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. Last Updated: 07/27/2016

New-Look KGB, Your Partner Against Crime

Foreign businessmen worried that organized crime gangs are about to come knocking at their doors can rest assured that the Federal Security Service, the successor to the Soviet-era KGB, has the means to protect them, a senior Russian crime-fighter told a conference Thursday.


The Federal Security Service, or FSB, "has sufficient experience and resources to resist criminal interference in business operations," said Alexander Yurchenko, deputy director of the service's economic counter-intelligence department.


But he acknowledged to a group of Western and Russian business representatives that a persistently high crime rate is deterring some foreign firms from doing business here.


"The level of crime in the Russian Federation has become prohibitively high, and the increase in some categories of crime does not reassure the FSB," Yurchenko said.


The one-day conference at Moscow's Renaissance Hotel was organized by the American company O'Gara Security International, and featured speeches by former CIA and FBI agency and department chiefs and others concerned with doing business safely in Russia.


The issue is also likely to figure at this week's summit between presidents Bill Clinton and Boris Yeltsin in Helsinki, Finland. FSB chief Nikolai Kovalyov told journalists Wednesday that his agency was declaring open war on economic crime, and he hinted that the Russian and U.S. presidents might unveil a new joint initiative on the issue.


Topics at the conference were varied, but swung repeatedly between two main points: the need for businesses in Russia to develop comprehensive security systems, and the deceptive nature of what Yurchenko termed the "myth of the all-powerful Russian mafia."


"[The reality] is a far cry from the stories that flourish in the media -- particularly in the Western media -- about the perils of doing business in today's Russia," said Peter Charow, executive director of the American Chamber of Commerce in Russia.


Although he acknowledged that any business is susceptible to criminal intimidation, Charow pointed out that headaches experienced by Western companies were more often caused by obstruction from corrupt officials looking to profit from their positions.


Government law-enforcement efforts and government policy toward business came in for a verbal drubbing throughout the conference.


Criticism was leveled at what participants said was the failure of government agencies to work constructively with private Russian security organizations, which now number about 4,500.


Also under fire was the government's cumbersome tax policy. Charow said its severity often forces smaller businesses into the shadowland of pay-offs to government officials. "This fosters the opinion that the government itself is a criminal organization," he said.


Most Russians attending the conference listened with polite interest to advice of American security experts, although not all were convinced that the same principles apply to Russia.


"The theory of good security is nothing new to us," said Viktor Ivanenko, vice president of the Yukos oil company. "But businesses in the U.S. work in a stable environment. In Russia, on the other hand, we are more vulnerable to political decisions taken arbitrarily from above."


Today the challenges of conducting business in Russia provide ample scope for security companies like O'Gara International to prosper since they offer precautions as diverse as satellite communications systems to armored vehicles.


Thursday's conference, however, was particularly well timed, following President Boris Yeltsin's recent castigation of Russian Prosecutor General Yury Skuratov for failing to solve a number of high-profile murders.


In a news release, O'Gara Security President Steve Vasko said his company is "encouraged by President Yeltsin's pledge to reinstate order based on law in his March 6 state-of-the-nation address. ... However, the domestic and international business community recognizes that Russia's law enforcement infrastructure is unable to provide adequate protection from criminals."


Yurchenko's pledge to come galloping to the rescue of harassed Western companies in Russia drew some skeptical looks, but one security manager at a large Western company later confirmed that her company had actually called upon Yurchenko's department to investigate an employee suspected to have links with the underworld.


"They were very responsive and effective, and there was no demand for any payment for their assistance," said the employee, an American who wished to remain anonymous.


Such efforts by federal security services, which in the Soviet era spied on rather than tried to help foreign businesses in Russia, could get added weight if Clinton and Yeltsin put their weight behind a crime-fighting initiative in Helsinki.


Just how feasible it would be to coordinate the security services of East and West in an attack on organized crime is hard to say, but intelligence experts are optimistic.


"I believe we can beat organized crime together," former FBI Director William Sessions said at Thursday's conference. "The first task, however, is to create a structure where the various agencies are actually willing to exchange information with each other."