In early November, the Department of Justice (DOJ) and the U.S. Attorney’s Office for the Eastern District of New York announced their investigation into whether Gennady Timchenko, a member of Vladimir Putin’s inner circle, moved funds from foreign corrupt deals through the U.S. financial system.
“Kleptocracy” – literally “rule by thieves” – has become an international project of the U. S. Department of Justice. In 2010, U. S. Attorney General Eric Holder announced the formation of the “Kleptocracy Asset Recovery Initiative,” targeting the proceeds of high level foreign corruption that are moved through the U. S. financial system. The Initiative was originally directed at corruption in the Middle East and Africa but is now probing Russia, as well.
One of the Initiative’s early Russian targets is Gennady Timchenko, a multi-billionaire with Russian and Finnish citizenship. Mr. Timchenko was reportedly an apt pupil of capitalism in from its earliest Russian version and his massive accumulation of wealth coincided with Mr. Putin’s rise in power. Mr. Timchenko is supposedly currently worth $13+ billion.
The crux of Mr. Timchenko’s alleged kleptocracy is his prior interest in Gunvor Group, a commodities firm that bought oil at “sweetheart” prices from Russia’s OAO Rosneft and then sold it to others. Gunvor Group has been called a “front for massive corruption,” as it is the required trader for some oil exports and adds $1 to the price of each barrel (vs. the 5 – 20 cents normally added to the price in the competitive market). Transferring fund through the U. S. financial system would be criminal money laundering if those funds came from illegal activity, such as crooked sales of a national asset like oil. Though Mr. Timchenko is the primary target, Vladimir Putin supposedly has investments in Gunvor and the Initiative will also examine wither his Putin’s personal wealth is involved.
Mr. Timchenko was already sanctioned by the U. S. government, which banned him from entering the U. S. and made his assets within the U. S. subject to freezing. The filing of criminal money-laundering charges against him would further empower U. S. officials to obtain an Interpol Red Notice whereby Timchenko would be subject to arrest and extradition from numerous countries.
Meanwhile, Timchenko claims that he is just a businessman, not a politician, and the specter of further sanctions in the form of arrest and extradition are frightening. Though he controls major interests in shipping, seaports and railways through the Volga Group, he states that he is now afraid to travel in most of Europe.
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