The Swiss falcon shows the white feather

The way in which our government settles one hundred billion of Russia's debt towards the Czech Republic facilitates the danger that the transaction turns into a huge dirty money laundry. The company Falkon Capital is buying the debt from the government for twenty-two billion crowns, though they themselves do not have the money to pay for it. The owners of the company are insignificant Swiss and Georgian trades people. The firm nevertheless promised the Czech government to raise the entire sales price by the end of December; the government refused to disclose how the origin of the money would be monitored. But this is not merely about highly suspicious funds possibly being transferred to the government's account. Should the Czech claim towards Russia wind up in the wrong hands, then the beneficiary would be enabled to legalize an unbelievable amount of one hundred billion dirty crowns on very favourable conditions.

Contract packages

Russia owes more than one hundred and thirty billion crowns to the Czech Republic. A fortnight ago, the representatives of both countries have signed a package of four contracts on how Russia shall return about ninety-five billion crowns of this amount. The Czech government has declared the contracts's wording to be classified material and refuses to provide even the opposition in parliament with the documents - allegedly on request of the Russians. The deputy minister of finance, Ladislav Zelinka, who took part in the negotiations concerning the sales of the debt to Falkon Capital, is surprised: „I cannot understand why this is kept secret even after the execution of the contracts,“ he says.

This calls for a simplified account of the matter: the Czech government sells a one-hundred billion claim to Falkon Capital for less than twenty-two billion, and the former is going to exact the debt from Russia on its own - and what they recover, is theirs. The Russian government itself, though, will not pay a single crown back - the domestic energy distributor RAO JES took over their debt on a contractual basis. The latter's management, in turn, signed an agreement with Falkon Capital, according to which they shall sell electricity on favourable terms to Falkon Capital; the Czech company is then supposed to export the electricity to Turkey, and the profit shall represent „installments“ on the Russian debt.

Zelinka admits that the government required no bank guarantee from Falkon, no warranties whatsoever concerning the source from which they intend to take the twenty-two billion for the purchase of the debt. Falkon simply has to make payment of the money to an already agreed bank account by the end of the year, and if they fail to do so, then the contracts will be null and void. But what guarantee does the government have that their disinterest in the source of the funds does not support the legalization of money acquired by criminal activities? „This is really a risk, and I hope intelligence to eliminate this risk, as they ascertain the money's source,“ says deputy minister Zelinka. „But this is none of my sorrows - I merely negotiated the price for which we sold the debt. Anything beyond that is the government's responsibility.“ Deputy minister Zelinka admits that he has never seen the Swiss owners of the company during negotiations, that he does not know them and has no idea as to their financial potential. „I negotiated only with a certain Paata Mamaladze,“ says Zelinka. But this man has ceased to play an official role at Falkon three years ago already. „Well, yes, but he was authorized to negotiate on their behalf,“ says Zelinka without being specific.

The investors from Switzerland

We have reached the point where we must deal with the involvement of Falkon in the settlement of Libya's debts: in 1997, Falkon representatives attempted to buy Libya's debt in the amount of several million crowns from our government. Ivan Pilip, then minister of finance, refused to enter the contract with them. „I had received information by the [Security and Information Service] BIS according to which the company constituted too much of a security risk,“ recalls Pilip today. The issue was that both BIS and the Section for the detection of organized crime had taken interest in two of the Georgian owners of Falkon, Paata Mamaladze and Važa Kiknavelidze, because of their contacts to the Russian mafia gangland. The Georgians later left their posts in Falkon's statutory bodies.

In April 1998, their position was assumed by two Swiss brothers (not spouses, as we had stated in a preceding article): Hans Peter Moser and Beat Urs Moser. „The company was properly sold. Today, ninety-five percent of the stock is in the hands of Swiss legal persons,“ says Jozef Čimbora, Falkon's director. In his opinion, the company's slate is now untarnished owing to this corporate change. But Mr. Čimbora is not quite right. Ninety-five percent of Falkon are in the ownership of „Magchim“, a Swiss company of the Moser brothers, the director of which is Mamaladze. Moreover, Mamaladze runs another company in Switzerland, Falkone, where two other Georgians join him on the board – Kačkačišvili and Tejmuraz (the Swiss commercial register does not provide their first names). Upon the question whether Falkone is another owner of Magchim, Moser replies: „I am not majority shareholder.“ All debt mediators we have addressed, from Moser to Čimbora, refuse to answer any questions related to the Russian debt. There is a high suspicion that all these people are puppets. „We screened them and informed the government that the company is not exactly solvent and that their intention might be to launder money,“ says intelligence chief František Bublan. „On the other hand, the company had already settled stuff for the government earlier, and that must have been more important when they made up their mind,“ he adds. Among the things that had made the secret service suspicious were the inaccessibility of the corporate representatives and their false addresses.

A cat-and-mouse game

For instance, according to the Commercial Register, Falkon Capital has its seat in Husová Street in Prague. At the respective address, however, a Dominican monastery and its church are situated. „Falkon has never had their seat here. We know the company because of the constant inquiries,“ says the gatekeeper. The company's office is located half a kilometre away from there. They are inaccessible. Upon ringing the bell, one is being told by a female voice with hard Russian accent that the company's boss Jozef Čimbora is not and will not be present. Paata Mamaladze's registered domicile is a non-existing address. It is a harrowing experience to visit the Swiss owners of the firm, whose alleged financial strength is stressed by Čimbora. On the outskirts of Neuhausen, a small town of 7,000 inhabitants, a small industrial zone is stretched out which features unattractive office buildings for dozens of firms. Magchim has a rented office in one of the standardized container buildings. The same office is shared by further companies of the Moser brothers and Paata Mamaladze. The company does not even have a secretary. Behind the desk sits Beat Moser himself. He is apparently caught off-guard by the visit of Czech journalists. He refuses to talk about anything related to the debt. „Write down your questions, I shall answer in writing,“ he says apprehensively. After two days of reminders via phone, he says: „We have read about you in the newspaper, you supposedly write anti-government stuff. We are not going to communicate with you. You must understand that any transaction has confidentialities.“

The Moser brothers and their companies are unknown even to the local paper Schaffhauser Nachrichten. „No, they certainly aren't among our major businesspeople, their names mean nothing to me,“ thinks editor Karl Holz aloud. „Where are they supposed to have their premises? In the industrial zone of Neuhausen? But that is an area for small-scale entrepreneurs.“

Russia in the NATO

According to Bublan, the ministers had all the information at their disposal. In spite of this, they approved a sales transaction in a way that allows possible crooks to have effectively legalized up to two billion dollars acquired by crime. (To put it somewhat exaggeratedly: it suffices to simply get hold of a fake confirmation from somewhere within the entangled mesh of Russian offices according to which company so-and-so has just been paid such-and-such an amount of millions or billions as an installment of officially acknowledged debts - and you are home and dry.) Nevertheless, the ministers are not upset by the fact that in their eagerness to add twenty billion to the state budget as fast as possible, they might have supported crime. „Settlement of debts? That's not my department. We have approved sales to a compromised firm and now there is the danger of money laundering? I don't know the least about such a thing,“ says Jaromír Schling, minister of transportation, for instance. „I shall not talk to you about this at all,“ refuses to comment foreign minister Jan Kavan. Eduard Zeman, the minister of education, also does not want to concede that the government's draft of contracts might have allowed for corruption and money laundering. „Falkon was mentioned, but I do not quite recall the details,“ he adds. Minister of justice Jaroslav Bureš says he was interested in the legal aspects of the agreements only, which were allegedly all right. Bureš denies that the government has generously created an opportunity to launder money. „I do not understand this issue, but I have faith in deputy prime minister Špidla, who ruled out the possibility,“ he adds.

The whole transaction has two more interesting aspects. The first one is of a technical nature. „If I was in charge, I would distribute the risk among many more companies,“ says main negotiator and deputy minister Zelinka. „This is how it has worked so far, and the Russians have returned us almost thirty billion crowns.“ So why did they enter the contract in question? „There was not much time, and the government had calculated with the money in the following year's budget already. I am a public official and my job is to carry out government directives,“ he says. The second issue is a political one. No one knows what has been incorporated in the contract between the Czech and the Russian government. But prime minister Miloš Zeman, for instance, has repeatedly put himself on record since the time the contracts were executed that he did not have objections against Russia joining the NATO.

Our way of settling debts Any effort to exact foreign state debts falls into one of two categories. The first one is the one promoted by deputy minister Zelinka. The debt is exacted in small installments by companies which have usually good contacts in the target country and which usually succeed in recovering approximately forty-five percent of the original amount. As a rule, however, only around thirty percent actually wind up in the state treasury.

The second model is represented by „big shows“ a la Falcon. In 1993, Lubomír Soudek, then executive of the Škoda works, tried to initiate the first major settlement of the Russian debt, single-handed, so-to-speak. Upon his return form Moscow, while still at Ruzyňe airport, he let the Champagne bottles pop, stating that he had negotiated fantastic deals. None of which would come true in the end. We almost became an object of disgrace in 1998, when Ivo Svoboda, then finance minister, tried to promote Barak Alon as our mediator for the Russian debt - a man who shortly thereafter found himself the object of investigations in the affair of an eight-billion asset stripping at Komerční banka. Svoboda's successor Mertlík suggested to have a part of the debts amortized by ways of importing MiG-29 fighter jets. This suggestion did not pass due to criticism voiced by right-wing deputies who pointed out that this would render the army dependent to a large degree on Russian industry.