the global net- and manage the building.7 works of influence and finance, licit and illicit, Exhibit A in the panoply of former Trump that exist among business people, investors, klep- business partners is Bayrock’s former Chair- tocrats, organized criminals, and politicians, as man, Tevfik Arif (a.k.a. Arifov), an émigré from well as the “enablers”—banks, accounting firms, Kazakhstan who reportedly took up residence law firms, and havens. Any particular component in Brooklyn in the 1990s. Trump also had of these networks might easily disappear without extensive contacts with another key Bayrock making any difference. But the networks live on. Russian-American from Brooklyn, Felix Sater It is these shadowy transnational networks that (a.k.a. Satter), discussed below.8 Trump has really deserve our scrutiny. lately had some difficulty recalling very much about either Arif or Sater. But this is hardly Bayrock Group LLC— surprising, given what we now know about Kazakhstan and Tevfik Arif them. Trump described his introduction to Bayrock in a 2013 deposition for a lawsuit that e’ll begin our tour of Trump’s Russian/ was brought by investors in the Fort Lauder- WFSU connections with several business dale project, one of Trump’s first with Bayrock: relationships that evolved out of the curious case “Well, we had a tenant in . . . Trump Tower of Bayrock Group LLC, a spectacularly unsuc- called Bayrock, and Bayrock was interested in cessful New York real estate development com- getting us into deals.”9 pany that surfaced in the early 2000s and, by According to several reports, Tevfik Arif was 2014, had all but disappeared except for a few originally from Kazakhstan, a Soviet republic lawsuits. As of 2007, Bayrock and its partners until 1992. Born in 1950, Arif worked for 17

10 THE AMERICAN INTEREST TRUMP’S RUSSIANS years in the Soviet Ministry of Commerce and another key Russian-Canadian business associ- Trade, serving as Deputy Director of Hotel ate of Donald Trump in Toronto. We will re- Management by the time of the Soviet Union’s turn to Birshtein below. collapse.10 In the early 1990s he relocated to The Trio also turn up in the April 2016 Pan- Turkey, where he reportedly helped to develop ama Papers database as the apparent beneficial properties for the Rixos Hotel chain. Not long owners of a Cook Islands company, “Interna- thereafter he relocated to Brooklyn, founded tional Financial Limited.”14 The Belgian news- Bayrock, opened an office in the Trump Tower, papers Het Laatste Nieuws, Le Soir, and La Libre and started to pursue projects with Trump and Belgique have reported that Chodiev paid €23 other investors.11 million to obtain a “Class B” banking license Tevfik Arif was not Bayrock’s only connec- for this same company, permitting it to make tion to Kazakhstan. A 2007 Bayrock investor international currency trades. In the words of presentation refers to Alexander Mashevich’s a leading Belgian financial regulator, quoted in “Eurasia Group” as a strategic partner for Bay- La Libre in 2013, that would “make all money rock’s equity finance. Together with two other laundering undetectable.” prominent Kazakh billionaires, Patokh Chodiev The Panama Papers also indicate that (a.k.a. “Shodiyev”) and Alijan Ibragimov, Mash- some of Arif’s connections at the Rixos Ho- kevich reportedly ran the “Eurasian Natural tel Group may have ties to Kazakhstan. For Resources Cooperation.” In Kazakhstan these example, one offshore company listed in the three are sometimes referred to as “the Trio.”12 Panama Papers database, “Group Rixos Ho- The Trio has apparently worked together in tel,” reportedly acts as an intermediary for metals and other natural resources ever since four British Virgin Islands offshore compa- Gorbachev’s late 1980s perestroika. It was dur- nies.15 Rixos Hotel’s CEO, Fettah Tamince, ing this period that they first acquired a sig- is listed as having been a shareholder of two nificant degree of control over Kazakhstan’s of these companies, while a shareholder of vast mineral and gas reserves. Naturally they another—“Hazara Asset Management”—had found it useful to become friends with Nursul- the same name as the son of a recent Kazakh tan Nazarbayev, Kazakhstan’s long-time ruler. Minister for Sports and Tourism. As of 2012, Indeed, State Department cables leaked by this Kazakh official was described as the Wikileaks in November 2010 describe a close third-most influential deputy in the country’s relationship between “the Trio” and the seem- Mazhilis (the lower house of Parliament), in ingly perpetual Nazarbayev kleptocracy. a Forbes Kazakhstan article. In any case, the Trio has recently attracted According to a 2015 lawsuit against Bayrock the attention of many other investigators and by Jody Kriss, one of its former employees, Bay- news outlets, including the September 11 Com- rock started to receive millions of dollars in eq- mission Report, the Guardian, Forbes, and uity contributions in 2004, supposedly by way the Wall Street Journal. In addition to resource of Arif’s brother in Russia, who allegedly “had grabbing, the litany of the Trio’s alleged activities access to cash accounts at a chromium refinery include money laundering, bribery, and rack- in Kazakhstan.” eteering.13 In 2005, according to U.S. State De- This as-yet-unproven allegation might well be partment cables released by Wikileaks, Chodi- just an attempt by the plaintiff to extract a more ev (referred to in a State Department cable as attractive settlement from Bayrock and its original “Fatokh Shodiyev”) was recorded himself on principals. But it is also consistent with fact that video attending the birthday of reputed Uzbek chromium is indeed one of the Kazakh natural mob boss Salim Abduvaliyeva and presenting resources that is reportedly controlled by the Trio. him with a $10,000 “gift” or “tribute.” As for Arif, his most recent visible brush According to a 2015 article in the Belgian with the law came in 2010, when he and other newspaper Le Soir, Chodiev and Mashkevich members of Bayrock’s Eurasian Trio were ar- also became close associates of a curious Rus- rested together in Turkey during a police raid sian-Canadian businessman, Boris J. Birshtein, on a suspected prostitution ring, according to who happens to have been the father-in-law of the Israeli daily Yediot Aharonot.

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At the time, Turkish investigators report- This is the fellow who worked at Bayrock from edly asserted that Arif might be the head of a 2002 to 2008 and negotiated several important criminal organization that was trafficking in deals with the Trump Organization and other Russian and Ukrainian escorts, allegedly in- investors. When Trump was asked in the 2013 cluding some as young as 13.16 According to deposition cited above who at Bayrock had these assertions, big-ticket clients were making brought him the Fort Lauderdale project, he re- their selections by way of a modeling agency plied: “It could have been Felix Sater, it could website, with Arif allegedly handling the logis- have been—I really don’t know who it might tics. Especially galling to Turkish authorities, have been, but somebody from Bayrock.”18 the preferred venue was reportedly a yacht that Although Sater left Bayrock in 2008, by had once belonged to the widely revered Turk- 2010 he was reportedly back in Trump Tower ish leader Atatürk. It was also alleged that Arif as a “senior advisor” to the Trump Organiza- may have provided lodging for young women at tion—at least on his business card—with Rixos Group hotels.17 his own office in the building. According to Russian media, two senior Ka- Sater has also testified under oath that he zakh officials were also arrested during this in- had escorted Donald Trump, Jr. and Ivanka cident, although the Turkish Foreign Ministry Trump around Moscow in 2006, had met quickly dismissed this allegation as “ground- frequently with Trump over several years, and less.” In the end, Turkish courts dismissed all had once flown with him to Colorado. And al- the charges against Arif resulting from this in- though this might easily have been staged, he is cident in 2012, and his spokespeople have sub- also reported to have visited Trump Tower in sequently denied all involvement. July 2016 and made a personal $5,400 contri- Finally, despite Bayrock’s nadir and these bution to Trump’s campaign. other legal entanglements, Arif has apparently Whatever Felix Sater has been up to recent- remained active. For example, Bloomberg re- ly, the key point is that by 2002 at the latest, ports that, as of 2013, he, his son, and Rixos Tevfik Arif decided to hire him as Bayrock’s Hotels’ CEO Fettah Tamince had partnered COO and managing director.19 This was de- to pursue the rather controversial business of spite the fact that by then Felix had already advancing funds to cash-strapped high-profile compiled an astonishing track record as a pro- soccer players in exchange for a share of their fessional criminal, with multiple felony pleas future marketing revenues and team transfer and convictions, extensive connections to orga- fees. In the case of Arif and his partners, this nized crime, and—the ultimate prize—a vir- new-wave form of indentured servitude was re- tual “get out of jail free card,” based on an in- portedly implemented by way of a UK- and formant relationship with the FBI and the CIA Malta-based hedge fund, Doyen Capital LLP. that is vaguely reminiscent of Whitey Bulger.20 Because this practice is subject to innumerable Sater, a Brooklyn resident like Arif, was born potential abuses, including the possibility of in Russia in 1966. He reportedly emigrated with subjecting athletes or clubs to undue pressure his family to the United States in the mid-1970s to sign over valuable rights and fees, UEFA, Eu- and settled in “Little Odessa.” It seems that his rope’s governing soccer body, wants to ban it. father, Mikhael Sheferovsky (a.k.a. Michael But FIFA, the notorious global football regula- Sater), may have been engaged in Russian mob tor, has been customarily slow to act. To date, activity before he arrived in the United States. Doyen Capital LLP has reportedly taken finan- According to a certified U.S. Supreme Court cial gambles on several well-known players, in- petition, Felix Sater’s FBI handler stated that he cluding the Brazilian star Neymar. “was well familiar with the crimes of Sater and [Sater’s] father, a [Semion] Mogilevich crime The Case of Bayrock LLC— syndicate boss.”21 A 1998 FBI analysis report- Felix Sater edly said Mogilevich’s organization had “ap- proximately 250 members,” and was involved ur second exhibit is Felix Sater, the senior in trafficking nuclear materials, weapons, and OBayrock executive introduced earlier. more, as well as money laundering. (See below.)

12 THE AMERICAN INTEREST TRUMP’S RUSSIANS

But Michael Sater may have been less am- scheme and illicit gun sales out of a Manhattan bitious than his son. His only reported U.S. storage locker. He and Klotsman fled to Rus- criminal conviction came in 2000, when he sia. However, according to the New York Times, pled guilty to two felony counts for extorting which cited Klotsman and Lauria, soon after Brooklyn restaurants, grocery stores, and clin- the events of September 11, 2001, the ever-cre- ics. He was released with three years’ probation. ative Sater succeeded in brokering information Interestingly, the U.S. Attorney for the Eastern about the black market for Stinger anti-aircraft District of New York who handled that case at missiles to the CIA and the FBI. According to the time was Loretta Lynch, who succeeded Klotsman, this strategy “bought Felix his free- Eric Holder as U.S. Attorney General in 2014. dom,” allowing him to return to Brooklyn. It is Back in 2000, she was also overseeing the plea still not clear precisely what information Sater bargain of—and budding informant relation- actually provided, but in 2015 U.S. Attorney ship with—Michael’s son Felix, which may General Loretta Lynch publicly commended help to explain the father’s sentence. him for sharing information that she described By then young Felix Sater was already well as “crucial to national security.” on his way to a career as a prototypical Rus- Meanwhile, Sater’s sentence for his financial sian-American mobster. In 1991 he stabbed a crimes continued to be deferred even after his commodity trader in the face with a margarita official cooperation ceased in late 2001. His glass stem in a Manhattan bar, severing a nerve. files remained sealed, and he managed to avoid He was convicted of a felony and sent to pris- any sentencing for those crimes at all until Oc- on. As Trump tells it, Sater simply “got into a tober 23, 2009. When he finally appeared be- barroom fight, which a lot of people do.” The fore the Eastern District’s Judge I. Leo Glasser, sentence for this felony conviction could not Felix received a $25,000 fine, no jail time, and have been very long, because by 1993, 27-year- no probation in a quiet proceeding that at- old Felix was already a trader in a brand-new tracted no press attention. Some compared this Brooklyn-based commodity firm called “White sentence to Judge Glasser’s earlier sentence of Rock Partners,” an innovative joint venture Mafia hit man “Sammy the Bull” Gravano to among four New York crime families and the 4.5 years for 19 murders, in exchange for “coop- Russian mob aimed at bringing state-of-the-art erating against John Gotti.” financial fraud to Wall Street. In any case, between 2002 and 2008, when Five years later, in 1998, Felix Sater pled Felix Sater finally left Bayrock LLC, and well guilty to stock racketeering, as one of 19 U.S.- beyond, his ability to avoid jail and conceal his and Russian mob-connected traders who par- criminal roots enabled him to enjoy a lucrative ticipated in a $40 million “pump and dump” new career as Bayrock’s chief operating officer. securities fraud scheme. Facing twenty years in In that position, he was in charge of negotiat- Federal prison, Sater and Gennady Klotsman, ing aggressive property deals all over the planet, a fellow Russian American who’d been with even while—according to lawsuits by former him on the night of the Manhattan bar fight, Bayrock investors—engaging in still more fi- turned “snitch” and helped the Department of nancial fraud. The only apparent difference Justice prosecute their co-conspirators.22 Re- was that he changed his name from “Sater” to portedly, so did Salvatore Lauria, another “trad- “Satter.”23 er” involved in the scheme. According to the In the 2013 deposition cited earlier, Trump Jody Kriss lawsuit, Lauria later joined Bayrock went on to say, “I don’t see Felix as being a as an off-the-books paid “consultant.” Initially member of the Mafia.” Asked if he had any evi- their cooperation, which lasted from 1998 until dence for this claim, Trump conceded, “I have at least late 2001, was kept secret, until it was none.”24 inadvertently revealed in a March 2000 press As for Sater’s pal Klotsman, the past few release by U.S. Attorney Lynch. years have not been kind. As of December 2016 Unfortunately for Sater, at about the same he was in a Russian penal colony, working off a time the NYPD also reportedly discovered ten-year sentence for a failed $2.8 million Mos- that he had been running a money-laundering cow diamond heist in August 2010. In 2016

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Klotsman was reportedly placed on a “top-ten in exchange for a 62 percent stake in the four list” of Americans that the Russians were will- Bayrock Trump projects, but Bayrock would ing to exchange for high-value Russian pris- structure the contract as a “loan.” This meant oners in U.S. custody, like the infamous arms that Bayrock would not have to pay taxes on dealer Viktor Bout. So far there have been no the initial proceeds, while FLG’s anticipated takers. But with Donald Trump as President, $250 million of dividends would be channeled who knows? through a Delaware company and character- ized as “interest payments,” allowing Bayrock The Case of Iceland’s FL Group to avoid up to $100 million in taxes. For tax purposes, Bayrock would pretend that their ac- ne of the most serious frauds alleged in tual partner was a Delaware partnership that it Othe recent Bayrock lawsuit involves FL had formed with FLG, “FLG Property I LLC,” Group. FL Group is an Icelandic private invest- rather than FLG itself. ment fund that is really a saga all on its own. The Trump Organization has denied any Iceland is not usually thought of as a major involvement with FLG. However, as an equity offshore financial center. It is a small snowy is- partner in the Trump SoHo, with a significant land in the North Atlantic, closer to Greenland 18 percent equity stake in this one deal alone, than to the United Kingdom or Europe, with Donald Trump himself had to sign off on the only 330,000 citizens and a total GDP of just Bayrock-FLG deal. $17 billion. Twenty years ago, its main exports This raises many questions. Most of these were cod and aluminum—with the imported will have to await the outcome of the Kriss liti- bauxite smelted there to take advantage of the gation, which might take years, especially now island’s low electricity costs. that Trump is President. But several of these But in the 1990s Iceland’s tiny neoliberal questions just leap off the page. political elite had what they all told themselves For example, how much did President was a brilliant idea: “Let’s privatize our state- Trump know about the partners and the inner owned banks, deregulate capital markets, and workings of this deal? After all, he had a sig- turn them loose on the world!” By the time all nificant equity stake in it, unlike many of his three of the resulting privatized banks, as well “brand-name only” deals, and it was also sup- as FL Group, failed in 2008, the combined posed to finance several of his most important bank loan portfolio amounted to more than East Coast properties. 12.5 times Iceland’s GDP—the highest coun- For another, how did the FL Group and Bay- try-debt ratio in the world. rock come together to do this dodgy deal in the For purposes of our story, the most interest- first place? One former FL Group manager al- ing thing about Iceland is that, long before the leges that the deal arrived by accident, a “relative- financial crisis hit and utterly bankrupted FL ly small deal” that was nothing special on either Group, our two key Russian/FSU/Brooklyn side.25 The Kriss lawsuit, on the other hand, al- mobster-mavens, Arif and Sater, had somehow leges that FLG was a well-known source of easy stumbled on this obscure Iceland fund. Indeed, money from sources like Kazakhstan and Russia, in early 2007 they persuaded FL Group to in- and that other Bayrock players with criminal his- vest $50 million in a project to build the Trump tories—like Salvatore Lauria, for example—were SoHo in mid-town Manhattan. involved in making the introductions. According to the Kriss lawsuit, at the same At this stage the evidence with respect to time FL Group and Bayrock’s Felix Sater also this second question is incomplete. But there agreed in principle to pursue up to an addi- are already some interesting indications that FL tional $2 billion in other Trump-related deals. Group’s willingness to generously finance Bay- The Kriss lawsuit further alleges that FL Group rock’s peculiar Russian/FSU/Brooklyn team, (FLG) also agreed to work with Bayrock to fa- its rather poorly conceived Trump projects, cilitate outright tax fraud on more than $250 and its purported tax dodging were not simply million of potential earnings. In particular, it due to Icelandic backwardness. There is much alleges that FLG agreed to provide $50 million more for us to know about Iceland’s “special”

14 THE AMERICAN INTEREST TRUMP’S RUSSIANS relationship with Russian finance. In this re- New York branch in 2007-08 were rejected by gard, there are seven puzzles to be resolved. the Fed. Similar unconfirmed rumors repeat- First, FL Group, Iceland’s largest private edly appeared in Danish and German publica- investment fund until it crashed in 2008, had tions, and there were allegations in the Kriss several owners/investors with deep Russian lawsuit about the supposed Kazakh origins of business connections, including several key in- FLG’s cash to be “laundered.” vestors in all three top Iceland banks. Sixth, there is the peculiar fact that, when Second, FL Group had constructed an Iceland’s banks went belly-up in October 2008, incredible maze of cross-shareholding, lend- their private banking subsidiaries in Luxem- ing, and cross-derivatives relationships with bourg, which were managing at least €8 billion all these major banks.26 This thicket of cross- of private assets, were suddenly seized by Lux- dealing made it almost impossible to regulate embourg banking authorities and transferred to “control fraud,” where insiders at leading a new bank, Banque Havilland. This happened financial institutions went on a self-serving so fast that Iceland’s Central Bank was prevent- binge, borrowing and lending to finance risky ed from learning anything about the identities investments of all kinds. It became difficult or portfolio sizes of the Iceland banks’ private to determine which institutions were net offshore clients. But again, there were rumors borrowers or investors, as the concentration of some important Russian names. of ownership and self-dealing in the financial Finally, there is the rather odd phone call system soared. that Russia’s Ambassador to Iceland made to Third, FL Group made a variety of peculiar Iceland’s Prime Minister at 6:45 a.m. on Oc- loans to Russian-connected oligarchs as well as tober 7, 2008, the day after the financial crisis to Bayrock. For example, as discussed below, hit Iceland. According to the PM’s own ac- Alex Shnaider, the Russian-Canadian billion- count, the Russian Ambassador informed him aire who later became Donald Trump’s Toronto that then-Prime Minister Putin was willing to business partner, secured a €45.8 million loan consider offering Iceland a €4 billion Russian to buy a yacht from Kaupthing Bank during bailout. the same period, while a company belonging This alleged Putin offer was modified not to another Russian billionaire who reportedly long thereafter into a willingness to entertain owns an important vodka franchise got an even an Icelandic negotiating team in Moscow. By larger loan.27 the time the team got to Moscow later that year, Fourth, Iceland’s largest banks also made a Russia’s desire to lend had cooled, and Iceland series of extraordinary loans to Russian inter- ended up accepting a $2.1 billion IMF “sta- ests during the run-up to the 2008 crisis. For bilization package” instead. According to a example, one of Russia’s wealthiest oligarchs, member of the negotiating team, the reasons a close friend of President Putin, nearly man- for the reversal are still a mystery. Perhaps Putin aged to secure at least €400 million (some say had simply decided that Russia had to worry up to four times that much) from Kaupthing, about its own considerable financial problems. Iceland’s largest bank, in late September 2008, Or perhaps he had discovered that Iceland’s just as the financial crisis was breaking wide banks had indeed been very generous to open. This bank also had important direct and Russian interests on the lending side, while— indirect investments in FL Group. Indeed, un- given Luxembourg’s actions—any Russian til December 2006, it is reported to have em- private wealth invested in Icelandic banks was ployed the FL Group private equity manager already safe. who allegedly negotiated Felix Sater’s $50 mil- On the other hand, there may be a simpler lion deal in early 2007.28 explanation for Iceland’s peculiar generos- Fifth, there are unconfirmed accounts of ity to sketchy partners like Bayrock. After all, a secret U.S. Federal Reserve report that un- right up to the last minute before the October named Iceland banks were being used for 2008 meltdown, the whole world had awarded Russian money laundering.29 Furthermore, Iceland AAA ratings: Depositors queued up Kaupthing Bank’s repeated requests to open a in London to open high-yield Iceland bank

SPRING (MARCH/APRIL) 2017 15 RUSSIA accounts, its bank stocks were booming, and in a wide variety of locations, including An- the compensation paid to its financiers was off twerp,34 Toronto, 35 Winnipeg,36 Moscow, the charts. So why would anyone worry about Delaware,37 Panama,38 and Zurich.39 Several making a few more dubious deals? of these are still active.40 He often staffed them Overall, therefore, with respect to these odd with directors and officers from a far-flung net- “Russia-Iceland” connections, the proverbial work of Russians, emissaries from other FSU jury is still out. But all these Icelandic puzzles countries like Kyrgyzstan and Moldova, and are intriguing and bear further investigation. recent Russia/FSU émigrés to Canada.41 According to the Financial Times and the The Case of the Trump Toronto FBI, in addition to running Seabeco, Birshtein Tower and Hotel—Alex Shnaider was a close business associate of Sergei Mikhay- lov, the reputed head of Solntsevskaya Brat- ur fourth case study of Trump’s business va, the Russian mob’s largest branch and the Oassociates concerns the 48-year-old Rus- world’s highest-grossing organized crime group sian-Canadian billionaire Alex Shnaider, who as of 2014, according to Fortune.42 A 1996 FBI co-financed the seventy-story Trump Tower intelligence report cited by the FT claims that and Hotel, Canada’s tallest building. It opened Birshtein hosted a meeting in his Tel Aviv of- in Toronto in 2012. Unfortunately, like so fice for Mikhaylov, the Ukrainian-born Semi- many of Trump’s other Russia/FSU-financed on Mogilevich, and several other leaders of the projects before it, this massive Toronto condo- Russo/FSU mafia, in order to discuss “sharing hotel project went belly-up this November and interests in Ukraine.”43 A subsequent 1998 FBI has now entered foreclosure. Intelligence report on the “Semion Mogilevich According to an online profile of Shnaider Organization” repeated the same charge, and by a Ukrainian news agency, Alex Shnaider was described Mogilevich’s successful attempts at born in Leningrad in 1968, the son of “ gaining control over Ukrainian privatization ,” or “Evsei Shnaider” in Rus- assets.44 The FT article also described how sian.30 A 2005 Forbes article says that he and Birshtein and his associates had acquired ex- his family emigrated to Israel from Russia when traordinary influence with key Ukraine offi- he was four and then relocated to Toronto when cials, including President Leonid Kuchma, with he was 13 or 14. The Ukrainian news agency the help of up to $5 million in payoffs.45 Citing says that Alex’s family soon established “one of Swiss and Belgian investigators, the FT also the most successful stories in Toronto’s Russian claimed that Birshtein and Mikhaylov jointly quarter, “ and that young Alex, with “an en- controlled a Belgian company called MAB In- trepreneurial streak,” “helped his father Evsei ternational in the early 1990s.46 During that Shnaider in the business, placing goods on the period, those same investigators reportedly shelves and wiping floors.” observed transfers worth millions of dollars be- The younger Shnaider prospered in the tween accounts held by Mikhaylov, Birshtein, New World. Much of this was no doubt due and Alexander Volkov, Seabeco’s representative to raw talent. But it also appears that for a time in Ukraine. he got a significant helping hand from his (now In 1993, the Yeltsin government reportedly reportedly ex-) father-in-law, another colorful accused Birshtein of illegally exporting seven Russian-Canadian, Boris J. Birshtein. million tons of Russian oil and laundering the Originally from Lithuania, Birshtein, now proceeds.47 Dmytro Iakoubovski, a former as- about 69, has been a Canadian citizen since at sociate of Birshtein’s who had also moved to To- least 1982.31 He resided in Zurich for a time in ronto, was said to be cooperating with the Rus- the early 1990s, but then returned to Toronto sian investigation. One night a gunman fired and New York.32 One of his key companies was three shots into Iakoubovski’s home, leaving called Seabeco SA, a “trading” company that was a note warning him to cease his cooperation, registered in Zurich in December 1982.33 By according to a New York Times article pub- the early 1990s Birshtein and his partners had lished that year. As noted above, according to started many other Seabeco-related companies the Belgian newspaper Le Soir, two members

16 THE AMERICAN INTEREST TRUMP’S RUSSIANS of Bayrock’s Eurasian Trio were also involved connections were very deep. By 2001 they had in Seabeco during this period as well—Patokh purchased 93 percent of the plant for about $70 Chodiev and Alexander Mashkevich. Chodiev million, a stake worth much more just five years reportedly first met Birshtein through the So- later, when Shnaider reportedly turned down a viet Foreign Ministry, and then went on to run $1.2 billion offer. Seabeco’s Moscow office before joining its Bel- Today, Midland Resources Holdings Ltd. gium office in 1991. Le Soir further claims that reportedly generates more than $4 billion a Mashkevich worked for Seabeco, too, and that year of revenue and has numerous subsidiaries this was how he and Chodiev had first met. across Eastern Europe.51 Shnaider also report- All this is fascinating, but what about the edly owns Talon International Development, connections between Birshtein and Trump’s the firm that oversaw construction of the Toronto business associate, Alex Shnaider? Trump hotel tower in Toronto. All this wealth Again, the leads we have are tantalizing. apparently helped Iceland’s FL Group decide The Toronto Globe and Mail reported in 2005 that it could afford to extend a €45.8 million that in 1991, while enrolled in law school, loan to Alex Shnaider in 2008 to buy a yacht.52 young Alex Shnaider started working for Birsh- As of December 2016, a search of the Pana- tein at Seabeco’s Zurich headquarters, where ma Papers database found no fewer than 28 off- he was reportedly introduced to steel trading. shore companies that have been associated with Evidently this was much more than just a job; “Midland Resources Holding Limited.”53 Ac- the Zurich company registry lists “Alex Shnaid- cording to the database, “Midland Resources er” as a director of “Seabeco Metals AG” from Holding Limited” was a shareholder in at least March 1993 to January 1994.48 two of these companies, alongside an individ- According to this account, he reportedly left ual named “Oleg Sheykhametov.”54 The two Seabeco in January 1994 to start his own trad- companies, Olave Equities Limited and Colley ing company in Antwerp, in partnership with a International Marketing SA, were both regis- Belgian trader-partner. Curiously, Le Soir also tered and active in the British Virgin Islands reported in 1997 that Mikhaylov and Birshtein from 2007–10.55 A Russian restaurateur by that co-founded MAB International in Antwerp in same name reportedly runs a business owned January 1994. Is it far-fetched to suspect that by two other alleged Solntsevskaya mob asso- Alex Shnaider and mob boss Mikhaylov might ciates, Lev Kvetnoy and Andrei Skoch, both have crossed paths, since they were both in the of whom appear with Sergei Mikhaylov. Of same city and they were both close to Shnaider’s course, mere inclusion in such a group photo father-in-law? is not evidence of wrongdoing.56 According According to Forbes, soon after Shnaid- to Forbes, Kvetnoy is the 55th richest person in er moved to Antwerp, he started visiting Russia and Skoch, now a deputy in the Russian the factories of his steel-trading partners in Duma, is the 18th.57 Ukraine.49 His favorite client was the Zapor- Finally, it is also intriguing to note that Bo- izhstal steel mill, Ukraine’s fourth-largest. At ris Birshtein is also listed as the President of the Zaporizhstal mill he reportedly met Eduard “ME Moldova Enterprises AG,” a Zurich-based Shifrin (a.k.a. Shyfrin), a metals trader with a company founded in November 1992, trans- doctorate in metallurgical engineering. Togeth- ferred to the canton of Schwyz in September er they founded Midland Resource Holdings 1994, and liquidated and cancelled in January Ltd. in 1994.50 1999.58 Birshstein was a member of the com- As the Forbes piece argues, with privatization pany’s board of directors from November 1992 sweeping Eastern Europe, private investors to January 1994, when he became its president. were jockeying to buy up the government’s At that point he was succeeded as president shares in Zaprozhstal. But most traders lacked in June 1994 by one “Evsei Shnaider, Cana- the financial backing and political connections dian citizen, resident in Zurich,” who was also to accumulate large, risky positions. Shnaider listed as director of the company in September and Shifrin, in contrast, started buying up 1994.59 “Evsei Schnaider” is also listed in the shares without limit, as if their pockets and Panama registry as a treasurer and director of

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“The Seabeco Group Inc.,” formed on Decem- Since 2014 there has been a spate of other ber 6, 1991,60 and as treasurer and director of Firtash-related prosecutions, with the United Seabeco Security International Inc.,” formed States trying to extradite him from Austria in on December 10, 1991. As of December 2016, order to try him on allegations that his vast both companies are still in existence.61 Boris spider net “Group DF” had bribed Indian of- Birshtein is listed as president and director of ficials to secure mining licenses. The Austrian both companies.62 court has required him to put up a record- busting €125 million bail while he awaits a The Case of Paul Manafort’s decision.65 And just this past November, Spain Ukrainian Oligarchs also tried to extradite Firtash on a separate money-laundering case involving the launder- ur fifth Trump associate profile con- ing of €10 million through Spanish property Ocerns the Russo/Ukrainian connections investments. of Paul Manafort, the former Washington After Firtash pulled out of the deal, Manafort lobbyist who served as Donald Trump’s na- reportedly turned to Trump, but he declined to tional campaign director from April to August engage. Manafort stepped down as Trump’s of 2016. Manafort’s partner, Rick Davis, also campaign manager in August of 2016, in re- served as national campaign manager for Sena- sponse to press investigations into his ties not tor John McCain in 2008, so this may not be only to Firtash, but to Ukraine’s previous, pro- just a Trump association. Russian Yanukovych government, which had One of Manafort’s biggest clients was been deposed by an uprising in 2014. However, the dubious pro-Russian Ukrainian billion- following the November 8 election, Manafort aire Dmytro Firtash. By his own admission, reportedly returned, joining his business associ- Firtash maintains strong ties with a recurring ate Roger Stone in advising Trump on staffing figure on this scene, the reputed Ukrainian/ his new Administration. He got an assist from Russian mob boss Semion Mogilevich. His Putin—on November 30 a spokeswoman for most important other link is almost certainly the Russian Foreign Ministry accused Ukraine to Putin. Otherwise it is difficult to explain of leaking stories about Manafort in an effort how this former used-car salesman could gain to hurt Trump. a lock on trading goods for gas in Turkmeni- stan and also become a lynchpin investor in the The Case of “Well-Connected” Swiss company RosUrEnergo, which controls Russia/FSU Mobsters Gazprom’s gas sales to Europe.63 In 2008, Manafort teamed up with a for- inally, several other interesting Russian/ mer manager of the Trump Organization to FFSU connections have a more residential purchase the Drake Hotel in New York for up flavor, but they are a source of important leads to $850 million, with Firtash agreeing to invest about the Trump network. Indeed, partly be- $112 million. According to a lawsuit brought cause it has no prying co-op board, Trump against Manafort and Firtash, the point of the Tower in New York has received little press deal was not to make a carefully planned invest- attention for including among its many hon- ment in real estate, but simply to launder part est residents tax-dodgers, bribers, arms dealers, of the huge profits that Firtash had skimmed convicted cocaine traffickers, and corrupt for- while brokering natural gas deals between Rus- mer FIFA officials.66 sia and Ukraine, with Mogilevich acting as a One typical example involves the alleged “silent partner.” Russian mobster Anatoly Golubchik, who Ultimately, Firtash pulled out of the Drake went to prison in 2014 for running an illegal Hotel deal. The reasons are unclear—it has gambling ring out of Trump Tower—not only been suggested that he needed to focus on the the headquarters of the Trump Organization 2015 collapse and nationalization of his Group but also the former headquarters of Bayrock DF’s Bank Nadra back home in Ukraine.64 But Group LLC. This operation reportedly took up it doesn’t appear to have changed his behavior. the entire 51st floor. Also reportedly involved in

18 THE AMERICAN INTEREST TRUMP’S RUSSIANS it was the alleged mobster Alimzhan Tokhtak- allegedly worked with Manafort to channel hounov,67 who has the distinction of making Firtash’s funding into the Drake Hotel ven- the Forbes 2008 list of the World’s Ten Most ture, is also listed in the Panama Papers da- Wanted Criminals, and whose organization the tabase as a Group DF shareholder. Moreover, FBI believes to be tied to Mogilevich’s. Even as a 2006 Financial Times investigation identi- this gambling ring was still operating in Trump fied three other offshore companies that are Tower, Tok htak hounov reportedly traveled to linked to both Firtash and Telesh.73 Moscow to attend Donald Trump’s 2013 Miss Of course, all of these curious relation- Universe contest as a special VIP. ships may just be meaningless coincidences. In the Panama Papers database we do find After all, the director shared by Telesh and the name “Anatoly Golubchik.” Interestingly, Golubchik is also listed in the same role for his particular offshore company, “Lytton Ven- more than 200 other companies, and more tures Inc.,” shares a corporate director, Stanley than one thousand companies besides Arbat Williams, with a company that may well be Capital and Arigon Overseas share Westix’s connected to Semion Mogilevich, the Rus- corporate address. In the burgeoning land of sian mafia’s alleged “Boss of Bosses” who has offshore havens and shell-game corporate citi- appeared so frequently in the story above.68 zenship, there is no such thing as overcrowd- Thus Lytton Ventures Inc. shares this particu- ing. The appropriate way to view all this lar director with another company that is held evidence is to regard it as “Socratic”: raising under the name of “Galina Telesh.”69 Accord- important unanswered questions, not provid- ing to the Organized Crime and Corruption ing definite answers. Reporting Project, multiple offshore companies In any case, returning to Trump’s relation- belonging to Semion Mogilevich have been reg- ships through Trump Tower, another odd one istered under this same name—which just hap- involves the 1990s-vintage fraudulent compa- pens to be that of Mogilevich’s first wife. ny YBM Magnex International. YBM, osten- A 2003 indictment of Mogilevich also men- sibly a world-class manufacturer of industrial tions two offshore companies he is said to have magnets, was founded indirectly in Newtown, owned, with names that include the terms “Ar- Bucks County, Pennsylvania in 1995 by the bat” and “Arigon.” The same corporate director “boss of bosses,” Semion Mogilevich, Moscow’s shared by Golubchik and Telesh also happens “brainy Don.” to be a director of a company called Westix This is a fellow with a remarkable history, Ltd.,70 which shares its Moscow address with even if only half of what has been written about “Arigon Overseas” and “Arbat Capital.”71 And him is true.74 Unfortunately, we need focus here another company with that same director ap- only on the bits that are most relevant. Born pears to belong to Dariga Nazarbayeva, the in Kiev, and now a citizen of Israel as well as eldest daughter of Nursultan Nazarbayev, the Ukraine and Russia, Semion, now seventy, is a long-lived President of Kazakhstan. Dariga lifelong criminal. But he boasts an undergradu- is expected to take his place if he ever decides to ate economics degree from Lviv University, and leave office or proves to be mortal. is reported to take special pride in designing Lastly, Dmytro Firtash—the Mogilevich sophisticated, virtually undetectable financial pal and Manafort client we met earlier—also frauds that take years to put in place. To pull turns up in the Panama Papers database as them off, he often relies on the human frailties part of Galina Telesh’s network neighbor- of top bankers, stockbrokers, accountants, busi- hood. A director of Telesh’s “Barlow Invest- ness magnates, and key politicians.75 ing,” Vasliki Andreou, was also a nominee di- In YBM’s case, using a mere $2.4 million in rector of a Cyprus company called “Toromont bribes, Semion and his henchmen spent years Ltd.,” while another Toromont Ltd. nominee in the 1990s launching a product-free, fictitious director, Annex Holdings Ltd., a St. Kitts company on the still-badly under-regulated company, is also listed as a shareholder in Toronto Stock Exchange. Along the way they Firtash’s Group DF Ltd., along with Firtash secured the support of several leading Toronto himself.72 And Group DF’s CEO, who business people, and a former Ontario Province

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Premier won a seat on YBM’s board. They also First, the President really is very “well-con- paid the “Big Four” accounting firm Deloitte nected,” with an extensive network of global Touche very handsomely in exchange for glow- underground connections unprecedented ing audits. By mid-1998, YBM’s stock price had in White House history. In choosing his as- gone from less than $0.10 to $20, and Semion sociates, evidently Donald Trump only pays cashed out at least $18 million—a relatively cursory attention to questions of background, big fraud for its day—before the FBI raided character, and integrity. YBM’s corporate headquarters. When it did so, Second, Donald Trump has literally spent it found piles of bogus invoices for magnets, but decades cultivating relationships of all kinds no magnets.76 with Russia and the FSU. And senior public In 2003, Mogilevich was indicted in Phila- and private Russian figures of all kinds have delphia on 45 felony counts for this $150 mil- likewise spent decades cultivating him, not lion stock fraud. But there is no extradition only as a business partner, but possibly as a treaty between the United States and Russia, “useful idiot.” After all, on September 1, 1987, and no chance that Russia will ever extradite Trump was already willing to spend $94,801 Semion voluntarily; he is arguably a national on full-page ads in the Boston Globe, the Wash- treasure, especially now. Acknowledging these ington Post, and the New York Times calling realities, or perhaps for other reasons, the FBI for the United States to stop spending mon- quietly removed Mogilevich from its Top Ten ey to defend Japan, Europe, and the Persian Most Wanted list in 2015, where he had resided Gulf, “an area of only marginal significance for the previous six years.77 to the U.S. for its oil supplies, but one upon For our purposes, one of the most interest- which Japan and others are almost totally de- ing things to note about this YBM Magnex pendent.80 This is one key reason why Robert case is that its CEO was a Russian-American Gates—a registered Republican who served named Jacob Bogatin, who was also indicted as Secretary of Defense under Presidents in the Philadelphia case. His brother David Bush and Obama, as well as former Direc- had served in the Soviet Army in a North tor and Deputy Director of the CIA—criti- Vietnamese anti-aircraft unit, helping to cized the response of Congress and the White shoot down American pilots like Senator John House to the alleged Putin-backed hacking McCain. Since the early 1990s, David Boga- as far too “laid back.”81 tin was considered by the FBI to be one of the Third, even beyond questions of possible il- key members of Semion Mogilevich’s Russian legality, the public clearly has a right to know organized crime family in the United States, much more than it already does about the na- with a long string of convictions for big-ticket ture of such global connections. As the open- Mogilevich-type offenses like financial fraud ing quote from Cervantes suggests, these re- and tax dodging. lationships are probably a pretty good leading At one point, David Bogatin owned five indicator of how the President will behave in separate condos in Trump Tower that Don- office. ald Trump had reportedly sold to him person- Unfortunately, for many reasons, this year ally.78 And Vyacheslav Ivankov, another key American voters never really got the chance to Mogilevich lieutenant in the United States decide whether such low connections and en- during the 1990s, also resided for a time at tanglements belong at the world’s high peak of Trump Tower, and reportedly had in his per- official power. It is now too late to establish the sonal phone book the private telephone and fax kind of bipartisan, 9/11-type commission that numbers for the Trump Organization’s office would be needed to explore these connections in that building.79 in detail. Finally, the long-term consequence of care- o what have we learned from this deep dive less, or careful but misguided, interventions Sinto the network of Donald Trump’s Rus- into other countries’ politics is that they often sian/FSU connections? Four main points stand come back to haunt us. In Russia’s case, per- forth. haps, after a 25-year arc, it just has.

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End Notes

1Author’s estimates; see globalhavenindustry.com 12See also Elnur Salihovic, Major Players in the for more details. Muslim Business World (Universal-Publishers, 2For an overview and critical discussion, see Peter 2015), p.107; and Rowena Mason, “U.S. Am- Rutland, “Mission Impossible? The IMF and bassador Unimpressed by Food at Oligarch the Failure of the Market Transition in Russia” Alexander Mashkevich’s House,” Telegraph, Review of International Studies (Fall 1999), pp. December 1, 2010. 183-200. 13See also Alastair Fraser & Miles Larmer, Zam- 3See Lawrence Klein and Marshall Pomer, Russia’s bia, Mining, and Neo-Liberalism (Palgrave Economic Transition Gone Awry (Stanford Uni- Macmillan, 2010); Jason Bennett, “The Bel- versity Press, 2002); see also James S. Henry gian Billionaire George Arthur Forrest, Who and Marshall Pomer, “A Pile of Ruble,” New Was Named in the “Kazakhgate” Affair by the Republic, September 7, 1998. French Site Mediapart on Monday, Denies Any 4See Michelle Lee, “Fact Check: Has Trump De- Involvement,” Brussels Times, June 17, 2015; clared Bankruptcy Four or Six Times?” Wash- and Alain Lallemand, Philippe Regnier, and ington Post, September 26, 2016. This report Beatrice Delvaux, “Le parquet de Bruxelles en- counts six bankruptcies of the Trump Orga- quête ‘Kazakhgate’: Tractebel confirme, sans nization, but excludes failed projects like the commentaire,” Le Soir, December 28, 1999. Trump SoHo, the Toronto condo-hotel, the 14According to the Panama Papers database, “In- Fort Lauderdale condo-hotel, and many others ternational Financial Limited” was registered in which Trump was a minority investor or had on April 3, 1998, but is no longer active today, simply licensed his brand. although no precise deregistration date is avail- 5For example, the Swiss federal and cantonal cor- able. See “International Financial Limited,” porate registries, available at http://zefix.ad- Offshore Leaks Database, ICIJ. min.ch/. 15According to the Panama Papers, “Group Rixos 6See “Offshore Leaks Database,” the International Hotel” is still an active company, while three Consortium of Investigative Journalists (ICIJ). of the four companies it served were struck off The database draws on the “Panama Papers,” in 2007 and the fourth, Hazara Asset Manage- and was created in April 2016. ment, in 2013. 7Trump’s minority equity deal with Bayrock was 16Yana Pevzner & Thiya Barak, “A Billionaire in unlike many others, where he simply licensed Stormy Waters,” Yediot Aharonot, March 29, his name. See Michael Idev, “ Trump Soho 2011. Is Not an Oxymoron,” New York Magazine, 17See also Yazıcı Dostu Gösterim, “Savarona March 30, 2008. zanlıları sorgulanırken, İsmailov adliyeye 8“I dealt mostly with Tevfik,” he said in 2007. gitti,” TurizmGüncel.com, October 2, 2010; Wayne Barrett, “Inside Donald Trump’s Em- and Jerome Bastion, “Machkévitch et ses com- pire: Why He Didn’t Run for President in plices blanchis par la justice turque,” Le Grand 2012,” Daily Beast, May 5, 2011. Soir, May 26, 2011. 9Trilogy Properties LLC vs. SB Hotel Associates 18 Trilogy Properties LLC vs. SB Hotel Associates LLC, Case No. 1:09-cv-21406-KMW, Docu- LLC, Document 408, p. 16. ment 408, United States District Court South- 19The exact date that Sater joined Bayrock is un- ern District of Florida (November 26, 2013), clear. A New York Times article says 2003, but p. 15. this appears to be too late. See Charles V. Bagli, 10“Tevfik Arif,” Kazakh Business Bulletin. “Real Estate Executive With Hand in Trump 11Bayrock reported its co-ownership of six Rixos Projects Rose From Tangled Past,” New York hotels in a 2007 press release. Bayrock Group Times, December 17, 2007. Sater says 1999, LLC, “Bayrock Group Increases Stake in Mid- but this is too early. A certified petition filed town Miami Mixed-Use Development,” PR with the U.S. Supreme Court places the time Newswire, July 27, 2007. around 2002, which is more consistent with

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Sater’s other activities during this period, in- Arif as the sole owner on offering documents. cluding his cooperation with the Department 24See Palmer v. Doe, p. 155. of Justice on the Coppa case in 1998–2001, 25See Sigrún Davíðsdóttir’s Icelog, the blog of Ice- and his foreign travel. landic journalist Sigrún Davíðsdóttir. 20See Gary Silverman, “U.S. Election: Trump’s 26See “Report of the Special Investigation Russian Riddle,” Financial Times, August Commission on the 2008 Financial Crisis” 14, 2016; Mike McIntire, “Donald Trump Rannsóknarnefndir Alþingi, April 12, 2010. Settled a Real Estate Lawsuit, and a Crimi- 27These loans are disclosed in “Corporate Cred- nal Case Was Closed,” New York Times, April it—Disclosure of Large Exposures > €40 5, 2016; and Rosalind S. Helderman & Tom mm” Kaupthing Bank, September 25, 2008. Hamburger, “Former Mafia-linked Figure This document was disclosed by Wikileaks Describes Association with Trump,” Wash- in 2009. On p. 145, the report lists a €79.5 ington Post, May 17, 2016. Note that previous million yacht-construction loan to Russian accounts of Sater’s activities have overlooked vodka magnate Yuri Shefler’s Serena Equity the role that this very permissive relationship Ltd.; on p. 208, it mentions a €45.8 million with Federal law enforcement, especially the yacht-construction loan to Canadian-Russian FBI, may have played in encouraging Sater’s billionaire Alex Shnaider’s Filbert Pacific Ltd. subsequent risk-taking and financial crimes. See also Rowena Mason, “Kaupthing Leak Ex- See Lorienton N.A. Palmer et al. v. John Doe poses Loans,” Telegraph, August 4, 2009. 98-CR-01101 et al., Case No. 13-2373-cv, 28See Kriss v. Bayrock; author’s analysis of U.S. Court of Appeals for the Second Circuit Kaupthing/FLG employees’ published career (June 5, 2014), cert. denied, Supreme Court of histories. the United States (January 12, 2015). Accessed 29Author’s interview, Reykjavik, July 2016. at National Review Online. 30“Dossier on Alex Schneider—co-owner of “Za- 21See Palmer v. Doe, p. 13. porizhstal,” Uniad. The passage in Russian, 22Sater’s 1998 case, never formally sealed, was with the father’s name underlined, is as fol- U.S. v. Sater, 98-CR-1101, United States Dis- lows: “ trict Court Eastern District of New York. The case in which Sater secretly informed was U.S. v. Coppa, 00-CR-196, United States District Court Eastern District of New York. See also Michael Weiss, Catherine A. Fitzpatrick, and James Miller, “Trump’s Russia Towers: He Just Can’t Get Them Up,” Daily Beast, November 6, 2016. 23See Charles V. Bagli, “Real Estate Executive with Hand in Trump Projects Rose from Tangled Past.” Sater also may have taken other .” “” is the steps to conceal his criminal past. According dative case of “ ,” or “Evsei to the 2015 lawsuit filed by ex-Bayrocker Jody Shnaider,” the father’s name in Russian. Kriss, Arif agreed to pay Sater his $1 million 31The Zurich company registry reports that “Sea- salary under the table, allowing Sater to pre- beco SA” (CHE-104.863.207) was initially tend that he lacked resources to compensate registered on December 16, 1982, with “Boris any victims of his prior financial frauds. See Joseph Birshtein, Canadian citizen, resident in the complaint of Kriss et al. v. Bayrock et al., Toronto” as its President. It entered liquidation No. 10 Civ. 3959 (LGS) (FM), United States on May 5, 1999 in Arth, which was handled District Court Southern District of New York, by the Swiss trustee Paul Barth. The Zurich pp. 2, 18. The lawsuit also alleges that Sater company registry listed “Boris Joseph Birsh- may have held a majority of Bayrock’s owner- tein, Canadian citizen, resident in Toronto,” ship, but that Arif, Sater, and other Bayrock of- as the president of Seabeco Kirgizstan AG in ficers may have conspired to hide this by listing 1992, while “Boris Joseph Birshtein, Canadian

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citizen, resident in Zurich,” was listed as the port and Population Registration system. That company’s president in 1993. “Boris Birshtein” contract was not renewed in 2006, and the is also listed as the president and director of a subsidiary and Trimol have had no revenues 1991 Panama company, The Seabeco Group, since then. Accordingly, as of 2016 Trimol has Inc. as of December 6 1991. See below. only two part-time employees, its two principal 32Marcel Sel, “Quand Kubla et De Decker tourn- shareholders, Birshtein and his nephew, who, ent kazakh (MàJ)” Un Blog de Sel, February directly and indirectly account for 79 percent 26, 2015. of Trimol’s shares outstanding. According to 33The Zurich company registry reports that “Sea- the July 2015 10-K, Birshtein, in particular, beco SA” (CHE-104.863.207) was initially owned 54 percent of TMOL’s outstanding registered on December 16, 1982, with “Boris 78.3 million shares, including 3.9 million by Joseph Birshtein, Canadian citizen, resident way of “Magnum Associates, Inc.,” which the in Toronto” as its president. According to the 10-K says only has Birshtein as a shareholder, registry, it entered liquidation on May 5, 1999. and 34.7 million by way of yet another Ca- See also “Seabeco—Agreement Between Boris nadian company, “Royal HTM Group, Inc.” Birshtein & Sergei Mikhailov—Russian Ma- of Ontario (Canadian Federal Corporation fia—Intelligence Newsletter,” March 27, 1997. #624476-9), which is also owned 50-50 by Posted on the Google Group soc.culture.ukrai- Birshtein and a nephew. It is interesting to nian. The liquidation was handled by the Swiss note that according to the Panama Papers da- trustee Paul Barth, in Arth. tabase, a Panama company called “Magnum 34For Seabeco’s Antwerp subsidiary, see Alain Associates Inc.” was incorporated on Decem- Lallemand, “Perquisitions en série dans le ber 10, 1987, and struck off on March 10, dossier Mikhaïlov: un lien apparaît entre le 1989. See “Magnum Associates Inc.,” Offshore mafieux russe et un homme davantage lié au Leaks Database, ICIJ. As of December 2016, KGB, Boris Birshtein,” Le Soir, March 17, TMOL’s stock price was zero. 1997. 38See the case of Trimol Group, Inc. above. The 35Royal HTM Group, Inc. of Toronto, Canadian Seabeco Group, Inc., a Panama company that Federal Corporation #624476-9, owned 50- was formed in December 1991, apparently 50 by Birshtein and his nephew. See “Federal still exists. Boris J. Birshtein is listed as this Corporation Information—624476-9,” Gov- company’s director and president. “The Sea- ernment of Canada, January 3, 2017. beco Group Inc.,” was registered in Panama by 36Birshtein was a director of Seabeco Capital Inc. Morgan y Morgan on December 6, 1991, with (Canadian Federal Incorporation #248194-4,) “numero de ficha” 254192; see “The Seabeco a Winnipeg company created June 2, 1989, Group Inc.,” Dan O’Huiginn’s Panama Com- and dissolved December 22, 1992. pany Records Database; and “The Seabeco 37Since 1998, Boris Birshtein (Toronto) has also Group, Inc.,” OpenCorporates. served as Chairman, CEO, and a principle 39As of December 2016, the Zurich company reg- shareholder of “Trimol Group Inc.,” a publicly istry listed a Zurich company called “Conim traded Delaware company that trades over the Investment AG” (CH-020.3.002.334-7), counter. (Symbol: TMOL). Its product line is which was originally formed in May 1992, and supposedly “computerized photo identifica- in January 1995 was transferred to Arth, in tion and database management system utilized the Canton of Schwyz, where it is still in exis- in the production of a variety of secure essen- tence (CHE-102.029.498). This is confirmed tial government identification documents.” by the Schwyz Canton registry. According to See “TMOL:US,” Bloomberg Markets. How- these registries, Conim Investment AG is the ever, according to Trimol’s July 2015 10-K (ac- successor company to two other Zurich com- cessed on Wikinvest), the company has only panies, “Seabeco Kirgizstan AG,” formed in had one customer, the former FSU member 1992, and “KD Kirgizstan Development AG,” Moldova, with which Trimol’s wholly owned its direct successor. The Swiss federal company subsidiary Intercomsoft concluded a contract registry also reports the following Swiss com- in 1996 for the production of a National Pass- panies in which Boris J. Birshtein has been

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an officer and or a director, all of which are Kuchma’s Adviser Cast Shadows.” now in liquidation: (1) Seabeco Trade and 46Ibid. Finance AG (CH-020.3.002.179-4, April 3, 47Jack Lakey & Cal Millar, “Boris Knows Every- 1992–November 30, 1998) (2) Seabeco SA one,” Toronto Star, August 28, 1993. (CHE-104.863.207, December 16, 1982– 48See Zurich corporate registry for “Seabeco Met- May 9, 1999); (3) Seabeco Metals AG (April als AG” (CH-020.3.002.181-9), formed April 3, 1992–June 11, 1996) (4) BNB Trading AG 3, 1992 and liquidated June 11, 1996. (CH-020.3.002.181-9, January 10, 1992–No- 49Heidi Brown & Nathan Vardi “Man of Steel,” vember 19, 1998); and (5) ME Moldova En- Forbes, March 28, 2005. terprises AG (CH-020.3.003.104-1, Novem- 50“Company Overview of Midland Resources ber 10 1992–September 16, 1994). All of these Holding Ltd.,” Bloomberg, January 13, 2017. liquidations were handled by the same trustee, 51Ibid. Paul Barth, in Arth. 52See “Loan Book, September 2008,” Kaupthing 40As of December 2016, active Birshtein compa- Bank. Found in “Financial collapse: Confi- nies include “Conim Investment AG” (CH- dential Exposure Analysis of 205 Companies 020.3.002.334-7) in the Swiss Canton of Each Owing Above EUR45M to Icelandic Schwyz and the Seabeco Group, Inc. in Pan- Bank Kaupthing, 26 Sep 2008,” Wikileaks, ama. July 30, 2009. 41For example, the Zurich and Schwyz company 53The ICIJ’s Offshore Leaks Database provides registries indicates that the following have an address for “Midland Resources Holding been board members of Birshtein companies: Limited” that exactly matches the compa- (1) Seabeco Trade and Finance AG: Iouri Or- ny’s corporate address in Guernsey, as noted by lov (citizen of Russia, resident of Moscow), Al- Bloomberg’s corporate database (“Company exander Griaznov (citizen of Russia, resident Overview of Midland Resources Holding Ltd.,” of Basserdorf, Switzerland), and Igor Filippov Bloomberg, January 16, 2017). Here are the 28 (citizen of Russia, resident of Basel). (2) ME companies that are associated with Midland in Moldova Enterprises: Andrei Keptein (citizen the database: Aligory Business Ltd.; Anglesey of FSU/Moldova; Evsei Shnaider (Russian Business Ltd.; Blue Industrial Skies Inc.; Cl émigré to Canada); (3) Seabeco Kirigizstan/ 850 Aviation Holdings Ltd.; Cl 850 Aircraft Conim Investment AG: Sanjarbek Almatov Investments Ltd.; Caray Business Inc.; Chal- (citizen of Bishkek, FSU/ Kirgizstan), Tour- lenger Aircraft Company Limited; Colley In- sounbek Tchynguychev (citizen of Bishkek, ternational Marketing S.A.; East International FSU/Kirgizstan), Evsei Shnaider (Russian Realty Ltd.; Filbert Pacific Limited; Gorlane émigré to Canada); (4) BNB Trading AG: Yuri Business Inc.; Jabar Incorporated; Jervois Spivak (Russian émigré to Canada); (5) Seabe- Holdings Inc.; Kerryhill Investments Corp.; co Metals AG: Alex Shnaider (Russian émigré Leaterby International Investments Corp.; to Canada). Maddocks Equities Ltd.; Maverfin Holding 42Charles Clover, “Ukraine: Questions Over Inc.; Midland Maritime Holding Ltd.; Mid- Kuchma’s Adviser Cast Shadows,” Financial land River-Sea Holding Ltd.; Midland Dry- Times, October 30, 1999; Chris Matthews, bulk Holding Ltd.; Midland Fundco Ltd.; “Fortune 5: The Biggest Organized Crime Norson Investments Corp.; Olave Equities Groups in the World,” Fortune, September Limited; Orlion Business Incorporated; Per- 14, 2014. See also Misha Glenny, McMafia: A seus Global Inc.; Sellana Investments Global Journey Through the Global Criminal Under- Corp.; Stogan Assets Incorporated; and Toom- world (Vintage Books, 2009), pp. 63–5. ish Asset Ltd. 43Charles Clover, “Ukraine: Questions over 54With the address “11 First Tverskaya-Yamskaya Kuchma’s adviser cast shadows.” Street, Apt. 42, Moscow, Russia.” See “Colley 44See “Semion Mogilevich Organization: Eurasian International Marketing,” “Mr. Oleg Sheykha- Organized Crime,” FBI Intelligence Section, metov,” and “Olave Equities Limited,” Off- Organizational Intelligence Unit (August 1998). shore Leaks Database, ICIJ. 45Charles Clover, “Ukraine: Questions Over 55As for the Midland-related offshore vehicles

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still listed as active, one shareholder in two 59See “ME Moldova Enterprises AG,” Commer- of them—Stogan Assets Incorporated and cial Register of the Canton of Zurich. Com- Blue Sky Industries Inc.—happens to have mercial register number CH-020.3.003.104-1 the same name as Russia’s Deputy Culture 60See “The Seabeco Group Inc.,” OpenCorpo- Minister Gregory Pirumov, reportedly ar- rates. Commercial register number 254192, in rested in March 2016 on embezzlement the jurisdiction of Panama. Formed December charges. See Sophia Kishkovsky, “Russian 6, 1991. Deputy Culture Minister Detained on Em- 61See “Seabeco Security International Inc.,” bezzlement Charges” The Art Newspaper, OpenCorporates. Commercial register num- March 15, 2016. The “Gregory Pirumov” in ber 254206, in the jurisdiction of Panama. the Panama Papers has a registered address in Formed December 10, 1991. Moscow (4 Beregkovskaia Quay; 121059), as 62See footnotes 58 and 59. do the reported agents of the two aforemen- 63Jim Armitage, “Spain Seeks Extradition for tioned companies: “Global Secretary Services Ukrainian Oligarch Linked to Senior Tories Ltd. Mal. Tolmachevskiy pereulok 10 Office for Alleged Money Laundering,” Independent, No.3 Moscow, Russia 119017).” See “Sto- November 25, 2016. gan Assets Incorporated,” Panama Offshore 64See “Nadra Bank, Owned by Firtash, Declared Leaks Database. A “Georgy Pirumov” is Insolvent,” Unian Information Agency, Febru- also listed separately in the Panama Papers ary 6, 2015. as having been a shareholder in the same 65See footnote 62. two companies. See “Stogan Assets Incorpo- 66See “First We Take Miami: Why Russian Busi- rated,” Offshore Leaks Database, ICIJ; “Mr. nessmen and Criminals Move into Trump’s Georgy Pirumov,” Offshore Leaks Database, Towers,” Transparency International Russia, ICIJ. For what it is worth, in September November 10, 2016. 2016, one “Georgy Pirumov” was convicted 67A.k.a. “Tochtachunov.” See “Semion Mogilev- in Moscow of “illegally taking over a build- ich Organization: Eurasian Organized Crime.” ing in Gogolevsky Boulevard,” and sentenced 68According to the Panama Papers, as of Decem- to 20 months in a minimum-security correc- ber 2016, Lytton Ventures Inc., incorporated tional facility. See “In Moscow, Man Found in 2006, was still an active company but its Guilty of Hostile Takeover of Building in registration jurisdiction was listed as “un- Gogolevsky Boulevard,” Investigative Com- known.” “Lytton Ventures Inc.,” Offshore mittee of the Russian Federation, September Leaks Database, ICIJ. 15, 2016. At this point, however, we need to 69For Telesh’s company the director’s name is emphasize that there is still plenty that needs given as “Stanley Williams,” as compared with to be investigated—we cannot yet confirm “Stanley Edward Williams” in Golubchik’s, whether “Georgy” and “Gregory” are the but they have the same address. See “Barlow same person, whether they are related, how Investing Ltd.,” Offshore Leaks Database, they might be related to Shnaider’s Mineral ICIJ. Telesh’s company, Barlow Investing, was Resources, or whether they are the same incorporated in 2004. In the PP database, as people named in the articles just noted above of December 2016 its status was “Transferred about criminal prosecutions. Out,” although its de-registration date and reg- 56Simon Goodley, Luke Harding, and Miriam istration jurisdiction are unknown. Elder, “Man Behind MegaFon Pictured with 70Westix Ltd., registered in 2005, is still active, Alleged Russian Gangsters,” Guardian, No- according to the Panama Papers. See “Westix vember 28, 2012. Ltd.,” Offshore Leaks Database, ICIJ. 57“#1476 Lev Kvetnoi” Forbes Real Time Rank- 71In the Panama Papers, Telesh’s company and ing, January 16, 2017. Golubchik’s reportedly have the same direc- 58See “ME Moldova Enterprises AG,” Commer- tor, one Stanley Williams. Williams is also cial Register of Canton Schwyz. Commercial reportedly a director of Westix, which shares register number CH-130.0.007.159-5, Novem- its address with two other offshore companies, ber 10, 1992–September 16, 1994. which use corporate names that Mogilevich

SPRING (MARCH/APRIL) 2017 25 RUSSIA

has reportedly used at least twice each in the Eurasian Organized Crime.” past. See “Semion Mogilevich Dossier,” Rus- 76Pat Huddleston, “How to spot fraud and be a sian Mafia Blog. Arbat Capital, registered in vigilant investor,” Globe and Mail, October 3, 2003, was still active as of December 2016, as 2011. was Arigon Overseas, registered in 2007. 77See “FBI Ten Most Wanted Fugitives: Semion 72See the diagram below. Mogilevich,” Federal Bureau of Investigations 73These three offshore companies are not in Archives, October 21, 2009; and Justin Peters, the Panama Papers database. Firtash ac- “This Obese Mob Boss Is Twice the Villain knowledged these connections to Telesh but Whitey Bulger Ever Was,” Slate, August 5, still told FT reporters that he didn’t know her. 2013. See Tom Warner, “Key man in Ukraine gas 78David Cay Johnston, interview with the author, dispute faces questions,” Financial Times, July November 2016. Wayne Barrett, Trump: The 13, 2006. The three companies identified in Greatest Show on Earth: The Deals, the Down- the report are (1) Highrock Holdings, which fall, the Reinvention (Regan Arts, 2016). Firtash and Telesh each reportedly owned one- 79Johnston, interview; see also John Tuohy, “The third of, and of which Firtash served as direc- Superpower of Crime,” Russian Mafia Gang- tor beginning in 2001; (2) Agatheas Holdings, ster Blog, December 2012. In another interest- where Firtash apparently replaced Telesh as ing coincidence, the President of YBM Mag- director in 2003; and (3) Elmstad Trading, nex was also reportedly a financial director of a Cyprus company owned by Firtash that in Highrock in the late 1990s, before Manafort- 2002 transferred the shares of a Russian com- client Dmytro Firtash joined the company as pany named Rinvey to Telesh and two other a director in 2001. See also Michael Weiss, people—one of them Firtash’s lawyer and the “Married to the Ukrainian Mob.” other the wife of a reputed Mogilevich busi- 80John Shanahan, “Trump: U.S. Should Stop ness partner. See also Michael Weiss, “Married Paying to Defend Countries that Can Protect to the Ukrainian Mob,” Foreign Policy, March Selves,” Associated Press News Archive, Septem- 19, 2014. ber 1, 1987. 74On Mogilevich, see, for example, “Nationwide 81Joanna Walters & Martin Pengelly, “Robert Con Artist, Part One,” Russian Mafia Blog, Gates Criticises ‘Laid-Back’ US Response to June 27, 2011. Russia Election Hack,” Guardian, December 75See also ““Semion Mogilevich Organization: 18, 2016.

here exists a subterranean world where pathological fantasies disguised as ideas are Tchurned out by crooks and half-educated fanatics for the benefit of the ignorant and superstitious. There are times when this underworld emerges from the depths and suddenly fascinates, captures, and dominates multitudes of usually sane and responsible people, who thereupon take leave of sanity and responsibility. And it occasionally hap- pens that this underworld becomes a political power and changes the course of history. —Norman Cohn, Warrant for Genocide: The Myth of the Jewish World-Conspiracy and The Protocols of the Elders of Zion (2006), p. 18

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