September 14, 2006:
Russian Central Bank reformer Andrei Kozlov gunned down —

Andrei Kozlov, who had spearheaded the campaign against fraudulent banks and money laundering as the No. 2 official at the Central Bank, died of gunshot wounds early Thursday.

Kozlov, 41, the bank’s first deputy head, and his driver, Alexander Semyonov, 54, were shot by two gunmen with automatic pistols Wednesday evening as Kozlov was exiting the Spartak sports complex.

… A longtime Central Bank official, Kozlov oversaw the closure of 44 banks accused of improper activities this year alone. He had also pushed for mandatory deposit insurance for banks, which was particularly important to millions of Russians who lost their savings in financial crises in the 1990s.

Most recently, he had lobbied for a permanent ban on those convicted of tax evasion from working in the banking sector.

Kozlov’s killing has raised concerns among many in the banking sector that these reforms and others could be stalled.

While the investigation has just begun, several senior government officials and banking sector experts said Kozlov died because of his work.

“He was a very brave and honest man, and through his activity he repeatedly encroached on the interests of unprincipled financiers,” Finance Minister Alexei Kudrin said in a statement Thursday.

Born in Moscow on Jan. 6, 1965, Kozlov, started his career at the State Bank of the Soviet Union in 1989. He joined the Central Bank after the 1991 Soviet collapse, reaching the bank’s highest echelons by the mid-1990s and becoming first deputy head in 1997.

From 1999 to 2001, Kozlov took a break from government. During that time, he served as board chairman of the Russky Standard bank and also worked for a subsidiary of Aeroflot.

Kozlov is survived by his wife, Yekaterina, and three children.

[Moscow Times: Link]

Andrew Osborn reports from Moscow –

Russian President Vladimir Putin has warned that his country’s battle with organised crime has entered a dangerous new phase after the assassination of a top anti-money-laundering official.

Putin called [Kozlov’s] murder “a manifestation of the intensifying situation in the struggle against crime” and ordered a special task force be established to staunch the rivers of dirty money that flow through Russia every day.

… It is no exaggeration to say that Kozlov’s slaying was the most high- profile murder of a senior official since Putin came to power six years ago; his rank was close to that of a government minister. Senior politicians called the attack an assault on the government itself and said it shattered an unspoken truce between the Kremlin and the Russian mafia, a catch-all phrase for scores of highly organised criminal groupings that have sprung up since the collapse of the Soviet Union.

In the chaotic 1990s, the Mafia routinely “eliminated” awkward politicians and officials, but since the tough- talking Putin took the reins of power it had backed away from such terror tactics and was thought to have opted instead for a veneer of respectability.

That “truce” now appears to have been torn up overnight.

Kozlov … had shut down dozens of “dirty” banks after revealing that they were fronts for money launderers.

Perhaps more significantly, he planned to shut down dozens of others in the months and years ahead and kept a blacklist of financial institutions he suspected were “compromised” which he was working his way through.

… Kozlov had become adept at “following the money” and closing down such banks by withdrawing their licences and publicising their wrongdoing.

His most high-profile case came in 2004 when he took on the aptly named Sodbiznesbank, ironically a large contributor to Putin’s re-election campaign.

Kozlov accused the bank of accepting ransom money to the value of $1m (£532,000) from a well-known criminal group. The money was purportedly extorted from a Russian truck-maker called Kamaz, whose general director Viktor Faber was kidnapped along with the company’s chief economist Natalia Starodubtseva.

The kidnapping went badly wrong: both were abducted in May 2003 and found dead in September but the hostage-takers got their money nonetheless.

Kozlov suggested that the bank was implicated in the crime, said over 80% of its capital was fictitious, and ordered it to hand back its banking licence.

Sodbiznesbank’s defence mechanism was crude. It blocked access to its central Moscow office for two weeks during which time it allegedly spirited away millions of dollars of assets. In the end, Kozlov ordered in the riot police who stormed the offices ending the standoff.

Powerful vested interests were clearly upset though and the affair caught up with Alexander Slesarev, the 37-year-old owner of Sodbiznesbank bank, last October.

He was executed with his wife and daughter in a contract drive-by shooting just outside Moscow.

[Sunday Herald: Link]

Flashback 1997:
Business Week praises Andrei Kozlov for creating “Russia’s most liquid, clean, and efficient securities market” –

In 1992, Russia’s economy was in chaos. Inflation was 2,000%. Industrial output was falling. Trust in Boris N. Yeltsin’s radical reformers was nil.

But in the bowels of the Central Bank of Russia, Andrei A. Kozlov, 32, saw a way out. A staffer in the securities department, he heard a group of American bankers, including then New York Federal Reserve Bank President Gerald E. Corrigan, describe how the U.S. government finances its operations by borrowing money on capital markets. Kozlov vowed to develop Russia’s own government securities program. Says Kozlov: ‘’The attitude of the majority of higher-level government officials was, ‘Let these young guys play with their toys.”’

Five years later, Kozlov, is First Deputy Chairman of the Central Bank, and his ‘’toys'’ are bringing billions of dollars to the Russian budget. Using Corrigan’s advice, he created Russia’s most liquid, clean, and efficient securities market. Now, Russian and foreign investors feel confident enough to put over $50 billion in Russian Treasury bonds. Russia qualified for an international rating in September, 1996. Since then, Russians have sold more than $6.5 billion in Eurobonds. Says David Boren, Salomon Brothers’ emerging- markets research president: ‘’Kozlov was there early, he’s going to stay around a long time, and he’s clean.'’

[Link]