'Virtual Mafia States': Russian Mafia an International Concern for US Diplomats

By Uwe Klußmann

Leaked embassy cables show US diplomats are concerned about the growing power of Russian organized crime and believe it has contacts with the highest levels of government in Moscow.

US diplomats believe that organized crime connections are deep in Moscow. Zoom
AP

US diplomats believe that organized crime connections are deep in Moscow.

The secret embassy reports read like descriptions of a small banana republic. The mayor of the capital city allegedly has "connections to the criminal world," a few of his friends, including members of parliament, are said to be little more than "bandits," with city officials supposedly "requiring bribes from businesses attempting to operate in the city." The mayor, US diplomats allege, "oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behavior."

The US cable, dated Feb. 12, 2010, originated from one of the world's largest capitals, Moscow. Russian President Dmitry Medvedev fired Moscow Mayor Yuriy Luzhkov at the end of September because he is no longer trusted by the government. Nevertheless, the memos documented by the American diplomats show how the mafia appears to be deeply anchored in Russian society and to have ties with the government. US diplomats believe that some criminal masterminds have the blessing of people in the Kremlin and security services.

Even a tough approach on the part of Western investigators has done little harm to Moscow's mafiosi, a fact supported, for example, by memos from the US embassy in Madrid. During the summer and autumn of 2008, Spanish investigators conducted home raids and arrested a number of suspected members of the Russian mafia.

In October 2008, they raided the Mallorca vacation mansion of a Russian named Vladislav Reznik and issued an arrest warrant. Among other crimes, the Spanish suspected he was involved in money-laundering, an accusation Reznik denies. And the arrest warrant meant little, anyway, because the man lives in Moscow and has no reason to fear that Russian authorities would extradite him. He is the chair of the financial markets committee in the Duma, Russia's parliament. Prime Minister Vladimir Putin refers to him using the term of endearment "Slava," Russian for glory. The Russian prime minister has made it possible for the multimillionaire to rise to the executive board of his United Russia party and to become the deputy chairman of the party's group in the Duma.

Little More than 'Optimistic Statements'

The "public declarations by senior Spanish officials" in mid-2008 that they had successfully investigated and "decapitated" the Russian mafia in Spain were little more than "optimistic statements made in a moment of euphoria that did not reflect the current reality," an embassy report dated October 2009 read.

A Spanish national court prosecutor responsible for dealing with corruption and organized crime shared his views with the US ambassador in January 2010 after spending several years investigating the Russian mafia, and his conclusion sounds devastating. The investigator complained that it is bad enough that the "Eurasian mafia" retains the "best attorneys and law firms" in Spain. Even worse, though, he complained, is how deeply entangled the governments of Russia, Belarus and Chechnya are in organized crime. They are "virtual 'mafia states'," the cable states. And Ukraine is on its way to becoming one, it says.

"For each of those countries," the top prosecutor alleged, "one cannot differentiate between the activities of the government and organized crime groups." He said he believed that the Russian domestic intelligence agency once run by Putin, the FSB, is "absorbing" major mafia criminals.

The "Russian mafia," the Spaniard complained, already has "tremendous control" over "certain strategic sectors of the global economy," such as aluminium production. The fact that mafia clans are also powerful in Russia's provinces, is also made clear in reports from the US Consulate in Vladivostok. The port city on the Pacific Ocean is, according to the cables, an El Dorado for crooks.

'Corruption and Complicity'

"Fishing is often said to bet he most criminalized industry in the Russian Far East," one report from the US Consulate assesses. In the area, which shares borders with both China and North Korea, the diplomats also see the most illegal logging, with the "largest illegal cutting operations in Russia," according to a cable dated January 2009, often thanks to "corruption and complicity by the authorities."

Even 6,600 kilometers further to the west, Russia still appears to be far from becoming a country that observes the rule of law, according to a dossier from the Moscow Embassy about the Russian constituent Republic of Chechnya. The leadership style of President Ramzan Kadyrov is based on the "organization of corruption," the Americans claim.

The US diplomats suspect that Kadyrov has a "drive to eliminate potential rivals," and that he uses mafia methods to do so. This has enabled him to become the "strongest figure in the Caucasus." Kadyrov also has the support of the Kremlin. Presidential Administration Deputy Vladimir Surkov, whose father is Chechen, the memo claims, has "close ties to Kadyrov."

Many of the men who are observed with distrust by America's diplomats maintain the best possible contacts to Israel. One former leader of the Russian Jewish community, the US diplomats report, said that the Russian government hoped to use Jews who had emigrated to Israel as a "bridge between their homeland and adopted countries." Perhaps they could provide opportunities for investment and "give Russia access to Israeli technology."

'Murky, High-Stakes Gas Deals'

But there's also a dark side to trade and relations between Russia and Israel, the US Ambassador in Tel Aviv sums up in a May 2009 dispatch. "Many Russian oligarchs of Jewish origin and Jewish members of organized crime groups have received Israeli citizenship, or at least maintain residences in the country," the ambassador writes. Estimates provided by sources cultivated by the Americans within Israel indicate that within a short number of years, Russian organized crime groups in the country have "laundered as much as USD 10 billion through Israeli holdings."

Originals: The Key Russian Underworld Cables
Click on the headlines below to read the full texts...
Feb. 12, 2010 -- Moscow
XXXXXX: Redacted by the editors. Important note on the dispatches...

<<248674>> 02.12.2010 15:39 10MOSCOW317 Embassy Moscow SECRET

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S e c r e t section 01 of 03 moscow 000317

Sipdis

E.o. 12958: decl: 02/11/2020 Tags: pgov, prel, phum, pinr, econ, kdem, kcor, rs Subject: the luzkhov dilemma

Classified By: Ambassador John R. Beyrle. Reason: 1.4 (b), (d).

1. (C) Summary: Moscow Mayor Yuriy Luzhkov remains a loyal member of United Russia, with a reputation for ensuring that the city has the resources it needs to function smoothly. Questions increasingly arise regarding Luzhkov's connections to the criminal world and the impact of these ties on governance. Luzhkov remains in a solid position due to his value as a consistent deliverer of votes for the ruling party. Unfortunately, the shadowy world of corrupt business practices under Luzhkov continues in Moscow, with corrupt officials requiring bribes from businesses attempting to operate in the city. End Summary.

Overview: The Kremlin's Luzhkov Dilemma ---------------------------------------

2. (C) Moscow Mayor Yuriy Luzhkov is the embodiment of political dilemma for the Kremlin. A loyal, founding member of United Russia and a trusted deliverer of votes and influence for the ruling party and its leader, Prime Minister Putin, Luzhkov's connections to Moscow's business community -- the big and legitimate as well as the marginal and corrupt -- has enabled him to call for support when he needs it, to deliver votes for United Russia, or to ensure that the city has the resources it needs to function smoothly. Luzhkov's national reputation as the man who governs the ungovernable, who cleans the streets, keeps the Metro running and maintains order in Europe's largest metropolis of almost 11 million people, earns him a certain amount of slack from government and party leaders. He oversaw what even United Russia insiders acknowledge was a dirty, compromised election for the Moscow City Duma in October, and yet received only a slap on the wrist from President Medvedev.

3. (C) Muscovites are increasingly questioning the standard operating procedures of their chief executive, a man who, as of 2007, they no longer directly elect. Luzhkov's connections to the criminal world and the impact that these ties have had on governance and development in Moscow are increasingly a matter of public discussion. Although Luzhkov was successful in winning court-ordered damages from opposition leader Boris Nemtsov for his recent publication "Luzhkov: An Accounting," Nemtsov and his Solidarity-movement allies were heartened by the fact that the judge did not award damages on the basis of the corruption accusations themselves, but rather on a libel technicality.

4. (C) Few believe that Luzhkov will voluntarily relinquish his post prior to 2012, when the Moscow City Duma must submit a list of mayoral candidates to Medvedev for his selection. United Russia will probably call on Luzhkov's political machine and his genuine public support to deliver votes for them in the 2011 State Duma elections, as well as the 2012 Presidential contest. With no apparent successor in line, and with no ambitions beyond remaining mayor, Luzhkov is in a solid position. The evidence of his involvement -- or at least association -- with corruption remains significant. This cable presents that side of Luzhkov -- one that bears not only on Luzhkov and his handling of local politics, but on Putin and Medvedev as they move toward the 2012 elections.

Background on Moscow's Criminal World -------------------------------------

5. (C) The Moscow city government's direct links to criminality have led some to call it "dysfunctional," and to assert that the government operates more as a kleptocracy than a government. Criminal elements enjoy a "krysha" (a term from the criminal/mafia world literally meaning "roof" or protection) that runs through the police, the Federal Security Service (FSB), Ministry of Internal Affairs (MVD), and the prosecutor's office, as well as throughout the Moscow city government bureaucracy. Analysts identify a three-tiered structure in Moscow's criminal world. Luzhkov is at the top. The FSB, MVD, and militia are at the second level. Finally, ordinary criminals and corrupt inspectors are at the lowest level. This is an inefficient system in which criminal groups fill a void in some areas because the city is not providing some services.

6. (C)xxxxx, told us that Moscow's ethnic criminal groups do business and give paybacks. It is the federal headquarters of the parties, not the criminal groups, who decide who will participate in politics. xxxxx argued that the political parties are the ones with the political clout; therefore, they have some power over these criminal groups.

Moscow 00000317 002 of 003

Crime groups work with municipal bureaucrats, but at a low level. For example, the Armenians and Georgians were formerly heavily involved in the gambling business before city officials closed the gambling facilities. These ethnic groups needed protection from law enforcement crackdowns, so they sought cooperation with the municipal bureaucrats. In such scenarios, crime groups paid the Moscow police for protection.

Luzhkov's Links to Criminal Figures -----------------------------------

7. (S) xxxxx, told us that Luzhkov's wife, Yelena Baturina, definitely has links to the criminal world, and particularly to the Solntsevo criminal group (widely regarded by Russian law enforcement as one of the most powerful organized crime groups in Russia). According to the Internet article, "On the Moscow Group," Vladimir Yevtushenko, the head of the company Sistema, is married to Natalya Yevtushenko, Baturina's sister. Sistema was created with Moscow city government-owned shares, and Sistema initially focused on privatizing the capital's real estate and gas. Sistema's president, Yevgeny Novitsky, controlled the Solntsevo criminal gang. Today, Sistema has spun off into various companies, which implement projects that typically include 50 percent funding from the Moscow city government.

8. (S) xxxxx, Luzhkov used criminal money to support his rise to power and has been involved with bribes and deals regarding lucrative construction contracts throughout Moscow. xxxxx told us that Luzhkov's friends and associates (including recently deceased crime boss Vyacheslav Ivankov and reputedly corrupt Duma Deputy Joseph Kobzon) are "bandits." xxxxx told us that he knew this because he formerly had contacts in these criminal groups, but many of his contacts have since been killed. xxxxx said that the Moscow government has links to many different criminal groups and it regularly takes cash bribes from businesses. The people under Luzhkov maintain these criminal connections. Recently, ultranationalist LDPR opposition party leader Vladimir Zhirinovskiy strongly criticized Luzhkov and called for him to step down, claiming that Luzhkov's government was the "most criminal" in Russian history. This remarkable denunciation, carried on state TV flagship Channel One, was widely seen as an indirect Kremlin rebuke of Luzhkov.

9. (S) xxxxx told us everyone knows that Russia's laws do not work. The Moscow system is based on officials making money. The government bureaucrats, FSB, MVD, police, and prosecutor's offices all accept bribes. xxxxx stated that everything depends on the Kremlin and he thought that Luzhkov, as well as many mayors and governors, pay off key insiders in the Kremlin. xxxxx argued that the vertical works because people are paying bribes all the way to the top. xxxxx told us that people often witness officials going into the Kremlin with large suitcases and bodyguards, and he speculated that the suitcases are full of money. The governors collect money based on bribes, almost resembling a tax system, throughout their regions. xxxxx described how there are parallel structures in the regions in which people are able to pay their leaders. For instance, the FSB, MVD, and militia all have distinct money collection systems. Further, xxxxx deputies generally have to buy their seats in the government. They need money to get to the top, but once they are there, their positions become quite lucrative money making opportunities. Bureaucrats in Moscow are notorious for doing all kinds of illegal business to get extra money.

10. (S) According xxxxx, Luzhkov is following orders from the Kremlin to not go after Moscow's criminal groups. For example, xxxxx argued that it was only a public relations stunt from Putin to close gambling. In contrast to xxxxx said he did not see the sense in suitcases of money going into the Kremlin since it would be easier to open a secret account in Cyprus. He speculated that the Moscow police heads have a secret war chest of money. xxxxx said that this money is likely used to solve problems that the Kremlin decides, such as rigging elections. It can be accessed as a resource for when orders come from above, for example, for bribes or to pay off people when necessary. xxxxx postulated that the Kremlin might say to a governor that he can rule a certain territory but in exchange he must do what the Kremlin says.

11. (C) Notwithstanding Luzhkov's solid position, some of our contacts believe that cracks have appeared in his armor, due

Moscow 00000317 003 of 003

to his corrupt activities. xxxxx told us that Luzhkov has many enemies because his wife has the most lucrative business deals in Moscow and many people think Luzhkov has received too much money. xxxxxxxxxxxx was credited with removing long-standing Governor Yegor Stroyev from Orel. xxxxx asserted that Luzhkov is "on his way out," although he acknowledged that the Kremlin has not identified a suitable replacement yet. Issues such as corruption and traffic congestion have, to a certain degree, eroded Luzhkov's popularity. Putin, xxxxx, will likely pick the quietest and least expected person to replace Luzhkov.

In Moscow, Everyone Needs a "Krysha" ------------------------------------

12. (C) According to many observers, the lawless criminal climate in Russia makes it difficult for businesses to survive without being defended by some type of protection. xxxxx explained how bribes work in Moscow: a cafe owner pays the local police chief via cash through a courier. He needs to pay a certain negotiated amount over a certain profit. The high prices of goods in Moscow cover these hidden costs. Sometimes people receive "bad protection" in the sense that the "krysha" extorts an excessive amount of money. As a result, they cannot make enough of a profit to maintain their businesses. If people attempt to forego protection, they will instantly be shut down. For example, officials from the fire or sanitation service will appear at the business and invent a violation. According to xxxxx everyone has bought into the idea of protection in Moscow, so it has become a norm. In general, Muscovites have little freedom to speak out against corrupt activities and are afraid of their leaders.

13. (C) xxxxx explained that Moscow business owners understand that it is best to get protection from the MVD and FSB (rather than organized crime groups) since they not only have more guns, resources, and power than criminal groups, but they are also protected by the law. For this reason, protection from criminal gangs is no longer so high in demand. Police and MVD collect money from small businesses while the FSB collects from big businesses. According to xxxxx the FSB "krysha" is allegedly the best protection. xxxxx told us that, while the MVD and FSB both have close links to Solntsevo, the FSB is the real "krysha" for Solntsevo. This system is not an incentive for smaller businesses and nobody is immune; even rich people who think they are protected get arrested. According to Transparency International's 2009 survey, bribery costs Russia USD 300 billion a year, or about 18 percent of its gross domestic product. xxxxx argued that the "krysha" system has led to an erosion of police internal discipline. For instance, young police officers spend their money buying luxury vehicles that a normal worker could never afford.

Comment -------

14. (S) Despite Medvedev's stated anti-corruption campaign, the extent of corruption in Moscow remains pervasive with Mayor Luzhkov at the top of the pyramid. Luzhkov oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behavior. Putin and Medvedev's dilemma is deciding when Luzhkov becomes a bigger liability than asset. While public sentiment against Luzhkov has grown since the "tainted" elections in October 2009, United Russia's leadership knows that he has been a loyal supporter who can deliver voter support. Ousting Luzhkov before he is ready to go could create major difficulties because he could link others in the government to the corruption. While reforming Luzhkov's questionable activities might seem like the right thing to do, for now keeping him in place, efficiently running the city, is United Russia's best option. Ultimately, the tandem will put Luzhkov out to pasture, like it has done with fellow long-term regional leaders like Sverdlovsk oblast governor Edward Rossel and Tatarstan President Mintimir Shaymiyev.

Beyrle
May 15, 2009 -- Tel Aviv
XXXXXX: Redacted by the editors. Important note on the dispatches...

<<207278>> 5/15/2009 14:14 09TELAVIV1098 Embassy Tel Aviv UNCLASSIFIED

VZCZCXYZ0018 RR RUEHWEB

DE RUEHTV #1098/01 1351414 ZNR UUUUU ZZH (CCY AD66A605 MSI9229-632) R 151414Z MAY 09 ZDS FM AMEMBASSY TEL AVIV TO RUEHC/SECSTATE WASHDC 1845 INFO RUEHJM/AMCONSUL JERUSALEM 2041 RUCNFB/FBI WASHDC//INTD/CTD/CT WATCH// RHMFIUU/US CUSTOMS AND BORDER PROTECTION WASHDC RUEAHLC/HOMELAND SECURITY CENTER WASHDC 0068 RUEHRO/AMEMBASSY ROME 7509 TAGS: CVIS, SNAR, CMGT, KFRD, KCOR, KCRM, KTIP, PINR, IS SUBJECT: ISRAEL: A PROMISED LAND FOR ORGANIZED CRIME?

Unclas tel aviv 001098

C o r r e c t e d c o p y (corrected addee)

Dept for ca/vo/l/c; ca/vo/l/a; ca/fpp sarah sexton; inr/tipoff; ds ofac rome for dhs/ice

Ca/fpp: please pass to doj lisa holtyn and bruce ohr sipdis

E.o. 12958:n/a Tags: cvis, snar, cmgt, kfrd, kcor, kcrm, ktip, pinr, is Subject: israel: a promised land for organized crime?

Summary ---------

1. (SBU) Organized crime (OC) has longstanding roots in Israel, but in recent years there has been a sharp increase in the reach and impact of OC networks. In seeking a competitive advantage in such lucrative trades as narcotics and prostitution, Israeli crime groups have demonstrated their ability and willingness to engage in violent attacks on each other with little regard for innocent bystanders. The Israeli National Police (INP) and the courts have engaged in a vigorous campaign against organized crime leaders, including the creation of a new specialized anti-OC unit, but they remain unable to cope with the full scope of the problem. Organized crime in Israel now has global reach, with direct impact inside the United States. Post is currently utilizing all available tools to deny Israeli OC figures access to the United States in order to prevent them from furthering their criminal activities on U.S. soil. End Summary.

Crime War Hits the Streets of Israel -------------------------------------

2. (SBU) In November 2008, Israeli crime boss Yaakov Alperon was assassinated in broad daylight in a gruesome attack on the streets of Tel Aviv, only about a mile away from the Embassy. According to several media accounts, a motor scooter pulled up alongside Alperon's car and the rider attached a sophisticated explosive device with a remote detonator to the car door. The bomb killed Alperon and his driver, and injured two innocent pedestrians. The hit was the latest in a series of violent attacks and reprisals, and indicated a widening crime war in Israel.

3. In July 2008, a 31-year-old Israeli woman was killed by a stray bullet on the beach in Bat Yam in front of her husband and two children during a failed assassination attempt on noted crime figure Rami Amira. In a feud between the Abutbul and Shirazi clans, crime boss Shalom "Charlie" Abutbul was shot by two gunmen in September 2008, an attack that also wounded three bystanders. In December 2008, Charlie Abutbul's son-in-law, Nati Ohayon, was gunned down in his car in Netanya. Before the fatal bombing of his car, Alperon himself had survived at least three previous attempts on his life before his assassination, and was engaged in an ongoing feud with the rival Abergil clan (although there are numerous suspects in Alperon's murder). The day after Alperon's death, two members of the Abergil syndicate were sentenced for conspiring to kill Alperon's brother, Nissim, in May 2008.

4. (SBU) In response to rising concerns for public safety, former Prime Minister Olmert convened an emergency meeting of top law enforcement officials, cabinet members, and prosecutors in December 2008. He promised to add 1,000 officers to the INP and to allocate approximately NIS 340 million (USD 81 million) to improve the INP's technical capabilities. In general, the rise in OC-related violence has led some public figures to call for emergency state powers to attack criminal organizations, and OC became a minor but important issue in the February 2009 Knesset elections. Former Labor Party MK Ephraim Sneh publicly decried criminal extortion in his campaign ads, only to have his car torched in apparent retaliation outside his home in Herzliya.

Background ------------

5. (SBU) Organized criminal activity is not a new phenomenon in Israel, and major crime families are well known to the Israeli public (the Alperons even featured in a recent reality television program). Five or six crime families have traditionally dominated OC in Israel, although the names and makeup of these syndicates have fluctuated in recent years. The Abergil, Abutbul, Alperon, and Rosenstein organizations are among the most well known, but recent arrests and assassinations have created a power vacuum at the top. New names such as Mulner, Shirazi, Cohen and Domrani have moved quickly to fill the gap. Other up-and-coming groups include the Harari, Ohana, and Kdoshim families. There are also a number of rival families active in the underworld of Israel's Arab sector.

6. (SBU) Traditional OC activities in Israel include illegal neighborhood casinos, prostitution rings, extortion, and loan sharking, with each family controlling a different geographic region. The Alperon family, for instance, dominates the Sharon region, while the Abutbul operation is based in the coastal city of Netanya. The focus is largely on easy money guaranteed by the limited use of violence. Criminal involvement in the recycling business, for example, has been well covered in the press. OC

families collect bottles illegally from municipal recycling bins and restaurants, return them at the collection centers claiming twice the actual numbers, and pocket the change for millions in profits.

Not Your Grandfather's Mob ---------------------------

7. (SBU) Despite their notoriety, OC figures have generally been viewed as a nuisance to be handled by local police. Law enforcement resources were directed to more existential security threats from terrorists and enemy states. In recent years, however, the rules of the game have changed. According to xxxxx, the old school of Israel OC is giving way to a new, more violent, breed of crime. xxxxx told conoffs that the new style of crime features knowledge of hi-tech explosives acquired from service in the Israeli Defense Forces, and a willingness to use indiscriminate violence, at least against rival gang leaders. New OC business also includes technology-related crimes, such as stock market and credit card fraud, and operates on a global scale.

8. (SBU) As the reach of Israeli OC has grown, so have the stakes. Crime families are working further from home and exporting violence abroad. Older gambling schemes have grown to include sprawling casino franchises in Eastern Europe. The Abutbul family began its gambling business in Romania over a decade ago, and now owns the Europe-wide Casino Royale network. In 2002, Israeli OC turf wars spilled into Europe when Yaakov Abergil and Felix Abutbul were killed two months apart. Abutbul was gunned down in front of his casino in Prague in a show of force by the Abergils as they attempted to capture a portion of the European gambling market.

9. (SBU) Israeli OC now plays a significant role in the global drug trade, providing both a local consumer market and an important transit point to Europe and the United States. In 2004, Zeev Rosenstein was arrested in Israel for possession of 700,000 ecstasy tablets in his New York apartment, destined for distribution in the U.S. market. He was ultimately extradited to the United States in 2006, where he is currently serving a 12-year prison sentence. Two other crime figures, Meir Abergil and Israel Ozifa, are also facing U.S. extradition charges on charges that include smuggling 100,000 ecstasy tablets into the United States.

10. (SBU) The prostitution business has also grown beyond the neighborhood brothel. In March 2009, the INP arrested twelve suspects in what is believed to be the largest Israeli-led human trafficking network unearthed to date. Ring leader Rami Saban and his associates were charged with smuggling thousands of women from the former Soviet Union and forcing them to work as prostitutes in Israel, Cyprus, Belgium, and Great Britain. Some women were flown to Egypt and smuggled across the Sinai border by Bedouins.

Law Enforcement Steps up the Pressure -------------------------------------

11. (SBU) After years of perceived inaction, in 2008 the INP created a new unit called Lahav 433. The elite unit operates under the direct command of the police commissioner, and is charged specifically with infiltrating and eliminating Israel's major crime syndicates. Lahav 433 also cooperates closely with district investigative units to combat smaller criminal organizations, many of which are aligned with the larger crime families.

12. (SBU) Following Alperon's assassination, the INP initiated a series of raids that led to the arrests of a number of leading crime figures. Among their targets were Aviv and Adam Abutbul, sons of crime-family head Charlie Abutbul, both charged with possession of illegal weapons. (A third brother, Francois, is already facing murder charges for a nightclub killing in 2004.) Police also arrested gangland figure Amir Mulner for weapons possession and conspiracy to commit a crime. Mulner is known to be an explosives expert by army training, and is a suspect in Yaakov Alperon's murder. He is also believed to be managing affairs for Rosenstein while the latter serves his sentence in the United States.

13. (SBU) Yaakov Alperon's brother Nissim was arrested with 18 others in December 2008, in what was reported to be a "mafia meeting" in a Tel Aviv-area caf. According to the Jerusalem Post, the group may have been planning a revenge attack for his brother's recent assassination. Alperon's son Dror, recently dismissed from his army service for disorderly behavior, also faces several counts of assault and was convicted on extortion charges. Also in December, police in Netanya launched several raids on illegal gambling houses and the homes of suspected money launderers with ties to the crime families. In Ashdod, brothers Roni and David Harari were arrested on charges of extortion. Regional police stuck a blow against the Jerusalem Gang, and convicted its leader Itzik Bar Muha.

Skepticism Hovers Over GOI Efforts ----------------------------------

14. (SBU)xxxxx told conoffs that "thousands of foot soldiers" remain active on the streets despite these aggressive anti-OC operations. He noted that approximately 2,000 people attended Alperon's very public funeral. xxxxx expressed skepticism that recent arrests will bear fruit in the long term without a sustained commitment to enforcement. He noted that many of the crime leaders remain active while in prison and their operations are not hampered significantly even when they are convicted and jailed.

15. (SBU) In December 2008, former Prime Minister Olmert himself admitted that efforts to combat OC have long been diluted among different agencies, and that INP technology lags far behind that allocated to security services for counterterrorism. Given the recent change in government and the current economic crisis, there is public skepticism as to whether GOI promises to remedy the situation will be fulfilled. In 2003, following a failed assassination attempt on Rosenstein, then Prime Minister Ariel Sharon made similar promises to commit manpower and resources to combating the problem.

16. (SBU) It is not entirely clear to what extent OC elements have penetrated the Israeli establishment and corrupted public officials. The INP insists that such instances are rare, despite the occasional revelation of crooked police officers in the press. Nevertheless, there have been several dramatic revelations in recent years that indicate a growing problem. In 2004, former government minister Gonen Segev was arrested for trying to smuggle thousands of ecstasy pills into Israel, a case that produced considerable circumstantial evidence of his involvement in OC. The election of Inbal Gavrieli to the Knesset in 2003 as a member of Likud raised concerns about OC influence in the party's Central Committee. Gavrieli is the daughter of a suspected crime boss, and she attempted to use her parliamentary immunity to block investigations into her father's business. (Gavrieli is no longer a member of the Knesset.) Just last month, Israeli politicos and OC figures came together for the funeral of Likud party activist Shlomi Oz, who served time in prison in the 1990s for extortion on behalf of the Alperon family. Among those in attendance was Omri Sharon, son of former Prime Minister Ariel Sharon, who was himself convicted in 2006 on illegal fundraising charges unrelated to OC.

Courts Testing New Powers --------------------------

17. (SBU) In 2003, the GOI passed anti-OC legislation that carries a maximum sentence of 10 years imprisonment for heading a criminal organization and three years for working in such an organization. The law defines such a body as a group of people working in an "organized, methodical and ongoing pattern to commit offenses that are defined by the laws of Israel as crimes." The law also allows for property forfeiture, both in the wake of conviction and in cases where it is proven to belong to a criminal organization.

18. (SBU) Until recently, xxxxx, judges and lawyers have been slow to make use of this authority, and are hampered by a lack of resources, insufficient understanding of the tools at their disposal, and reticence to mete out tough sentences. A witness protection program for those who testify against OC is just now getting off the ground, and is not backed by any specific legislation. Nevertheless, on March 16th, a Tel Aviv district court took the important step of sentencing 14 convicted criminals belonging to two mob organizations in Ramle and Jaffa to up to 27 years in prison.

19. (SBU) Increased efforts by Israeli authorities to combat OC have engendered retaliatory threats of violence. Recent press reports indicate that as many as 10 Israeli judges are currently receiving 24-hour protection by the police against the threat of violence from members of crime organizations. Israeli OC appears to be intent on intimidating judges personally, as a way of influencing the legal process. Judges in Tel Aviv, Jerusalem, and Haifa have been assigned police protection, underscoring the depth of the problem.

Israeli Crime Reaches American Shores --------------------------------------

20. (SBU) Israel's multi-ethnic population provides a deep well of opportunity for Israeli OC to expand into new territory. Most Israeli crime families trace their roots to North Africa or Eastern Europe, and many of their Israeli operatives hold foreign passports allowing them to move freely in European countries, most of which participate in the visa waiver program with the United States. Approximately one million Russians moved to Israel following the dissolution of the Soviet Union, and Russian citizens no longer require visas to enter Israel. Many Russian oligarchs of Jewish origin and Jewish members of OC groups have received Israeli citizenship, or at least maintain residences in the country. Little is known about the full extent of Russian criminal activity in Israel, but sources in the police estimate that Russian OC has laundered as much as USD 10 billion through Israeli holdings. While most Israeli OC families are native-born and the stereotype that Russian immigrants tend to be mobsters is greatly overblown, indigenous OC groups routinely employ "muscle" from the former Soviet Union.

21. (SBU) The profit motive serves as a great unifier among Israel's diverse demographic groups. According to xxxxx, some Amsterdam-based Hasidic groups allegedly are implicated in international drug smuggling through links to Israeli OC. Arab and Jewish Israeli criminals routinely cooperate and form alliances to expand control of lucrative drug, car theft and extortion rackets. Even hostile and closed borders pose few obstacles to OC groups. According to the INP, 43% of intercepted heroin in 2008 was smuggled from Lebanon, 37% from Jordan, and 12% from Egypt.

Israeli OC Operating Freely in United States ---------------------------------------------

22. (SBU) Given the volume of travel and trade between the United States and Israel, it is not surprising that Israeli OC has also gained a foothold in America. Over the last decade, media reports have detailed a number of high-profile cases involving Israeli OC, ranging from large-scale drug deals to murder. The ongoing Central District of California grand jury investigation against the Abergil family, where a RICO conspiracy case was initiated in December 2007, best demonstrates the full extent of such criminal activity. Investigators have linked Yitzhak Abergil and his entire network to crimes of "embezzlement, extortion, kidnapping, and money laundering." Yitzhak Abergil is currently under arrest in Israel and facing extradition for related charges linking him to the murder of Israeli drug dealer Samy Attias on U.S. soil.

23. (SBU) As part of an ongoing effort to track Israeli OC through media reports and police sources, Post so far has identified 16 families and 78 related individuals who are at the center of Israeli organized criminal activity. The consular section has revoked several visas for those who have been convicted of crimes in Israel, but many OC figures have no prior criminal convictions and carry no visa ineligibilities. As a result, many hold valid nonimmigrant visas to the United States and have traveled freely or attempted to travel for a variety of purposes.

24. (SBU) In March 2009, Post received information from law enforcement authorities that convicted criminal and member of the Abergil organization, Mordechai Yair Hasin, along with his pregnant wife and child, was intending to flee Israel for Los Angeles on valid tourist visas. Hasin's visa was revoked based on his conviction, as were his family's visas after they were determined to be intending immigrants.

25. (SBU) As in the Hasin case, Post is using every available tool to limit OC travel to the United States, but such efforts are not always successful. In June 2008, Post issued Adam Abitbul a valid tourist visa. Abitbul had no prior criminal convictions, and carried no visa ineligibilities. Several months later, Post received information from the Los Angeles Police Department (LAPD) that he had traveled to the United States to carry out a hit. Abitbul returned to Israel prematurely for his father's funeral, at which time Post revoked his visa. (Post can only revoke the visas of Israeli citizens while in country.) In a similar case, in October 2008 Post issued Moshe Bar Muha a tourist visa; he claimed to be traveling for medical treatment. Post subsequently received information from the LAPD that Bar Muha is in fact the brother of Itzik Bar Muha of the Jerusalem Gang (see above) and a convicted criminal.

26. (SBU) As recently as March 2009, Zvika Ben Shabat, Yaacov Avitan, and Tzuri Rokah requested visas to attend a "security-related convention" in Las Vegas. According to local media reports, all three had involvement with OC. Post asked the applicants to provide police reports for any criminal records in Israel, but without such evidence there is no immediate ineligibility for links to OC. Luckily, all three have so far failed to return for continued adjudication of their applications. Nevertheless, it is fair to assume that many known OC figures hold valid tourist visas to the United States and travel freely.

Comment: Israeli OC Slipping Through the Consular Cracks --------------------------------------------- ---------

27. (SBU) Given the growing reach and lethal methods of Israeli OC, blocking the travel of known OC figures to the United States is a matter of great concern to Post. Through collaboration with Israeli and U.S. law enforcement authorities, Post has developed an extensive database and placed lookouts for OC figures and their foot soldiers. Nevertheless, the above visa cases demonstrate the challenges that have arisen since the termination of the Visas Shark in September 2008. Unlike OC groups from the former Soviet Union, Italy, China, and Central America, application of INA 212(a)(3)(A)(ii) against Israeli OC is not specifically authorized per Foreign Affairs Manual 40.31 N5.3. As such, Israelis who are known to work for or belong to OC families are not automatically ineligible for travel to the United States.

Cunningham
Oct. 15, 2009 -- Madrid
XXXXXX: Redacted by the editors Important note on the dispatches...

<<229718>> 10/15/2009 6:18 09MADRID1003 Embassy Madrid CONFIDENTIAL 09MADRID869|09MADRID870 VZCZCXRO0354 RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR DE RUEHMD #1003/01 2880618 ZNY CCCCC ZZH R 150618Z OCT 09 FM AMEMBASSY MADRID TO RUEHC/SECSTATE WASHDC 1326 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE RUEHMO/AMEMBASSY MOSCOW 0975 RUEHLA/AMCONSUL BARCELONA 4147 RUEAIIA/CIA WASHDC RUEHNA/DEA HQS WASHDC RUEAWJA/DEPT OF JUSTICE WASHDC RUCNFB/FBI WASHDC RUEAHLC/HOMELAND SECURITY CENTER WASHINGTON DC TAGS: PREL, PINR, KCRM, KCOR, KJUS, SP, RS SUBJECT: SPAIN: ANTI-MAFIA PROSECUTORS WELCOME USG REF: A. MADRID 870

C o n f i d e n t i a l section 01 of 02 madrid 001003

Sipdis

For alex mcknight and stacie zerdecki of eur/we alessandro nardi of eur/era jennifer mcelveen and stephen worobec of inr/tnc john regas of nic thomas firestone of embassy moscow scott harris of inl pass to barry m. Braun and karen greenaway of fbi's criminal investigative division pass to tom ott and bruce ohr of doj's criminal division

E.o. 12958: decl: 10/15/2019 Tags: prel, pinr, kcrm, kcor, kjus, sp, rs Subject: spain: anti-mafia prosecutors welcome usg outreach, seek collaboration

Ref: a. Madrid 870 b. Madrid 869

Madrid 00001003 001.2 of 002

Classified By: Acting Deputy Chief of Mission William Duncan for reason s 1.4 (b) and (d)

1. (C) SUMMARY. Embassy Madrid POLOFF and POL/GSO Officer from the Barcelona CG on September 29 met xxxxxxxxxxxx. The two welcomed USG outreach to begin a working relationship based on mutual interests. They expressed interest in meeting DOJ and/or FBI officials during proposed travel to Barcelona on November 13 to speak to private audiences on criminal justice issues, money laundering issues as well as the Russian mafia (See Ref A). COMMENT: Separately, Embassy Madrid understands from the US Consular Agent in La Palma that Mallorcan authorities involved in the June 2008 arrest of Russian crimelord Gennadios Petrov (see Ref B) are prepared to host a dinner for visiting USG officials on November 11 or 12. END SUMMARY AND COMMENT.

//Taking on the Russian Mafia//

2. (C) xxxxx claimed that there is large scale money laundering going on in Catalonia and "many, many" members of the Russian mafia are active in the region. (NOTE: In Spain, the term "Russian mafia" refers to organized crime members from not only Russia but also all other former members of the USSR.) xxxxx suggested that public declarations by senior Spanish officials in mid-2008 (see Ref A) that the raid that nabbed Petrov and others had "decapitated" the Russian mafia in Spain were optimistic statements made in a moment of euphoria that did not reflect the current reality. They asserted that the Russian mafia presence has not diminished. xxxxx said that Russian mafia leaders were originally drawn to Spain's Costa Brava as a vacation destination. Recognizing the opportunities and lax law enforcement, however, the Russian mafia subsequently started using Catalonia as a base for money laundering and other illegal ventures. He asserted that Catalonia cannot allow itself to become a refuge for the Russian mafia nor can it prejudice the investments of legitimate Eurasian businessmen.

3. (C) xxxxx case against Eduard Planells, the former Deputy Delegate (2004-07) from the Spanish central government to Catalonia, who - together with two staffers - was arrested in 2007 for facilitating work and residency permits to alleged Russian mafia members whose applications already had been rejected in normal channels because of their criminal records (See Ref B). Spanish media reported in mid-September 2009 that Investigating Judge Fernando Andreu of the National Court ruled a month earlier that there was sufficient evidence in that case for Planells to stand trial for document falsification, breach of trust and coercion. Planells allegedly faciliated the entrance into Spain of underlings to Georgian-born Israeli citizen Malchas Tetruashvili, a prominent local businessmen who allegedly was a key deputy to "Russian mafia" crimelord Tariel Oniani. xxxxx confided that Planells may have had a high-ranking accomplice in the Spanish National Police (SNP), although he said this was "sensitive" information and asked that USG officials - for their "own safety" as well as other reasons - not mention this in meetings with the Ministry of Interior or other GOS offices. COMMENT: USG officials were left with the distinct impression the investigation into a possible mole within the SNP in this case remains ongoing. Tetruashvili was arrested in Spain in 2005 as part of Operation Avispa while Oniani was

Madrid 00001003 002.2 of 002

arrested in Moscow in 2009 (See Ref B). END COMMENT.

4. (C) xxxxx agreed with the notion that money talks, and added this is especially true when the amounts being offered as bribes are so large. xxxxx related to USG officials a saying that in Italy, the mafia is so powerful that it can buy judges. He then added that Italian author Roberto Saviano, famous for his work on the Italian mafia, has commented that the judicial system in Spain is so corrupt that the mafia does not need to buy judges. COMMENT: USG officials understood that xxxxx believed there was an element of truth in what Saviano said. END COMMENT.

5. (C) xxxxx. Chacon
Further cables track international deals by Russian businessmen. For example, diplomats report about the supposedly "murky, high-stakes gas deals" between Russia and the Ukraine through an intermediary, RosUkrEnergo. The company, owned by Moscow energy giant Gazprom and two Ukrainian businessmen, made money from January 2006 until January 2009 from Russian and Turkmen gas exports to Ukraine.

The Americans were alarmed by unconfirmed reports that the deals involved a man who is wanted by the FBI for a large number of alleged fraud cases: Seymon M., a citizen of Israel, Russia, Ukraine and Hungary. The Americans regard the man as a leading figure in the Russian underworld. He's an easy man to find, too: he lives in Moscow.

US diplomats found out a little more about him from a co-owner of RosUkrEnergo, who surprisingly rang up the American ambassador in Kiev and asked for a meeting. The information the guest provided in a two-and-a-half-hour conversation confirmed US fears. According to one cable, the RosUkrEnergo official saw Russian business interests "as the biggest threat to the country's security." One of the RosUkrEnergo owners had "ties to Russian organized crime figure Seymon M.," the cable said in a summary of the meeting.

The RosUkrEnergo co-owner -- regarded by the embassy as "arguably one Ukraine's most powerful people" -- had even required M.'s "approval to get into business in the first place."

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