Corrupt To The Bone – Kirill Shamalov – Putin’s Son In Law

Putin's billionaire son-in-law replaces Russian leader's daughter for  glamorous new socialite wife | Daily Mail Online

Thousands of emails sent and received by Kirill Shamalov — Vladimir Putin’s former son-in-law — showcase the fantastic wealth and personal power that come with access to Russia’s first family.

Key Findings

  • Shamalov and Putin’s daughter spent millions setting up luxurious households in Russia and France even as Putin banned Russian elites from owning foreign assets.
  • Soon after marrying Putin’s daughter, Shamalov spent an astonishing $100 to acquire a share in Russia’s largest petrochemical company that was worth $380 million.
  • Shamalov later acquired an additional, much larger stake in the company in a well-known deal that made him a billionaire. His emails reveal that this acquisition was just one of the lucrative opportunities with which he was presented — and contain a hint about how it may have been structured.
  • Shamalov’s proximity to political power made him a highly desired partner. In one case, he was offered a free share in a large company in exchange for his ability to wield “administrative resources,” exemplifying the corrupt nexus of power and business that characterizes modern Russia.

In Russia, few secrets are guarded as jealously as basic information about President Vladimir Putin’s family.

The president’s official biography confirms the widely-known fact that he and his former wife had two daughters, Maria and Katerina. But neither Putin nor his press service have ever revealed his daughters’ full names or anything about their family lives or careers. Neither uses his surname in public.Кирилл и КатяRead this investigation in Russian on the site of our Russian member center, IStories.Read more

Among the few facts that have been pieced together by journalists is that Putin’s younger daughter, Katerina, was once married to a man named Kirill Shamalov. It is clear that Shamalov is a wealthy man, having become Russia’s youngest billionaire at just 32 years old. But he is not a household name, and few details about his fantastic acquisition of wealth have been reported.

Now, for the first time, a wider set of facts about Shamalov has become available. Earlier this year, reporters from IStories, OCCRP’s Russian member center, gained access to a leaked archive of Shamalov’s emails from an anonymous source.

The leak contains more than 10,000 messages spanning the years 2003 to 2020, and it offers unprecedented insight into a man who has rare access to the inner workings of Russian political life.

🔗Collection Number One

The anonymous source didn’t reveal how he or she obtained Shamalov’s emails — but the messages themselves hint at a possible answer.MORE

Publishing leaks from anonymous sources is a difficult journalistic decision.

In the first place, the authenticity of documents received from an unknown party may be in question. To verify the Shamalov archive, the emails were first structured and indexed by OCCRP’s data analysts. Reporters from IStories then spent nearly a year verifying them: They checked email headers, spoke with senders, and substantiated information in company registries, real estate databases, social networks, and other publicly available sources. Our conclusion is that the emails are real.

Another issue is privacy. When granting access to the material, the source requested that reporters not publish any medical records. This request has been honored. IStories and OCCRP have also chosen not to release the archive indiscriminately. What’s being used in this investigation is just enough to tell a story that’s in the public interest.

Beyond confirming without a doubt that Shamalov married Putin’s daughter Katerina, who uses the surname Tikhonova, the archive contains a number of other revelations about the financial advantages he gained, and the influence he enjoyed, through his access to the first family. His evident ability to wield administrative resources and personal connections to the financial benefit of himself and his friends and business partners exemplifies the corrupt nexus of power and business that characterizes modern Russia.

Kirill Shamalov and Katerina Tikhonova both declined to comment for this story. Vladimir Putin’s spokesman, Dmitry Peskov, replied in one sentence: “We’ve already left such questions without answers many times.”

🔗The Elder Shamalov

Kirill Shamalov is the son of Nikolai Shamalov, one of Putin’s oldest and closest friends.MORE

“New Piterskie”

Many members of Russia’s ruling elite are old Putin associates who followed him to Moscow and took up key government posts after he rose to the presidency.

These dacha neighbors, judo sparring partners, massage therapists, and one-time city bureaucrats are sometimes called Piterskie after their hometown of St. Petersburg — a term that, by analogy to other geographical epithets like the Tambovskie or Izmailovskie, carries more than a whiff of organized crime.

Many of these men are still around. But over the two decades since Putin took office, their children and grandchildren have amassed their own wealth and power and have begun to rise into top positions. Call them the “new Piterskie.”

Shamalov’s email archive offers a curious portrait of this group. Many of them, like him, studied law at St. Petersburg State University. They discuss taking positions in government, state firms, and big business, and note that when they come to Moscow, the city will be a different one than their parents once conquered.

But some things never change. As in their parents’ world, personal connections mean everything for the new Piterskie.

In June 2004, when Shamalov was in his final year of studies, he received an email from a classmate, Yan Piskunov:

Buddy, we’ll arrange everything in the best way possible! It’ll be sweet. The main thing is to discuss the organization. I’ll send you the speech on Tuesday morning. I’ll pick up the review today or Monday, and during the week we’ll prepare answers to the reviewers’ questions and comments. I was very glad to finally see you. Get some rest and take your time.”

Judging from the context, the message is about helping Shamalov prepare his thesis defense — and handing him a pre-written speech to present before the examination committee.

A few days later, the presentation was ready.

“Hello Shamalov :)!,” Piskunov writes again. “Draft speech … attached.” And indeed, the attached file contained a presentation about a thesis on real estate law.

The cheerful Piskunov had a career ahead of him that would be the envy of any Russian student. Not long after he graduated, at age 25, he vaulted into an executive position at Gazprom-Media, the largest media holding in the country, becoming its deputy general director and head of the legal department.

The group, which includes such popular outlets as the NTV and TNT television channels and the Echo of Moscow radio station, belongs to Gazprombank. By coincidence or not, Shamalov’s older brother, Yuri, is on the board of directors of both the media holding and the bank. He did not respond to requests for comment.

In September 2009, Piskunov came up in Shamalov’s correspondence again when an acquaintance wrote him with an unusual, but extremely frank, request: “Question: is it possible to change the position of Piskunov and Pleshkov towards Vnukovo airport, or to neutralize their activities?”

A memo attached to the email provided the relevant context: Two of Moscow’s major airports, Vnukovo and Domodedovo, had been involved in a commercial dispute that had been resolved in Domodedovo’s favor, costing Vnukovo some 350 million rubles ($11.8 million). According to the writer, the courts had made the ruling “under pressure” from Dmitry Pleshkov, then the “Head of the Secretariat of the Chairman of the Supreme Arbitration Court,” who himself allegedly acted “on behalf of Yan Borisovich Piskunov … of Gazprom-Media.” He was asking whether these two men could be influenced in a way that would favor Vnukovo airport.

There’s no evidence that Shamalov made any requests to either Piskunov or Pleshkov to intervene in the airport dispute. But a month later, the Federal Arbitration Court of the Moscow District overturned the earlier court decision, saving Vnukovo millions. Exactly what Shamalov’s acquaintance asked for had happened.

Shamalov was only 27 that year, but he already had an impressive resume, having worked for Gazprom, Gazprombank, the Russian government, and Rosoboronexport, the country’s top arms exporter. He was now Vice President for Administrative Business Support at Sibur, Russia’s largest petrochemical company.

But much bigger things were to come.

In 2013, as several outlets including Reuters reported, Shamalov married a woman named Katerina Tikhonova who was described as Putin’s daughter.Young Scientist Flies High with Leg Up From PutinThis OCCRP story from 2015 looks into Tikhonova’s Innopraktika Foundation — and her passion for acrobatic rock-and-roll.Read more

The Kremlin has refused to confirm that this is the case. But Shamalov’s emails leave no doubt, and confirm Tikhonova and Shamalov were married in February 2013. They don’t reveal when the couple got acquainted. But the evidence — including this message he received from one of the organizers of their wedding — indicates that he has known her for most of his life:

Kirill, Katerina,

During the Ice Show, a screen will be installed behind the stage to show a video sequence to accompany the performances on the ice, and during some numbers a live broadcast will be organized to show what’s happening on stage (for example, during your dance).

For the video sequence, we need:

  1. Your joint photos from 2012-2013 (“recent”)
  2. Childhood photos — separately, together …
  3. Text from messages, from both Katerina and Kirill … just the text, it’d be nice to have something recognizable … how you addressed each other …
  4. Kirill, a photo in military uniform? Maybe with friends, or taking your oath, there’s probably something …
  5. Kirill — what was your phone number in 2003/2004 – when you called Katerina?
  6. Katerina, we would like to have some video clips of your performances ? Perhaps there are some from that iconic world championship in Munich, when Kirill spent 11 hours with you? Or whatever you’re willing to show (I remember that there are competitors among the guests)

Credit: Shamalov email archiveA rendering of a proposed arrangement for the inner garden of the Usovo house.

By the summer before their wedding, the couple was busy arranging a luxurious life in Russia and France. On June 2, 2012, Shamalov received an email from the woman who was in charge of rebuilding and decorating a house for the young couple in Usovo, a village in an elite area near Moscow not far from the president’s Novo-Ogarevo residence:

Dear Kirill, here are the photos of items that Katya has chosen for your garden. Everything is in stock in Italy (we received confirmation). To get this order moving, you must make an advance payment of 60% of the indicated amount.

Attached to the email was a list of purchases for a small outdoor tent — a table, a sofa, a couple of armchairs, a fabric curtain — that cost 53,000 euros.

Shamalov forwarded this to his future wife: “I like it, no objections. What’s your opinion?”

Two days later, Tikhonova sent Shamalov a list of Japanese books for their home library that cost over $7,700. More expensive still was a carpet for the library that the couple purchased for 54,300 euros.

Shamalov received frequent reports on the progress of the house thanks to which it is possible to estimate its total cost. The renovation, furniture, and equipment came to nearly 8 million euros. Adding the estimated cost of the land and the house itself brings the possible total price of the mansion to about 15-17 million euros.Credit: Table by OCCRPA selection of 10 noteworthy items for Shamalov and Tikhonova’s Usovo mansion from the home improvement reports he received.

But the house in Usovo was not the couple’s only expensive property.

In October 2012, through a Monaco company called Alta Mira, Shamalov bought a mansion in the French resort town of Biarritz from the family of Gennady Timchenko, a longtime Putin friend and a multi-billionaire with interests in energy, transport and infrastructure. Judging by documents in Shamalov’s emails, the Biarritz mansion cost 4.5 million euros.

The decoration of this house, too, spoke of the couple’s expensive tastes. In July 2014, a designer asked Shamalov to approve the purchase of 19,000 euros’ worth of terrace and garden furniture. He forwarded this message to Tikhonova, who replied two days later: “This isn’t how it’s done. Tell her to send pictures;) or at least links to a site where you can see pictures)”Credit: The Anti-Corruption FoundationShamalov and Tikhonova’s mansion in Biarritz.

In the Russian Style

New Husband of Putin’s Ex-Wife Buys Posh Villa in South of FranceArtur Ocheretny, the new husband of Putin’s ex-wife, acquired his own villa in Biarritz in 2013, not far from Shamalov’s mansion.Read more

Shamalov’s emails reveal the details of the couple’s February 2013 wedding at the Igora ski resort in the Leningrad region.

At the end of January, Shamalov began sending out invitations with a detailed description of the elaborate dress code for three days and nights of celebration, including “cocktail,” “creative black tie,” and “casual chic” attire, all “in the Russian style.”

The newlyweds invited about 100 guests, including six officers of the Presidential Security Service who stayed nearby for protection. Curiously, the list did not include Tikhonova’s parents, Putin and his wife (the couple had not yet announced their divorce), though their omission may have been a security precaution.

On February 1, Shamalov received the final schedule. The first day included a “Russian tea party” with a samovar, traditional sweets, and buns, followed by a pre-wedding dinner. On the morning of the second day, the young couple was to marry in the church, followed by street festivities called “Russian holiday on the square” and a wedding banquet. On the third day, guests gathered for a farewell dinner where they were serenaded by Tikhonova’s favorite singer, Margarita Pozoyan.

Like most Russian couples, the newlyweds asked the guests to chip in for a gift. “We are planning to order an individual wedding tea-table service for 24 persons produced by the Imperial Porcelain Factory. The program will provide a special time and place for collecting money in envelopes,” the postcard read. The newlyweds spent their honeymoon in Mauritius.

A Generous Gift

Credit: Shamalov email archiveThe happy couple.

It was after the wedding that Shamalov’s wealth began to approach the stratosphere.

Judging by his emails, Shamalov already owned a network of offshore companies by the time he was married. Most of these firms, run by lawyers from various countries, were registered to proxy owners. The main custodian of Shamalov’s offshore secrets was Dario Item, the ambassador of the small Caribbean state of Antigua and Barbuda to Spain, Monaco, and Liechtenstein.

In June 2013, Shamalov’s offshore company in Belize, Kylsyth Investments Limited, acquired 38,000 shares of a Guernsey-based offshore, Themis Holdings Limited, from yet another offshore called Volyn Portfolio Corp, this one based in the British Virgin Islands.

At that time, Themis Holdings was Sibur’s parent company. In other words, by acquiring the Themis shares, Shamalov had acquired 3.8 percent of Russia’s largest petrochemical company.

He did so for the astonishing price of $100. Shamalov later estimated Sibur’s value at the time to be $10 billion, which means his share would be worth $380 million. He had acquired fantastic wealth for nearly nothing.

In a later interview with Kommersant, Shamalov mentioned acquiring the Sibur shares in an options program. Such programs are meant to reward employees of a company by giving them a stake in its performance, allowing them to buy shares at a discount.

In response to journalists’ inquiries, the Sibur press office provided a statement from the company’s chairman, Dmitry Konov, who confirmed that this was how Shamalov obtained his shares. He said he had done so like any other manager: “The conditions of the purchase … didn’t differ from the conditions of purchases by other managers,” he wrote. “There were no exclusive conditions for Shamalov.”

Just six months later, another Shamalov-related offshore from the British Virgin Islands, Lauruz Ltd, raised $250 million against just 2 percent of Themis Holdings Ltd. The guarantor of this loan agreement was Kylsyth Investments.

IStories reporters examined the contracts of 11 top Sibur managers who participated in the program at the same time as Shamalov and found that they all paid real money for their shares, with discounts of about 15 percent from market price. For example, Sergei Komyshan, the company’s executive director, paid $21.6 million for his shares, which represented 0.26 percent of the company, according to his contract. The vice president, Alexei Filippovski, paid $12.7 million for his 0.15 percent. (Sibur’s chairman disputed these numbers, but did not provide any alternatives.)

The president’s son-in-law was the only one who used the stock options program to acquire so much wealth for nearly nothing. And this was only the beginning of his post-nuptial luck.Credit: ITAR-TASS / Vladimir SmirnovA Sibur petrochemical plant in the Nizhni Novgorod region.

Offer After Offer

As he settled into his career at Sibur, Shamalov attracted droves of advisers and assistants who went looking for projects for him to invest in, wrote abstracts for his speeches, and even provided him with answers to possible audience questions — just like when he was a student.

After he married Tikhonova, his assistants got to work finding financial projects for their boss. One by one, Shamalov began to receive messages from them with fantastic offers worth billions, enabling him to choose from among them the way we might pick out milk at the store.

In May 2013, Shamalov’s assistant Denis Nikienko sent him a proposal to acquire stakes in three companies at once — Rostelecom, Tele2-Russia and Tricolor TV — in order to subsequently unite them into a “national telecommunications leader.” The total cost of the deal would be about $9 billion. Nikienko suggested financing it using money from “friendly financial institutions” like Gazprombank or Gazfond — headed by Shamalov’s brother — rather than his own funds.

The best minds in Russia were apparently eager to make deals with the young businessman. In August and September 2013, Nikienko sent his boss several proposals from Sergey Kotlyarenko, the asset manager of former Deputy Prime Minister Igor Shuvalov. In his first message, Kotlyarenko suggested that Shamalov buy up an entire tower and business center in the Moscow City business district for $1.3 billion. Kotlyarenko’s second idea was “to create a global leader in oilfield services’’ through the acquisition of RN-Bureniya, a subsidiary of the Rosneft state oil company. “The company’s revenue for 2014-2015 can be brought to 4.5 billion dollars a year,” Kotlyarenko wrote. (He did not respond to requests for comment.)

In April 2014, Nikienko sent Shamalov more proposals. One was to buy 51 percent of the VSMPO-Avisma corporation, the world’s largest titanium producer. Such a stake was then worth over $1 billion. He explained the advantages of the deal:

Why 51%? If someone is on a sanctions list, then U.S. citizens and corporations can’t do business with companies in which the sanctioned person owns more than 50%. Since the U.S. is interested in collaborating with VSMPO-Avisma, it’s unlikely to sanction this company or its shareholders.

Another proposal was for Shamalov to purchase an additional stake in Sibur.

GNT [Gennady Nikolayevich Timchenko] being a shareholder in the Company creates restrictions for its operations. There have already been cases of banks and business partners refusing to collaborate with Sibur [due to Timchenko’s inclusion in the sanctions lists.] To solve the problem, it is proposed to buy out GNT’s share. The purchase can be carried out through two of the Company’s managers and subsequently consolidating the share (the mechanism of creating an artificial debt and repaying it with a second block of shares has been worked out).

As subsequent events showed, this was the proposal Shamalov chose.

Billions More

On August 1, 2014, Shamalov registered a company called Yauza 12 at his Moscow apartment. Then, as his emails show, his company acquired 17 percent of Sibur from Timchenko just six days later, bringing his share in the petrochemical giant to just over 21 percent — and increasing his wealth by $2 billion.

The transaction made Shamalov the youngest billionaire in Russia and the second-largest shareholder in the country’s largest petrochemical holding company. It also attracted considerable attention, and the following year Shamalov sat for his friendly interview with Kommersant.

The president’s son-in-law told the newspaper that he had borrowed the funds to make this acquisition from Gazprombank (whose board of directors includes his brother Yuri), backed by his own assets. He did not explain what these assets were. Leveraging the 3.8 percent of Sibur he had already acquired, Shamalov could theoretically have raised about $500 million. But where did the young businessman get the remaining amount?

Shamalov’s emails provide no answer to this question — but Nikienko’s reference to “creating artificial debt” is a tantalizing hint. The practice of using fictitious debt to create a legal pretext for transferring assets as a “repayment” has been described in Russian legal literature as a popular method of gaining control of enterprises for next to nothing.

But the technique need not be limited to hostile takeovers. If such a method were used in this case, with the Sibur shares being transferred as a “repayment” of a debt that did not really exist, no additional funds would need to be raised. However, beyond Nikienko’s suggestion in a single email, there is no evidence that this is what happened, and the full story remains unexplained.

It’s unknown when and how Shamalov’s Yauza 12 paid off its huge loan. Its most recent available financial statements, for 2016, show 80 billion rubles ($1.28 billion) in borrowed funds. The company was liquidated in December 2017.

Shamalov ended his Kommersant interview with a patriotic statement: “I was born, raised, and live in Russia. And my businesses are here too. And all of them are in Russian jurisdiction, not offshore. It’s not like me to build some kind of fallback position, to organize businesses abroad.”

Of course, many of his dealings were in fact abroad — his transactions in Belize, his French villa (then owned by a Monaco company), and several bank accounts he opened in Switzerland that year. But by 2017, as sanctions cover an ever-wider circle of Putin acquaintances, Shamalov’s attorneys began to curtail his financial activities in European banks and registered a special fund for him, the Centurion International Fund, on Labuan Island, an offshore territory that is part of Malaysia.

The Wife’s Acquaintance

Even before his marriage, Shamalov could be considered one of the most influential people in Russia thanks to his father’s friendship with the president and his “new Piterskie” friends and acquaintances. But after the wedding, he became a member of the family — with all the opportunities that come with it.

One of the guests at his wedding, listed as a guest of the bride, was Kirill Dmitriev, head of the Russian Direct Investment Fund (RDIF), the country’s sovereign wealth fund and one of the most important state players in the Russian economy. Created in 2011, the fund was tasked with investing in leading Russian companies and attracting foreign investors.

Dmitriev’s wife, Natalya Popova, was Tikhonova’s deputy at her non-profit foundation, and the two young couples were friends, celebrating holidays together abroad several times. Shamalov and Dmitriev regularly exchanged emails, sharing links and opinions on economic issues. In several cases, Dmitriev sent Shamalov confidential RDIF documents.

On December 7, 2012, Dmitriev sent Shamalov a RDIF presentation marked “strictly confidential.” It described a planned transaction where the fund would buy into Rostelecom, one of Russia’s largest telecom operators.

At the time, this deal was not publicly known, and the RDIF director was well aware that he was sharing secret information:

I am sending this — but everything is extremely confidential — if you need to use the materials or show it to someone else — please let me know — I will advise on the best way — because a lot of what is attached is confidential and for your eyes only.”

On another occasion, in July 2013, Dmitriev forwarded Shamalov a message he had sent to Ksenia Yudaeva, then the head of the Expert Department of the President of Russia. Attached were the minutes of a meeting between RDIF officials and Nikolai Nikiforov, the minister of communications, on the creation of a postal bank.

It is common for state companies like RDIF to have trade secret protection clauses. Reporters were unable to find such a provision on the RDIF website, and RDIF did not respond to requests for comment, but similar documents have been published on the websites of other state-owned companies. Typically, an employee of such an enterprise can send confidential information to third parties only on the basis of an agreement. Violation of these standards can carry not only administrative, but also criminal liability.

It’s unknown whether Shamalov benefited from the confidential documents Dmitriev shared with him, but in theory such information could be worth a fortune. This is especially true when it comes to publicly traded companies like Rostelecom. In 2013, together with Deutsche Bank, RDIF acquired 2.7 percent of the telecom operator for 7.7 billion rubles ($238 million), six months after Shamalov learned of these plans. The news led to an increase in the value of Rostelecom shares by nearly 30 percent between August, when the first reports of a possible deal emerged, and October, when the deal was closed. Someone who knew of the plans in advance would be in a position to make a tidy profit.

RDIF also proved helpful to Shamalov in strictly material terms. In January 2015, Dmitriev sent Shamalov an article from the newspaper Vedomosti with the headline “RDIF will help Sibur.” The article discussed RDIF’s proposed investment in a Sibur project to build a petrochemical plant in Tobolsk called Zapsibneftekhim.

“Little by little, we’re beginning to realize [the plan] :),” – Dmitriev wrote.

“Super!” answered Shamalov, Sibur’s second-largest shareholder.

Zapsibneftekhim, the largest petrochemical complex in Russia, opened last May after $9.5 billion in investment. At the end of 2015, RDIF announced on its website that, along with other investors, it had provided more than a third of the project funding.

🔗Putin Helps

To implement such a massive scheme, the participation of a friendly state fund was insufficient — so Shamalov’s father-in-law came to his aid. In October 2015, Putin approved the allocation of $1.75 billion for the Zapsibneftekhim project from the National Wealth Fund, which is intended to co-finance citizens’ pension savings and to cover the deficit of the Pension Fund.

Dmitriev also benefited from his friendship with Shamalov. For example, RDIF purchased the Sibur terminal for transshipment of liquefied petroleum gas (LPG) in the Ust-Luga commercial seaport. Judging from Shamalov’s emails, not all of Sibur’s top managers were delighted with the idea of selling the terminal. The company’s former CFO, Pavel Maly, wrote that the deal would lose Sibur more than $250 million.

I understand that the transaction may contain other assets that I don’t know about. Maybe it’s extremely important for us to establish cooperation with RDIF. … I would be grateful for this kind of information. But if there are no other considerations, it seems to me the most reasonable move is to ‘pull the plug on the project.’

Dmitriev somehow acquired this confidential note, and left comments in red for Shamalov indicating his disagreement with Maly’s assessment. In the end, Sibur went ahead with the deal. With a consortium of other investors, RDIF bought the Ust-Luga terminal for $700 million.

Dmitriev did not reply to requests for comment for this story.

An Administrative Resource

Shamalov was an incredibly popular business partner. Businessmen with the most tempting offers lined up to meet him, and he was offered free shares in various enterprises, apparently under the assumption that the president’s son-in-law would bring something more valuable to the table than money.

In 2017, his former classmate Dmitry Utevsky offered Shamalov a share in a large garbage company in the Leningrad region. Utevsky promised his partner a “fixed annual income,” and in return asked literally for an “administrative resource (at least at the level of the head of a region).” In Russia, this is the common term for officials who make use of their powers for private benefit. We don’t know how Shamalov responded to this proposal, but his emails contain examples when he helped his partners solve problems through high-level government contacts.

Together with his father, for many years Shamalov was a co-owner of the Russian Cement Company and the Siberian Cement holding company. In 2016, Sharykin found himself in an unpleasant situation. On April 7, his home and office were searched by officers from the Investigative Committee and FSB operatives.

Four days later, Shamalov received an email from Valery Bodrenkov, Siberian Cement’s vice president, with the subject line “For the guarantor, a ‘soft’ version.” The email was accompanied by a message to Putin from Sharykin.

The company owner wrote that the searches had been initiated by a “business competitor,” Siberian Cement’s former president. His note ended with an earnest appeal:

I ask you, dear Vladimir Vladimirovich, to take this situation under your personal control, to instruct the leadership of the General Prosecutor’s Office of the Russian Federation to assess the legality of the actions of the FSB and the Investigative Committee of the Russian Federation regarding the searches at my place of residence.

That same day, Shamalov forwarded the message to his secretary and asked for it to be printed out. It’s unknown whether Shamalov delivered it to his father-in-law, but this was not the only time Sharykin asked for his help — and there is evidence that Shamalov responded to his requests.

A year later, in April 2017, Sharykin sent Shamalov two more messages addressed to the president. In the first, he complained that his company, Ceramic Technologies (which Shamalov’s father also co-owned for several years), had developed an innovative method of burying radioactive waste, but that Rosatom had not agreed to cooperate. “I ask you to instruct the head of the State Atomic Energy Corporation ‘Rosatom’ Likhachev A.V. about the creation and implementation of a joint program,” Sharykin wrote.

In his second note, Shamalov’s partner complained that the same company, Ceramic Technologies, was developing optics for space and ground-based telescopes, but the state corporation Roscosmos was not buying them. “I ask you to instruct the General Director of the State Corporation for Space Activities ‘Roscosmos’ I.A. Komarov to develop a joint program for the implementation of existing technologies,” Sharykin wrote.

Apparently, Shamalov managed to help, at least in part. Two weeks later, on May 12, 2017, he received another email from Sharykin.

Kirill, good morning. I’m sending the protocols. The meeting with KSV went well, he delved carefully into all the issues. Warmest regards.

The abbreviation “KSV” corresponds to the initials of Sergei Vladilenovich Kirienko, the former head of Rosatom, as well as first deputy of the head of the Presidential Administration of Russia. Attached to the email were minutes of a meeting between managers of Rosatom and Ceramic Technologies. Sharykin did not respond to requests for comment.

On another occasion, a request for help came through Tikhonova’s foundation, Innopraktika . The message so accurately characterizes the Russian economy that it’s worth citing in detail.

On November 12, 2014, Alexander Veresov, the foundation’s head for working with the scientific community, received an email from the CEO of a company that developed veterinary medicines. His company was having a hard time getting a drug registered, facing monopolization in the veterinary market and general corruption. So he asked Veresov to get the president’s daughter to help:

First of all, you understand, to avoid serious problems in the future, ask Katerina to use this information without any links to me. … Entry to the market for veterinary drugs is practically closed for the ‘wrong’ companies that could compete with several of the largest companies, the ultimate beneficiaries of which are officials of the Rosselkhoznadzor [the Federal Service for Veterinary and Phytosanitary Supervision].



The problem is that for the “wrong” companies, the requirements are applied in full, making the registration process almost impossible, while for the “right” companies, mostly, it’s not. Therefore, to summarize, I would ask Katerina, firstly, to send a direct and transparent message (without any excessive pressure) to the “spoiling” comrades that domestic innovative developments should be given a pass. Because their actions are at odds with the interests and security of the state. This concerns not only me, but dozens of unfairly treated applicants. But, I would really ask Katerina to give a clear signal that there will be MONITORING of their further actions … If there is such monitoring and control on her part, they will not dare to do what they usually do.

We do not know what Shamalov and Tikhonova may have done to help, but the drug was registered in 2016.

The Parting

In early 2018, Bloomberg reported that Shamalov and Tikhonova had split up after about five years of marriage. Six months earlier, Shamalov sold the Sibur stake he had acquired from Timchenko in 2013. His emails shed no light on how much, if anything, he received for the sale. Timchenko did not respond to requests for comment.

After parting with Tikhonova, Shamalov found a new partner, the glamorous socialite Zhanna Volkova. By 2019, their relationship appeared to be official: That October, Volkova sent documents to Shamalov about registration of an offshore company in the British Virgin Islands, Kenaston Properties Ltd, of which she became the beneficiary. In the documents, her surname is indicated as Shamalova.

In 2018, Shamalov was sanctioned by the United States joining “a select circle of billionaires from Vladimir Putin’s entourage” after his marriage. The Americans were rather late: The last email in the archive between Shamalov and Tikhonova was sent on June 15, 2017. In it, Shamalov forwarded a message from a famous St. Petersburg architect with design options for a country villa.

EU Parliament wants Sanctions against Putin’s Inner Circle and Russian Oligarchs

Nawalny veröffentlicht Video zu angeblichem Luxus-Palast von Putin |  STERN.de

The European Parliament has adopted a resolution calling on EU member states to “significantly strengthen” sanctions against Russia and stop work on completing the Nord Stream 2 pipeline in response to the arrest of opposition figure Alexey Navalny. 

In particular, the members of the European Parliament are calling for sanctions against:

  • “Individuals and legal entities” involved in the decision to imprison Navalny
  • “Russian oligarchs linked to the regime”
  • Members of President Vladimir Putin’s inner circle
  • And “Russian media propagandists, who possess assets in the EU and can currently travel there.”

Additional restrictive measures could also be taken for human rights violations, under the new EU GlobalHuman Rights Sanctions Regime.

The resolution demands Navalny’s “immediate and unconditional release,” as well as the release of all other individuals detained in connection with his return to Russia.

After Alexey Navalny’s arrest, his associate Vladimir Ashurkov published a list of Russian nationals who, in Navalny’s opinion, ought to be placed under sanctions. Among others, the list includes oligarch Alisher Usmanov, billionaire Roman Abramovich, TV host Vladimir Solovyov, and Health Minister Mikhail Murashk.

Nawalny veröffentlicht investigatives Video über Putin | Machtkampf in Russland

Putin´s berühmtester Kritiker Nawalny veröffentlichte vor einigen Stunden ein investigatives Antikorruptionsvideo gegen den russischen Präsidenten. Innerhalb weniger Stunden wurde das Video bereits 18 Millionen mal angeklickt. Studio Berlin veröffentlicht das fast 2 Stunden lange Video ungekürzt. Das Video ist in russischer Sprache, allerdings kann man in den Youtube-Einstellungen “englisch” als Untertitel aktivieren. Die Studio Berlin Community hat viele russisch-sprachige Follower. Vielleicht mag der eine oder andere seine Meinung zu dem Video in die Kommentare schreiben. Kurz nach dem Nawalny in Moskau verhaftet wurde, hat sein Team dieses Video veröffentlicht. Dazu sagt Nawalny im Video selbst: »Wir haben ausgemacht, dass wir diese Recherche erst veröffentlichen, wenn ich wieder in Moskau bin, damit ihr wichtigster Held nicht glaubt, wir haben Angst vor ihm«. Dabei sitzt Nawalny auf einer Bank in Dresden (In Dresden war Putin einst als KGB-Offizier aktiv). Dies werde »ein psychologisches Porträt«, so Nawalny: »Wir wollen verstehen, wie aus einem einfachen Sowjetoffizier ein Irrer wurde, der auf Geld und Luxus fixiert ist.«

Borat at Putin’s Palace from the investigation of Alexei Navalny

Freedom for Alexei Navalny. Wikipedia: Putin’s Palace(Residence at Cape Idokopas). On 19 January 2021, two days after Navalny was detained by Russian authorities upon his return to Russia, a video investigation by him and the Anti-Corruption Foundation FBK was published accusing President Vladimir Putin of using fraudulently obtained funds to build the estate for himself in what he called “the world’s biggest bribe”. In the investigation, Navalny said that the estate is 39 times the size of Monaco and cost over 100 billion rubles $1.35 billion to construct. It also showed aerial footage of the estate via a drone and a detailed floorplan of the palace that Navalny said was given by a contractor, which he compared to photographs from inside the palace that were leaked onto the Internet in 2011. He also detailed an elaborate corruption scheme allegedly involving Putin’s inner circle that allowed Putin to hide billions of dollars to build the estate. World community Alexey Navalny needs your help. The Residence at Cape Idokopas Russian: Резиденция на мысе Идокопас, also known as Putin’s Palace is a large Italianate palace complex located on the Black Sea coast near the village of Praskoveevka in Gelendzhik, Krasnodar Krai, Russia. The palace was claimed to have been built for President Vladimir Putin


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Cybersecurity and Infrastructure Security Agency Report: Protecting Against the Threat of Unmanned Aircraft Systems (UAS)

This document provides guidance for federal Executive Branch departments and agencies regarding best practices, lessons learned, and recommendations to protect against the threat of malicious unmanned aircraft systems (UAS) operations.

2.0 Background

The development of UAS is a significant technological advance. In addition to recreational and commercial use, unmanned aircraft are used across the United States to support firefighting and search- and-rescue operations, to monitor and assess critical infrastructure, to provide disaster relief by transporting emergency medical supplies to remote locations, and to aid border-security efforts. However, UAS can also be used for malicious schemes by terrorists, criminal organizations (including transnational organizations), and lone actors.

The potential safety hazards and security threats presented by malicious UAS activity in the national airspace system requires security professionals to address the associated risks. Organizations should be aware of the potential exposure of private data through operating UAS. Sensitive data may be at greater risk of exposure when operating UAS designed, manufactured, or supplied abroad where the data is stored, transferred to, or accessible by servers in a foreign country. UAS incorporate technologies that generate or collect sensitive data or otherwise access critical systems.

The ISC details the threat of adversarial use of UAS as an increasing concern in The Design-Basis Threat (DBT) Report. Adversarial uses of UAS include hostile surveillance, smuggling, disruption, and weaponization. From a cybersecurity perspective, an adversary may use UAS as a mobile platform to interrupt or modify digital services or gain unauthorized access to data systems.

The capabilities of UAS continue to grow with longer flight times, greater ranges, and increased payload capacities. These greater capacities, when coupled with malicious intent, increase the threat to federal facilities.

5.0 Threats Posed by UAS

The Department of Justice defines credible threat as the reasonable belief based on the totality of circumstances that the activity of a UAV or UAS may, if unabated:
•Cause physical harm to a person;
•Damage property, assets, facilities, or systems;
•Interfere with the mission of a covered facility or asset, including its movement, security, or protection;
•Facilitate or constitute unlawful activity;
•Interfere with the preparation or execution of an authorized government activity, including the authorized movement of persons;
•Result in unauthorized surveillance or reconnaissance; or
•Result in unauthorized access to or disclosure of classified, sensitive, or otherwise lawfully protected information.7

Many UAS events are caused by careless or reckless operators. An adversary can also use UAS in a variety of malicious ways, which include the following:
•Hostile Surveillance. An adversary uses UAS to collect information about federal government operations, security measures, or law enforcement operations.
•Smuggling or Contraband Delivery. An adversary uses UAS to bypass security measures to deliver illegal or prohibited items onto federal property.
•Disruption of Government Business. An adversary uses UAS to interfere with federal government operations through the presence of the UAS, use of on-board cyber-capabilities, or by using the UAS to distribute propaganda onto federal property.
•Weaponization. An adversary mounts a firearm, explosive, chemical, or biological agent ona UAV or deliberately crashes the UAV in an attack.

An organization or facility should consider the totality of threats posed by UAS, whether these threats are caused by negligent or reckless use of UAS, criminality, terrorism, or espionage. The risks associated with UAS should not be considered in isolation of other prevailing threat conditions. Considering the full range of threats will facilitate the development of a risk-based mitigation strategy that minimizes those risks most pertinent to the site or organization.

When considering the likelihood of an adversary using UAS, it is important to consider both the intent and the capability of the adversary, including their desired effect. The following table details several basic UAV characteristics structured by the threat actor’s capability level and intended effect.

“Where injustice becomes right, resistance becomes a duty!”

 

Alexej Nawalny: Wie der Anti-Putin wirklich tickt und was ihn antreibt

“Where injustice becomes right, resistance becomes a duty!”

This motto does not only apply to the Hitler era, but also to Russia under Putin.

Alexey Navalny lives this resistance, setting an example for all of us – as do Julian Assange and Edward Snowden.

This becomes all the more important as the mainstream media of all countries are often corrupt and use the above-mentioned lone fighters as an alibi.

Allow me to remind you that even in Germany former Chancellors and active Prime Ministers still actively support Putin and his system of injustice.

A murderous system of injustice to which former Stasi employees and their IMs will still be subject to in 2021.

The federal German legislature, judiciary and executive are also disintegrated by these figures.

As is well known, the fish stinks from the head.

Sincerely you

Bernd Pulch

“Wo Unrecht zu Recht wird, wird Widerstand zur Pflicht !”

Gemeinsam gegen Putin: Chodorkowski unterstützt Nawalny - n-tv.de

“Wo Unrecht zu Recht wird, wird Widerstand zur Pflicht !”

Dieses Motto gilt nicht nur für die Hitler-Zeit, sondern ebenso für das Russland unter Putin.

Alexey Nawalny lebt diesen Widerstand, beispiel gebend für uns alle – ebenso wie Julian Assange und Edward Snowden.

Dies wird um so wichtiger als die Mainstream-Medien aller Länder oft korrupt sind und die oben genannten Einzelkämpfer als Alibi nutzen.

Es sei mir erlaubt daran zu erinnern, dass auch in Deutschland noch ehemalige Bundeskanzler und aktive Ministerpräsidentinnen Putin und sein Unrechtssystem aktiv unterstützen.

Ein mörderisches Unrechtssystem, dem weiter ehemalige Stasi-Mitarbeiter und deren IM auch in 2021 noch untertan sind.

Auch die bundesdeutsche Legislative, Judikative und Exekutive ist von diesen Gestalten zersetzt.

Der Fisch stinkt bekanntlich vom Kopf her.

Herzlichst Ihr

Bernd Pulch

i

Exposed – The Sinaloa Cartel’s Move Toward Europe

Quellbild anzeigen
El Chapo

Police agencies have long known that Mexican drug cartels help supply Europe’s nearly US$10 billion annual cocaine habit, but acknowledge they have little idea about the workings of these highly organized and well-financed operations.

But now, a recent Italian police investigation, code-named Operation Halcon, has provided the most in-depth look yet into how Mexico’s leading drug traffickers, the Sinaloa Cartel, do business in Europe. IrpiMedia, OCCRP’s Italian partner, obtained access to police files and surveillance reports that show the cartel’s methods in unprecedented detail.

Operation Halcon started in early 2019, at a time when Europe was being flooded with cocaine from Latin America. The Sinaloa Cartel, a global leader in cocaine sales with operations in at least 50 countries, was looking for new routes into Italy as a way to expand its European presence. Mexican cartels already sold synthetic drugs such as methamphetamine on the continent, but Colombian, Albanian, and Italian organized crime have historically dominated Europe’s cocaine trade.

Most drugs arrive in Europe by ship, usually to large ports with good connections to other major cities. Sinaloa wanted to establish another route: Bulk shipment by private planes flying into small airports in Southern Italy, with the drugs then trans-shipped to other parts of the country.

Catania, a mid-size city on Sicily’s eastern coast, was chosen for a test. The area, which was rapidly becoming a tourist destination, offered an international airport and a special draw: an airport official willing to help.

The Informant

The cartel’s plan didn’t stay secret for long. The Organized Crime Investigation Group (GICO), the anti-mafia unit of Italy’s financial police in Catania, learned from an informant in January 2019 that Sinaloa was planning to fly in cocaine from Colombia.

The tip seemed odd. Catania isn’t known as a hub for international drug trafficking, and direct drug flights using private planes are generally unknown in Italy. Catania–Fontanarossa Airport had only limited international service, while the local port sees relatively little commercial traffic.Credit: Notiziecatania/PixabayCatania from above, with Mt. Etna in the background.

But the local head of the GICO, Captain Pablo Leccese, took the report seriously. In less than three months, the unit identified the cartel’s players in southern Italy: Guatemalans Daniel “Tito” Esteban Ortega Ubeda and Felix Ruben Villagran Lopez. The airport insider was identified only by his nickname, Don Señor.Credit: Guardia di FinanzaFelix Ruben Villagran Lopez.

Ortega and Villagran were working with another Guatemalan, Luis Fernando Morales Hernandez, alias “El Suegro,” or “The Father-in-Law,” who would make arrangements for the shipment in Colombia.

The police informant added more names to the file. The cell operating in Catania was under the direction of a shadowy Sinaloa leader known as “El Flaco,” or “Skinny,” whom police identified as second-in-command of the entire cartel after drug lord Ismael “El Mayo” Zambada Garcia.

El Flaco was soon to meet Don Señor to work out the logistics for handling the cocaine flight and the distribution of its cargo to buyers from various organized crime groups who would come for it.

The Italian police would be waiting for them.Credit: Aurélien Sesmat

On June 1, 2019, El Flaco landed in Catania with a female companion. After the couple checked in at the luxury seaside Romano Palace Hotel, the police learned his real name for the first time: José Angel Rivera Zazueta.

The following day El Flaco, Don Señor, and their associates met in a hotel restaurant to go over the plan. A private plane would fly from Mexico to Cartagena, Colombia, where it would be loaded with cocaine. After refueling in Cape Verde, it would land in Catania, where Don Señor would shift the drugs to a vehicle, avoid customs, and head to northern Italy — likely to Verona.

Two elements of the plan were a surprise to the financial police: The contraband was to be flown by a pilot usually entrusted with similar tasks by Joaquín “El Chapo” Guzmán Loera, the legendary former Sinaloa leader. And the size of the “test” was staggering.

“We know this Sinaloa cell had already imported cocaine to Europe and that they already had 1.5 tons of cocaine ready to be sent after a couple of hundred kilos of trial,” Leccese told IrpiMedia.

On arrival in Italy, the drugs would be sold to the Calabrian mafia, the ’Ndrangheta, which is widely considered to be Europe’s most powerful cocaine distributor. Mafia involvement made sense. Sinaloa is known to forge partnerships with existing organizations, rather than trying to steamroll its way into new markets.

Cops bugged a restaurant where the narco traffickers would meet, and settled in to listen. What they heard was a revelation. Italian law enforcement seldom gets an inside look at Mexican cartels, but now El Flaco was laying it all out for his associates, unaware that his tutorials were reaching the ears of the police.

Catania police heard boasts of 35 small planes each week leaving Venezuela to Chetumal, a resort town on the border of Mexico and Belize. Each allegedly carried 500 to 800 kilograms of cocaine — more than half of the world’s total annual cocaine production — and all with the blessing of the Venezuelan military.

The flights likely came from San Felipe, in northwest Venezuelan state of Zulia, where there are so many traffickers that locals call their town “Sinaloa,” according to the InSightCrime website.

The restaurant talk also turned to more personal news. The traffickers spoke about Villagran’s family, which was said to handle two to three tons of cocaine per month. They spoke of “El Sordo” (The Deaf), who is now part of Mexico’s Guardia Nacional, and of “El Calvo” (The Bald), a key cartel operative in Canada.

Tales were told about El Flaco’s two girlfriends, one a relative of the late drug lord Amado Carrillo Fuentes, and about his father, who supposedly owned thousands of currency exchange shops, as well as his alleged contacts in the CIA.

Although the Italian investigators couldn’t confirm much of the restaurant talk, they were fascinated.Credit: Amrai CoenA Sinaloa Cartel member testing a weapon after repairing it in a small town in Sinaloa, Mexico.

A Little “Help” From the Police

In mid-June, the informant told police that El Flaco had a 300-kilogram test shipment ready in Colombia and would send it to Catania as soon as the cartel could line up a facilitator in Cartagena.

On June 18, Don Señor met the cartel members in Rome. As police listened in, El Flaco offered to follow the test run with another 1,500 kilograms via private jet from Cartagena, through Mexico, to Catania.

But the cartel encountered unforeseen problems. It had trouble finding someone in Cartagena to facilitate the shipment. The whole operation was accumulating delays.

So the police decided to “help” them.

Working with the Antidrug Central Directorate, a police body that coordinates antidrug operations in Italy, and the Italian antidrug attache in Bogotá, Captain Leccese brought in two Latino informants based in Italy, code-named Rodriguez and El Cholo, along with a Colombian Dirección de Antinarcóticos undercover officer, known as Lucas, to pose as drug dealers.

In late August, Villagran and Morales took El Cholo and Lucas to meet suppliers in the mountains in southern Colombia’s Cauca region. After passing through a checkpoint, where they were likely photographed, they reached a place in the jungle where traffickers confiscated their cellphones. From there, they walked through the jungle to a cocaine refinery.Credit: Guardia di FinanzaCocaine prepared by Colombian suppliers.

El Abuelo, “The Grandfather,” a former member of the now-defunct Revolutionary Armed Forces of Colombia (FARC) guerrillas, showed them around, displaying drugs being cooked and shipments ready to go out.

Meanwhile, Rodriguez was halfway around the world, meeting El Flaco in Kaohsiung, Taiwan. Police in Catania had learned that El Flaco lived mainly in Asia, where he managed an important part of the cartel’s synthetic drug business.

The undercover operation soon encountered logistical problems of its own. The Colombian cocaine cooks delayed shipment to the cartel until October. Still more time was lost when a national strike closed Colombia’s airports.

Once again, the Italian and Colombian police stepped in to help. The informant, El Cholo, offered to provide a “better alternative” using his contacts at the Bogotá airport to place the drugs on an airline flight.

The Delivery

Finally, on January 9, 2020, around 400 kilograms of cocaine arrived in Catania aboard a passenger flight. Don Señor moved it to a safe house at the edge of the city.

Don Señor, Ortega, Rodriguez, and El Cholo were on their way to inspect the cargo when El Flaco called from Cancun for an update. Again, police listened in as Ortega checked the shipment and produced El Flaco’s written instructions about how the drug should be distributed.

“So the compensation is 32,” he said, referring to the number of cocaine bricks Don Señor would get for his labor. That much cocaine would be worth nearly $1 million in Europe.

“The compensation is better than a payment,” Rodriguez said with a laugh.

Cartels like to compensate collaborators outside their organization by giving them product, rather than money. Cash payments would mean the smugglers would have to divulge business information, such as profits, to outsiders.

“My uncle told me he needs 20 in Genoa,” Ortega continued. “And we need three in Verona if possible.”

Again, the traffickers’ work didn’t go smoothly. An emissary of a Chinese criminal organization based near Milan but with ties to Mexico, already angry at the delayed delivery, demanded a kilogram to test. If his organization liked the quality, he would want 50 kilograms upfront.

The Mexicans stalled. “Charlie,” an Italian working for a mysterious figure referred to only as “Tocayo,” was their priority for this load because he wanted to make a far bigger purchase.

The plan, Ortega told El Flaco in a call, was to take three kilograms to Charlie in Verona, followed by deliveries of 20 kilograms at a time, for a total sale of up to 300 kilograms.

On January 16, Ortega and Villagran flew to Verona to meet “El Arquitecto,” an important cartel figure who was coming from Mexico to oversee the sale, and met Don Señor, who had brought his order. Again, Italian police managed to listen in.Daniel “Tito” Esteban Ortega Ubeda and Felix Ruben Villagran Lopez in Verona, where they traveled from southern Italy for a cocaine deal.

An indictment later filed in Catania describes El Arqui as El Flaco’s representative, sent to guarantee the quality of the Sinaloa cocaine. Villagran told his associates that El Arqui wanted to test the product before delivering it.

But the traffickers couldn’t catch a break. El Arqui and Charlie were delayed by snow. On January 22, they reached Milan and went straight to meet the buyer, Charlie’s boss. Later, they delivered 35,000 euros for the initial three kilograms to Ortega and Villagran near Verona.

Italy’s Financial Police, who were watching both groups all along, arrested Ortega and Villagran in Verona. They were charged with international drug trafficking and distribution and taken into custody, but have not yet been put on trial.

The ’Ndrangheta

The police also set up a roadblock as an excuse to stop the Milan contingent’s Mercedes E350 and identify — but not arrest — El Arqui and Charlie.

El Arqui proved to be Jalisco-born Salvador Ascensio Chavez. Charlie is Mauro Da Fiume, an Italian from San Remo. Both are experienced drug traffickers.

Records obtained by The Cartel Project show that El Arqui, identified by Canada’s iNFOnews as a Mexican architect married to a Canadian, served a three-year prison term in Canada after being convicted for importing 2.2 kilograms of cocaine in 2001. His record was erased after he was granted a pardon.

In 2010, El Arqui was caught smuggling 97 kilograms of cocaine hidden in a fruit-grinding machine imported from Argentina, and was sentenced to more than seven years in prison in 2014. In 2017 he was granted release and deported to Mexico.

In a Canadian parole board document, authorities summarize El Arqui’s admission of guilt and his promise to go straight: “You admitted associating with cartels and/or organized crime in Mexico,” the Canadians wrote. “You told the Board that you have a large positive community support in your country and are planning to design and build homes.”

The document doesn’t mention plans to supervise Sinaloa cocaine sales in Europe.Credit: Guardia di FinanzaA map put together by Italian authorities investigating Mauro Da Fiume, an experienced Italian drug trafficker.

Da Fiume owned a restaurant and two import-export companies in Barcelona. His involvement in the deal suggests the drugs were destined for one or more ’Ndrangheta clans.

Spanish police arrested da Fiume on February 4 on behalf of Catania authorities for being part of a “criminal association aimed at drug trafficking and possession” which planned to move “huge amounts of cocaine” through “a criminal organization operating in Italy, Colombia, Mexico and Spain.”

A list maintained by the police agency puts Da Fiume among “people linked to the ‘Ndrangheta,” and identified him as having ties to the Sinaloa Cartel.

Mauro Da Fiume was allegedly associated with a long-running operation trafficking cocaine between Italy, France, Spain and Morocco. That operation, exposed in 2015 by the Genoa anti-mafia bureau’s “Operation Trait d’Union,” dealt with the Piromalli-Molè clan’s infiltration of Genoa and the movement of drugs through the French Riviera.

Da Fiume was not arrested in Operation Trait d’Union, but was identified as the right-hand man of clan boss Antonio Magnoli.

Ascensio Chavez, El Flaco, and Morales remain at large. They will soon be tried in absentia in Catania for international drug trafficking.

Antonio Baquero (OCCRP), Marco Oved (Toronto Star), Mathieu Tortlieur (Proceso), and Paolo Frosina (IrpiMedia) contributed reporting.

About This Report

This article was produced in collaboration with “The Cartel Project,” an investigation coordinated by Paris-based Forbidden Stories. It involves 60 journalists from 25 organizations in 18 countries and involves various aspects of Mexican cartel violence, including the murders of journalists in Veracruz state. Forbidden Stories is a nonprofit group dedicated to continuing the work of journalists silenced by homicide.

The case of Crypto AG – Report of the audit committee of the Federal Assembly of Switzerland

The essentials in brief

Since the Fall of 1993, the Strategic Intelligence Service (German: Strategischer Nachrichtendienst or SND) managed to get reliable information about Crypto AG. It learned that the company was owned by foreign intelligence agencies and exported “weak” devices, the encryption of which could be broken with a realistic effort.

In order to be able to break the encryption of such devices itself, the SND began to gather technical information about their encryption methods and customer lists. Later, when the SND had become a civilian office, it managed to get enduring access to this knowledge with the consent of the American intelligence agencies.

Legal situation

From a legal point of view, the parliamentary audit committee (GPDel) therefore sees it as an intelligence cooperation, like in the past it was provided in the military law and today in the Intelligence Service Act (Nachrichtendienstgesetz or NDG). From the fact that the SND and the American agencies acted by mutual agreement, it follows that the Swiss authorities share responsibility for the activities of Crypto AG.

It was legally allowed that the SND and a foreign intelligence agency used a company in Switzerland to gather information about foreign countries. Given the big political implications of this cooperation, however, the GPDel considers it wrong that except for the current head of the Federal Department of Defence, Civil Protection and Sport (VBS) none of her predecessors were informed about this operation.

The east wing of the Federal Palace (Bundeshaus) in Bern, Switzerland,
home of the Federal Department of Defence, Civil Protection and Sport (VBS)
(photo: Mike Lehmann/Wikimedia Commons – click to enlarge)

Police investigation

In addition, the SND’s findings on Crypto AG during the Bühler affair, which was investigated by the federal police (Bundespolizei or BuPo) in 1994 and 1995, should not have been withheld from the political leadership. The head of the federal military department (EMD) at the time did not learn the truth about Crypo AG via other ways either, as he explained to the GPDel.

The GPDel also did not found any evidence that the government unduly influenced the investigations by the BuPo. Rather, the head of the Federal Department of Justice and Police (EJPD) made an effort to clarify the ownership of the company. Ultimately, however, the BuPo had to stop its investigations without being able to answer this question.

In 1994, the GPDel was informed repeatedly about the ongoing investigations of the BuPo. Just like the military and political superiors of the SND, the GPDel did not learn anything from the foreign intelligence service related to Crypto AG. The company was never subject of the information provided by the Defense Department (VBS) when the overall supervisor specifically dealt with the topic of cryptology in 2007 and 2009.

Storage and destruction of documents related to Crypto AG

Especially valuable for the inspection of the GPDel were the operational files of the SND and the BuPo, which the federal intelligence service (Nachrichtendienst des Bundes or NDB) stored in a converted K-Anlage [Kriegsanlage, a well-hidden former command bunker of the Swiss army near Bern]. Their archiving in accordance with the applicable regulations is still pending. Due to the archiving practice of the intelligence services, however, there is no guarantee that all important documents are still available.

The destruction of such records was in part allowed by law and regulations, but in some cases it contradicted them. Between 2011 and 2014, the NDB destroyed documents from their correspondence with foreign partner services, instead of storing them internally as prescribed. Its inspection showed the GPDel that the destruction of files by the intelligence service is not an effective method for source protection. Rather, there is a risk that former sources can be compromised when authorities don’t have the proper information.

Foreign espionage under the guise of a Swiss company

Companies and organizations that operate on Swiss soil benefit from Switzerland’s image as a neutral state. Accordingly, foreign intelligence services may have an interest to operate under the guise of a Swiss company to the detriment of other countries.

Under certain circumstances, such a company can be guilty of the criminal offense of forbidden intelligence service against foreign states. However, such an operation is permissible under applicable law when a foreign agency uses such a company together with the NDB to collect information about foreign countries (cf. Art. 34 Para. 2 NDG).

In the view of the GPDel, planning such an operation should include a political assessment of the possible consequences for Switzerland, as well as for any affected employees of the company. The Federal Council (Bundesrat) should therefore clarify in principle how much room for maneuver it wants to grant the Defense Department (VBS) in this regard.

Not enough attention for the supply of secure encryption devices

The case of Crypto AG shows that companies under the influence of foreign intelligence services can produce devices with “weak” encryption methods. However, the GPDel assumes that Crypto AG has never supplied the “weak” encryption equipment to the Swiss authorities. Important in this case was that the Swiss authorities were able to inspect the security of the purchased devices or even influence their design. However, this is only possible with suppliers who develop and manufacture their devices in Switzerland.

For security reasons, it is not responsible for the federal government to purchase encryption solutions from foreign suppliers. Right from the start, the Federal Council did not pay the necessary attention to the role that domestic suppliers play in ensuring the availability of secure encryption technology for the Swiss authorities. As the responsible department, the Defense Department (VBS) didn’t analyze the risks for a reliable supply in time and informed the Federal Council about this matter.

Access to Crypto AG at the management of the intelligence services

The information access to the Crypto AG was a well-kept secret at the management level of the SND. But when the Federal Intelligence and Security Service (NDB) was created [in 2010], this knowledge remained hidden for its first director. When confronted with this a few years later, he refused to take his responsibility.

It was only in the summer of 2019 that the current director commissioned a position paper for this case, although he was not informed by his predecessor and it was still before the NDB learned from the research of the media about Crypto AG. However, he did not use this informational advantage to uncover the relations between Crypto AG, the NDB’s predecessors and the American intelligence agencies. Instead of clarifying the legal situation and recognizing the political implications, the NDB downplayed the relevance of the Crypto AG case for the current organisation.

The Defense Department (VBS), which already informed the Federal Council and the GPDel in November 2019, did not succeed in identifying the need for political action. The interdepartmental working group, which the VBS also set up, was not able to support the political leadership because of the reluctance of the NDB to provide information for the looming intelligence affair.

In its application for the Federal Council meeting on December 20, 2019, the Defense Department asserted that the level of information was insufficient for a substantive discussion about the case of Crypto AG. After finding the files in the K-Anlage, about which the Defense Department had informed the Federal Council, this finding was no longer valid.

Since the NDB had not evaluated the extensive files before the Federal Council meeting, the Council decided to establish an external committee of experts to clarify the apparently purely historical questions. With this, the Federal Council gave the strategic leadership for dealing with the Crypto AG case of the hand from the start.

Ending the parallel investigation by judge Oberholzer

When the GPDel opened its inspection on February 13, 2020, former federal judge [Niklaus] Oberholzer had been active as an external expert on behalf of the Federal Council for a month, but without having access to the files from the K-Anlage. After the GPDel had requested all relevant files from the NDB, it recognized that the Crypto AG case went beyond pure history and was of current importance. This proved the approach of the defense department, to examine the historical and current aspects of the case separately, as not very effective.

Given the various parallel investigations, the GPDel considered it necessary to discuss the unresolved coordination issues with the head of the Defense Department before the work was continued. However, when the Defense Department expanded the scope of the Oberholzer investigation before to the meeting agreed with the GPDel, the GPDel revoked its authorization to the Federal Council to commission Mr Oberholzer on February 21, 2020. As an investigative officer for the GPDel, he then reported on the intelligence-related aspects of the Crypto AG case in a secret report for the GPDel.

On February 25, 2020, the GPDel discussed its revocation of the authorization with the head of the Defense Department. The subsequent written exchange with the Federal Council led to a meeting with the federal president and the head of the Defense Department on May 25, 2020, where the GPDel provided information about the most important facts about the role of the intelligence services in the case of Crypto AG. In a classified letter this information was also brought to the attention of the Federal Council.

Former headquarters of Crypto AG in Steinhausen, Switzerland
(photo: Keystone – click to enlarge)

Suspension of the export licenses for Crypto AG’s successors

After the meeting of the Federal Council on December 20, 2019, the Federal Department of Economic Affairs, Education and Research (WBF) decided to suspend the general export licenses for the successor companies of Crypto AG [Crypto International AG and TCG Legacy AG]. The goal was apparently to avoid unfavorable media coverage for the WBF.

From the point of view of the GPDel, however, the suspension of these licenses was neither materially nor legally justified, just like the way the State Secretariat for Economic Affairs (SECO) delayed matters related to those companies. Individual export applications could still be submitted though.

There were also no legal arguments against their issuance, as the export control group rightly recognized on March 4, 2020. However, due to the position of the Federal Department of Foreign Affairs (EDA), it was decided in May 2020 to submit all applications to the Federal Council for decision.

Filing a criminal complaint against Crypto AG

On February 25, 2020, the SECO, with the support of the WBF, filed a criminal complaint at the federal prosecutor’s office. Because of the first media coverage, the SECO suspected that by exporting “weaker” encryption technology before 2018, Crypto AG had violated individual declaration obligations from the export control law (Güterkontrollrecht).

Without further scrutiny, the WBF took over the argument of the SECO according to which there was a legal obligation to file a complaint. However, in an opinion at the request of the SECO, the federal prosecutor had advised against filing a criminal complaint; the SECO did not discussed the matter with other federal agencies.

From the point of view of the GPDel, the criminal complaint was based on an insufficient assessment of the facts and an inadequate legal reasoning. Since the complaint was apparently made for political reasons, it should have been submitted by the Department of Economic Affairs (WBF) instead of by the SECO.

Authorization to prosecute Crypto AG

On March 13, 2020, the federal prosecutor asked the Justice and Police Department (EJPD) for the authorization to prosecute the violations of the export control law as reported by he SECO. Three months later, the EJPD submitted the prosecutor’s application for decision to the Federal Council. Before that, the EJPD had a discussion about it with the GPDel on May 25, 2020.

The WBF for its part, requested the Federal Council on June 10, 2020 to approve all pending export applications, this although it had supported SECO’s criminal complaint. After the Federal Council had postponed the issue by a week, the WBF requested to suspend the decision until the prosecutor’s investigation had been finished. The Federal Council followed this proposal on June 19, 2020 and on the same day it granted the authorization to the federal prosecutor.

Violation of good faith and of the separation of powers

The GPDel recognizes the coherence between the decisions of the Federal Council regarding the authorization application by the federal prosecutor and the individual export applications from the successor companies of Crypto AG. With their indefinite postponement, however, the Federal Council may have violated the principle of good faith, because in principle every Swiss company can expect an authorization of its exports, unless there are legal arguments against it.

The export control law was also not a suitable means of approaching the Crypto AG case, while the criminal complaint was obviously an attempt to get rid of political responsibility by letting the justice system tackle the Crypto AG case. With this, the Federal Council ultimately linked the criminal case with the ongoing investigation of the GPDel, which was problematic given the separation of powers.


The Swiss foreign intelligence service

Initially, the Swiss foreign intelligence service (German: Strategischer Nachrichtendienst or SND) was part of the Untergruppe Nachrichtendienst (UG ND), which reported to the general staff of the Swiss army. In 2001, it was removed from the military hierarchy and turned into a civilian office, but still under the responsibility of the head of the Defense Department.

On January 1, 2010, the SND was merged with the domestic security service (Dienst für Analyse und Prävention or DAP) into the current federal intelligence and security service (Nachrichtendienst des Bundes or NDB), which is also responsible for signals intelligence.

Known divisions of the NDB are:

– NDBA for Auswertung (Analysis)
– NDBB for Beschaffung (Acquisition)
   – NDBB-A for Beschaffung Ausland (Foreign Acquisition)
   – NDBB-I for Beschaffung Inland (Domestic Acquisition)
– NDBS for Steuerung und Lage (Coordination)
– NDBU for Unterstützung (Support)

Headquarters of the Nachrichtendienst des Bundes (NDB) in Bern, Switzerland
(photo: Samuel Schalch – click to enlarge)

More details from the Crypto AG report

Besides the general conclusions as translated above, the GPDel report about the Crypto AG case also contains some more detailed information that is worth to be translated:

The MIVERVA report

The NDB provided the parliamentary audit committee (GPDel) with a copy of the internal CIA report about Crypto AG. This report is titled “MINERVA – A History” and describes how since the 1950s, US intelligence agencies cooperated with the Swedish owner of Crypto AG and was taken over by CIA and BND in 1970. The report includes the withdrawel of the Germans from the operation in 1993 and ends in 1995. The MINERVA report was written after the year 2000 with input from representatives of the BND.

It seems that around 2005, the Germans were provided a copy of the report and prepared additional assessments. This version of the American report, together with German documents, came in the hands of the press, which in February 2020 published about certain sections of the report. The full MINERVA report of almost 100 pages has not yet been released.

The GPDel analyzed the MINERVA report and additional information from the NDB confirmed the authenticity of the document. Regarding the situation in Switzerland, the report is not always accurate and contains small mistakes. Apparently the American authors were not very familiar with Switzerland and its government. (p. 9-10)

> See also: Codewords related to Crypto AG

Acquiring and using information about weakened algorithms

Since the autumn of 1993, the SND got informed about the fact that Crypto AG was owned by American and German intelligence services and that the company built encryption devices with weaker algorithms. The SND aimed at breaking the encryption of these weakened devices themselves and gathered technical information about the encryption methods of the exported Crypto AG devices. This knowledge could also be used to identify weak encryption methods used in devices bought by Swiss customers. (p. 20)

This search for information about the weak algorithms continued after the SND became a civilian office in 2001 and was only successful because American intelligence agreed that Switzerland got the necessary information but only as far as necessary. (p. 20)

In order to actually use its knowledge about the weakened encryption methods for national security interests, the SND also had to gain access to encrypted communications. Interception of radio communications was conducted by a unit of the Swiss army (Führungsunterstützungsbasis der Armee or FUB).

After modernizing systems to intercept short wave (high frequency) radio communications, Switzerland started to set up a system to intercept satellite links, which is codenamed Onyx and became fully operational in 2006. The decryption capabilities were integrated in the interception process managed by the SND. (p. 20)

The Onyx satellite intercept station in Leuk, Switzerland
(photo: Martin Steiger/Wikimedia Commons – click to enlarge)

Knowledge about Crypto AG at the SND and the NDB

At the SND the information about Crypto AG was a closely held secret. Only the head of the SND (Fred Schreier) and his successors (Hans Wegmüller and Paul Zinniker) and no more than two other employees of the SND knew about it. The director of the newly created NDB, Markus Seiler, was (orally) informed about the existence of weak Crypto AG devices when he assumed office in 2010. (p. 21)

Only during his last year in office, 2017, Seiler was also informed about what made his organization able to decrypt the weak algorithms, but he declined to accept a note about further options. Vice-director Paul Zinniker supported him in not taking further actions. The former heads of the Swiss Defense Department (VBS) were not informed about the fact that Crypto AG was under control of American intelligence and that Swiss intelligence was using its knowledge about the weak algorithms. (p. 21)

In the spring of 2019, the current director of the NDB, Jean-Philippe Gaudin, got basically the same information about Crypto AG as his predecessor two years earlier. But this time, Gaudin requested a detailed presentation and demanded a written position paper. On August 19, 2019, Gaudin also informed the head of the Defense Department (p. 21)

Mid-October 2019, the NDB was provided with a copy of the MINERVA report and its director was informed about its contents. As of the end of October there was an increase in the communications between the NDB, the American and other foreign intelligence services, also in order to anticipate the media coverage about the MINERVA report. (p. 22)

Awareness about weaknesses in encryption devices

In 2007, the GPDel was briefed about how the SND’s decryption capabilities are integrated in the process of intercepting foreign communications. A fact sheet showed that many manufacturers of encryption devices built in weaknesses for some of their customers. Behind this practice were the intelligence agencies of the United States and some of its allies. However, other states with the proper capabilities, like Switzerland, could also benefit from this. (p. 23)

According to the GPDel, the knowledge about the weakened Crypto AG devices provided useful intelligence for Switzerland as it could be used to decrypt the communications from foreign targets and exchange information with foreign intelligence services, which also strengthed the position of Switzerland. However, it should also be noticed that encryption methods and access to relevant communications are changing continously and know-how can rapidly loose its value. (p. 27)

The GPDel found that it was possible to identify weaknesses in various types of encryption devices used by Swiss institutions and to repair the deficiencies. This shows how important it is to have good insights on domestic manufacturers and influence the quality of their products. (p. 27) The GPDel was assured that all inspections made clear that Crypto AG never provided weak encryption devices to Swiss government agencies – unlike another company. (p. 31)

A second Swiss company selling weakened encryption devices

From hand-written notes from the head of the Defense Department, the GPDel learned that the security of encryption devices used by federal agencies had regularly been a talking point between the director of the SND and the head of the Defense Department. Somewhere between 2002 and 2008 it became clear that a Swiss manufacturer (not being Crypto AG) had sold unsecure equipment to the federal government and two large corporations. After learning about this, the Defense Department took measures to close the hole. (p. 28)

In November 2020, the Swiss broadcaster SRF revealed that this other Swiss company was Omnisec AG, which was founded in 1987 and dissolved in 2018. According to SRF, Omnisec had sold less secure encryption devices from their 500-series to Swiss federal agencies and even to the secret services SND and DAP. These weakened devices were also sold to at least two private companies, including the UBS bank – around the time when the US pressed Swiss banks to lift their banking secrecy.

Former headquarters of Omnisec AG in Dällikon, Switzerland
(photo: ZVG – click to enlarge)

Links & sources

– Swissinfo.ch: Second Swiss firm allegedly sold encrypted spying devices (Nov. 26, 2020)
– Woz.ch: Professor Maurer und die NSA (Nov. 26, 2020)
– SRF.ch: Geheimdienstaffäre, Corona im Milieu, Boni trotz Pandemie (Nov. 25, 2020)
– Res Strehle, Operation Crypto. Die Schweiz im Dienst von CIA und BND, Echtzeit Verlag, Juli 2020.
– CryptoMuseum.com: Operation RUBICON – The secret purchase of Crypto AG by BND and CIA