OCCRP Weekly News Roundup

In an announcement that seemed to surprise no one, Putin announced on Saturday his intention to be United Russia’s candidate for president in the March 2012 general elections.  Medvedev, who was famously described by US diplomats in leaked cables as the Robin to Putin’s Batman, will become Prime Minister.

Following his election in May 2008, Medvedev said one of his biggest priorities was clamping down on corruption.  In his inauguration speech, he made rule of law a priority. “I believe my most important aims will be to protect civil and economic freedoms....We must fight for a true respect of the law.”  In July of the same year, Medvedev announced a presidential anti-corruption council and approved a plan to create state-level anti-corruption bodies.

But according to international watchdogs, corruption at all levels of government has continued unabated.

According to Transparency International, bribery costs Russia $300 billion annually, almost 18 percent of the country’s gross domestic product.  The corruption watchdog rated the country 154 out of 180 countries in its 2010 index, tying it with Yemen, Congo-Brazzaville, and Guinea.

In US State Department cables leaked last year, US Ambassador to Russia John Beyrle wrote that the Moscow “government operates more as a kleptocracy than a government” and that “everything depends on the Kremlin ... [former Moscow mayor Yuri] Luzhkov, as well as many mayors and governors, pay off key insiders in the Kremlin.”

The cables detailed collaboration between top mafia bosses and Russian spies, alleged parallel tax systems, police protection for criminal networks, and close relationships between prosecutors and judges, The cables speculated that Putin had hidden “illicit proceeds” from his activities in bank accounts overseas.

Despite being aware of large-scale corruption, international business will be pleased by Mr. Putin’s announcement, because investors will know what to expect, according to a report released by the Eurasia Group.

“Predictability will at least in the short-term reassure investors and improve market sentiment,” the report’s author, Cliff Kupchan, a senior analyst with the consulting firm, wrote.

Predictability is exactly the word to use for Putin 2.0—his new reign could last until 2024, which would make him one of the longest serving Russian leaders.

The New York Times yesterday quoted the Economist Intelligence Unit’s former Soviet specialist Laza Kekic, as saying Mr. Putin’s candidacy announcement was “a retrograde, and indeed farcical step, that is incompatible with economic and political progress in Russia,” putting the country on track to become a “third-world petrokleptocracy.”

Candidate Putin will also have to work to combat the image that he is helping petrol magnates at taxpayer’s expense.  He denied allegations this week that he helped Gunvor, an oil company owned by a friend, become the worlds third largest.

Petrol will be an important topic in Putin’s future presidency, as the global financial crisis has pushed rates down, challenging Russia to diversify its economy or risk economic stagnation.

Turkey: Prosecutor Requests 171 Years for Doctor Accused of Organ Trafficking in Kosovo

A prosecutor has asked a Turkish court to sentence Yusuf Sonmez, who was indicted earlier this year for organ trafficking and forming an illicit criminal organization, to 171 years behind bars.

Sonmez allegedly conducted at least 11 organ removal surgeries in Pristina, Kosovo, at a private clinic, and prosecutors say the organs were sold in Israel.

Prosecutors asked for the same sentence for the Israeli intermediary Moshe Harel, reports B92.

EULEX, the European Union body that oversees Kosovo, also issued an indictment for Sonmez, but Turkey said he cannot be extradited.  The body is also investigating claims that Kosovo Prime Minister Hashin Thaci was involved in organ trafficking during the 1999 war there.  Thaci denied the charges.

Romania: Corrupt Referees

Romania has added its name to the list of countries whose football associations are plagued by the perception of corruption in 2011. On Sunday, Vasile Avram, leader of the Romanian Referees Commission, was arrested for allegedly accepting bribes in exchange for appointing referees who would look favorably on a first division football club, FCM Tirgu Mures.

Avram, accused of receiving €19,000 in May, was scheduled to appoint referees for 2011-2012 championship matches.  He will be detained for 29 days.  His lawyers have appealed the decision.

The last chief referee was also arrested in 2009 for corruption.

Mexico: Cartels Target Online Activists

Drug Cartel operatives in Mexico have started targeting individuals who publicly criticize them through new media.  Reuters carries a report about why the narco-traffickers have been trying to silence—permanently—those who denounce their violence on web portals meant to spread awareness about cartel activities and use virtual community organizing to bring attention to instances of violence.

Maria Macias, a woman who had been trying to encourage other members of an online forum to resist working for cartels, was found mutilated in the city of Nuevo Laredo.   Writes Reuters:

"Keep speaking out," she wrote last Thursday under the handle "NenaDLaredo" (or Laredo Girl), according to messages still visible on the site, urging readers to catch the "ratzzz" -- an apparent reference to the brutal Zetas drug gang.

Her mutilated body was found on Saturday morning at a busy intersection, next to computer keyboards and a sign saying: "OK Nuevo Laredo en Vivo and social networks, I am Laredo Girl and I am here because of my reports and yours."

It was signed ZZZZ.

German Business Not Interested in Investing in Ukraine, Citing Growing Corruption

German businesses will not show interest in investing in Ukraine until transparency improves, the German Ambassador to Ukraine, Hans-Jurgen Heimsoeth told Moloda, a Ukrainian media outlet.

“I unfortunately do not see any signs of German investors’ interest in Ukraine. Moreover, there may even be cases of withdrawal of investments, as legal uncertainty is too great, and the actions of regional authorities are self-willed. Therefore, German companies find better conditions in other countries,” he said.

The Ambassador said it was unfortunate that “the opacity of economic activity remains consistently high” in Ukraine, and that the privatization processes are very difficult to understand.

He said he welcomed the government’s effort at reforms, especially of VAT refunds.

VALERIE HOPKINS