Moscow -- On the night of September 13, Andrei Kozlov, the first Vice President of the Central Bank of the Russia Federation and his driver were shot dead. The equivalent crime in America would be killing the Vice Chairman of the U.S. Federal Reserve Bank in Washington, D.C. This is the first murder of a high-ranking government official since Putin became President in 2000. High profile business murders were common in the Yeltsin era of the 1990s, but Putin's core group of government officials fighting corruption were thought untouchable until Wednesday night. President Putin, government officials and all ranks of society are genuinely shocked by this tragedy.
Andrei Kozlov was responsible for supervising credit organizations and banks for the entire country; Kozlov was the key official who had the power to revoke a license from any bank involved in fraud, money laundering or other illegal business activities. And so he did -- over 900 unlawful banking operations were closed down on his watch. Professional colleagues and personal friends all remember Mr. Kozlov as a very honest man, who took pride in his work. Kozlov epitomized the model new government official in Putin's Russia, who works openly according to the laws, fights corruption and refuses to take bribes. Now the whole country knows that Kozlov's integrity cost him his life.
Andrei Kozlov had supported introducing legislation in Parliament to ban convicted criminals for life from the banking profession. However, many say that in Russia one can get killed for something he has done, rather than for saying and proposing an action. With so many criminal enterprises foiled by Kozlov's work, there is no shortage of suspects. While stabilizing Russia's banking system, meeting all the international FATF banking requirements, and making Russia one of the most attractive countries for foreign investment, Kozlov made a lot of enemies.
The police report that on Wednesday night, September 13, 2006 at 8:30 PM, Andrei Kozlov was leaving the indoor stadium Spartak, where his company soccer team had a game. Andrei Kozlov had always refused to accept the bodyguards offered to him by Zentrobank, and because he was not the director of the department (which equals a minister's rank), he was not allowed to have the kind of security that high-ranking officials do -- blue lights, special number plates, multi-armored vehicles and the right to disobey traffic laws. After Kozlov's murder, many Russians who normally resent these trappings of office are now wondering if such security might be necessary after all.
Mr. Kozlov left the stadium through one of the service exits, where there is no camera surveillance and there are many trees and bushes bordering the parking lot. Kozlov's driver was shot almost simultaneously with him; Kozlov was shot twice, in the neck and head, and died on his way to a hospital. The bushes around the parking lot provided easy concealment for his killer/s to flee in many directions without being noticed. Even though the entire Moscow police force was alerted within minutes of the murder, no suspects have been caught or reported.
In his statement, President Putin offered his sympathy to Kozlovs family and friends, and said that this murder "is evidence of the ignited situation around fighting the crimes in economical sphere."
The President has ordered a major investigation, where the investigators would consist of at least one vice-minister from each department: Ministry of Internal Affairs (MVD), the Tax Ministry, Zentrobank, FSB, Financial Ministry, etc. This investigating task force will be lead and supervised by the Prokuratura (General Prosecutor's Office).
In his remarks, Putin painted an honest picture of today's Russia, a picture of corruption which has been a way of life for centuries: "We are witnessing monthly cashing of billions of rubles in this country, and leaking of enormous financial resources abroad. This sources, which are cashed through the banking sector, are used not only to pay for services of certain workers in certain spheres in envelopes, but are directed at paying government officials, who provide these "certain services" for business representatives, getting around laws and the social good; they are going for enormous bribes!"
Russian Prime-Minister Fradkov, after a minute of mournful silence, addressed Russian ministers with a short speech, in which he said "We all are working hard in the conditions of this transitional period. We are making better conditions for business, so through the means of competition there would be the motivation to make life better". This complicated blurb means that Russian ministers realize how dangerous and necessary it is to fight corruption, which once defeated would open a way for a true free market in Russia. After a free market and safe investment climate are in place, the entire nation would be better off.
These positive changes have been ongoing for a number of years, and Russians simply got used to them without thinking about the risks that imposing the rule of law requires. Since Yeltsin stepped down in 2000, the federal budget has been in surplus (this year up to 8.7% of GDP), the number of business murders has drastically dropped, and the average Russian salary, which is still only $350 a month, has increased by one third in just the last two years. Now the Kozlov murder makes Russians and foreigners question the stability of the Russian market. The laws on the books are already strict, corruption is being reduced, and the government is in control of the situation. According to multiple financial specialists, there is really no additional law that would help the situation. Russian banking laws already exceed international standards, and Andrei Kozlov's work proved that these laws can be successfully enforced in Russia.
The murder comes as a big surprise and more proof that Russia is still a tough place, a country in transition, where corruption is strong as always, and the Wild West mentality is not popular but still very much present. If there is something "positive" that can be drawn from this tragic story, it's the fact that after the murder of a high ranking financial government official the Russian market did not crash or react in a disastrous way, as it would have just a few years ago.