Borisov in the spotlight

Borisov has been described variously as a black belt in karate, a former bodyguard and a wrestler. One paper reports that his anti-Gypsy and anti-Turk comments have shown that he’s “more maverick populist than reformer” and says a GERB-run Bulgaria may be more likely to draw foreign investment. But what about the corruption and crime that prompted the EU to suspend hundreds of millions in aid last year?

The incoming government must also address Bulgaria's opaque public finances and "reassure our European partners that corruption will no longer be such a big issue" in order to release more than half a billion euros from Brussels. Those funds have been frozen over the past two years amid accusations of graft and a failure to address organized crime in the Balkan country, Ms. Kostadinova adds.

It is far from obvious what concrete measures can and will be made to root out these problems, but Borisov has clearly staked his reputation on doing so.

Another post reports that his nickname in Bulgaria is “Batman,” and says that Borisov

has great public appeal and popularity, but has done little to demonstrate his credentials for political leadership…While he has a way to charm the public, speaking and dressing in a manner oddly reminiscent of Marlon Brando's portrayal of Vito Corleone, Borisov largely lacks any political or international relations experience or training.

Meanwhile, it’s business as usual at the EU’s anti-fraud office, OLAF. One year after an OLAF report on Bulgaria’s misuse of EU funds helped the EU decide to freeze millions in aid, its director once again urged Bulgaria to get its ducks in a row.

"Clearly there is a long way to go," OLAF director Franz-Hermann Bruener told reporters in Brussels.

"We are still waiting for outcome of some cases, and we are still seeing some criminals playing under the noses of everyone including the government of Bulgaria. They are dancing with us and I don't like it."

Obama touches on graft on Russian visit

Though fighting corruption is Russian President Dmitry Medvedev’s pet issue , and Swedish furniture giant Ikea recently said it would do no more business in Russia due to graft, US President BarackObama did not harp on the issue when he visited the country last week.

Obama mentioned corruption only in passing when speaking to students at Moscow’s New Economic School.

Obama was careful in his speech, billed by the White House as a major setpiece, to avoid direct criticism of the Kremlin, where he agreed on Monday an anarms-cutting package and permission for US troops to cross Russia en route for Afghanistan.Instead, Obama emphasized American ideals such as prosperity, democracy and the rule of law.

"People everywhere should have the right to do business or get an education without paying a bribe," Obama told students, obliquely referring to Russia's ingrained culture of corruption.

In other “walking on eggshells around Russia” news, the Zurich-based Russian Analytical Digest took a completely benign view of Russian oligarchs in a new report out last week. One researcher wrote:

In 2006 I published a book entitled Russia’s Oil Barons and Metal Magnates. There I argued, rather unfashionably, that on balance the oligarchs – by whom was meant the small group of private businesspeople who through the 1990s had built up a major presence in the Russian economy, above all in the oil and metals sectors – had played a positive role in Russian post-Soviet economic development. They were value adders rather than asset strippers. In difficult circumstances they had turned around enterprises that, when they obtained them, had been riddled with debts and run-down assets.

Not exactly the prevailing view, which is that the oligarchs created no value. Rather, they made money in banking/money laundering, by speculating on commodities, or by snapping up Russia’s assets through the loans-for-shares scheme, voucher privatization or at auctions widely seen as rigged. Nor did they re-invest their billions into Russia’s economy, opting instead to park their money in Swiss bank accounts. And their coziness with the old Kremlin and involvement in Boris Yeltsin’s re-election is well-known. The economic crisis’s impact on Oleg Deripaska’s aluminum giant Rusal, however, is discussed in greater detail in the article, which makes for interesting reading if you can ignore the stuff about the “value adders.” This 2003 article and this 2002 abstract offer more of the prevailing view of how the oligarchs operated in 1990s Russia. 

FP: Beware a failed state in Tajikistan

Beware a failed state in Tajikistan (among other places), writes Ian Bremmer in last week’s Foreign Policy. Its economy is no good, and there’s no reliable electricity for 80 percent of the population. Bremmer writes:

Tajikistan matters because it serves as a transit point (and in some cases a source) of flows of drugs and weapons into several more internationally influential countries. It shares a porous 1200 km-long border with Afghanistan that cannot be secured, which could help reinforce militants fighting against US and NATO troops. Drugs and weapons already cross the border into Russia and China and flow across South Asia. State collapse in Tajikistan would destabilize the broader Fergana Valley, with impact on neighboring Uzbekistan and the Kyrgyz Republic.

Finally, there might well be spillover effects inside China's Xinjiang province, where about 45 percent of the population is Muslim and where unrest over the weekend reportedly killed at least 140 people. According to the Chinese government, Xinjiang produces 30 percent of China's oil reserves, 34 percent of its natural gas reserves, and 40 percent of its coal reserves- in a country that still draws 70 percent of its energy from coal.

“Pirate of Prague” pal to pay the piper

A federal jury last week convicted Frederic Bourke, Jr . – a handbag mogul and associate of a shady Czech investor known as the “pirate of Prague” – of conspiring to pay bribes to officials in Azerbaijan in 1998.

The US District Court in Manhattan also found Bourke, the co-founder of handbag maker Dooney& Bourke , guilty of making false statements to the FBI, but acquitted him of money laundering conspiracy. He could face 10 years for violating the Foreign Corrupt Practices Act (FCPA), which the Justice Department is robustly enforcing to crack down on overseas bribery. Bloomberg had more details :

Bourke, 63, was on trial for investing with (Czech-born investor Viktor) Kozeny knowing he gave Azeri leaders millions of dollars in cash and a secret two-thirds interest in a venture Kozeny formed to buy the state oil company, known as Socar. Defense attorney John Cline said an appeal is “very likely.”…

Azerbaijan, a former Soviet Republic on the Caspian Sea, never sold Socar, wiping out the investment.

Kozeny, who also has been charged, is a fugitive living in the Bahamas. He admits bribing Azeri leaders, denies stealing from his investors and claims they knew their money was being used as payoffs. He says the FCPA doesn’t apply to him.

Trial witnesses told of plane flights into Azerbaijan with millions of dollars stuffed into suitcases, of shakedowns in government offices, and of dealings with Chechen mobsters who provided protection to Kozeny’s operation.

Kozeny said his investors might control about half of the Azeri economy if they captured Socar. Others believed their investment might grow tenfold, witnesses said.

In other international corruption news, British engineering company Mabey and Johnson pleaded guilty last week to trying to influence officials in Ghana and Jamaica when bidding for public contracts. German police also arrested three people and searched the offices of industrial services company MAN Ferrostaal AG last week in an investigation of suspected corruption at the company.

UK appoints new SOCA head

Britain has appointed a longtime defense ministry official to head its equivalent of the FBI , the Serious Organized Crime Agency (SOCA). Ian Andrews, whose last post was managing bases and land owned by the British military, replaces former MI5 head Stephen Lander, who is retiring. 

SOCA has faced its share of criticism since its creation in 2006. The British press has reported on the agency’s lack of focus, its bloated upper management , its having to answer to politicians who think only in the short term , its abandonment of investigations , and most recently, its mismanagement of its asset forfeiture program .

Sir Ian’s appointment did not pass quietly, either. The Daily Telegraph reported :

Sir Ian Andrews, a civil servant who spent his career at the Ministry of Defence and has no experience with crime agencies, has been appointed the new head of Soca, Britain's "FBI". …
Senior officers in serious and organised crime nationwide admitted they had "never heard" of him.