The Gas Mobster Trial

As Russia’s prosecutorial bulldozer plods its way through the second trial of Mikhail Khodorkovsky, another trial is getting underway across town, which oddly makes the former seem relatively open, at least by Russian standards.  Some of our more loyal readers may remember that interesting story about Semyon Mogilevich – a Russian version of John Gotti but connected to the state’s gas trade – suddenly getting arrested in January 2008 police raid which was subsequently widely broadcasted on state television.  Clearly a strong message was being sent from one of the feuding clans to another in the unending tug-of-war over Russia’s natural gas trade (one Interpol rep told the press that “The arrest of someone this big had to come from the president himself or from the circle around the president”), but who was the message meant for?


As Roman Kupchinsky reports over EDM,the trial proceedings against Mogilevich are being kept locked down andinaccessible to the public and/or media for several clear reasons:  “Were this trial conducted openly it might implicate the highest electedofficials in Russia of collusion with Mogilevich in illegal activities-which has already created concern throughout Europe about energysecurity. In other words, it smacks of a massive cover-up by Russianofficials of their illicit deals.

Around the time of his arrest, observers were splitamong those who thought the arrest was engineered by the siloviki as anattack against the newly inaugurated President Dmitry Medvedev, whileothers believe that Vladimir Putin ordered his arrest to protect andinsulate the new president from criminal activity existing at a highlevel of the Russian government.

It is however commonly accepted that 1) Mogilevich is likely deeply involved in the shell game that is the Ukraine-Russia-Turkmenistan gas trade, and that 2) there was certainly no doubt that the government knew exactly where Mogilevich was at all times but had not moved on him until this moment.  His arrest may also have been the critical trigger which has led up to the most recent dramatic changes in how Gazprom sells gas to the Ukraine through these virtually anonymous trading companies based in Switzerland (for example, if we had an up to date graphic of the ownership structure, RosUkrEnergo would have to be replaced with RosGas – another scandal tied to this trial).

Either way, Russia is confronted by one of its own weaknesses in this case – the inability to administer real justice, even when the crime is real and the suspect apprehended.  Have the police, prosecutors, and judges become so used to carrying out counterfeit, political cases, that they don’t have the skills and resources to string up what appears to be a real criminal?  We saw something similar with the conviction of Alexei Frenkel for the murder of Central Banker Andrei Kozlov – Frenkel certainly looked like a crook, but a crook that didn’t kill Kozlov (as that may have unraveled something much larger involving the Interior Ministry and an Austrian bank).

We will likely never learn what is being revealed inside that courtroom, but I think that Kupchinsky is on top of a hot story here.  If only reporters in Austria and Switzerland would start showing more interest in what kinds of activities their financial communities are getting involved in…