13.04.2004
The Mafia, the Law and Radicalism
№2 2004 April/June

“You are all future jailbirds” was a slogan addressed to the
business magnates whom the Russians refer to as the oligarchs; it
became a leitmotif of the December 2003 Russian parliamentary
elections. The slogan adequately reflects the mood that is
presently dominating Russian society, as the population generally
feels more hostility toward the big business and the wealthy than
it had for the former Communist Party nomenklatura back in
the rebellious August of 1991.

The root cause of this new type of social radicalism lies, first
and foremost, in the feeling of being deceived. This sentiment is
currently shared by millions of people, whose aspirations have not
come true. Nobel Prize winning economist, Joseph E. Stiglitz,
compares the current level of inequality in Russia with the
inequality in Latin American societies. There is a difference,
though: in the Latin American countries, the inequality has evolved
from its half-feudal legacy, whereas in Russia the inequality has
been developing over the last fifteen years.

THE MAFIA AS AN OBJECT AND SOURCE OF RADICALISM

People at the grassroots level have acquired the conviction that
the mafia – in the broadest sense of the word, it is an
agglomeration of gangsters, racketeers, thieves, swindlers, corrupt
officials, in association with businessmen who resort to their
services – as opposed to narrowly viewed family-based or clan-based
criminal communities, is the major source of deceit. In the era of
Mikhail Gorbachev’s perestroika, the people traditionally
associated the mafia with members of the Communist Party apparatus,
the so-called nomenklatura – a tightly interconnected
circle of people largely held together by internal corporate
relationships. The perceptions of the mafia have changed since
then, and it is primarily associated with oligarchs and democratic
reformers. Right-wing political parties did talk extensively about
fighting organized crime and corruption during the election
campaign, but their proclamations were not radical enough for the
radically-minded society, and most of the people found the talk
about “future jailbirds” and “executions by firing squad” more
acceptable than yet more promises to “pass new laws that will be
more liberal than the old ones.”

Society’s extreme repulsion of the democratic reformers, so
vividly manifested by their defeat in the election, is in many ways
a reaction to the radical economic reforms. This is only natural,
given the specificity of the society that has taken shape as a
result of the transformation. Consider, for example, a report on
Russian organized crime that was put together by the U.S. Center
for Strategic and International Studies. It characterizes Russian
society as a criminal-syndicate type, meaning that the state
machinery is controlled by tightly interconnected corrupt
officials, unscrupulous businessmen and criminals. International
financier George Soros describes it as predatory capitalism,
whereas Joseph Stiglitz describes it as a capitalism of clans and
mafias, which he blames on the Russian reformers, the West in
general, and the major international institutions – the IMF and the
World Bank. Russian experts use another broad term – “the criminal
community.”

GUILLOTINE AGAINST THE MAFIA

The popularity of anti-mafia radicalism in the public’s mindset
has reached the point where even scholars have been enchanted by
the lust for blood and the idea of punitive measures, complete with
severed heads rolling down from the scaffold. One such example is
found in a textbook entitled Criminal Penology, whose
author, Professor Oleg Starkov, suggests the following:

“A war on crime is a priority of the day, and it stipulates that
the parties engage in a deadly armed fight. First, there is a need
for a military operation by a National Guard or, before it is
established, by special units that have the experience of combat
actions, for example, in Chechnya. Those units shall be committed
to the Constitution and the State Duma, and shall carry out total
physical destruction of tracked, registered and well-evidenced
leaders of criminal groups. These operations shall be carried out
within a twenty-four hour period, and will remain under the control
of the prosecution officials. This is the only feasible way of
implementing the idea of society’s ‘necessary offensive,’ as well
as rehabilitating the sphere of punishment. The legal foundations
for such a program must be based on the articles of the Criminal
Code specifying ‘forced attack’ and the ‘necessary defense of
society’…

“In the second phase, an advanced program of attack on crime
must include the arrest of all regular members of criminal
organizations from the level of ‘soldiers’ and above, if such
people were not eliminated in phase one. It will involve all the
actions presupposed by the law on fighting organized crime, which
will preclude interference by corrupt justice and government
officials. On the basis of gathered evidence and the presentation
of proof, the latter officials must be subjected to a variety of
punishments. These will include the death sentence (a predominant
type), sentences for life in prison, and the lengthiest possible
prison terms.” (Oleg V. Starkov. Criminal Penology.
Moscow: Ekzamen Publishing House, 2004, p. 96).

No doubt, these stipulations would rally massive support, should
they be put on a national referendum, but the supporters of such
radical concepts generally have a very vague idea of how the
practical implementation of the war on organized crime would
look.

The total physical destruction of exposed leaders and
rank-and-file members of criminal organizations presupposes that
the ones who propose such a plan have a clear understanding of the
form and structure of the criminal organizations. What do we mean
by “organized crime?” Almost twenty years of studying the organized
crime phenomenon in the former Soviet Union (the Soviet Interior
Ministry and the KGB began using terms such as “organized group,”
“thief get-togethers,” and “criminal pools” in their confidential
documents in 1984 and 1985), and then again in the reformist
period, have failed to produce a clear and practically operable set
of standards in this area. Russia’s Criminal Code, revised in 1996,
provides a somewhat abridged notion of an “organized group” and
introduces the term of a “criminal organization (community)”
without any clear definition. The Code’s authors ignored the
Exemplary Legislative Act on Fighting with Organized Crime that the
Inter-Parliamentary Assembly of the Commonwealth of Independent
States had endorsed in 1996. Incidentally, that document did
contain definitions of a “criminal organization” and “criminal
community,” which the Russian Criminal Code is badly wanting. Nor
does the Russian legislation specify which actions fall into the
category of “corruption,” although Russia has signed (but not yet
ratified) international agreements that fully explain the essence
of this notion. These are the UN Convention Against Transnational
Organized Crime (2000), the UN Convention Against Corruption
(2003), and the Council of Europe’s Criminal Law Convention on
Corruption (1999).

This legal uncertainty admits of rather broad interpretations of
such concepts in various circumstances. For instance, it allows for
incriminating participation in organized crime not on the basis of
law but on the basis of a “revolutionary consciousness.” If a
criminal investigation is targeted on the governor of a Russian
constituent territory or a city mayor, for example, the operatives
or investigators may claim that a “criminal community” includes the
entire administration of the region or city, as well as businessmen
or officials from other regions who have contacts with that
administration.

The same thing is happening with regard to private businesses.
The irony is that virtually any corporation in Russia can be
treated as a potential, or real, criminal organization, and there
is a scientifically grounded basis for this. Since the 1970s,
organized crime in the U.S. has been considered a model of
enterprise (see Criminology, ed. by G.F. Shelley). Russian
researchers went even further than this. A monograph entitled
The Financial and Legal Aspects of Criminality at Holding
Companies
discusses almost all the holding corporations as the
largest criminal organizations which dominate many sectors of the
national economy (V.F. Gaponenko, A.B. Melnikov, N.D. Eriashvili.
The Financial and Legal Aspects of Criminality at Holding
Companies
. Moscow: UNITY-DANA, 2003). By instituting criminal
cases against executives from the MOST, SIBUR and YUKOS
corporations, the Russian Prosecutor General’s Office took the
researchers’ concept of counteracting an “enterprise as a form of
organized crime” quite literally, and moreover, applied it in
practice.

If Prof. Starkov’s concept of fighting the mafia is put into
practice in the conditions of imperfect laws, it may lead to the
demise of all those who work in regional and municipal
administration or in management of holding companies that have
fallen under suspicion. In case this practice is applied to heads
of individual departments of law enforcement agencies, the entire
departments will be destroyed. This brings to mind the repression
of the so-called “werewolves in police uniforms.” Analogies with
some aspects of 20th century Russian history creep into mind, the
only difference being that in Stalin’ time the marked individuals
were called “the foes of the people;” today they are called
“members of criminal communities.”

SOLDIERS OF THE MAFIA AND FIGHTERS WITH THE MAFIA

The Russian radicals believe that one thing can oppose organized
crime and corruption: it is only the “healthy forces of society,”
argue the advocates of the hard line. Prof. Starkov believes such
people can be found in the special forces who have gone through the
trials and tribulations of the Chechen war. Others tend to place
their trust in the veterans of the Afghan war of the 1980s. But the
truth is that a rather significant number of people from those two
categories, who ostensibly resist moral degradation, have
themselves fallen under the yoke of criminal groupings. Many
Russians can still recall the terrifying showdowns between the top
executives of foundations for the veterans of the Afghan war, and
the killing spree in St. Petersburg by former servicemen of special
forces of the Defense Ministry’s Main Intelligence Department
(GRU).

The academics who study Russian criminology have come up with an
explanation as to why the mafia organizations have accumulated such
impressive power. Dr Sergei Inshakov, a lawyer, writes in this
connection: “Criminal organizations that wage mortal fights against
their adversaries have proved to be most viable in the process of a
criminal evolution. In strict compliance with this law, mafia
organizations are always commanded by strong individuals who
violently resist anything that may pose a threat… Survival of the
mafia organization hinges on the strict performance of the crime
bosses to the positions they occupy… The accidental accession of
individuals to those positions is practically ruled out… The same
goes for any kind of protectionism in the process of appointment to
those positions… Government service has a far more complex
mechanism of evolution. The most viable ones in that system are not
those who wage deadly fights or who are loyal to their system, but
those who renounce fighting… A bribe-taking official has more
chances to survive than an advocate of honor and decency.” (S.M.
Inshakov, Foreign Criminology, 2nd edition. Moscow:
UNITY-DANA, Law and Legislation, 2003, p. 307).

This is a somewhat ideal picture, however, since the majority of
mafia leaders do not show any signs of being extraordinary. Many of
these individuals, including bandits and black economy operators,
often betray their ‘brethren in arms’ to the law enforcement
agencies – either from considerations of the material rewards or
out of petty selfish calculus (to survive and not to end up behind
bars). Protectionism in the criminal world is also rife. Even the
so called ‘thieves-in-law’ (guardians of the thieves’ code, in the
criminal hierarchy) now buy or even ‘inherit’ this status, as
distinct from the former times when they were ‘enthroned’ because
of the merits they bestowed to the criminal community.

The problem in confronting these groups and individuals derives
from the sporadic and frequent reforms of the law enforcement
agencies and secret services, as well as rotations of their
members. This factor has brought accidental people into
professional detachments that are entrusted to fight against crime
and has led to a situation where the people appointed to fight
against the mafia often start working for it.

FROM LEGAL ISOLATIONISM TO LEGAL INTEGRATION

Nevertheless, it is possible to emerge victorious from the fight
against the mafia without the use of radical instruments. But in
order for this to happen, Russian legislation must contain
provisions that conform to international legislative documents
rather than simple populist slogans. This means, first of all, an
early ratification of the aforementioned UN Conventions and the
Convention of the Council of Europe. Their ratification presumes a
harmonization of Russian laws with them, even those standing
outside the legislative scope of the Criminal Code, the Code of
Practice, the Administrative Code, and the Code of Search and
Operative Measures. For example, the UN Convention Against
Corruption stipulates, among other things, that the signatory
countries take due measures to ensure a high degree of transparency
in managing and accounting of public finances.
Transparency-building measures must embrace the endorsement of
national budgets, a timely submission of reports on revenues and
spending, a system of accounting and auditing standards, and the
mechanisms of their supervision. The Convention also requires
measures to form an adequate system of procurements and greater
transparency in the financing of political parties and selection of
candidates for elected posts. Besides, it requires the building up
of schemes for training specialists who will occupy the public
positions most vulnerable to corruption.

The UN Convention Against Corruption is targeted, above all, at
exposing and halting the international transfers of illicit assets
by freezing the transfer operations, confiscating the revenues from
criminal transactions, and returning those revenues to the
countries where the money originated.

Presently, however, Russian legislation stands apart from
international legal standards, marking a certain legal
isolationism. It is difficult to produce a different assessment of
the novelties introduced into the Russian Criminal Code in late
2003, right at the time when the UN endorsed its Convention Against
Corruption. Alongside the new provisions that really liberalized
the criminal law, the authorities scrapped property confiscation as
a penal measure, replacing it with fines varying from 500,000
rubles to a million rubles. In practical terms, this means that a
criminal who has stolen U.S. $100 million from the state and
laundered the money through offshore companies can get away with a
fine amounting to slightly more than U.S. $30,000, and the state
will consider the damage forgiven. The initiators of those
amendments explain that the lifting of the property confiscation
clause from the Criminal Code is made up for by provisions in the
Code of Practice. Indeed, Article 81 (Material Evidence) states
that the money and valuables obtained illicitly shall be subject to
being placed under state control upon a verdict by the court. The
difference is, however, that the latter stipulation applies only to
money and valuables, which the courts classify as material
evidence, i.e., which are found to have been obtained illicitly,
while the property confiscation clause permits the confiscation of
all property obtained by an individual whose guilt had been
proved.

The abolition of the property confiscation clause runs counter
to Russia’s obligations under several international acts. The
Council of Europe’s Convention on the Laundering, Search, Seizure
and Confiscation of the Proceeds from Crime interprets “proceeds”
as “any economic advantage from criminal offences,” and in the UN
Conventions Against Transnational Organized Crime and Corruption
“proceeds of crime” mean “any property derived from or obtained,
directly or indirectly, through the commission of an offence.” This
is a far cry from the actual definition of ‘material evidence.’

To sum up, the narrow meaning of ‘illicit revenues,’ which the
Code of Practice interprets as ‘material evidence,’ was made up for
by the property confiscation clause in the Criminal Code before the
December 2003 amendment. But the balance between the two codes has
been upset, and Russia has been pushed to the sidelines in its
efforts to fight organized crime and corruption together with the
international community. With the amendment endorsed, many
procedures of cooperation in the field of confiscations, especially
in the handling of confiscated property and revenues, amounted to
nothing. Let us consider the above-mentioned $100 million that was
(hypothetically) stolen. In that case, the individual who placed
the money on an overseas bank account will be able to claim it once
he pays a fine and serves a prison term.

The reintroduction of confiscation clauses into the Criminal
Code, and the assimilation of international mechanisms of
confiscation in the Code of Practice, is an immediate goal for
Russian lawyers in the struggle against corruption and organized
crime. This is a far from simple task, for it will require the
revision of ideological principles linked to economic reform. One
of those principles involves certain misgivings that the authors of
liberal reforms had about tough laws against organized crime and
corruption – similar to the RICO (Racketeer Influenced and Corrupt
Organization) laws adopted in the U.S. in the 1970s. RICO specifies
a set of legal instruments aimed at curbing extortion and
corruption and weeding out organized criminal communities. It also
provides for the confiscation of property from the members of
criminal groups, the liquidation of the enterprises they control,
and many other things.

Foreign experts who advised on the reforms in Russia bluntly
told the reformers that the introduction of RICO in this country
would not facilitate its progress toward a free market economy, as
the sanctions against collusion might entail a restoration of the
worst traits of the Soviet legal system – the iron fist of
executive power and arbitrary confiscations (Martens, F.T., Roosa,
S.B. Exporting RICO to Eastern Europe: Prudent or Irresponsible?
In: Journal of Contemporary Criminal Justice, No.
4/10,1994, pp.267-289).

The advice was heeded and the property confiscation clause
vanished from the Criminal Code. The initiators of the change
clearly ignored the fact that the RICO provisions for confiscating
any profits or property obtained by a criminal community or its
separate members were also featured in the UN Conventions Against
Transnational Organized Crime and Against Corruption.

According to the international legal practice, illicit profits
can be confiscated only on the basis of anti-laundering law. Some
may think that Russia has done much toward that end in recent
years. Indeed, it has passed a federal law and set up a specialized
agency, the Financial Monitoring Committee under the auspices of
the Finance Ministry. The committee has been nicknamed ‘financial
intelligence,’ but the problem is that it does not fall into the
category of intelligence bodies, the way similar organizations in
foreign countries do. The committee does not have operative and
investigation functions – it cannot embed its agents, perform
electronic monitoring of negotiations, organize street
surveillance, etc. What it can do is use official data of the
organizations that report to it. So it is little wonder that the
committee has displayed less efficiency than its predecessor – the
Inter-Departmental Anti-Laundering Center that reported to the Main
Department for Economic Crimes at the Russian Interior Ministry.
The latter did have operative and investigation functions, and it
seems that providing these functions to the Financial Monitoring
Committee would be highly beneficial for the struggle against
organized crime and corruption.

The introduction of international legislative standards in the
struggle against organized crime and corruption would be a good
remedy for anti-mafia radicalism, but one must recall that
adjustments in the law will be successful only if legal changes
proceed in parallel with the revitalization of the judiciary.

In a country where the slogans like “Down with the rich” or
“Divide the wealth equally” are popular, the confiscation mechanism
may become one more weapon in the radicals’ arsenals. In the
absence of independent and uncorrupted courts, not to mention weak
public control over the activity of law enforcers, the struggle
against organized crime may easily degrade into settling accounts,
violations of the law and encroachments on human rights. No doubt,
successful counteraction to the mafia or any other criminal
entities will eventually receive better legislative support, but
any anti-crime laws, however correct and efficacious, will have
real effects only when their application is unbiased and
competent.