ESSAY: Crime Pays for Sellers of Stolen Foreign Autos

Since last fall, as a result of the sharp drop in price for Russian automobiles, theft of foreign-made cars has increased. It is now much more profitable for auto thieves to resell prestigious Mercedes, Volvos and jeeps of various types than Zhigulis, which have dropped steeply in value. The prices for stolen foreign cars have also fallen, but they are still in demand. September and October of 1998 were the busiest months on record for Moscow's auto mafia. Up to 50 cars were stolen each day.

Colonel Vladimir Koroteyev, a deputy commander with Moscow's branch of the State Traffic Inspectorate, says that out of the 5000 cars stolen each year, only a third are recovered and returned to their owners. An analysis carried out by the Moscow police showed that no car brought illegally into Russia from Europe has ever been returned to its owner. According to statistics, one-third of stolen cars on Moscow's streets were registered in Europe.

Anybody shopping for a car in Moscow must wonder why two identical Mercedes differ radically in price: one costs $40,000; the other, $20,000. The answer is simple: The one with the high price is as clean as a newborn baby, while the cheaper one is palyonnye - or singed - meaning it's stolen. Employees of car dealerships will admit this to the customer and explain how the car can be legalized. At the moment a new foreign car is purchased, they will explain, it will not yet be recorded on law-enforcement computers as being stolen, but several months down the road, it might be. Auto sales personnel tell the client that there is no well-defined agreement between countries for the return of stolen vehicles, and that a court may very well rule in favor of the new owner. Most shoppers, after weighing the pros and cons, end up convinced by the salespeople's arguments and, after making their purchase, they can peacefully drive it around Moscow or even the country at large.

The background of the stolen car is generally as follows.

A purchaser-reseller locates a client in Germany or the Czech Republic and hatches a conspiracy with him. The client's car, let's say, is assessed by his insurance company as being worth 30,000 Deutsche marks ($16,000). The client is offered 10,000 marks cash in exchange for a promise that he will not report his car's disappearance for two months. Later this "victim" receives the payment from his insurance company that, added to his criminal bonus, means he has received a total of 40,000 marks.

Meanwhile the purchaser-reseller delivers the car to Russia, where it is prepared for sale. Documents are forged and the car then passes through three or four hands and winds up with its new owner "clean." Only after the agreed-upon two months have passed is the car entered on Interpol's database, after which this data automatically shows up on Russian law enforcement computers.

But the car's new owner usually falls foul of the authorities only later, during a scheduled technical inspection or a planned check by the State Traffic Inspectorate. Even in this case, the owner generally comes out clean because the car was purchased from a legal dealer and was legally registered with the Moscow auto inspectorate. Thus no criminal charges are pursued, and the owner drives the stolen vehicle as long as there is no specific inquiry about it from Germany or the Czech Republic.

The police may have suspicions about the car dealership, but rarely acts on them since stolen cars usually end up there via middlemen. Russian inspectors are obligated by international convention to report to Interpol that a stolen car has been found. This information then goes to the German insurance company. For German insurance companies, however, Russia means bad roads, substandard petrol, high travel expenses and a host of other problems - including, of course, auto theft. Thus the total sum for reclaiming the stolen vehicle equals or even exceeds its value. The insurance companies pass on retrieving the car, and the new owner becomes its legal owner.

The traffic inspectorate's Koroteyev says that the absence of legal norms or mutual agreements between Russia and European countries means attempts to retrieve stolen cars from Russia have "no hopes for success." Belarus and Ukraine, meanwhile, have such agreements with European countries and stolen cars are returned to their owners or insurance companies according to court rulings. But this simply bolsters the Russian auto mafia.

At the same time, the recovery of stolen vehicles is a major headache for Russian law enforcement. The lack of parking lots or control over those that do exist creates huge problems. The removal of spare parts from these cars has become routine not only for ordinary thieves, but also an illegal business for corrupt police officers.

If a car is ordered by serious people, it will be stolen one way or another - including car-jacking - and sent to the client, police experts say.

A court decision earlier this year to overturn the mandatory system for having driver's licenses notarized was a big gift to the auto mafia. Now a person may drive a car not belonging to him if he has a power of attorney written by the car's owner. State Traffic Inspectorate officials say while this is a decisive step toward better relations between car lovers and traffic police, auto thieves have fewer documents to forge.

Three or four years ago, the largest flow of stolen expensive foreign-made cars went to the North Caucasus. Given the high level of law-enforcement corruption in that region - particularly in Chechnya and Ingushetia - a stolen car easily found an owner and legal registration. But after the war in Chechnya ended, selling stolen vehicles there became more dangerous because of the riseof another criminal business - kidnapping. Now stolen foreign luxury cars tend to be sold in oil-producing areas of Russia, where there are powerful and rich provincial mafias.

The passage of new legal measures and treaties between Russian law-enforcement agencies and those of European states will undoubtedly improve the legal situation surrounding car theft. But whether it will become economically viable for Western insurance companies to recover stolen cars from Russia remains an open question. For now, the Russian automobile mafia has a green light.

Mumin Shakirov is a correspondent for Radio Free Europe. He contributed this essay to The Moscow Times.