LUZKHOV DILEMMA, Cable of
2-12-2010 from US ambassador to Russia, via Wikileaks:
Current Classification:
SECRET
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.
…6. (C) Nabi Abdullayev, a journalist at The Moscow Times, 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. Abdullayev argued that the
political parties are the ones with the political clout;
therefore they have some power over these criminal groups.
7. (S) Sergei Kanev, an investigative crime reporter at the liberal newspaper Novaya Gazeta, 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) According to Kanev, Luzhkov used criminal money to support his rise to power and has been involved with bribes and deals regarding lucrative construction contracts throughout Moscow. Kanev told us that Luzhkov's friends and
associates (including recently deceased crime boss Vyacheslav Ivankov and reputedly corrupt Duma Deputy Joseph Kobzon) are "bandits." He told us that he knew this because he formerly
had contacts in these criminal groups, but many of his
contacts have since been killed. Kanev 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) Kanev 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. Kanev 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. Kanev argued that the vertical works because people are paying bribes all the way to the top. He 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. Kanev 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, Kanev told us that 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 to Abdullayev, Luzhkov is following orders from the Kremlin to not go after Moscow's criminal groups. For example, Abdullayev argued that it was only a public relations stunt from Putin to close gambling. In contrast to
Kanev, Abdullayev 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.
Abdullayev 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. Abdullayev 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 to his corrupt activities. Kanev 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. The son of the head of the interior police, Vladimir Kolokotsev, told Kanev that Kolokotsev's number one job is to get Luzhkov out within a year. Kolokotsev was credited with removing long-standing Governor Yegor Stroyev from Orel. Abdullayev 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, Abdullayev said, will likely pick the quietest and least expected person to replace Luzhkov.
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.
Abdullayev 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 Abdullayev, 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) Abdullayev 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 Kanev, the FSB "krysha" is allegedly the best protection. He 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. Abdullayev 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. https://wikileaks.org/plusd/cables/10MOSCOW
……….
On 28 September 2010, Luzhkov was fired from his post by a decree issued by President Dmitry Medvedev.[4] Luzkhov died on 10 December 2019 in Munich, Germany….Each non-resident, who arrives in the city, must register with the local police department within 90 days of their arrival. The fine for noncompliance is 2500 rubles of penalty, and he or she would have trouble getting legal employment. Moscow police frequently ask for people's identification to check whether they have a propiska . https://en.wikipedia.org/wiki/Yury_Luzhkov
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