S. HRG. 108–403 COMBATING TRANSNATIONAL CRIME AND CORRUPTION IN EUROPE HEARING BEFORE THE SUBCOMMITTEE ON EUROPEAN AFFAIRS OF THE COMMITTEE ON FOREIGN RELATIONS UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS FIRST SESSION OCTOBER 30, 2003 Printed for the use of the Committee on Foreign Relations ( Available via the World Wide Web: http://www.access.gpo.gov/congress/senate U.S. GOVERNMENT PRINTING OFFICE 92–792 PDF WASHINGTON : 2004 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 13:24 Apr 01, 2004 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 92792 SFORELA1 PsN: SFORELA1 COMMITTEE ON FOREIGN RELATIONS RICHARD G. LUGAR, Indiana, Chairman CHUCK HAGEL, Nebraska JOSEPH R. BIDEN, JR., Delaware LINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland GEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut SAM BROWNBACK, Kansas JOHN F. KERRY, Massachusetts MICHAEL B. ENZI, Wyoming RUSSELL D. FEINGOLD, Wisconsin GEORGE V. VOINOVICH, Ohio BARBARA BOXER, California LAMAR ALEXANDER, Tennessee BILL NELSON, Florida NORM COLEMAN, Minnesota JOHN D. ROCKEFELLER IV, West Virginia JOHN E. SUNUNU, New Hampshire JON S. CORZINE, New Jersey KENNETH A. MYERS, JR., Staff Director ANTONY J. BLINKEN, Democratic Staff Director SUBCOMMITTEE ON EUROPEAN AFFAIRS GEORGE ALLEN, Virginia, Chairman GEORGE V. VOINOVICH, Ohio JOSEPH R. BIDEN, JR., Delaware CHUCK HAGEL, Nebraska PAUL S. SARBANES, Maryland JOHN E. SUNUNU, New Hampshire CHRISTOPHER J. DODD, Connecticut LINCOLN CHAFEE, Rhode Island JOHN F. KERRY, Massachusetts (II) VerDate 11-MAY-2000 13:24 Apr 01, 2004 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 92792 SFORELA1 PsN: SFORELA1 CONTENTS Page Ashley, Mr. Grant D., Assistant Director, Criminal Investigative Division, Federal Bureau of Investigation, Washington, DC ........................................... 27 Prepared statement .......................................................................................... 28 Lee, Dr. Rensselaer W., III, president, Global Advisory Services, McLean, VA .......................................................................................................................... 50 Noble Ventures, ‘‘The Experience of One American Company in Romania,’’ statement submitted for the record by Charles N. Franges, president ........... 59 Pifer, Hon. Steven, Deputy Assistant Secretary of State, Bureau of European and Eurasian Affairs, U.S. Department of State, Washington, DC ................. 6 Prepared statement .......................................................................................... 8 Responses to additional questions for the record from Senator Lugar ........ 63 Schrage, Mr. Steve, Deputy Assistant Secretary of State, Bureau of Inter- national Narcotics and Law Enforcement Affairs, U.S. Department of State, Washington, DC ................................................................................................... 14 Prepared statement .......................................................................................... 17 Shelley, Dr. Louise I., professor and director, Transnational Crime and Cor- ruption Center, American University, Washington, DC ................................... 42 Prepared statement .......................................................................................... 45 Swartz, Mr. Bruce C., Deputy Assistant Attorney General, Criminal Division, U.S. Department of Justice, Washington, DC ................................................... 22 Prepared statement .......................................................................................... 24 Voinovich, Hon. George V., U.S. Senator from Ohio, opening statement ........... 4 (III) VerDate 11-MAY-2000 13:24 Apr 01, 2004 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 92792 SFORELA1 PsN: SFORELA1 VerDate 11-MAY-2000 13:24 Apr 01, 2004 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 92792 SFORELA1 PsN: SFORELA1 COMBATING TRANSNATIONAL CRIME AND CORRUPTION IN EUROPE THURSDAY, OCTOBER 30, 2003 U.S. SENATE, SUBCOMMITTEE ON EUROPEAN AFFAIRS, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. The subcommittee met, pursuant to notice, at 2:41 p.m., in room D–419, Dirksen Senate Office Building, Hon. George Allen (chair- man of the subcommittee), presiding. Present: Senators Allen and Voinovich. Senator ALLEN. Good afternoon. I thank all who are interested in this hearing of the European Affairs Subcommittee. We will be examining the issue of combating transnational crime and corrup- tion in Europe I want to thank all the witnesses in the first panel and the second panel for being with us today. I’m glad to be joined by my colleague who is a leader and knowledgeable and experi- enced insofar as this issue is concerned. He was a key leader in bringing this issue to the attention of the subcommittee and I am happy to open this hearing. Transnational crime is a term that unfortunately is quite famil- iar to Europeans and Americans today. It’s crystal clear to us all here how the criminal elements in Europe and also in other parts of the world affect our daily lives. We need to work together to fight crime such as narcotics trafficking, terrorism and corruption. Today more than ever, crime and corruption cannot be classified as just something here in the United States or in a European na- tion. It is a phenomenon that crosses geographical borders just as easily as e-mail messages over the Internet. And I would like to say here at the outset that the United States considers Europe as our closest allies in the struggle against organized crime and cor- ruption on all levels and in all areas of law. Law enforcement offi- cials in the United States stress the close cooperation that exists between law enforcement agencies in Europe. The purpose of this hearing is to examine these bilateral efforts and to hear suggestions from experts in the field on how we can make them even more effective in combating this criminal activity. But I would also like to say that we in the United States recognize the homegrown problems we face with organized crime and corrup- tion. We have never been shy here in the United States about ad- mitting our own problems. But the difference between American and European societies compared with other societies that are not as free is that European and American societies are built upon the foundation of law and order and the rule of law. Our citizens insist (1) VerDate 11-MAY-2000 13:24 Apr 01, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 92792 SFORELA1 PsN: SFORELA1 2 that law enforcement officials expose crime and corruption to the light of day and punish the criminals. Hopefully we can use our institutions and expertise to help the newly independent countries avoid the mistakes and the harm caused by criminal activity and corruption in those countries. The prevalence of any sort of criminal activity or corruption in the country clearly would inhibit its ability to get investment in that country, thereby inhibiting its ability to attract jobs, as well as ob- viously affect the quality of life of its own citizens. And so while we’re looking at emerging nations whether in Central Europe, Southeastern Europe, Eastern Europe, or wherever it may be in the world, if you don’t have a safe place in which to do business where the rule of law and a concept of property rights and basic security is assured, you’re simply not going to get investment. It’s no different here in the United States. If you have a high crime area, no one is going to want to put a business in that com- munity. No one will want to shop or work in a place where they are worried about criminal activity. And so, this crime is beyond random robberies. We’re going to be examining more than random robberies and those sorts of things that happen from time to time. The criminal elements that we’re talking about, whether in the United States or Europe, are dynamic, they are large, they are ever changing their patterns and their methods of operation. And for this reason, we must be fluid in possibly looking at ways to im- prove our capabilities. To meet this challenge we have created a multitude of bilateral and multilateral initiatives, each focusing on its own particular specialized area of crime. We are honored today to have before the European Affairs Sub- committee representatives from the top United States agencies di- recting these initiatives, as well as representatives from academia and the private sector. We welcome two representatives from the Department of State, Ambassador Steven Pifer, Deputy Assistant Secretary of the European and Eurasian Affairs Bureau. We also have Deputy Assistant Secretary Steve Schrage, from the Bureau of International Narcotics and Law Enforcement. We have two representatives from the Department of Justice, Grant Ashley from the Criminal Investigative Division of the FBI, and Bruce Swartz, Deputy Assistant Attorney General of the Criminal Division. From American University, we welcome Dr. Louise Shelley, who is the director of the Transnational Crime and Corruption Center. And an especially warm welcome to the president of Global Advi- sory Services from McLean, Virginia, Dr. Rensselaer Lee III. I thank all our witnesses for appearing today. I know we look forward to reading and hearing and learning from your expertise and your insight on these issues and these problems facing us in the area