Kleptocracy: Russia’s Most Successful Export

​Image: Vilnius, Lithuania by 3DMan_EU | CC0 1.0

By Marius Laurinavičius

Nowadays it is generally accepted that Russian support for populist anti-EU parties poses a threat to Europe; meanwhile, the terms ‘mafia state’ and ‘kleptocracy’ have become increasingly widespread definitions of Putin’s Russia. However, one thing is still missing: An understanding that the Kremlin reserves the right not only to pursue an undemocratic, mafia-style system at home, but is actively trying to manufacture similar regimes all over the world. How? By exporting kleptocracy.

Even the Kremlin’s foreign policy advisor, Sergey Karaganov, cynically describes Russian foreign policy as one that buys the elite of neighboring countries “with money that was then stolen, likely together.” Nevertheless, a lack of hard facts often gives Russian influence the benefit of the doubt both in Europe and the United States.

Even President Trump questions his own intelligence services’ findings on Russian interference in the U.S. elections, as no hard evidence could be publicly presented. However, when it comes to the export of Russian kleptocracy and an attempted takeover of a sovereign country by the Kremlin, we can refer to at least one case recounted in easily accessible court documents.

In 2004, the Lithuanian president Rolandas Paksas became the first European leader to be removed from office by impeachment. Accusations of murky ties to the Russian mafia based on intercepted phone calls, his acceptance of Russian money and help during his re-election campaign, and allowing Russia’s secret services to penetrate the presidential offices were the subject of widespread discussion and concern both in Lithuania and abroad.

However, even according to U.S. officials at the time, there was no evidence that Russian authorities had sought to subvert Lithuanian democracy. The FBI indicated that the Russian mob had shown little interest in the country, and the then-US ambassador to Lithuania was one of Paksas’ staunchest public defenders.

Ultimately, Paksas was officially impeached on less dramatic charges: leaking classified information about his investigation to his main financial donor, Yuri Borisov; improperly restoring Borisov’s citizenship; and interfering in a privatization transaction. Evidence supporting the other accusations did not meet the admission standards of the Constitutional court or other courts which followed.

That allowed Paksas to escape any kind of formal punishment, except being disqualified from running for elections in Lithuania. He was duly elected as a member of the European Parliament instead, where he unsurprisingly belongs to the Russia-friendly Europe of Freedom and Direct Democracy group, which comprises populist anti-European political movements like the UK Independence Party, Five Star movement of Italy, and Sweden Democrats.

Paksas also took his case to the European Court of Human Rights, where Strasbourg judges accepted that, while a breach of the constitution was “a particularly serious matter,” permanent and irreversible disqualification from running for election was disproportionate.

On the other hand, politics and public trust are not based on legal judgements alone. Public awareness plays much bigger role. It was the Lithuanian public, rather than any court, that really closed the case—because Paksas and his party’s popularity plummeted so far that the impeached president could expect reelection only in his wildest dreams.

At the same time, Paksas’ case stands as an important example of what Russia and its kleptocracy is up to—which is why the Kleptocracy Initiative’s Archive Project has chosen to include numerous documents from the Lithuanian Parliament’s inquiry and relevant Constitutional court hearings. Together, these documents form a compelling narrative of how Russia exports kleptocracy and buys influence abroad. Of course, this case unfolded more than a dozen years ago, when the world was hardly even thinking about the Kremlin in such terms.

One of the documents was found by the investigators in the computer of Paksas’ aforementioned financial donor, Borisov. It details what the elected president of a European Union member state was expected to do in return for the $1.1 million donated to his election campaign by a businessman closely related to the Russian military-industrial complex: Return $18 million in cash and favors.

These documents reveal how—before almost anyone in the West could have imagined it–Russia was already participating in the elections of a European country. They also prove that, in Putin’s Russia, it is hard to find any distinction between the state, security services, mafia, and business. Many other parallels can be drawn between then and now, and many lessons might be learned if this case was recalled more frequently as an illustration of the threat posed by Russian kleptocratic export.

While the impeachment proceedings form the centerpiece of the documents, the whole account of Paksas’ path to power deserves closer scrutiny.

Comrade J, a book by Pete Earley based on the memoirs of Sergei Tretyakov, an SVR officer who worked for Russian intelligence and later defected to the U.S., reveals how kleptocratic methods were deployed for intelligence purposes under Yeltsin and Putin. In 1994, for example, the SVR was able to arrange cover for its Canadian agent (codename KIRILL) to travel to Moscow by using an anonymous company to hire KIRILL’s Ottowa-based firm.

Another then-revolutionary idea, which Tretyakov attributes to himself and seems proud of, was to secure financing for the same Canadian KGB agent by giving him a contract to build houses in Russia. This shows just how mistaken it is to view Russian business through the prism of purely commercial Western practices.

Perhaps it is just a coincidence that, before entering politics, Paksas started his business career in a very similar way to KIRILL – by mysteriously being awarded housing construction contracts in Russia.

Marius Laurinavičius is the Baltic-American Freedom Foundation (BAFF) Security Research Fellow currently in residence at Hudson Institute. Follow him on Twitter.