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Comment by bluetomcat | Hacker News Reader

This is not an isolated case in the post-soviet space. The general pattern is - squeeze lots of money domestically via your privileged position of operating whole key sectors of the national economy and spend them comfortably abroad. Everything from banks through insurance companies through delivery companies to media groups is owned by people formerly involved with state security. It's an exclusive social network in which political decisions and private economic interests are tightly coordinated.

The worrying thing is that the West gave international legitimacy to these wealthy elites, while only pointing fingers at the endemic corruption in their countries.

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It's not just 'post Soviet' it's also 'current Rest of World'.

Business outside of 'established rich places' may often include huge sums for bribery and that money comes back in many ways, including 'very expensive real estate in NY / London' etc. and Dubai is becoming a major centre of such activity. [1]

The question is, how long can Dubai balance it's claims to legitimacy and integrity, while at the same time looking the other way? Will nascent powers like India and China even care? It's going to be an interesting next 50 years.

[1] https://www.transparency.org/en/news/the-united-arab-emirate...

> The worrying thing is that the West gave international legitimacy to these wealthy elites, while only pointing fingers at the endemic corruption in their countries.

The whole Western commitment to anticorruption is on display on Mayfair street in London.

Oh, you mean the part of town where an apartment is so expensive that it is out of reach even to London bankers?

Can give some more context about this situation? A web search didn't find the obvious answer, other than it was an expensive area.

It's like a half of Russian mafia owns mansions there, right in the open, laughing in the face of UK courts, and its money laundering laws.

>an expensive area

This is a bit of an understatement. If Mayfair is not the most expensive neighborhood in the world, it's close. A large number of the residents of Mayfair are former soviet state security who became oligarchs with the money to live there by pillaging their country then funneling that cash to the west with the aid of western banks including British banks.

This. And the problem I've found is whenever anyone gets to a position that could legitimately deal with this issue, they become either compromised or they become involved themselves in the situation.

Basically there's another very rich black market that won't be stopped easily.

>And the problem I've found is whenever anyone gets to a position that could legitimately deal with this issue, they become either compromised or they become involved themselves

In Post Soviet Countries challenging the Oligarchs is like asking for a death sentence. What is required is a Western effort to go after these Crooks helping the elected Government to implement a system that can be trusted.

No western country would do anything that helps solving the problem because they benefit from the situation.

All what it takes is to digitize the whole infrastructure and make transparent all the public spending with details of details of the details all the way down to where the money currently is, all that is including large loans. Public spending? No privacy whatsoever, no hidden transactions nor business trading behind curtains. Oligarchs buy popular support as well, they own televisions themselves to manipulate local politics, but with detailed accounting all that could potentially be stopped. Of course the efforts to implement these would be gargantuan because they would fight back.

I don't think the problem is that people don't know _who_ the problem is.

People know who the problem is.

The thing is, if you want to do something about them, you're going to need to use a lot of violence - because those people will happily use violence against you.

Most people aren't interested in a starting a war, and would rather keep their heads down, and mind their own business.

That and the historic evidence that the prize for all that bloodshed is just a new set of oligarchs.

You’d be surprised how much manipulation is taking place through local television and even social media. Local support is needed for elections, different politicians threat their existence..

As a software dev in one of the Ex soviet block countries, I’ve heard several tales of accounting software projects being canceled because they would reveal inconvenient truths.

A good friend of mine once worked for a small software shop that was building some accounting software for power plants. When the project was almost done, the mafia guys in charge were reviewing it. The realized that if it was actually used, it would be waaay to revealing. The project got canceled immediately. With a clause to “stay quiet or else”...

And a couple of years back the government was trying to “crack down” on the gray economy. They released an app, that you could scan a receipt (from grocery shops, restaurants, everywhere really) and verify that the establishment has indeed paid its tax and has registered the transaction with the tax office.

However people “in the know” got access to a special api. When the verification is taking place there is actually a web hook being sent, which you can register for. And pay your tax “on demand” only when someone actually wants to verify it.

As far as I am aware this system is still in place today... Though its too esoteric to explain to the public so nobody really cares it seams. The public is like “sure government is crooked, like what else is new” :(

> digitize the whole infrastructure and make transparent all the public spending with details of details of the details all the way down to where the money currently is, all that is including large loans.

This is a use case for Bitcoin/crypto I hadn’t previously thought of. The public auditability is exactly the reason I don’t think it’s good for citizen use cases, but it seems perfect for government use cases. There’s an issue of how revenues get accurately added to the ledger, but tying a transaction to say an ID generated when a return is submitted would make it possible to track one’s own payment.

That's not so different from how the European noble families established their privileged positions centuries ago. It's just that they were military leaders rather than state security officers.

> Everything from banks through insurance companies through delivery companies to media groups is owned by people formerly involved with state security.

Not the case with Kolomoisky, who was not involved with state security. Generally, Ukrainian oligarchs do not come from state security background.

Russian oligarchs generally don't come from state security background either. I don't where the OP got that from.

It seems that he was referring to the Bulgarian oligarchs. Some of the early ones were part of the security services or were married to a family members who were involved in security.

[1] https://en.wikipedia.org/wiki/Ilia_Pavlov

Wasn't Kolomoisky one of the oligarchs that backed the overthrow of the previous pro-Russian government as well as financed the current president of Ukraine? I am wondering what went wrong for him with the US, was it just Trump in power instead of a more friendly politician?

It seems like this scheme was unraveling before Trump came into office. If it hadn't been, Trump may have proved to be good for him, in driving renewed optimism for domestic steel production and simultaneously stripping regulatory bodies like the EPA of oversight and enforcement capacity.

That this scheme was even considered seems like a more general enddictment of the history of US corporate and industrial regulatory oversight... Just put it on the wall next to the SEC and Wall Street, with highlights on Bernie Madoff and the subprime mortgage crisis.

From a Bulgarian perspective what I’ve said holds true. The oligarchs themselves were often picked from prominent nomenklatura families and in spite of not having a background as state security officers, were largely kept responsible for their actions by them. The state security officers had all the information about trade routes, information about all state enterprises and their financial status, etc.

or having relatives to BKP

> Generally, Ukrainian oligarchs do not come from state security background.

Kolomoyskyi is just a smart shark without security or criminal background, Akhmetov has criminal background (Donetsk region), Pinchuk is related to former President Kuchma (indirect Communist party background), Poroshenko has Communist party background, Firtash is a frontman for criminal organization (mastermind fled from Hungary to Moscow).

> The worrying thing is that the West gave international legitimacy to these wealthy elites, while only pointing fingers at the endemic corruption in their countries.

Wouldn't it be quite difficult to prevent foreign money being laundered in some other country? I would guess verifying whether the money is legit coming from some weird foreign jurisdictions is probably quite difficult. The only way to work around that would probably reject all customers who are sending money from there.

Those oligarchs are a tiny minority of the country population and their international financial endeavours are almost always tracked by Western intelligence agencies, but the pragmatic interest of the West is to welcome that money. They buy the most expensive real estate in London without even negotiating, send their kids to elite schools, buy their wifes jewellery at outrageous prices.

>>Everything from banks through insurance companies through delivery companies to media groups is owned by people formerly involved with state security.

Carry over from the massive corruption created from handing control over the entire population to the state bureaucracy, in the name of creating a non-exploitive communist economy.

The West gave legitimacy to this because it's own elites do the same thing with monopoly enterprises. Microsoft did it with OSs, Google with search, Telecoms expanding from wired phones, to wireless, now to entertainment media ownership, etc... Though perhaps the private equity companies come closest to the methods of operation described in the article.

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