Three Whales Corruption Scandal

The Three Whales Corruption Scandal is a major corruption scandal in Russia involving several furniture companies and federal government bodies which has unfolded since 2000.

2000 smuggling investigation

Three Whales (Tri kita) is a Moscow furniture shopping complex owned by Sergei Zuev. On August 132000, Russian Customs inspectors suspended it and seized a furniture consignment supplied by the companies Bastion and Liga Mars, as they allegedly had smuggled 400 tons of furniture into Russia, while Zuev had not paid $5 million of Customs duty by falsifying the price and weight of imported goods. On October 202000, Captain Pavel Zaitsev filed a criminal case against Liga Mars initiated on September 7 by the Moscow Oblast Directorate of Internal Affairs. [http://www.kommersant.ru/doc.html?docId=704751] [http://www.newizv.ru/news/2006-07-18/50286/]

The Customs inspectors revealed that the Three Whales shop was controlled by Yevgeny Zaostrovtsev, a former chief of now FSB Director Nikolai Patrushev and the father of FSB General Yury Zaostrovtsev which at that time was the Head of the Economic Security Department and a Deputy Director of FSB. [http://www.nupi.no/cgi-win/Russland/krono.exe?4954] [http://www.ng.ru/politics/2006-06-15/1_trikita.html]

Prosecutor General's Office reaction

In November 2000, the Prosecutor General's Office under Vladimir Ustinov halted the investigation and confiscated files related to the case. In December 2000 it charged Captain Pavel Zaitsev with abuse of office and claimed that he allegedly had conducted 12 searches without a prosecutor sanction and had illegally detained two suspects. On September 52002, the Moscow City Court found Zaitsev not guilty on the charges. Later the Supreme Court of the Russian Federation cancelled this decision, and on November 32003 Pavel Zaitsev was sentenced by a Moscow court for two years on probation. [http://www.kommersant.ru/doc.html?docId=704751] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html] , [http://www.ng.ru/politics/2006-06-21/4_trikita.html] Olga Kudeshkina, a judge that took part in the trial, on December 12003, said she was pressured to convict him, but refused to do so. In 2004, Kudeshkina lost her job. [http://www.kommersant.com/page.asp?id=682324] , [http://www.kommersant.ru/doc.html?DocID=709466&IssueId=30215] , [http://www.kommersant.ru/doc.html?docId=670421]

On May 72001, First Deputy Prosecutor General Yury Biryukov citing lack of evidence signed a directive stopping the smuggling investigation. [http://2006.novayagazeta.ru/nomer/2006/45n/n45n-s00.shtml] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html]

In Autumn 2001 the Prosecutor General's Office also accused Chief of the Customs Investigation Directorate Marat Fayzulin and Chief of the Customs Inspection Alexander Volkov with abuse of office and extortion of money from Sergei Zuev and an associate of him. [http://news.kommersant.ru/index-news.html?ext=news&id=27438&id_themes=11&page=1] , but on June 42003 a Moscow court acquitted them. [http://www.kommersant.ru/doc.html?docId=704751] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html] , [http://www.kommersant.ru/doc.html?docId=387025] , [http://lenta.ru/russia/2003/06/04/gtk/]

On October 152001, at a press conference the State Customs Committee claimed that it had discovered a smuggling network allegedly organized by Sergei Zuev. Customs officially charged him with custom duty evasion. [http://www.kommersant.ru/doc.html?docId=704751]

This situation as a whole was widely considered as an episode of the struggle between Boris Yeltsin's "Family" represented by the State Customs Committee chairman Mikhail Vanin, a close ally of Alexander Voloshin and Roman Abramovich, and security services personnel group, known as "siloviki". Vanin has apparently lost the battle, as he left his position in March 2004 during the government reshuffle initiated by Vladimir Putin, when the Customs Committee was included into the Economy Ministry of Russia. [http://www.kommersant.com/page.asp?idr=527&id=673129] , [http://www.sptimes.ru/index.php?action_id=2&story_id=18047]

Parliamentary commission

Two deputies of the State Duma and members of the State Duma Security Committee, Yury Shchekochikhin, a journalist, and Alexander Gurov, Lieutenant General of Interior Affairs, launched a parliamentary inquiry into the case, approved by the State Duma on March 132002. [http://www.duma.gov.ru/search/kmpage/80200016/arc3/post/1.html] , [http://www.polit.ru/news/2002/02/14/569468.html] , [http://www.ng.ru/regions/2002-03-15/4_absurdity.html] , [http://www.rg.ru/Anons/arc_2002/0320/1.shtm] , [http://www.duma.gov.ru/search/kmpage/80200016/arc3/news/42.html] Prosecutor General's Office rejected all the accusations of corruption, claiming that the investigation was closed for legitimate reasons. In April 2002 Shchekochikhin, Gurov, and Nikolay Kovalyov, another State Duma deputy and a former FSB head, asked Vladimir Putin to intervene. At last, the inquiry forced Prosecutor General's Office to resume investigation of the smuggling. A prosecutor from Leningrad Oblast, Vladimir Loskutov, was chosen by President Vladimir Putin personally to lead the investigation of this affair. [http://www.kommersant.ru/doc.html?docId=704751] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html]

Earlier that year on February 182002, in Novaya Gazeta Shchekochikhin published a detailed article on the smuggling affair and corrupting officials in the Interior Ministry and the Prosecutor-General's Office: [http://2002.novayagazeta.ru/nomer/2002/12n/n12n-s07.shtml] , [http://www.duma.gov.ru/csecure/arc3/public/48.html] Immediately after this he received a death threat [http://www.rferl.org/reports/rpw/2003/07/28-160703.asp] [http://www.cdi.org/russia/johnson/6089.htm] [http://www.jamestown.org/publications_details.php?volume_id=25&issue_id=2201&article_id=19181] On June 22003, in that newspaper he published another article where he accused Prosecutor's General Office and Biryukov personally in corruption: [http://2003.novayagazeta.ru/nomer/2003/39n/n39n-s00.shtml]

:"See also Yury Shchekochikhin"

Possible victims

On May 272003, Mikhail Pereverzev, the president of the Furniture Importers Association and a key witness in the affair, was shot dead in a hospital. On July 32003, Yury Shchekochikhin died few days after he had been hospitalized, according to the Russian officials, from a suddenly developed allergy of unknown origin, but his relatives were denied an official medical report about the cause of his illness, and were forbidden to take specimens of his tissues to conduct an independent medical investigation. The possibility that he could been poisoned is widely considered. Also in 2003, Andrey Saenko, another key witness, was severely injured as a result of an assassination attempt. [http://www.newizv.ru/news/2006-07-18/50286/] , [http://www.vremya.ru/2003/96/4/71669.html] , [http://www.polit.ru/news/2003/05/28/618688.html] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html] , [http://2006.novayagazeta.ru/nomer/2006/45n/n45n-s00.shtml]

2006 arrests and government bodies reshuffle

The dismissal of Alexander Zherikhov, head of the Federal Custom Service, as well as some other FSB, Interior Ministry and Prosecutor General's Office officials in May 2006 is linked by many to the Three Whales scandal. [http://www.kommersant.ru/doc.html?docId=704751] On June 2 2006 Prosecutor General of Russia Vladimir Ustinov, who had been in the office since 1999, resigned and became Justice Minister of Russia later that month. A major corruption scandal has unfolded unexpectedly and almost out of public sight. On June 14 Prosecutor General's Office under acting Prosecutor General Yury Chaika reported that it had reopened the furniture contraband investigation going back to 2000 and arrested Sergey Zuev, owner of the Three Whales and Grand furniture retail centers, Andrey Latushkin, Director General of the parent company Alliance-96, Andrey Saenko and two smugglers, Pavel Podsotsky and his wife Irina Podsotskaya, Moscow representatives of a Latvian firm, were arrested for smuggling and custom duty evasion. [http://www.kommersant.com/page.asp?id=682324] , [http://www.kommersant.ru/k-vlast/get_page.asp?page_id=20062426-6.HTM] , [http://www.rg.ru/2006/06/15/kontrabanda-mebelj.html] , [http://lenta.ru/news/2006/06/14/three/] , [http://www.mn.ru/print.php?2006-22-46] , [http://www.ng.ru/politics/2006-06-15/1_trikita.html] , [http://www.vesti7.ru/news?id=8784] , [http://genproc.gov.ru/ru/news/index.shtml?id=4064] , [http://www.lenta.ru/articles/2006/06/15/three/] , [http://www.sptimes.ru/index.php?action_id=2&story_id=18047] Later Yekaterina Leladze, Anatoly Melnichuk, founder of Liga Mars, Valery Belyakov and Pavel Polyakov (by default) were also charged. [http://www.kommersant.ru/doc.html?DocID=734017&IssueId=36175] , [http://www.kommersant.ru/doc.html?docId=712676] , [http://www.lenta.ru/news/2006/10/12/whale/] The businesspeople were charged with grand smuggling by an organized group, exceptionally grand custom duty evasion and grand legalization of smuggled goods by an organized group (art.188 part 4, art. 194 part 2, art. 174 part 3 of the Russian Criminal Code). [http://www.kommersant.ru/index-news.html?ext=news&id=107873] , [http://lenta.ru/news/2006/07/19/kit/] , [http://www.kommersant.ru/doc.html?docId=728008] , [http://lenta.ru/news/2006/12/05/whales/] , [http://www.rg.ru/2006/09/25/chaika-kity.html]

On June 15, in Shanghai, President Vladimir Putin told journalists that he had asked Vladimir Loskutov, a prosecutor from Leningrad Oblast and a former classmate of him, to take on the case, as the President couldn't trust the Moscow offices of law-enforcement agencies. [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html]

On July 7 First deputy Prosecutor General Yury Buiryukov resigned. On September 132006, the Prosecutor General's Office under Yury Chaika announced that it had attained the dismissals of 19 unnamed high-rank state employees involved in the furniture smuggling cases as well as illegal imports of consumer goods from China, although unlike employees of furniture companies, no official has ever been charged with this. Mass media revealed that the officials dismissed around that time had worked in the Moscow and federal offices of FSB Colonel General Sergei Shishin, former Head of the Internal Security Directorate of FSB and current Head of the FSB Activities Support Directorate, Colonel General Vladimir Anisimov, former Head of the Internal Security Directorate of FSB, Lieutenant General Alexander Kupryazhkin, current head of the Internal Security Directorate] , Prosecutor General's Office Prosecutors Dmitry Shokhin and Kamil Kashaev who had prosecuted YUKOS, head of the department for Investigations of Top Importance Cases Vladimir Lyseiko, oversight directorates heads Alexander Kizlyk and Vladimir Titov ] , Moscow Regional Prosecutor's Office, Federal Customs Service and Presidential Executive Office. Deputy heads of the FSB Internal Security Department also figured in the report authored by Viktor Cherkesov. The purge has occurred while FSB head Nikolai Patrushev was on vacations. [http://www.kommersant.com/p706081/r_500/Property_Fund_s_Confistated_Goods_Dealer_Fired/] , [http://www.kommersant.com/p704751/r_1/Mass_Dismissals_at_the_FSB/] , [http://www.kommersant.ru/doc.html?docId=706135] , [http://grani.ru/Politics/Russia/President/m.114307.html] , [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html] Vladimir Vdovin, Deputy Chairman of the Russian Federal Property Fund, has also resigned after 12 years in office on September 192006, officially because of a change of job, but it was rumored that his dismissal was linked to the Three Whales case. [http://www.kommersant.com/p706081/r_500/Property_Fund_s_Confistated_Goods_Dealer_Fired/]

Notes

External links

* [http://rfe.rferl.org/featuresarticle/2006/09/33cc2719-2ad5-4a45-a326-72828b9baf64.html Russia: Corruption Scandal Could Shake Kremlin] by Victor Yasmann. Radio Free Europe/Radio Liberty, September 262006.
* [http://www.grandfs.ru/grand/ Grand Official Site]
* [http://www.3kita.ru/ Three Whales Official Site]