ORGANIZED CRIME AND CORRUPTION IN RUSSIA:  IMPLICATIONS FOR U.S.AND INTERNATIONAL LAW

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Disclaimer: This article expresses the views of the author, and should not be construed as astatement of U.S. Government policy or an endorsement of Fordham International LawJournal.Fordham International Law Journal [Vol. 19: 1999 1996]
Note: Endnotes in the text are marked by brackets [ ]
Scott P. Boylan*
**I.  SUMMARY**
This Essay is both a warning and a recommendation.  It is awarning to U.S. businesses and businessmen that bribing RussianGovernment officials is a risky and illegal process under bothRussian and U.S. laws.  It is also a warning to the U.S.Government that the bribery of Russian Government officials byU.S. and foreign businesses and businessmen is seriouslyundermining the transformation to democracy in Russia.   
       This Essay recommends that U.S. businesses operating in Russiatake steps to ensure that their local offices and representativesin Russia are not violating the anti-bribery laws of the UnitedStates.  This Essay also recommends that the U.S. Governmentcreate a procedure for Russian and foreign businesses, incooperation with the Russian Government, for reporting requestsfor bribes from Russian Government officials.  Finally, thisEssay recommends that U.S. anti-bribery laws be amended toprovide U.S. businesses with the right to commence civil actionsagainst companies and individuals who make illegal bribes to thecompetitive detriment of U.S. firms.
**II.  INTRODUCTION**
Corruption has become a way of life for Government officials inRussia.[1]  Bribe-taking, in fact, is a widespread practicethroughout the Russian bureaucracy.[2]  A number of U.S. andother Western businesses and businessmen routinely pay bribes toRussian Government officials in order to conduct their businessesin Russia.[3]  Indeed, the most prevalent crime in Russia todayis bribery.[4]  Of those charged with bribery and corruption inRussia in 1993, over forty-two percent were Governmentofficials[5] and over twenty-five percent were law enforcementofficers.[6]  Not only do Russian officials routinely accept andeven demand bribes,[7] they have also entered into an illicitpartnership with organized crime and with clandestine businessgroups.[8]  Former Communist apparachiks, who continue to workwithin the Russian bureaucracy, exploit previously madeblack-marketeer relationships to profit in the newpost-Revolutionary Russian system.[9]  Thus, a partnership formedlong before the attempted coup of 1991 by organized crime andCommunist government officials now threatens the growth ofdemocracy in Russia.[10]
Not only does the Mafiya[11] kill and steal in Russia, it does soin the United States as well.[12]  The Russian Mafiya isincreasingly engaged in crime in the West.[13]  Mafiya membersare involved in "theft, extortion, money-laundering,[14]gun-trafficking, drug running, prostitution, smuggling, loansharking, contract killing and more."[15]  The U.S. Department ofJustice (DOJ) has established task forces to deal with theRussian Mafiya in New York, Los Angeles, and Miami.  Thus, U.S.businesses that pay bribes and protection money in Russia may beunwittingly financing Russian criminal activity back in theUnited States.[16]  As one commentator notes, businessmen:
[W]ho pay protection money to the Russian Mafia are helping tocement anarchy for years to come and prevent the establishment ofthe rule of law in Russia.  And those who hope that theircompromises will in the long run promote the penetration of aless corrupt "Western Culture" are lying to themselves.  IfRussia recovers, it will be despite and not because of the Mafia,despite and not because of passive collaboration by foreignbusinessmen.[17]
Clearly, it is not in the best interests of the United States forRussia to become a criminal oligarchy.  Following the demolitionof the Berlin Wall and the collapse of the Soviet Union, manyobservers were euphoric about a potential future partnershipbetween the United States and other Western democracies and a newdemocratic Russia.  In some ways this type of partnership hasemerged, but it has not been free of problems.  The initialeuphoria has been tempered by the sobering facts of reality. Optimism has surrendered to pessimism as the reality of Russia'sdifficult transition from a command government, economy, andsociety to a liberal government, economy, and society haspresented Russia and the world with enormous and difficultchallenges.  It is now apparent that a major hurdle for Russia onthe road to democracy is the issue of crime and officialcorruption.
Recent visits to Russia by U.S. law enforcement officials havemade it clear that the U.S. Government is concerned about crimeand corruption in Russia.[18]  The Director of the Federal Bureauof Investigation (FBI), Louis Freeh, has said that the growth oforganized crime in Russia and Eastern Europe is a "threat to theintegrity of government."[19]  The Russian people have alsoexpressed their deep concern about crime and its negative impactupon reform in Russia.  President Boris Yeltsin[20] has expressedconcern about Mafiya influence in government and has said that"organized crime is persistently trying to gain access to BigPolitics and the machinery of state."[21]   
The success of Russian democracy represents a fundamental pillarof U.S. foreign policy.  The U.S. Government spends millions ofU.S. tax dollars to promote democratic and market, economicreforms in Russia.  Meanwhile, U.S. businesses and businessmenwho pay bribes to Russian Government officials may be unwittingsupporters of organized crime in Russia.  More importantly,bribery of Russian Government officials undercuts efforts tocreate an open and democratic government in Russia.[22]  The U.S.Government should not permit the U.S. business community inRussia to work at cross-purposes with U.S. foreign policy byindirectly financing criminal activity in Russia and the UnitedStates.
The current Administration in Washington is searching for meansto combat the rise of crime and criminal elements in Russia.[23] Indeed, it is a cornerstone of U.S. foreign policy and the key tothe post-Cold War era that democracy take root and flourish inRussia.  Much effort is being made by the United States and otherdemocratic nations to assist Russia in its metamorphosis from acorrupt totalitarian regime to a popular democracy.  Thesenations should, therefore, not tolerate support of corruptofficials and organizations by private businesses in directcontradiction to this policy.
The United States currently has the means to combat the paymentof bribes by U.S. citizens to corrupt Russian Governmentofficials through the Foreign Corrupt Practices Act (FCPA).[24] Unfortunately, U.S. officials have failed to vigorously enforcethis legal mechanism vis-a-vis corrupt practices in Russia andthe former Soviet Union.
The FCPA prohibits the payment of bribes or other illicitpayments to government officials.[25]  Congress enacted the lawto prohibit the payment of bribes to foreign government officialsand to prevent any adverse effects such illicit payments wouldand could have on U.S. foreign policy, foreign governments, andU.S. businesses operating abroad.[26] 
The U.S. business community in Russia should be aware that theU.S. Government will likely seek to enforce this law with all duediligence.[27]  U.S. law enforcement agencies have already begunto cooperate with Russian authorities in combating organizedcrime and corruption.  It is only a matter of time, and perhapsanother Russian election, before Russian and U.S. law enforcementagencies recognize the potential of the FCPA in fighting officialcorruption in Russia.  U.S. businesses should take care that theyare operating in Russia in a manner that does not work atcross-purposes with U.S. foreign policy by taking steps to ensurethat their Russian operations fully comply with the FCPA.  Onlyby doing so will they avoid what may prove to be crushing lossesto their economic and business interests in the future.[28]  
The current "Wild East"[29] atmosphere in Russia, hopefully, willnot endure.  As Russia moves toward the establishment ofdemocratic rule and a market economy, it is highly unlikely thatrampant bribery of government officials will continue to betolerated or that past illegal conduct will be easily forgiven. Enforcement and punishment of such practices will begin[30] andU.S. businesses that do not rectify their conduct in accordancewith FCPA may encounter severe problems in the future.
**III. THE FALL OF THE SOVIET UNION AND THE RISE OF THEMAFIYA**
With the fall of the Soviet Union and rise of market reforms inRussia, a then-existing group consisting of corrupt criminalofficials, ex-black-marketeers, and common criminals tookadvantage of the lack of commercial regulation and crumblingpolice power to prey on the nascent commercial enterprises of theresurrected Russia.[31]  The Mafiya is not a new force inRussia.[32]  The entire Soviet system has long operated with aflourishing black-market supervised and controlled by thisgroup.[33]  The black-market is a key to understanding not onlythe history of the Soviet Union, but also the problems Russia ispresently facing in its gradual transformation into a democratic,free market society.[34]  The black-market and trade Mafiya haslong existed in Russia.  It flourished during the Brezhnev yearsand in the 1980's.[35]
The virtually unregulated market in Russia has created a wealthof opportunities for criminal organizations, from the shake-downof small kiosk operators for protection money[36] to the peddlingof stolen nuclear fuel on the international market.[37]  Officialcorruption is rampant.  In 1995, criminal proceedings wereinstituted against two-thousand employees of the Russian Ministryof Internal Affairs.[38]
**IV.  DEMOCRATIC REFORMS IN RUSSIA:  THREATENED BY CRIME**
In a poll conducted by the Public Opinion Foundation in 1994,only fourteen percent of Russians living in Moscow said theyconsidered Russia a democracy.[39]  Twenty-three percent ofRussians living in urban areas believe that organized crime, notthe Government, runs the country.[40]  One U.S. Governmentofficial notes that "the Russian criminal organizations not onlythreaten government authority but, in some instances, are viewedby citizens as alternatives to state authority because of theservice they supply."[41]  Those Russians who do not viewcriminal organizations in a positive light seem willing totolerate extreme measures to combat crime.[42]
Government officials in the United States, from the White Houseto Capitol Hill, have expressed concern about crime in Russia andits threat to democratic reforms.[43]  In testimony beforeCongress in 1994, Director of the Central Intelligence Agency(CIA) James Woolsey commented outright that organized crime was athreat to democratic reform in Russia.[44]  Russian bankers agreewith the CIA and have called upon President Yeltsin to providebankers with protection from organized crime.[45]  Bank managersand officials who are not willing to assist the Russian Mafiyaare, and have been, routinely assassinated by organized crimegroups.[46]  To combat this wave of terrorism against bankers, in1994 the Association of Russian Bankers hired as its director aformer Russian Interior Ministry official who is spearheadinglobbying efforts to convince the Government to provide betterprotection for banks and bankers against crime.[47]  U.S.businessmen have also been threatened with violence by criminalgroups.[48] Moreover, the crime wave in Russia has, indirectly,already had a strongly negative impact on democratic reforms.[49] Russians have become disheartened with democratic reform, andhave begun to equate democracy with lawlessness and a sharpdecrease in personal safety and well-being.
In an effort to combat rising crime and corruption within theGovernment, President Boris Yeltsin promulgated a stringentdecree to fight crime that grants the police the right to detaina criminal suspect for up to thirty days before bringing formalcharges.[50]  Ironically, many view this decree as a blow todemocratic reform in Russia.[51]  The Russian Duma,[52] passing aresolution by 279 votes to 10, held that Yeltsin's decree"restricts the constitutional rights and citizen's freedomwithout sufficient basis."[53]
In addition, a conservative version of an organized crime billcurrently pending in the Duma, "would set up special courts ofthree professional judges to rule on matters involving organizedcrime, require that banks report on any suspicious activity bytheir clients and give law enforcers the power to provokesuspects into criminal actions."[54]  Liberals in the Duma havecriticized this bill, arguing "that the special courts wouldbarely differ from the notorious troikas set up by Joseph Stalinto persecute political opponents without a proper trial."[55] Such undemocratic tendencies in the Russian Government are beingfueled by official corruption and crime.  Since most Russiangovernment officials gained their experience in the totalitarianSoviet regime, the solutions they formulate in response to crimeand corruption often draw on this "totalitarian" experience. Democratic principles of restraint are often overlooked.  Indeed,it is difficult not to doubt the sincerity of the anti-crimepolitical rhetoric when many of these same officials are"profiting from the legal chaos of New Russia."[56]
**V.  CRIME IN RUSSIA**
Crime and its impact on the development of democracy is theprimary concern of many Russian politicians.  As mentioned above,President Boris Yeltsin has taken strong measures against crimein his anti-crime decree, even as the Law has alarmed defendersof individual and human rights in the Russian Duma.[57]  Stillother members of the Russian legislature have expressed concernthat Russia will become a criminalized society if economic reformis not pushed through the Russian Duma and corrupt influences arenot eliminated from government.[58]
Russian politicians themselves have not been immune from thecrime wave gripping Russia.  A communist member of the Duma diedon November 5, 1994, from head injuries sustained in an attacknear the entrance to his home in Moscow four days earlier.[59] The Communist Party issued a statement stating that:
The tragic death of our comrade is not a coincidence --it is adirect result of the outburst of crime, lawlessness and chaos insociety which has occurred because of the loss of governance inthe country, and the paralysis of its structures ofauthority.[60]
In April 1994, another Russian Member of Parliament (MP)[61] wasgunned down in front of his home on the outskirts of Moscow in agang-style shooting.[62]  In commenting on this incident, membersof the Duma have expressed their displeasure with having to servealongside other members of the Duma who are connected, orbelieved to be connected, to organized crime groups.[63]  Infact, Mafiya leaders actually encourage criminals to seek seatsin the Duma because of the broad immunity conferred on thoseelected to the Russian parliament,[64] and it is a well-knownfact that a number of individuals have run for office solely toavoid prison sentences.[65]  One operator who established a largepyramid scheme to bilk thousands of Russians out of millions ofdollars actually avoided detention by successfully running for aseat in the Duma.[66]  Following the December 1995 Dumaelections, the Russian Central Election Commission noted thatover seventy of the registered candidates seeking election havecriminal records or criminal charges pending against them.[67] President Yeltsin even informed regional leaders at the time that"some candidates had already come under pressure to drop out ofDecember's [1995] election to boost the chances of criminalsgetting elected."[68]
Members of the Duma have also been linked to organized crime.[69] Vladimir Zhirinovsky, leader of the ultranationalist LiberalDemocratic Party, is alleged to have received hundreds ofthousands of dollars for the party's most recent electoralcampaign, held in 1992, from reputed gangsters.[70]  
Top government officials have admitted that the Russianbureaucracy and police organizations have joined with organizedcrime to become the chief antagonist of independentbusinessmen.[71]  As one observer notes, "the unofficial alliancebetween [Russian] officialdom and criminal syndicates is nosecret."[72]  Russian businessmen are afraid to register theircompanies with local governments for fear of having theirfinancial information passed on to criminal groups who will thenuse the information to extort money from them.[73]
**A.  The Mafiya**