U.S. arrest of Putin ally riles Moscow

Swiss warrant alleging payoffs stops official on way to inaugural

January 19, 2001|By Kathy Lally | Kathy Lally,SUN FOREIGN STAFF

MOSCOW - The arrest in New York of Pavel P. Borodin, the Russian official who brought Vladimir V. Putin to the Kremlin, has created a huge sensation here, shocking even politicians who harbor their own suspicions of the former Kremlin property czar.

Borodin, on his way to attend an inaugural dinner in Washington tomorrow, was arrested on a Swiss warrant on money-laundering charges when he landed Wednesday at John F. Kennedy International Airport. The detention enraged members of the State Duma, the lower house of parliament, dominating their morning session yesterday.

"It's immoral to take advantage of a visit to the inauguration and arrest him," said Alexander V. Chuyev, a member of the Unity party linked to President Putin. "I think someone did this to spoil the inauguration atmosphere for President Bush."

Borodin, 54, appeared yesterday at a hearing in U.S. District Court in Brooklyn. Federal magistrate Viktor Pohorelsky ordered him held without bail until Jan. 25.

Swiss prosecutors said they would seek his extradition. They have been investigating allegations that Borodin took $25 million in kickbacks from two Swiss firms, Mabetex and Mercata Trading, in return for contracts for lavish Kremlin-managed renovations worth more than $400 million.

Borodin managed an estimated $600 billion worth of Kremlin-owned property, including government, commercial and residential buildings, during President Boris N. Yeltsin's administration. In December, Russian prosecutors dropped their own bribery investigation, citing lack of evidence.

The case has a seamy history. Yuri Skuratov, a Russian prosecutor who led an aggressive investigation of Borodin while Yeltsin was president, was forced out of office after videotapes appeared that seemed to show him in bed with two prostitutes.

Borodin, a former mayor of Yakutsk, brought Putin to Moscow in 1996, when he hired him as his deputy in the Kremlin administration, a post Putin held for a year.

Though Putin dismissed Borodin from the Kremlin property job last year, he gave him a post, mostly ceremonial, as head of an agency forging closer ties between Russia and Belarus. Reports at the time suggested that the post would provide Borodin with immunity from prosecution.

But Borodin was carrying an ordinary passport when arrested in New York. His lawyer, Boris Kuznetsov, said Borodin had not had time to secure a U.S. visa for his diplomatic passport, which presumably would have granted him immunity from arrest.

Yuri Ushakov, Russia's ambassador to the United States, said Borodin had been invited to an inaugural dinner by James Zenga, a businessman with Star Capital Co., the Itar-Tass news agency reported last night.

Borodin spent a night alone in a cell in a New York federal detention center. A Russian consular official met with him there.

Igor Ivanov, Russia's foreign minister, summoned U.S. Ambassador James Collins and made a formal protest yesterday, demanding Borodin's release. In Minsk, Alexander Lukashenko, the Belarus president, lashed out at the United States, calling the arrest a "gross violation of international law."

But Vladimir Lukin, a former Russian ambassador to the United States, said such official demands and accusations were useless, pointing out that the U.S. court system runs independently. "If there are grounds," he said, "they'll even put a U.S. president into jail."

In Washington, State Department spokesman Richard Boucher said the United States was obliged to act because of the Swiss arrest warrant. "When somebody shows up without any immunity or diplomatic status and he is subject to arrest, we have an obligation to carry it out," Boucher said.

Russian politicians were interpreting the Borodin incident through the prism of their own experience.

Yuri P. Shchekochikhin, a newspaper editor and liberal member of the Duma, agreed that the arrest was a set-up engineered in Washington, but disagreed that it was meant to disrupt the inauguration.

"Maybe some bureaucrat in Washington wanted to preserve his post in the new administration," Shchekochikhin said, adding that Bush has been quoted as criticizing corruption in Russia. "It's possible it was a first gift to President Bush and a first box on the ears to President Clinton."

Shchekochikhin was at his desk in the Duma, trying to telephone New York, where he wanted to assign reporters to cover the federal court hearing on the Swiss request to extradite Borodin. Shchekochikhin is deputy editor of Novaya Gazeta, a weekly newspaper that has been conducting an investigation of Borodin's activities.

Few officials gave credence to the possibility that Borodin was arrested simply because his name came up on a computer as a man wanted by the Swiss.

"Such a scandal cannot be allowed," said Maj. Gen. Nikolai Bezborodov, a conservative member of the Duma. "They sent him an invitation to the presidential inauguration and then they arrest him. I don't say he is completely innocent of abuse of power and machinations, but such things should be handled in a civilized way."

Another deputy, Vyacheslav V. Olenyiev, asserted that the incoming Bush administration cooked up the arrest to make a point about corruption in Russia.

"It's good news," said the Communist, cheerfully raising a clenched fist. "Anyone in the Yeltsin circle couldn't help but be implicated. The honest ones all left."

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