The Wall Street Journal-20080126-Politics - Economics- Russia Arrests Alleged Mobster Tied to Natural-Gas Trade
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Politics & Economics: Russia Arrests Alleged Mobster Tied to Natural-Gas Trade
Russian police arrested an alleged mafia boss who U.S. officials suspect has played a key role in the multibillion-dollar natural-gas trade through Ukraine to Western Europe.
U.S. officials say Semion Mogilevich is architect of a powerful Eastern European organized crime ring. Since the 1990s, he has been a minor irritant to Russian-U.S. relations.
Russian officials ruled out the extradition of Mr. Mogilevich, 61, who has been wanted in the U.S. for years. Russian state TV reported he was living comfortably near Moscow as recently as 2005. Officials said his arrest in Moscow is unrelated to a U.S. criminal case and that he was detained late Wednesday in Moscow in connection with tax evasion at a top cosmetics retailer, Arbat Prestige.
Mr. Mogilevich's lawyer denied the tax-evasion charges and said that his client had nothing to do with the perfume business. The lawyer, Alexander Pogonchikov, said Mr. Mogilevich and the other suspect, Arbat Prestige owner Vladimir Nekrasov, were friends and took a common interest in collecting antiques and art.
He said Mr. Mogilevich, who went under the name Sergei Shnaider, had taken the name of his most recent wife. "It has nothing to do with any attempt to hide," Mr. Pogonchikov said of the name change. Police said Mr. Mogilevich had more than a dozen aliases and passports from several countries. Late Friday, Russian news agencies reported that police detained Olga Shnaider, whom they identified as Mr. Mogilevich's ex-wife.
In Washington, U.S. officials said they believe the arrest is related to Kremlin intrigues involving the gas trade. The Justice Department's Organized Crime and Racketeering Section is investigating possible links between Mr. Mogilevich and a Ukrainian-Russian trading company that is central to the multibillion-dollar trade in Russian natural gas across Ukraine and on to Europe. His representatives and the companies involved have denied any ties.
In Philadelphia, a federal court charged him in 2003 in a 45-count racketeering and money-laundering indictment of masterminding a stock fraud using a web of shell companies in Europe. U.S. officials believe Mr. Mogilevich used $150 million of his winnings from the U.S. to invest in the gas business.
In rare interviews, Mr. Mogilevich has scoffed at the U.S. charges. In 1999, after U.S. officials said he was involved in the laundering of billions of dollars through the Bank of New York, Mr. Mogilevich told a Moscow newspaper that "I can only dream of such money . . . All these accusations are the nightmarish delirium of the FBI."
Russian state TV aired police video of his arrest Friday, showing dozens of officers, wearing ski masks and wielding submachine guns, shortly after they closed in on Mr. Mogilevich and his bodyguards outside a Moscow hotel-and-office complex.
Balding and overweight, Mr. Mogilevich was wearing a blue-and-white sweat suit and a leather jacket. Television later showed him in a glass defendant's cage in court, where he was arraigned.
Kremlin-watchers say the arrest of Mr. Mogilevich could mark a new round of power struggles between competing Kremlin clans in the run-up to presidential elections.
"The arrest of someone this big had to come from the president himself or from the circle around the president," said Vladimir Ovchinsky, former director of Russia's Interpol bureau.
Until recently, Mr. Mogilevich had probably been protected by someone in the government, Mr. Ovchinsky said, and his arrest means a shift in the power in the Kremlin. "I think that it is a fight at the top," he said.
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Glenn Simpson in Washington contributed to this article.
