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Tue Jan 29 09:14:54 EST 2008

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WORLD BUSINESS BRIEFING EUROPE

Russia: Gazprom-Ukraine Gas Dispute 

By ANDREW M. KRAMER 

29 January 2008

Late Edition - Final

6

The prime minister of Ukraine, Yulia Tymoshenko, below, demanded that Gazprom, the Russian natural gas monopoly, deal directly with the Ukrainian state oil and gas company rather than through an intermediary as it does now. The demand could unravel a natural gas trade agreement that settled a dispute between Ukraine and Gazprom two years ago. That agreement set up the intermediary, RosUkrEnergo, to buy gas from Gazprom and sell it at a loss to Ukraine and then recover the loss by selling gas in Europe at a higher price or blending gas with lower-cost gas from central Asia. Europe buys about 25 percent of its gas from Gazprom, and about 25 percent of it is shipped through Ukraine. In another sign that the deal may be unwinding, the Russian police last week arrested Semyon Mogilevich, a reputed organized-crime figure with ties to RosUkrEnergo, though on tax-evasion charges unrelated to the Ukrainian gas business. 

Financial Times

Ukraine PM welcomes Mogilevich arrest

Published: January 28 2008 23:36 

By Roman Olearchyk in Brussels and Reuters

Yulia Tymoshenko, the Ukrainian prime minister who is keen to clean up the murky natural gas trade between her country, Russia and central Asia, on Monday said Moscow’s arrest of a reputed crime boss was a sign that the days were numbered for ”corrupt” intermediaries.

Ms Tymoshenko was referring to the arrest of the 61-year old mobster Semyon Mogilevich, who has alleged links to Swiss-registered RosUkrEnergo, a company half owned by Gazprom and 50 per cent controlled by two Ukrainian businessmen.

”We don’t need any shadowy intermediaries,” Ms Tymoshenko told reporters in Brussels while on her first foreign visit after regaining the premier post last year.

Mr Mogilevich was detained by Russian officials last week on tax evasion charges that did not appear to directly involve his alleged role in the gas business. But analysts in Kiev and Moscow have claimed that his arrest signals a shift in Moscow’s support for gas trading intermediaries.

Since regaining the premiership last month, Ms Tymoshenko has resumed a campaign against RosUkrEnergo, which won its monopoly in January 2006 after a price dispute that led Russia to shut off gas to Ukraine in mid-winter. The dispute triggered supply shortages in Europe, which receives most of its Russian gas via Ukraine’s pipeline system.

Ms Tymoshenko told the BBC’s Panorama programme in 2006 that she had ”no doubts whatsoever” that Mogilevich was behind RosUkrEnergo, according to a transcript on the BBC website.

Ms Tymoshenko on Monday refrained from repeating those earlier claims, but insisted that such intermediaries posed an energy security risk to: Ukraine, a key transit country; Europe, a consumer; and Russia, a producer.

A lawyer for Mogilevich has denied his client’s involvement in RosUkrEnergo. Dmytro Firtash, a Ukrainian billionaire who owns 45 per cent of RosUkrEnergo, has also denied having business relations with Mr Mogilevich. 

Ms Tymoshenko’s Brussels visit comes at a critical time in relations between Ukraine, the European Union and Russia.

Kiev’s western integration drive, originally set in motion after the pro-democracy Orange Revolution of 2004, has received a fresh start after pro-western forces backing Ms Tymoshenko and Viktor Yushchenko, Ukraine’s president, reunited to win a snap parliamentary poll last autumn.

Ms Tymoshenko stressed in Brussels that her country was dedicated to a free trade pact with the European Union. Formal negotiations are to kick off after Kiev joins the World Trade Organisation, a long-delayed feat that is expected to happen in February.

”Ukraine is getting closer and closer to the European Union,” José Manuel Barroso, European Commission president, said after with his meeting with Ms Tymoshenko on Monday.

Financial Times

Russia holds suspect linked to gas trade with Ukraine

By Catherine Belton in Moscow and Roman Olearchyk in Kiev 

Published: January 26 2008 

Russia has arrested Semyon Mogilevich, a suspected organised crime boss, for large-scale tax evasion, moving against a man wanted by the FBI for racketeering, money-laundering and wire fraud.

Mr Mogilevich, a 61-year-old Russian citizen, is also believed by Ukrainian politicians to play a significant role in the multi-billion-dollar gas trade between Moscow and Kiev.

About 50 armed commandos wearing masks detained Mr Mogilevich and Vladimir Nekrasov, the owner of Arbat Prestige, a leading Moscow cosmetics retailer, as they left a Moscow office building on Wednesday evening, Mr Mogilevich's lawyer, Alexander Pogon-chenkov, said yesterday. They are now in prison after a Moscow court on Thursday sanctioned their arrest, he said.

A spokeswoman for the interior ministry said Mr Nekrasov and Mr Mogilevich, who is currently going by the name of Sergei Schnaider and who has as many as seven different surnames, were detained as part of a criminal case into large-scale tax evasion. She declined to disclose the sum.

Mr Mogilevich has been living freely in Moscow despite being on the FBI's most wanted list since 2003. Robert Mueller, FBI chief, in a 2005 speech accused Mr Mogilevich of setting up a "powerful organised crime enterprise" that "engaged in drug and weapons trafficking, prostitution and money laundering, and organised stock fraud in the United States and Canada in which investors lost over $150m [€102m, £76m]".

Mr Mogilevich's lawyer in Israel, Zeev Gordon, said Mr Mogilevich denied any wrongdoing. Alexander Dobrovinsky, Mr Nekrasov's lawyer, said his client denied any wrongdoing and any business ties with Mr Mogilevich.

Oleksandr Turchinov, Ukraine's first deputy prime minister, led an investigation in 2005, when he headed the security services, into possible links between Mr Mogilevich and Rosukren-ergo, the Swiss-registered gas trader, which has a monopoly on gas supplies to Ukraine. The inquiry was not completed. Rosukren-ergo is jointly owned by the Russian state-run Gazprom and a Ukrainian businessman, Dmytro Firtash.

Yesterday, a spokesman for Mr Firtash said he was on a business trip and unavailable for comment. He added that Group DF, Mr Firtash's holding company, had never had any interest in Arbat Prestige nor any links with Mr Nekrasov or Mr Mogilevich. Mr Gordon said Mr Mogilevich denied any ties with Rosukrenergo.

Mr Mogilevich's arrest this week sparked questions about a possible shake-up in the Russia-Ukraine gas trade. Russia's state-run television gave wide airing to his arrest.

Yulia Tymoshenko, who at the end of last year won back her position as Ukraine's prime minister, has long fought to remove Rosukrenergo from the gas business, calling it a "criminal canker" on the side of the Ukrainian-Russian gas trade.

Dmitry Medvedev, Vlad-imir Putin's preferred successor as Russian president and chairman of Gazprom, called last year for Ros-ukrenergo to be eliminated.

Stanislav Belkovsky, a political adviser who worked as an aide to Ms Tymoshenko in 2005, said Mr Mogilevich's arrest over the tax evasion allegations was "just an excuse".

"The real reason is gas," he said, adding that Ms Tymo-shenko had been lobbying Kremlin factions jealous of Rosukrenergo's status.

Mr Pogonchenkov said he could not rule out the possibility that the arrest of his client was connected with Ms Tymoshenko's appointment. "I can't exclude this," he said. "This is an advantageous step for Tymoshenko."

But he could not confirm any details of Mr Mogilevich's interests in the gas business, saying only that he was a criminal lawyer and did not delve into Mr Mogilevich's corporate business. Mr Gordon ruled out any link. "I don't believe it's connected to gas. If it's about gas, why arrest Nekrasov?" he said.

Mr Nekrasov was arrested on suspicion of orchestrating a tax evasion scheme by three suppliers to Arbat Prestige, while Mr Mogilevich was arrested on suspicion of helping mastermind the scheme, Mr Pogon-chenko said.

Mr Pogonchenkov said his client had maintained a close friendship with Mr Nekrasov over the past three years, but otherwise had nothing to do with Arbat Prestige.

"My client is not a shareholder or an employee of Arbat Prestige. His only contact with Arbat Prestige is when he goes there to shop and when he sometimes sees Nekrasov," he said. "They have not produced one bit of evidence."

Russian prosecutors must file charges within 10 days of the pair's arrest.

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Politics & Economics: Russia Arrests Alleged Mobster Tied to Natural-Gas Trade 

By Alan Cullison in Moscow and David Crawford in Berlin 

26 January 2008

A4

Russian police arrested an alleged mafia boss who U.S. officials suspect has played a key role in the multibillion-dollar natural-gas trade through Ukraine to Western Europe. 

U.S. officials say Semion Mogilevich is architect of a powerful Eastern European organized crime ring. Since the 1990s, he has been a minor irritant to Russian-U.S. relations. 

Russian officials ruled out the extradition of Mr. Mogilevich, 61, who has been wanted in the U.S. for years. Russian state TV reported he was living comfortably near Moscow as recently as 2005. Officials said his arrest in Moscow is unrelated to a U.S. criminal case and that he was detained late Wednesday in Moscow in connection with tax evasion at a top cosmetics retailer, Arbat Prestige.

Mr. Mogilevich's lawyer denied the tax-evasion charges and said that his client had nothing to do with the perfume business. The lawyer, Alexander Pogonchikov, said Mr. Mogilevich and the other suspect, Arbat Prestige owner Vladimir Nekrasov, were friends and took a common interest in collecting antiques and art. 

He said Mr. Mogilevich, who went under the name Sergei Shnaider, had taken the name of his most recent wife. "It has nothing to do with any attempt to hide," Mr. Pogonchikov said of the name change. Police said Mr. Mogilevich had more than a dozen aliases and passports from several countries. Late Friday, Russian news agencies reported that police detained Olga Shnaider, whom they identified as Mr. Mogilevich's ex-wife. 

In Washington, U.S. officials said they believe the arrest is related to Kremlin intrigues involving the gas trade. The Justice Department's Organized Crime and Racketeering Section is investigating possible links between Mr. Mogilevich and a Ukrainian-Russian trading company that is central to the multibillion-dollar trade in Russian natural gas across Ukraine and on to Europe. His representatives and the companies involved have denied any ties. 

In Philadelphia, a federal court charged him in 2003 in a 45-count racketeering and money-laundering indictment of masterminding a stock fraud using a web of shell companies in Europe. U.S. officials believe Mr. Mogilevich used $150 million of his winnings from the U.S. to invest in the gas business. 

In rare interviews, Mr. Mogilevich has scoffed at the U.S. charges. In 1999, after U.S. officials said he was involved in the laundering of billions of dollars through the Bank of New York, Mr. Mogilevich told a Moscow newspaper that "I can only dream of such money . . . All these accusations are the nightmarish delirium of the FBI." 

Russian state TV aired police video of his arrest Friday, showing dozens of officers, wearing ski masks and wielding submachine guns, shortly after they closed in on Mr. Mogilevich and his bodyguards outside a Moscow hotel-and-office complex. 

Balding and overweight, Mr. Mogilevich was wearing a blue-and-white sweat suit and a leather jacket. Television later showed him in a glass defendant's cage in court, where he was arraigned. 

Kremlin-watchers say the arrest of Mr. Mogilevich could mark a new round of power struggles between competing Kremlin clans in the run-up to presidential elections. 

"The arrest of someone this big had to come from the president himself or from the circle around the president," said Vladimir Ovchinsky, former director of Russia's Interpol bureau. 

Until recently, Mr. Mogilevich had probably been protected by someone in the government, Mr. Ovchinsky said, and his arrest means a shift in the power in the Kremlin. "I think that it is a fight at the top," he said. 

The Washington Post

Election Officials Bar Putin's Ex-Premier From Presidential Race

January 28, 2008

…."Kasyanov had no chance at all," Zyuganov said. "The Orange leprosy, as in Ukraine <http://www.washingtonpost.com/ac2/related/topic/Ukraine?tid=informline> , will not pass here." 

Zyuganov was referring to the Orange Revolution in neighboring Ukraine in 2004, which led to the election of a pro-Western president, Viktor Yushchenko <http://www.washingtonpost.com/ac2/related/topic/Viktor+Yushchenko?tid=informline> . Some in the Communist Party here echo the Kremlin's sentiment that the street protests that swept Yushchenko to power resulted from Western machinations, not popular will. And Kasyanov, along with other opponents of the Kremlin, is routinely described as a puppet of the West. ….

Link to full article:  http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012700248.html

The Washington Post

A Better Way to Grow NATO

By Ronald D. Asmus
Monday, January 28, 2008

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012701611_pf.html

Here an F.O.B., There an F.O.B.

Since leaving office, Bill's gotten by with a little help from his friends. Now he's re-examining his circle.

By Michael Isikoff and Mark Hosenball

NEWSWEEK

Updated: Jan 26, 2008

Last June, Bill Clinton took a break from helping his wife run for president to take care of some business of his own. He jetted off to the Black Sea resort of Yalta for an international conference sponsored by one of his good friends: Victor Pinchuk, a billionaire steel magnate and one of the richest men in Ukraine. In recent years, Pinchuk has become a fixture in Clinton's world, in part because Pinchuk has contributed millions of dollars to the Clinton Foundation, the former president's charity that fights AIDS and poverty. Pinchuk's generosity paid dividends. He was a guest at the inauguration of Clinton's presidential library in Little Rock, and he attended Clinton's exclusive 60th birthday bash in New York.

Pinchuk won an even bigger favor when Clinton agreed to speak at the Yalta conference. Clinton dazzled the audience with a powerful address about the global challenges facing Ukraine. But he also inadvertently caused a stir when he was embraced by Pinchuk's father-in-law, Ukraine's former president Leonid Kuchma, whose authoritarian rule had been condemned by the State Department. Three years ago, a Ukrainian government investigation linked Kuchma's regime to the decapitation in 2000 of dissident journalist Georgy Gongadze. When Gongadze's widow, Myroslava, saw a newspaper photo of Clinton and Kuchma at the conference, "I wanted to throw up," she told NEWSWEEK. Clinton, she says, was being used by Pinchuk "to clean up and legitimize Kuchma's legacy." (A Clinton spokesman declined to comment on the ex-president's encounter with Kuchma.)

If Hillary Clinton had been seen with a discredited former autocrat, it would have made front pages across the country. But Bill's Yalta visit went unnoticed outside Ukraine. The trip illustrates the unusual position the former president is in. He is his wife's top political adviser, and Hillary does little to downplay the idea that he would be a notable, if unofficial, presence in her administration. In speeches, she says that she would deploy her husband as a roving ambassador. Yet unlike Hillary, who must report the names of her campaign contributors and how much they give, Bill Clinton is a private citizen and does not have to disclose most details about his charitable and business ventures. His private dealings raise inevitable questions about who might come seeking favors if he and Hillary move back into the White House…

Link to full article:  http://www.newsweek.com/id/105650

NOTE:

If you wish to receive a soft-cover copy of the Helsinki Commission April 25, 2006 Chornobyl hearing with testimony from Ukraine’s Ambassador to the U.S. Oleh Shamshur, State Department official Steve Rademaker, and Prof. David Marples, including statements by Helsinki Commissioners Chris Smith, Ben Cardin, Hillary Clinton and Sam Brownback, please respond to me with the address to which you would like it sent.  A limited number of copies are still available.

Also, the hearing can be downloaded by going to the Commission’s website:  www.csce.gov <http://www.csce.gov/> .  Click on the map of Ukraine to view this hearing and various Commission Ukraine-related resolutions, reports, statements, press releases and other initiatives. 

OD

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