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. Last Updated: 07/27/2016

Tale Begins Once Upon a Time in Lugano




LUGANO, Switzerland -- In this city of breathtaking Alpine peaks, medieval charm and world-class fashion, the little Fenini Shop is notable for being, well, uninspiring.


The family-owned clothing store, tucked into a mini-mall near a highway offramp, sells a ho-hum selection of Levis and casual sweaters. Neighbors say they've rarely seen a customer in the place, and some snicker that the shopkeeper spends most of her time drinking Campari in the bar on the corner.


It is, to say the least, not the kind of establishment one would expect to find at the center of an international scandal. But it's this unassuming shop that is the purported linchpin of an alleged scheme to buy influence with President Boris Yeltsin by providing credit cards to him and his two daughters.


The credit card scheme is perhaps the most sensational of a stream of allegations over the last several weeks accusing top Kremlin officials of corruption and money laundering. Yeltsin is accused of at least tolerating, perhaps even encouraging, the unscrupulous activities of his aides.


Although it is not yet clear where the scandal will end, it is clear where it began: in 1990, in this Italian-speaking 19th century spa town, when the Fenini Shop's owner, Franco Fenini, met a young Soviet emigr? named Felipe Turover.


Fenini was a 39-year-old banker, an official with the Lugano-based Banca del Gottardo, which was looking to build up business in the collapsing Soviet Union. Turover, who had left the Soviet Union about seven years earlier, was about 25, savvy, energetic, spoke five languages and had connections in Moscow.


Fenini, now 48, says the two men became close friends despite their age gap. They took a trip to Mexico together in 1990 and over the next five years built up a lucrative debt collection business in Moscow.


Turover ran the Moscow end, tracking down assets in Russia and claiming them on behalf of customers of the bank. Fenini handled relations with the bank's customers in Switzerland.


According to Fenini, the two men had a private pact, which broke the bank's rules, under which they split the commissions from the reclaimed debts. Fenini says Turover decided in 1995 that he could continue the business on his own, disclosed the pact to the bank, and got Fenini fired. "I relied on him,'' Fenini said in an interview. "Perhaps I was naive.''


Turover tells a different story. He says they were never friends and that Fenini was blackmailing him for those five years, demanding and receiving a total of $3 million in return for not revealing Turover's income to Spanish tax authorities. Turover, a Spanish citizen, was avoiding taxes by declaring his tax residence as Russia.


And this is where, according to Turover, the Yeltsin credit cards come in. In 1995, in an effort to force him to pay more and keep quiet, Turover says, Fenini showed him three credit cards: an American Express card in the name of Boris Yeltsin and two Eurocards in the names of Yeltsin's two daughters, Tatyana Dyachenko and Yelena Okulova.


"He wanted to show me how high he is connected,'' Turover said in an interview.


Turover said Fenini also showed him some bill summaries indicating that purchases had been made on the cards, though he doesn't recall how much or where.


"I can't tell you the guy spent very much,'' Turover said, referring to Yeltsin.


Turover said the bills run up on those accounts were mailed to the Fenini Shop and paid out of accounts belonging to a Lugano-based construction firm, Mabetex, or its officers. Mabetex has been the recipient of several contracts to refurbish Kremlin properties. Fenini handled Mabetex's accounts at the bank and went to work for Mabetex after he was fired.


For his part, Fenini refuses to discuss the credit cards, answering every query with a curt "No comment.''


"All I can tell you is that the shop has never been used as a cover for bribery,'' Fenini said.


Turover and Fenini are now suing each other in Swiss courts. Turover accuses Fenini of extortion and forgery. Fenini accuses Turover of making a false accusation.


Meanwhile, the Kremlin accusations have taken on a life of their own. Both men have been questioned by Swiss investigators, who are cooperating with the Russians to investigate whether Mabetex, through Fenini, tried to bribe Yeltsin or other Kremlin officials.


So far, despite all the scrutiny of the case, no one has leaked to the public documents such as receipts with Yeltsin's signature. And there is no clear indication that Yeltsin knew about the cards or, even if he did, if he thought of them as anything other than a novelty or gift.


The allegations have focused ever more attention on Mabetex, headquartered in a posh, checkerboard-patterned pink marble building a few blocks from Lugano's lake-front.


According to public records in Lugano, Mabetex was founded in 1990 by a bankrupt local contractor. The company's flamboyant current director, Behgjet Pacolli, appears in public records as an officer of the company only in 1993. That was the same year that Pavel Borodin became manager of the Kremlin's property department, which administers a vast network of government buildings, country homes, resorts and other facilities.


Borodin and Pacolli knew each other from Borodin's tenure as mayor of the Siberian city of Yakutsk, where Pacolli helped build a hospital. The relationship continued after Borodin moved to the Kremlin, with Mabetex gaining six contracts to provide furniture and other materials for various renovations, including four presidential residences.


In recent years, the high volume of transactions on Mabetex bank accounts attracted attention from Swiss authorities as possible money laundering. But they were unable to open a new probe without indications that the money was of criminal origin.


"First, you must have a crime,'' said Dominique Reymond, spokesman for the Swiss attorney general. "Otherwise, you cannot have money laundering.''


The Swiss got the go-ahead after April 1998, when Russia and Switzerland concluded an agreement to tighten cooperation. Swiss Attorney General Carla del Ponte went to Moscow to sign the pact and mentioned to Yury Skuratov, her counterpart, that he might start looking into Mabetex.


Skuratov says he did and, in October 1998, he sent del Ponte's office an official request for assistance. Shortly thereafter, del Ponte interrogated Turover and, on Jan. 22 conducted a raid of Mabetex offices.


During the raid, some news reports say investigators seized the Yeltsin credit cards from a safe in Fenini's office - an assertion Swiss prosecutors refuse to discuss but make a point of not denying.