Three Whales Corruption Scandal
Encyclopedia
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.
Directorate of Internal Affairs.
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.
'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 5, 2002, 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 3, 2003 Pavel Zaitsev was sentenced by a Moscow court for two years on probation. Olga Kudeshkina, a judge that took part in the trial, on December 1, 2003, said she was pressured to convict him, but refused to do so. In 2004, Kudeshkina lost her job.
On May 7, 2001, First Deputy Prosecutor General Yury Biryukov
citing lack of evidence signed a directive stopping the smuggling investigation.
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. but on June 4, 2003 a Moscow court acquitted them.
On October 15, 2001, 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.
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 silovik
i. 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.
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 13, 2002.
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.
Earlier that year on February 18, 2002, 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. Immediately after this he received a death threat On June 2, 2003, in that newspaper he published another article where he accused Prosecutor's General Office and Biryukov personally in corruption:
A logistic manager for the stores Grand and Three Whales, Mr. Polyakov, was attacked two weeks later.
One day later an investigator for the Russian Customs Committee
captain Yuhimenko who followed a lead received a head trauma. On the same day the car of Moscow region's Interior Ministry investigator Ms. Nenahova was bombed. Ms. Nenahova worked on the case 12707 against Liga Mars employees. Investigator Pavel Zaitsev and his family received numerous threats throughout the year.
On May 27, 2003 Mikhail Pereverzev, the president of the Furniture Importers Association and a key witness in the affair, was shot dead in a hospital.
On July 3, 2003 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. Shchekochikhin's colleague in the Duma, Aleksandr Gurov, was never asked to witness, according to Novaya Gazeta's chief editor Dmitry Muratov.
Also in 2003 Andrey Saenko, another key witness, was severely injured as a result of an assassination attempt.
Customs investigators Mikhail Vanin and Colonel General Boris Gutin lost their jobs in 2004.
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 Latvia
n firm, were arrested for smuggling and custom duty evasion. Later Yekaterina Leladze, Anatoly Melnichuk, founder of Liga Mars, Valery Belyakov and Pavel Polyakov (by default) were also charged. 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
).
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 his, to take on the case, as the President couldn't trust the Moscow offices of law-enforcement agencies.
On July 7 First deputy Prosecutor General Yury Buiryukov resigned. On September 13, 2006, 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, Prosecutor General
's Office, 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. Vladimir Vdovin, Deputy Chairman of the Russian Federal Property Fund, has also resigned after 12 years in office on September 19, 2006, officially because of a change of job, but it was rumored that his dismissal was linked to the Three Whales case.
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
involving several furniture companies and federal government bodies
Politics of Russia
The politics of Russia take place in a framework of a federal semi-presidential republic. According to the Constitution of Russia, the President of Russia is head of state, and of a multi-party system with executive power exercised by the government, headed by the Prime Minister, who is appointed...
which has unfolded since 2000.
2000 smuggling investigation
Three Whales (Tri kita) is a Moscow furniture shopping complex owned by Sergei Zuev. On August 13, 2000, 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 20, 2000, Captain Pavel Zaitsev filed a criminal case against Liga Mars initiated on September 7 by the Moscow OblastMoscow Oblast
Moscow Oblast , or Podmoskovye , is a federal subject of Russia . Its area, at , is relatively small compared to other federal subjects, but it is one of the most densely populated regions in the country and, with the 2010 population of 7,092,941, is the second most populous federal subject...
Directorate of Internal Affairs.
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
Yury Zaostrovtsev
Yury Yevgenyevich Zaostrovtsev is a Russian security services official and businessman. He is a son of Yevgeny Zaostrovtsev, former Chief of the Karelian KGB Directorate....
which at that time was the Head of the Economic Security Department and a Deputy Director of FSB.
Prosecutor General's Office reaction
In November 2000, the Prosecutor GeneralProsecutor General of Russia
The Prosecutor General of Russia heads the system of official prosecution in courts known as the Office of the Prosecutor General of Russian Federation ....
's Office under Vladimir Ustinov
Vladimir Ustinov
Vladimir Vasilyevich Ustinov is a Russian politician.He currently is the Plenipotentiary Envoy to the Southern Federal District. Until 2008, he was Russia's Minister of Justice....
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 5, 2002, the Moscow City Court found Zaitsev not guilty on the charges. Later the Supreme Court of the Russian Federation
Supreme Court of the Russian Federation
The Supreme Court of the Russian Federation is the court of last resort in Russian administrative law, civil law and criminal law cases. It also supervises the work of lower courts. Its predecessor is the Supreme Court of the Soviet Union....
cancelled this decision, and on November 3, 2003 Pavel Zaitsev was sentenced by a Moscow court for two years on probation. Olga Kudeshkina, a judge that took part in the trial, on December 1, 2003, said she was pressured to convict him, but refused to do so. In 2004, Kudeshkina lost her job.
On May 7, 2001, First Deputy Prosecutor General Yury Biryukov
Yury Biryukov
Yury Stanislavovich Biryukov is a Russian lawyer and politician.From June 7, 2000 to July 7, 2006, he was a First Deputy Prosecutor General of Russia. Since 2006 he has been a representative of the executive power branch of Nenets Autonomous Okrug in the Federation Council of Russia.-References:...
citing lack of evidence signed a directive stopping the smuggling investigation.
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
Alexander Volkov
Alexander Volkov may refer to:*Alexander Volkov , Russian mixed martial artist*Alexander Volkov , Israeli pianist and pedagogue, member of the Israel Piano Trio, father of Ilan Volkov....
with abuse of office and extortion of money from Sergei Zuev and an associate of him. but on June 4, 2003 a Moscow court acquitted them.
On October 15, 2001, 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.
This situation as a whole was widely considered as an episode of the struggle between Boris Yeltsin
Boris Yeltsin
Boris Nikolayevich Yeltsin was the first President of the Russian Federation, serving from 1991 to 1999.Originally a supporter of Mikhail Gorbachev, Yeltsin emerged under the perestroika reforms as one of Gorbachev's most powerful political opponents. On 29 May 1990 he was elected the chairman of...
's "Family" represented by the State Customs Committee chairman Mikhail Vanin, a close ally of Alexander Voloshin
Alexander Voloshin
Alexander Staliyevich Voloshin is a Russian politician who briefly was chairman of the Board of Directors of RAO UES, the former Russian state power utility, which was liquidated as part of the country's comprehensive power sector reforms on 1 July 2008.In 1997, he was appointed as an assistant...
and Roman Abramovich
Roman Abramovich
Roman Arkadyevich Abramovich is a Russian businessman and the main owner of the private investment company Millhouse LLC.In 2003, Abramovich was named Person of the Year by Expert, a Russian business magazine. He shared this title with Mikhail Khodorkovsky...
, and security services personnel group, known as silovik
Silovik
Silovik is a Russian word for politicians from the security or military services, often the officers of the former KGB, the FSB, the Federal Narcotics Control Service and military or other security services who came into power...
i. Vanin has apparently lost the battle, as he left his position in March 2004 during the government reshuffle initiated by Vladimir Putin
Vladimir Putin
Vladimir Vladimirovich Putin served as the second President of the Russian Federation and is the current Prime Minister of Russia, as well as chairman of United Russia and Chairman of the Council of Ministers of the Union of Russia and Belarus. He became acting President on 31 December 1999, when...
, when the Customs Committee was included into the Economy Ministry of Russia.
Parliamentary commission
Two deputies of the State DumaState Duma
The State Duma , common abbreviation: Госду́ма ) in the Russian Federation is the lower house of the Federal Assembly of Russia , the upper house being the Federation Council of Russia. The Duma headquarters is located in central Moscow, a few steps from Manege Square. Its members are referred to...
and members of the State Duma Security Committee, Yury Shchekochikhin, a journalist, and Alexander Gurov
Alexander Gurov
Alexander Ivanovich Gurov is a Russian politician and Lieutenant General of Interior Affairs who made his name in the Soviet Union fighting organized crime in the 1980s. In 1999 he took part in the creation of the pro-government Unity Party of Russia...
, Lieutenant General of Interior Affairs, launched a parliamentary inquiry into the case, approved by the State Duma on March 13, 2002.
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
Leningrad Oblast
Leningrad Oblast is a federal subject of Russia . It was established on August 1, 1927, although it was not until 1946 that the oblast's borders had been mostly settled in their present position...
, Vladimir Loskutov, was chosen by President Vladimir Putin
Vladimir Putin
Vladimir Vladimirovich Putin served as the second President of the Russian Federation and is the current Prime Minister of Russia, as well as chairman of United Russia and Chairman of the Council of Ministers of the Union of Russia and Belarus. He became acting President on 31 December 1999, when...
personally to lead the investigation of this affair.
Earlier that year on February 18, 2002, in Novaya Gazeta
Novaya Gazeta
Novaya Gazeta is a Russian newspaper well known in the country for its critical and investigative coverage of Russian political and social affairs....
Shchekochikhin published a detailed article on the smuggling affair and corrupting officials in the Interior Ministry and the Prosecutor-General's Office. Immediately after this he received a death threat On June 2, 2003, in that newspaper he published another article where he accused Prosecutor's General Office and Biryukov personally in corruption:
- See also Yury Shchekochikhin
Possible victims
Mr. Vorobiov, Head of Central Operative Customs, who initiated criminal case 27400-22/2000 after finding out about the fictitious Liga Mars company, was assaulted in February 2002.A logistic manager for the stores Grand and Three Whales, Mr. Polyakov, was attacked two weeks later.
One day later an investigator for the Russian Customs Committee
Federal Customs Service of Russia
The Federal Customs Service of Russia is a Russian government service regulating customs.Since May 12, 2006, it has been led by Andrey Belyaninov-External links:**Category:Agencies of the government of Russia...
captain Yuhimenko who followed a lead received a head trauma. On the same day the car of Moscow region's Interior Ministry investigator Ms. Nenahova was bombed. Ms. Nenahova worked on the case 12707 against Liga Mars employees. Investigator Pavel Zaitsev and his family received numerous threats throughout the year.
On May 27, 2003 Mikhail Pereverzev, the president of the Furniture Importers Association and a key witness in the affair, was shot dead in a hospital.
On July 3, 2003 Yury Shchekochikhin died few days after he had been hospitalized, according to the Russian officials, from a suddenly developed allergy
Allergy
An Allergy is a hypersensitivity disorder of the immune system. Allergic reactions occur when a person's immune system reacts to normally harmless substances in the environment. A substance that causes a reaction is called an allergen. These reactions are acquired, predictable, and rapid...
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. Shchekochikhin's colleague in the Duma, Aleksandr Gurov, was never asked to witness, according to Novaya Gazeta's chief editor Dmitry Muratov.
Also in 2003 Andrey Saenko, another key witness, was severely injured as a result of an assassination attempt.
Customs investigators Mikhail Vanin and Colonel General Boris Gutin lost their jobs in 2004.
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. On June 2, 2006 Prosecutor General of RussiaProsecutor General of Russia
The Prosecutor General of Russia heads the system of official prosecution in courts known as the Office of the Prosecutor General of Russian Federation ....
Vladimir Ustinov
Vladimir Ustinov
Vladimir Vasilyevich Ustinov is a Russian politician.He currently is the Plenipotentiary Envoy to the Southern Federal District. Until 2008, he was Russia's Minister of Justice....
, 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
Yury Chaika
Yury Yakovlevich Chaika is the current Prosecutor General of Russia.-Career:Chaika began his career as an electrician in a shipyard. After serving in the army, he graduated from Sverdlovsk Institute of Law in 1976 and began work at Irkutsk Oblast Prosecutor's Office where he served as an...
reported that it had reopened the furniture contraband investigation going back to 2000 and arrested Sergey Zuev
Sergey Zuev
Sergey Nikolayevich Zuev is a Russian futsal player who plays for MFK Viz-Sinara and Russian national futsal team as a goalkeeper.-Honours:Individual* World's Best Futsal Goalkeeper 2008With MFK Viz-Sinara...
, 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 Latvia
Latvia
Latvia , officially the Republic of Latvia , is a country in the Baltic region of Northern Europe. It is bordered to the north by Estonia , to the south by Lithuania , to the east by the Russian Federation , to the southeast by Belarus and shares maritime borders to the west with Sweden...
n firm, were arrested for smuggling and custom duty evasion. Later Yekaterina Leladze, Anatoly Melnichuk, founder of Liga Mars, Valery Belyakov and Pavel Polyakov (by default) were also charged. The businesspeople were charged with grand smuggling
Smuggling
Smuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...
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
Russian Criminal Code
The Russian Criminal Code is the prime source of Law of the Russian Federation concerning criminal offences. The previous Criminal Code of the Russian Federation came into force on 1 January 1997. Moreover, on the 8 January President Yeltsin signed the Criminal Correctional Code to regulate the...
).
On June 15, in Shanghai, President Vladimir Putin
Vladimir Putin
Vladimir Vladimirovich Putin served as the second President of the Russian Federation and is the current Prime Minister of Russia, as well as chairman of United Russia and Chairman of the Council of Ministers of the Union of Russia and Belarus. He became acting President on 31 December 1999, when...
told journalists that he had asked Vladimir Loskutov, a prosecutor from Leningrad Oblast
Leningrad Oblast
Leningrad Oblast is a federal subject of Russia . It was established on August 1, 1927, although it was not until 1946 that the oblast's borders had been mostly settled in their present position...
and a former classmate of his, to take on the case, as the President couldn't trust the Moscow offices of law-enforcement agencies.
On July 7 First deputy Prosecutor General Yury Buiryukov resigned. On September 13, 2006, the Prosecutor General's Office under Yury Chaika
Yury Chaika
Yury Yakovlevich Chaika is the current Prosecutor General of Russia.-Career:Chaika began his career as an electrician in a shipyard. After serving in the army, he graduated from Sverdlovsk Institute of Law in 1976 and began work at Irkutsk Oblast Prosecutor's Office where he served as an...
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, Prosecutor General
Prosecutor General of Russia
The Prosecutor General of Russia heads the system of official prosecution in courts known as the Office of the Prosecutor General of Russian Federation ....
's Office, 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
Viktor Cherkesov
Viktor Vasilyevich Cherkesov is a Russian security services official.He graduated from the Law Department of Leningrad State University in 1973...
. The purge has occurred while FSB head Nikolai Patrushev was on vacations. Vladimir Vdovin, Deputy Chairman of the Russian Federal Property Fund, has also resigned after 12 years in office on September 19, 2006, officially because of a change of job, but it was rumored that his dismissal was linked to the Three Whales case.