The Looting of Russia
An FBI agent and an honest Moscow cop stop the plundering of the national treasury
As Zhirov worked the case--largely alone--he found the going tough. Again and again, officials assured him that the diamonds were in good hands. Worse, Zhirov couldn't gain access to key documents. Finance Minister Fyodorov, who had signed off on the deal, had classified everything tied to the company--contracts, correspondence, customs declarations. Still, police found enough evidence to raid Golden ADA's Moscow offices. They seized papers detailing the shipment of $88 million of rough diamonds, authorized by Bychkov. So where was the loot now? Zhirov asked Mike di Pretoro, the FBI's man in Moscow.
That the bureau even had a man in Russia was noteworthy. In the early 1990s, as Russian organized crime spread worldwide, the FBI realized it needed to deal effectively with law enforcement in the former Soviet Union. Being a cop in Russia is a thankless job: Pay is low, cars and basic gear like handcuffs are in short supply, and the work is unusually dangerous. In the past two years, more than 700 Russian officers have been slain in the line of duty, nearly three times the number slain in the United States during the same period. With street cops earning $300 per month, many police officers simply give up and freelance for the mob.
For the FBI, the key was to find reliable partners. Gradually, senior FBI agents built close relationships with officials at the Ministry of the Interior, home to Russia's national police force. They asked them to develop a small, elite group with whom the Americans could work. The result was the formation of what might be called the Russian Untouchables.
Viktor Zhirov was one of them. So when Zhirov phoned Mike di Pretoro, the FBI agent paid close attention. Di Pretoro suggested Zhirov fly to San Francisco as the bureau's guest, to see for himself. Zhirov started packing his bags.
The raw diamonds Bychkov sent to Golden ADA literally filled the firm's new corporate jet. The gems arrived in two shipments, guarded by off-duty San Francisco cops. The diamonds were to be cut, polished, and sold, and the money wired to Moscow. But while a relative handful were indeed processed at the factory, most disappeared, according to court records. The majority were quietly hauled back across the Atlantic, to Golden ADA's operation in Antwerp, where they were sold to companies controlled, ironically, by De Beers. The sales generated some $77 million, which investigators traced to Swiss accounts. As in San Francisco, the Antwerp Golden ADA reeked of corruption. False invoices declared the diamonds to be from Zaire, to avoid taxes and to mislead De Beers. "Everyone in Belgium got rich," said one Belgian cop. Belgian police had begun their own probe.
In San Francisco, Davidson puzzled over Golden ADA, too. Kozlenok, he had learned, knew little about the diamond business; his partners, the Shagirian brothers, knew even less. The diamonds Bychkov sent, moreover, were far in excess of what Golden ADA's three dozen employees could reasonably process. Bychkov had shipped nearly 90,000 carats of rough stones--enough for 45,000 engagement rings. At a major diamond processor in Russia, it took hundreds of workers a year to cut and polish the same number. Yet the firm lacked the classic signs of what cops call a bust-out fraud. Golden ADA spent millions to buy high-tech equipment and real estate and put it all in the company's name; professional looters usually lease their fronts and hide their assets.