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Russia June 1, 2007
Who Whacked Kozlov?
An update on last year’s Central Bank murder mystery By Yasha Levine Browse author Email

This one is big. Not as big as the UK charging Lugovoi for the world's first radioactive contract kill, but big nonetheless. A story in New Times, a semi-independent Russian newspaper, has implicated Russia's top government and private financial institutions in what might be the biggest money laundering and state-theft racket since the Yeltsin years. The scandal goes all the way to the top and is probably the reason for last September's hit on Central Bank deputy Andrei Kozlov, a Kremlin inside job signed off at the highest levels of power to keep a lid on operation.

You might recall that in 2006 Andrei Kozlov, the second-in-command at the Central Bank of Russia (CBR), was mysteriously gunned down in broad daylight as he left a soccer game. At the time of the murder, the prosecution guessed the whack job was carried out by one of the many enemies he made while at the helm of the CBR and pinned the crime on Alexei Frenkel, a small-time banker whose bank license Kozlov revoked a few years earlier. Frenkel professed his innocence and tried waging a dirty kompromat war against the CBR to secure his release. But it didn't do him any good. The case against him was shaky: there as no direct evidence, the established motive was questionable and no one was willing to testify. But it didn't matter; the prosecutor had it in for him. (I wrote about this extensively in eXile #257.) That was back in February. Now, based on police documents dug up by New Times, it's becoming obvious that the prosecution nabbed - or more likely, set up - the wrong guy.

Right before his murder, Kozlov stumbled upon a massive money-laundering operation involving a little-known, fly-by-night Moscow bank called Diskont. The scheme was linked to Gazprom Bank, Vneshtorgbank, Sberbank, Alfa Bank and about a dozen other top-tier financial institutions. It worked like this: The various banks would transfer massive sums of money (potentially hundreds of millions of dollars in a single day) into a couple of Diskont bank accounts registered to Russian shell companies held by Diskont Bank employees. They, in turn, would wire the cash to Raiffeisen bank accounts held by another set of shell companies, this time registered offshore. In the third and final step, the cash would be divvied up and wired to private accounts held at various Western banks. The scheme had been going on since the early 2000s. It isn't known who the final recipients of the money were, nor is the total amount of cash wired out of Russia. Diskont Bank never reported these transactions to the CBR. Just to get a sense of the scale, on August 29, 2006 CBR observed $1.6 billion go through Diskont Bank's accounts to Raiffeisen. New Times alleges that Diskont received a 10% cut from the money the bank wired overseas.

Diskont Bank's license was revoked on September 1, 2006 and a criminal investigation was launched into its activities. Ten days later Kozlov's brains were splattered all over Spartak's parking lot. Seems like a good lead to follow, right? Wrong. The investigation into Kozlov's murder never addressed or even mentioned this connection. Probably for good reason. According to New Times' MVD source, high-placed chinovniki have been siphoning government funds to personal accounts guised as money transfers for the financing of the underwater Baltic gas pipeline linking Russia and Germany that's currently under construction. Yeah, that's the one former German Chancellor Gerhard Schroeder is in charge of. Part of the money-laundering trail went through dummy accounts in Raiffeisen bank because it is financing a part of the pipeline project and gives the illegal transactions a cloak of legitimacy. According to the source, although an active criminal investigation is still open against Diskont Bank, the MVD is putting a lid on the situation. They are moving the trial into a provincial court where it will go unnoticed and can be better manipulated. They're also firing anyone who was involved in the investigation of Diskont.

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Yasha Levine is an editor at The eXile. You can contact him at

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The future of The eXile is in your hands! We're holding a fundraiser to save the paper, and your soul. Tune in to Gary Brecher's urgent request for reinforcements and donate as much as you can. If you don't, we'll be overrun and wiped off the face of the earth, forever.

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