Former Labour minister risks controversy by joining AFK Sistema group, which was implicated in 2010 WikiLeaks cable
Lord Mandelson risked courting controversy after he accepted nomination to the board of a Russian company with alleged links to organised crime and corruption.
The former Labour cabinet minister and European trade commissioner will become an independent director of AFK Sistema at the end of June, subject to shareholder approval at the company’s annual meeting, it was announced on Thursday.
The oil-to-telecoms conglomerate was implicated in a leaked secret cable about criminal activity, sent in 2010 by the then US ambassador to Russia, John Beyrle.
Sistema, which is majority owned by its billionaire chairman and co-founder, Vladimir Yevtushenkov, is linked to one of Russia’s largest organised crime gangs, Solntsevo, according to the cable released by WikiLeaks.
It is alleged that Evgeny Novitsky, the former president of Sistema and one of the current board members Lord Mandelson has been nominated to replace, is a member of Solntsevo.
Reporting on information he had been given, Beyrle said Novitsky “controlled the Solntsevo criminal gang”.
If appointed Mandelson will join Roger Munnings, Britain’s special representative for trade and investment between the UK and Russia, on the board of Sistema.
The cable from Beyrle more generally explored claims that Moscow’s veteran mayor Yuri Luzhkov was at the top of a “pyramid of corruption” involving the Kremlin, Russia’s police force, its security service, political parties and crime groups.
The ambassador wrote his cable in response to speculation that Luzhkov, who had been mayor since 1992, was about to lose his job. Luzhkov was subsequently sacked in September by the Russian president Dmitry Medvedev, who said he had lost confidence in him.
In the section of the cable relating to Sistema, Beyrle appeared to link Luzhkov’s wife Yelena Baturina both to Solntsevo and indirectly to the company. Both Luzhkov and his wife vehemently deny allegations of corruption.
Beyrle said he had been told that Baturina “definitely has links to the criminal world, and particularly to the Solntsevo criminal group (widely regarded by Russian law enforcement as one of the most powerful organised crime groups in Russia). According to the internet article, ‘On the Moscow Group,’ Vladimir Yevtushenko, the head of the company Sistema, is married to Natalya Yevtushenko, Baturina’s sister. Sistema was created with Moscow city government-owned shares, and Sistema initially focused on privatising the capital’s real estate and gas.”
A source close to the company said: “There is zero substance to these stories about Vladimir Yevtushenko. In fact he is more widely known as a person who steered clear of 90s privatisation and managed to build the business all on his own.”
Sistema declined to comment on any of the allegations, including the specific points about Yevtushenkov and Novitsky. Mandelson’s office did not respond to requests by the Guardian to comment.
Solntsevo is one of the largest and most international of the Russian organised crime networks, according to Mark Galeotti, a professor at New York University and an expert on Russian organised crime.
“It’s based in Moscow but you’ll also find it in the US, Israel and certain parts of Europe,” he said.
“It’s so large that it’s a stretch to call it a gang. It doesn’t really have a leadership or a hierarchy, it’s more like a criminal club full of regional clubs.”
Galeotti said that Solntsevo engaged in activities including “low-level thugs dealing heroin and shaking down kiosk owners, breaking legs where needed. But you’ll also find people who’ve migrated almost entirely into the realms of business and politics.”
“I disagree fundamentally that Novitsky could have run Solntsevo. But I’m entirely willing to believe he has been in bed with elements of Solntsevo,” Galeotti said. “In the Russian context, what we’re talking about is mutually advantageous connections in incestuous circles that span politics, business and crime, and that’s where I think Novitsky fits.”
It is not the first time Mandelson has been at the centre of controversy. He was appointed minister on three separate occasions in the former Labour government and was forced out twice. He resigned as trade minister in 1998 after it emerged he had failed to declare a £373,000 home loan from government colleague Geoffrey Robinson, and was again forced out as Northern Ireland Secretary in 2001 over allegations – subsequently disproved – that he had intervened in the passport application of an Indian businessman.
In the statement announcing his proposed appointment, the company emphasised Mandelson’s experience negotiating trade agreements, and leading European negotiations in the WTO Doha World Trade Round. The company is a Fortune Global 500 business that reported full-year revenue of $34.2bn (£22.5bn) in 2012.
Yevtushenkov’s net worth was valued at $6.7 billion by Forbes in March, placing him 175th on their worldwide list of billionaires. Forbes values him as the 22nd richest Russian.
Boris Berezovsky was the Kremlin’s bogeyman for many years. He’s not the only Russian exile in the UK to meet a suspicious death – so is Putin really silencing his enemies in Britain?
The circumstances of Boris Berezovsky’s tragic death seem clear enough. A depressed man, a locked bathroom, bruises on the neck. Berezovsky’s bodyguard discovered him lying fully dressed on the floor, 17 hours after he had last seen Boris alive. There was no note.
The bodyguard became concerned when he spotted Berezovsky’s mobile phone lying on the table. Uncharacteristically, there were missed calls. He went upstairs, broke down the door, and found his boss on the floor. “He touched Boris’s hand. It was cold. He called the police,” Berezovsky’s friend Yuli Dubov, who arrived at the scene at 5pm that day, says.
On Sunday, Thames Valley police gave their provisional account of what had befallen the 67-year-old Russian oligarch. Detectives said they were talking to his friends and family – code for the fact that he had been visibly depressed, following his crushing high court defeat to Roman Abramovich last year. (In another twist, Abramovich was wrongly reported to have been arrested in the US on Monday.)
Most crucially, they ruled out “third-party involvement at this stage”. Their findings, expressed in cautious police prose, all point to suicide rather than foul play. Berezovsky’s swirling problems – personal, political and financial – had conjoined and driven him to the desperate act of taking his own life, the police hinted.
And yet, three days after his death, some of the tycoon’s grieving family and friends remain deeply unconvinced by this version of events. Rather, they strongly suspect he was murdered. “I will never believe in the natural death of Boris Berezovsky,” Nikolai Glushkov, a Russian exile and close friend, says.
Gluskov adds: “The idea that he would have taken his own life is bullshit. I saw him the day that Mrs Justice Gloster handed down her judgment in Boris’s case. He was full of life even then, talking about a certain young lady who was waiting for him in the house. Latterly he had managed to resolve his financial issues.”
Glushkov said Berezovsky’s ex-wife, Galina – who rushed to the house on Saturday afternoon – was also sceptical that her ex-husband had died naturally. The pair were on good terms, with Berezovsky moving into her Ascot home after he was forced to sell his Surrey mansion. She believes he may have been strangled; a scarf was found next to his body. By the time she arrived, police were there; they kept Galina, her two kids and the bodyguard in the kitchen.
Others who spoke to Berezovsky in his final months cast doubt on the official version. “When we recently spoke for the last time, Boris was looking to the future. He did not appear to be suicidal,” his friend Yuri Felshtinsky says, adding that Boris had been looking for private schools in the US for his daughter. Felshtinsky goes on: “Boris understood that the Kremlin aimed to destroy him.”
The suspicions are understandable. The Kremlin, after all, has a nasty track record of eliminating its enemies abroad, of whom Berezovsky was undoubtedly one. The British government is convinced that Berezovsky’s friend Alexander Litvinenko was murdered in 2006 by Kremlin agents, sent by Moscow to London. The Litvinenko row plunged UK-Russian relations to their worst since the cold war.
Scotland Yard believes two former KGB officers, Andrei Lugovoi and Dmitry Kovtun, slipped radioactive polonium into Litvinenko’s tea during a meeting at a London hotel. Polonium-210 is an unusual substance. Its use as a murder weapon, government sources suggest, is the most compelling proof of Russian state involvement.
There are divergent opinions over Litvinenko’s assassination. One version says his gruesome killing – he lingered for three weeks – was a demonstrative act, designed to send a message to Berezovsky and to others like him who dare to oppose the Russian state.
Another says that the killing was meant to be the perfect crime. Polonium is virtually undetectable, and in this case was only found at the very last moment. Moreover, Litvinenko was an obscure Russian émigré whose death, his killers wrongly assumed, would provoke little police interest or official reaction.
The truth of Litvinenko’s murder may emerge in October, when an inquest is held. Berezovsky had expressed keenness to attend – another reason they find his death baffling. Friends, meanwhile, point out that since then the bodies of UK-based Russian exiles keep piling up. In 2008, Berezovsky’s long-time business partner and fellow exile Badri Patarkatsishvili suddenly dropped dead. A postmortem concluded he died of a heart attack.
Glushkov and others are unconvinced by that explanation. “You have the deaths of Boris and Badri over a short period of time. Too many bodies are happening. I would say this is a little bit too much,” Glushkov says.
Meanwhile, last March, the Russian banker German Gorbuntsov who had fled to London following a series of business disputes was gunned down in Canary Wharf. He survived, just, and the alleged shooter, a Moldovan man, was recently arrested in Moscow.
In November another Russian fugitive, Alexander Perepilichnyy, collapsed and died outside his Surrey mansion. Perepilichnyy had passed documents to Swiss investigators on corrupt Russian officials. Two autopsies have yet to uncover a cause of death.
Those of a suspicious disposition suggest the Kremlin was preternaturally well prepared over the weekend to respond to Berezovsky’s sudden demise. Dmitry Peskov, Vladimir Putin’s press spokesman, claimed that Berezovsky had written to Russia’s president in the past few months, begging forgiveness and saying sorry.
A Russian reporter for Forbes magazine then claimed to have interviewed the tycoon at the Four Seasons Hotel the evening before his death. Berezovsky allegedly told him he yearned for Moscow and had “over-estimated” the west. He also drank a cup of tea with honey – echoes, some think, of the poisoned cuppa that finished off Litvinenko.
Friends angrily dismiss these Moscow-inspired media reports as self-serving junk. (In essence, they amount to a Kremlin morality tale. It says that if you oppose legitimate Russian power, you end up exiled, broke, friendless, and ultimately dead.) Russian officials said Berezovsky’s relatives want him buried back in Moscow – a lie, a source close to the family says.
The Kremlin’s true feelings on the issue are probably best expressed by Nikolay Kovalyov, the former head of the FSB, Putin’s old spy agency. Speaking on Russian TV, he said that Berezovsky had got what he and other traitors to the motherland deserved under the KGB’s unforgiving code – a nasty death.
All agree that Berezovsky was a toxic figure for the Russian government and for Putin personally. Putin isn’t a man who likes criticism, especially from an oligarch instrumental in giving him the job of prime minister and then president. For over a decade Berezovsky had taunted him from afar, seemingly protected by British law.
The story of their friendship and subsequent bitter enmity is well known. Berezovsky plucked the untested Putin to run the country, only for them to quarrel in 2000 when it became clear Putin was no democrat. At Putin’s behest, Russian prosecutors opened numerous criminal cases against Berezovsky, enthroned as enemy number one.
When I arrived in Moscow in 2007, as the Guardian’s correspondent, Berezovsky was the Russian state’s omnipresent bogeyman, a baddie responsible for all evils. State media blamed him for the murders of Anna Politkovskaya and Alexander Litvinenko, and accused him of fomenting jihadist rebellion in the North Caucasus. Viewed as a flippant historical analogy, he was Trotsky to Putin’s Stalin.
Just how hated Berezovsky was I learned first-hand. In April 2007, two colleagues interviewed him in London. In self-dramatising style, he told them he was plotting a violent revolution to overthrow Putin, his friend-turned-enemy. The Guardian put the story on its front page. My name also appeared after I asked Peskov – then, as now, Putin’s spin doctor – for a quote.
The following day the FSB, the KGB’s paranoid successor agency, fell on me. Strange young men tailed me through the streets of Moscow; emails tagged “Berezovsky” vanished from my inbox; FSB goons broke into my Moscow flat. The agency summoned me for interrogation. I reported to Lefortovo, the KGB’s detention centre. A young FSB colonel began his interrogation by plonking in front of me a colour photocopy of the Guardian article featuring Berezovsky’s photo.
But if the FSB did finally catch up with Berezovsky, how was it done? According to Boris Karpichkov, a former KGB agent who defected to the UK in the late 1990s, the agency has a great number of clandestine methods. In particular, Karpichkov says, Russian spies are adept at using sodium flouride, an odourless substance that can be lethal in certain doses.
Typically, he adds, the KGB has used poisons that can induce heart attacks but don’t show up in postmortems. He explained: “The substance is colourless and without smell. It can be applied to personal items – like a pen, phone or door handle – or to places where the target inhales it. It dissolves in the ‘mark’s’ body. It’s undetectable in any postmortem carried out.”
It might sound far-fetched – were it not for the fact that Litvinenko died from a similarly ingenious and invisible poisoning. Certainly, Thames Valley police were taking no risks over the weekend, carrying out a series of chemical, biological and radiation tests at Berezovsky’s rustic country house in Berkshire, near the M25. So far they have found nothing.
Whatever the truth, Russian exiles opposed to Putin are convinced his regime is capable of anything, and they wonder who might be next. With Berezovsky, Litvinenko and Patarkatsishvili gone, the list is getting smaller. “I don’t see anyone left on it apart from me,” Glushkov says gloomily. As we speak there is a Moscow-style click on the phone: someone is listening in.
Luke Harding’s Mafia State: How one reporter became an enemy of the brutal new Russia is published by Guardian Books. Buy it for £13 at guardianbookshop.co.uk
ECB ratchets up pressure as party leaders met to agree a package that would satisfy its eurozone partners and the IMF
Cypriot politicians were racing to agree details of a “plan B” to rescue their economy on Thursday night, after the European Central Bank threatened to withdraw support for the country’s banking sector if a bailout was not agreed by Monday.
The country’s second-largest bank, Laiki, is to be restructured as part of the plan. It will avert bankrupcy and protect savers with up to €100,000, according to the country’s central bank governor, Panicos Demetriades.
The move came hours after the ECB ratcheted up the pressure on Nicosia as party leaders met to agree a package that would satisfy its eurozone partners and the International Monetary Fund. Tensions were rising on the streets, with crowds of bank workers demonstrating near the parliament building in Nicosia following reports that its second largest lender, Laiki, would be shut down and split into a good and bad bank.
On Thursday afternoon the president, Nicos Anastasiades, said parliament would receive a bill by the end of the night, outlining the creation of a state investment fund to meet the ECB’s ultimatum to raise billions of euros or face the loss of the bailout money and the collapse of its banking sector.
The ECB confirmed it would not provide emergency liquidity assistance to the island’s banking sector beyond 25 March, unless a bailout had been agreed. Without its support, Cyprus’s two largest banks, Bank of Cyprus and Laiki, could collapse.
There were lengthy queues at many Laiki cash machines on Thursday as banks and the domestic stock market remained closed.
The eurogroup of finance ministers were scheduled to hold a conference call from 6pm GMT on Thursday to discuss the situation in Cyprus.
Cypriot political leaders were involved in emergency talks on Thursday morning to find a way to raise the €6bn (£5.1bn) demanded by the IMF and EU in return for a €10bn bailout.
Averof Neophytou, the deputy leader of the ruling Disy party, confirmed the leaders had agreed to create the solidarity fund. Details of the scheme were not released, but it was believed the fund could use Cyprus’s energy resources as collateral, or include state assets, pension funds or the property of the Church of Cyprus. A vote on the package could come as early as Thursday night.
Parliamentary speaker Yiannakis Omirou, who leads the small Edek socialist party, said the issue of taxing bank deposits had not been discussed during the meeting, suggesting a savings levy could be off the agenda.
Two days ago, the parliament rejected the plan for a 6.75% tax on savers with more than €20,000 in the bank, rising to 9.9% for those with more than €100,000.
The ECB said a continuation of its emergency liquidity assistance “could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks”.
Speaking after the ECB issued its ultimatum, Cyprus’s central bank governor said he was confident the country would reach a deal in time. “We will have a programme of support for Cyprus by Monday,” said Demetriades.
The Cypriot finance minister, Michael Sarris, has been in Moscow since Tuesday in an attempt to secure a rescue package, but hopes for a Kremlin-brokered deal appeared to be fading, as negotiations between Sarris and his Russian counterpart looked set to enter a third day with no results.
For the first time, Nicosia showed a public willingness to offer access to financial assets and gas deposits in the eastern Mediterranean as part of any agreement. “Understandably, if there is to be help, it has to be connected with a number of economic activities,” said Sarris ahead of discussions with Russian finance minister Anton Siluanov.
Russian officials have sought to downplay talk of large amounts of corrupt cash flowing through Cyprus, but the Mediterranean island is thought to play a key role in Russian money laundering operations.
The Russian prime minister, Dmitry Medevdev, has intensified his criticism of the idea of a compulsory levy on deposits in Cyprus, where Russian citizens are estimated to hold up to $19bn, and said the plan “looked like theft”.
Medvedev interrupted a conference in Moscow to read the news from his iPad that the Cypriot parliament had decided to drop the compulsory tax proposal — and the announcement was met with applause and shouts of “hurrah!” from delegates.
Despite alarm over possible expropriation, the Cypriot appeal to Moscow has given Russia an unprecedented opportunity to exert influence in an internal European Union matter. “It’s an opportunity for the Russians to make a major play,” said one western banker in Moscow.
But the parameters of any deal remain unclear. State-owned gas giant Gazprom is unlikely to be interested in operating Cypriot gas fields in the context of an over-supplied European market, according to Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow.
Russia’s three biggest state-owned banks — Sberbank, VTB and Gazprombank — have all denied they are interested in buying financial assets in Cyprus.
Cyprus has recently discovered significant offshore gas deposits, and major energy companies have shown an interest in tapping those resources.
With the Monday deadline imposed by the ECB, time is running out for Cyprus to conclude an agreement with the Kremlin, according to Dmitry Polevoy, ING Bank’s chief economist in Russia. “All these deals [involving energy or banking assets] require intensive due diligence processes … and usually require much more time than Cyprus has,” he said.
“But Russia is a country of surprises and nobody knows what is really at stake and whose money is at risk,” he added.
Medvedev also sought to find more unorthodox benefits for Russia in Cyprus’s crisis. The Kremlin should develop islands, including the Kurils and Sakhalin, off the country’s far east Pacific coast as alternative offshore banking destinations, Medvedev said.
Russian sovereignty of the Kuril Islands is disputed by Japan, while Sakhalin is the site of a former Tsarist penal colony.
The implementation of such a plan would have “ruinous consequences for Russia’s financial system,” former finance minister Aleksei Kudrin wrote on Twitter.
The low-cost airline competes with British Airways as only the second UK airline to fly to Russia’s capital city
Ministers have welcomed the introduction of low-cost flights between London and Moscow as a boost to trade and investment, as the first easyJet service for the Russian capital departed on Monday.
EasyJet started its no-frills flights between London Gatwick and Moscow on the day it made its debut on the FTSE 100 index of Britain’s biggest companies, after its shares more than doubled in the last year.
The airline, which beat off competition from Virgin Atlantic to secure the limited rights to the route, expects to fly more than a quarter of a million passengers between London and Moscow annually.
Carolyn McCall, the chief executive of easyJet, said: “Moscow is a landmark route and one we are delighted to be able to serve. Russia is the world’s largest country with a growing economy. Offering frequent and affordable flights enables easyJet to play a key role to aid trade links between the two countries.”
EasyJet started officially trading on the FTSE 100 on Monday after its entry was confirmed earlier this month, less than 20 years after the airline with its distinctive orange-liveried aircraft was founded by Sir Stelios Haji-Ioannou with two borrowed planes.
McCall said the soaring share price was down to the “strategy of sustainable growth and returns and our disciplined approach to capital allocation” – a strategy that Haji-Ioannou, now the largest single shareholder, has attributed to his broadsides against the board and “always being on their case”.
McCall said bookings for both of easyJet’s Russian routes – direct flights from Manchester start on 28 March – had surpassed expectations, particularly from the Russian end. “We are already well known to Muscovites”.
A trade mission was on board the first flight, with representatives from UK companies in sectors including food, technology and manufacturing.
Transport minister Simon Burns welcomed the launch of the services, saying: “I am certain it will help to deliver tremendous benefits to business and leisure passengers. It also demonstrates the ongoing capability of London’s airport network to attract new, direct services with the world’s largest markets.”
Gatwick’s chief executive, Stewart Wingate, said the route not only provided an essential new link to a key emerging market, but was “significant because it offers passengers greater choice in terms of price, flight times and which airport they fly from” and would “enable businesses in both countries to make the most of the vast opportunities available for bilateral trade”.
Wingate has recently embarked on a more aggressive public dispute with rival airport Heathrow over the need for greater “hub airport” capacity, with Heathrow claiming that only a single hub can effectively deliver links to emerging markets.
British Airways is the only other UK airline to fly to Moscow, with three daily services from Heathrow. Russian airlines Transaero and Aeroflot also fly from the west London hub.
Lord Green, minister for trade and investment, said the launch showed the “strengthening relationship” between the UK and Russia. “Russia is currently our fastest growing major export market and its recent accession to the World Trade Organisation is making it easier for UK businesses to trade and invest there,” he said.
McCall dismissed suggestions that a slowdown in the Russian economy would hurt the route. She said: “Slamming into reverse for Russia is just slowing growth really. We’ve demonstrated our model succeeds even when times are tough.”
Leisure and business travel to Russia is likely to grow with the Sochi 2014 Winter Olympics and the football World Cup in 2018. Travel website TripAdvisor said searches from the UK for Moscow hotels had doubled since the cheaper flights went on sale.
EasyJet is offering two daily return flights from Gatwick to Moscow , with fares under £100 for a one-way trip. Its Manchester service will be the first direct scheduled link from the city to Moscow.
McCall made a pre-budget plea to the chancellor, George Osborne, to scrap air passenger duty, claiming it would “create jobs and drive growth”. Burns, said it was a matter for the chancellor and “he didn’t want to get into trouble or queer his pitch”.
A jogger who collapsed and died in leafy Weybridge turns out to have been blowing the whistle on one of Russia’s biggest tax frauds. Mark Townsend reports on a crisis that has pitted the Kremlin against the US Senate and British police
Shortly after 5.15pm on 10 November 2012, a jogger turned into Granville Road, Weybridge, running along the hedge-lined street of one of Britain’s wealthiest enclaves. Then, 50m from his home, he staggered into the road and died.
In the days that followed, Surrey police believed they were dealing with a natural, if unusual, death. Four months on, the passing of 44-year-old Alexander Perepilichnyy still remains a mystery. Two post-mortems have proved inconclusive, but the outcome of what Surrey police promise is their “full range” of toxicology tests is imminent.
To piece together Perepilichnyy’s final years is to drill down into the core of Russian criminality, according to one account.
What we know of Perepilichnyy is slight. In another age he might have been a rocket scientist. Peers called him a “genius”, a Ukranian whiz-kid with an uncanny knack for numbers. His favourite waste of time was, they say, discussing the theories behind cosmogony and Kondratiev waves – the long-term cycles of capitalism. However by the time Perepilichnyy arrived to study at the Moscow Institute of Physics and Technology – famous for supplying the brains behind the Soviet space race – Russia’s lunar ambitions had curdled with the collapse of communism. Instead Perepilichnyy applied his talents to the world of finance and was, until 2008, a star talent at an asset management firm in Moscow.
That year, on the other side of Moscow, across Red Square and the brown Moskva river, a rival investment fund to Perepilichnyy’s had become engulfed in crisis. Hermitage Capital was under the guidance of a man called Bill Browder, a naturalised Briton based in London who had built the investment firm into the largest foreign investor in Russia. But on Christmas Eve 2007, it had discovered itself to be the victim of a huge and sophisticated scam.
Browder hired Moscow-based lawyer Sergei Magnitsky, to investigate. In July 2008, Magnitsky revealed his findings detailing a web of corruption involving state tax officials and police. Magnitsky allegedly revealed how a gang of detectives, tax inspectors and convicted criminals had planned a 2007 police raid on Hermitage’s Moscow office in which officers stole paperwork relating to Browder’s companies. These documents were then used to secretly apply for a tax refund worth £144m.
Following the paper trail, Magnitsky found that the rebate, the largest in Russian history, had been approved at a Moscow tax office in just one day. The vast proceeds had disappeared into a shady network of accounts, according to Magnitsky. After reporting the crime to the authorities, instead of being lauded for his work, Magnitsky was arrested by police and accused of orchestrating the fraud himself. In jail, the 37-year-old was denied medical treatment, handcuffed and beaten by riot troops. He had been in prison awaiting trial for 358 days when on 16 November 2009 doctors found him dead on his cell floor in a pool of urine.
Perepilichnyy had paid close attention to Magnitsky’s fate. Among his client portfolio, he soon realised, were the same senior tax officials Magnitsky had accused of perpetrating the crime against Hermitage Capital. Worse still, Perepilichnyy suspected the vast proceeds of the crime were starting to wash through the foreign corporate bank and Credit Suisse accounts which he managed.
According to associates, Perepilichnyy was “properly scared” by the death of Magnitsky. Sources say the financier feared he might be implicated in the fraud or similarly victimised if he spoke out. At the end of 2009, Perepilichnyy fled to Britain with his family and what appears to have been a vast fortune, the provenance of which still remains opaque.
One friend in Moscow, who requested anonymity, said: “Most of all he was an outstanding father. He seemed to be thinking of them 80% of his time.”
Perepilichnyy believed the exclusive confines of St George’s Hill in Surrey would offer sufficient protection for himself, his wife and their two young children, and began renting the six-bedroom Coach House off Granville Road for around £15,000 a month. It was a fortified mansion in an area protected by round-the-clock guards and roadblocks. As one Surrey police source explained: Perepilichnyy lived where “even the security has security”.
Perepilichnyy adopted a deliberately low profile in the UK. All that changed during the summer of 2010, when he decided to follow the lead set by Magnitsky and handed over evidence and details of the Credit Suisse accounts. Hermitage in turn passed them to the Swiss police, sparking an ongoing international inquiry that has spread to six countries and resulted in the accounts of alleged Russian fraudsters being frozen.
Perepilichnyy’s act put him in grave danger. By the time he went for his final jog last November, the threats against him were mounting. One corrupt official allegedly involved in the fraud against Hermitage warned “the financial wizard” to stop running scared in England because he owed money to “scores of creditors”. Even the alleged killers of Litvinenko joined the long list of those with a potential motive. One of the suspects wanted for trial over the murder of the former KGB spy is among those understood to have launched legal action against Perepilichnyy, accusing him of failing to pay back debts. Perepilichnyy told business contacts in London that Moscow police agents had informed him his name was on the “hit list” of Chechen assassin groups for hire and that they had accumulated a dossier with details of his life in Surrey.
Rumours persist that he was part of the fraud against Hermitage, although his friends insist it was naivety, not greed, that brought him into danger. “He was a tragic hero,” says one. “He could have been a genius professor of maths at a different time and place. He became followed, threatened and put into a corner.”
Yet even at the end, Perepilichnyy had enough courage to flout the death threats and travel abroad. On the day he died, he had just returned from Paris after a three-day visit. During his sojourn in the French capital he’d booked two hotels, but it is unclear why he went to Paris or who he met there.
Investigators working for Hermitage claim the deaths of Magnitsky and Perepilichnyy are the latest in a series of suspicious deaths. They claim at least five other men who have died in strange circumstances had links to individuals they allege were involved in the fraud. The investigators paint a picture of a shadowy network of corrupt police, tax officials and criminals dubbed the Klyuev group, which is, they claim, headed by the bald, heavy-set figure of businessman Dmitry Klyuev. A spokesman for Klyuev, who is a convicted fraudster, describes the suggestion that such a group exists as a “fabrication and a lie”. The spokesman pours scorn on the idea of a string of suspicious deaths and adds that Browder, whom he describes as a “corporate blackmailer”, is running a highly defamatory PR campaign.
The first unusual death, according to the Hermitage investigators, came in 2005. Sergei Albaev, a former KGB officer, worked for Klyuev as a chauffeur. Documents from a Moscow court case record his wife’s worry: “He became more secretive, agitated, and kept saying he had problems at work.” Unknown to her, Albaev, along with his boss Klyuev, had been accused of helping orchestrate a £1.1bn fraud against Russia’s biggest iron-ore producer, a criminal act that Hermitage lawyers allege was a forerunner to the attack on them.
On 3 March 2005, before Albaev could plead his innocence in court, he went on a business trip. He called his wife, saying he was in the Rostov region, 700km south of Moscow. On 8 April she received a call from a man she did not recognise. Her husband had died, said the stranger. Albaev’s death certificate states he died from heart failure. Albaev was only 39. Although it was true Albaev liked a drink, smoked and weighed about 150kg, his family believes his death seemed sudden. Even now, his wife and child have no idea who he was with when he died or what he was doing.
Within weeks came another death. Alexei Alexanov had also been implicated as a key player in the attempted iron-ore fraud. Little is known about Alexanov other than, according to court transcripts, that he had known Klyuev since 1991. During a pre-trial interview, Alexanov insisted he would never sign fraudulent contracts, claiming that the implicating signatures looked nothing like his handwriting. Alexanov never had another chance to contest his innocence. Soon after, he too died in the Rostov region of heart failure. He was 46.
The next death wasn’t so much strange as mistimed, according to investigators. It occurred in the wake of the fraud against Hermitage Capital. In the period after Magnitsky uncovered the crime, and before his arrest, the Russian interior ministry launched an investigation into his claims that quickly yielded a culprit. On the face of it, Oktai Gasanov from Azerbaijan seemed an unusual criminal mastermind. The 58-year-old appears to have been little more than a lowly security guard at a Moscow trading centre. But it is Gasanov’s death certificate that raises the most questions. Gasanov died two months and 24 days before the actual fraud was committed. Had he been framed by police officers alleged to have been part of the syndicate that targeted Hermitage?
Then there was Valery Kurochkin – a bumbling alcoholic, according to police records, yet named by tax officials as the inheritor of Hermitage Capital. He never had time to indulge his new-found wealth: allegedly having taken a midnight train to Ukraine with five of the fraud suspects, the 48-year-old was found dead close to Boryspil international airport, near Kiev, on 30 April. His death certificate cites cirrhosis as the cause of death.
Then came Semyon Korobeinikov. Magnitsky had traced money from the Hermitage fraud to a Russian bank called USB which Klyuev had once owned but which had apparently been sold in 2006 to Korobeinikov. Before the 57-year-old could be questioned, Korobeinikov elected – according to the official report – to visit a Moscow construction site in September 2008 and climb a half-finished luxury penthouse. “Korobeinikov took himself to a big height,” says the police inquiry’s peculiar explanation. “His heart felt poorly, he fell down, obtaining injuries incompatible with life.”
Klyuev is robust in his rejection of the claims made by Hermitage, saying that the company, and Browder, is trying to frame him. “To completely fool the public, Browder hints at various ‘suspicious’ deaths, cynically describing them in the context of… Dmitry Klyuev,” says Klyuev’s spokesman. The “Klyuev group”, he says, was invented by Browder and the allegations are “unworthy and low”. The spokesman accuses Browder of extensive criminal activity himself and points out that Browder is facing charges in Russia, in a case that was due to start last week.
As diplomats in Moscow and London wait nervously for the outcome of the toxicology assessments on Perepilichnyy, many believe his name may join Magnitsky’s as a central source of friction between Russia and the west. In December the US Senate passed the Magnitsky Act, which imposes a visa ban and sanctions on 60 Russians implicated in the fraud and lawyer’s death. The act prompted Cold War-style posturing and tit-for-tat sanctions, including President Vladimir Putin‘s ban on Americans adopting Russian children. Russia is pressing ahead with the posthumous prosecution of Magnitsky for tax evasion, the trial that also indicts Browder.
This prosecution has drawn widespread international condemnation and forced the European Parliament to describe it as a “violation of international and national laws”. The last precedent for the posthumous trial dates back to medieval times when, in 897, the then pope held a trial of his predecessor, whose body was dug up and propped up on a chair in the papal court.
Klyuev claims the case will ensure Browder’s “own crimes cannot remain hidden. [He] should honestly reveal all the accusations made against him and explain his behaviour in each specific instance.”
Whether the Klyuev group exists or not, many of its alleged members appear to like London. Lawyers for Hermitage claim that analysis of flight records reveal that 61 flights between Moscow and London have carried at least one member of the so-called group since Magnitsky exposed the fraud and have identified to the Serious Fraud Office individuals who they say have laundered the fraudulent money.
If suspicions about Perepilichnyy’s death were to be confirmed, the broader concern among the intelligence services is that Russian hitmen could be freely entering the UK. Hermitage employees have received at least 11 death threats, mainly text messages from phones traced to Russia. The firm’s London staff report being put under surveillance by strangers, and many now follow elaborate security routines.
Former foreign minister Chris Bryant, a Labour MP, is among those perturbed that elements of the Russian mafia may be able to move freely about in London. “Undoubtedly there is a security risk in Britain at the moment,” says Bryant. “There are a number of Russian operatives acting in the UK – the long arm of Russian vendettas seems to stretch over here.” Browder has no doubt that he is a marked man.
Publicly, at least, no one is any wiser as to why Perepilichnyy dropped dead at the end of his jog. The ongoing police investigation is liaising with MI5, and Swiss and Russian authorities – but the latter relationship has been particularly difficult since Alexander Litvinenko‘s murder in 2006 in London. Perepilichnyy himself allegedly owed money to Dmitry Kovtun, one of the prime suspects wanted by British prosecutors over the poisoning. But senior Whitehall sources are keenly aware that the cause of Perepilichnyy’s death has potentially seismic ramifications. If it is proven that Perepilichnyy was murdered, then no one is safe.
• Telecoms company’s London flotation slips
• Post-Communist Moscow connections emerge
The photograph is low quality and appears similar to any taken of a group of male friends after dinner in post-Communist Moscow. But contained within this grainy 1994 shot, are some remarkable characters who have suddenly started to fascinate City bankers.
On the bottom right is Andrei Skoch, now rated as the richest man sitting in the Duma, Russia’s parliament. He is also a close friend of the billionaire oligarch and Arsenal shareholder Alisher Usmanov and indirectly a leading figure behind MegaFon, the Russian telecoms business that Usmanov jointly listed on the London and Moscow stock markets on Wednesday.
Sitting next to Skoch is Sergei Mikhailov and, next to him on the front row is Viktor Averin. These are said to be two of Russia’s most feared gangsters.
These old connections have suddenly resurfaced as MegaFon – which last week announced the appointment to its board of former Labour minister and one time chairman of the Guardian Media Group Lord Myners – began trading 17% of its shares in London. Coincidentally, that is almost the same size of stake indirectly owned by the Skoch family. The shares fell nearly 3% on their first day.
Skoch, who has placed all of his business interests in the name of his father, Vladimir, declined to answer any questions about his connections when approached by the Guardian in Moscow last week. In a response to questions by email, a spokesperson for Usmanov said there have been “too many unwarranted allegations, rumours and speculations about different people in Russia”.
However, Skoch was prepared to give an interview to last Friday’s Financial Times in which he admitted knowing Mikhailov and Averin. He also previously spoke about the ties in a 2010 interview with the Russian business newspaper Vedomosti, during which he confirmed that the photo was genuine.
He said that he got to know Mikhailov after he and Lev Kvetnoy bought several service companies at Moscow’s Vnukovo airport.
Skoch added that he was “introduced” to Mikhailov and Averin as the “owners” of the Vnukovo companies. “We met, discussed terms, and then agreed – the photo was taken afterwards,” he said.
Averin subsequently invited him and his wife to a holiday in Prague, in 1995. Skoch was one of 50 guests who celebrated Averin’s birthday at the Ritz Hotel. In his Vedomosti interview, Skoch said the guests had been sitting down for 15 minutes over dinner when the Czech police burst in. The police took all the guests down to the station for questioning, photographed them and then let them go. “After that I didn’t have any shared history with Viktor [Averin]. Not with him, not with Sergei [Mikhailov]. We didn’t have any joint interests,” he said.
However, Skoch told the FT last week that he continued to meet Averin for business purposes after the incident, with their last meeting seven years ago when they bumped into each other at a Moscow restaurant. “He’s a nice enough guy,” he told the paper.
The politician, whose wealth has been valued by Forbes at $4.2bn (£2.6bn), denied that he, Mikhailov or Averin had any links with Russian organised crime. “I can’t say they were bandits. They were ordinary businessmen,” he told the FT.
“I couldn’t say that anyone joined a [mafia] group. That would be incorrect,” Skoch also told Vedomosti. In the lawless Russia of the 1990s, he said it wasn’t entirely clear “who was in a mafia group and who wasn’t”. “You’d go into any restaurant and there would be a serious-looking guy sitting there. If you wanted to live, you had to be unafraid,” he said.
However, according to Federico Varese, professor of criminology at Oxford University, Mikhailov is the alleged founder of the “Solntsevo fraternity”, Russia’s most powerful mafia gang.
The group is named after a rundown area of western and southwestern Moscow – the name Solntsevo would translate as Sunnyside in English. Varese dubs the gang “arguably the mightiest organised crime group to emerge from the wreckage of the Soviet Union.”
In the same Vedomosti interview Skoch boasts of his close friendship with Usmanov – who has also faced questions about links to the alleged Uzbek drug trafficker, Gafur Rakhimov.
Usmanov denies that he has ever had any business dealings with Rakhimov, whom he says was a neighbour of his parents.
Skoch recalled that he met Usmanov in 1995, and went into business, buying a metallurgical industrial complex. The venture succeeded thanks to Usmanov’s “intellect”, Skoch said, adding: “We are very close. I trust him with my life.”
In 2010 Skoch said he saw Usmanov “virtually every day” and had travelled with him to Tashkent when Usmanov had a major operation.
Virgin describes CAA’s decision to award last flight slots to rival airline easyJet as ‘disappointing, surprising and strange’
The Virgin boss Richard Branson is to fly to Moscow to lobby the Russian government to open its airports to more UK airlines after the Civil Aviation Authority (CAA) on Wednesday awarded rights to the last flight slots to Moscow to a rival airline, easyJet.
Virgin have long held ambitions to fly to Moscow and have not ruled out legal action over what they describe as a “disappointing, surprising and strange” decision by the CAA.
Branson is due to meet Vladimir Putin but talks on the airline issue will be held with other officials and politicians. He said it was time for “open skies”, and that decisions on how many airlines fly between countries were best left to a market “rather than a civil servant”.
EasyJet will operate a 180-seat Airbus A320 on its twice-daily services from London Gatwick to Moscow Domodedovo airport. It expects to fly more than 230,000 passengers in its first year of operations, starting next spring, with fares as cheap as £125 return.
Carolyn McCall, easyJet’s chief executive, said it was the right decision for consumers in the UK and Russia, and that the airline would serve business and leisure travellers alike.
However, Virgin claims that the vast majority of the market is made up of business travellers who would prefer to fly to Heathrow. Branson said: “Our plane was far more suitable for the route. The 125,000 extra seats we would have put on would have meant people ended up paying less.”
While Branson said he thought there was room for easyJet and Virgin, he claimed Virgin’s bigger Airbus A330 would also have allowed it to compete in the cargo market, 42% of which is owned by British Airways. “BA must be smiling today,” he added.
While Branson stressed that he did not think “this is a train situation” – a reference to the west coast rail franchising fiasco, where legal action from Virgin overturned the government’s original decision – he said he did not rule it out.
Virgin Atlantic’s chief executive, Steve Ridgway, confirmed that a team in London was looking at the judgment. He said judicial review was “always an option”.
The CAA, under a bilateral agreement with Russia, has the right to award two daily London to Moscow slots to two UK airlines. BA retained the pair it held but the other had to be reallocated after the national carrier took over BMI, which also flew the route.
Branson and Ridgway were speaking in Delhi before Virgin’s inaugural flight on a new route from Mumbai.
While the airline is expanding its own services, Branson ruled out any further moves into Indian aviation, despite recent legislation relaxing foreign ownership rules. He told an Indian business audience that while he welcomed the moves, India needed to go further to attract investment. He added that he expected several airlines to go bust in an overcrowded domestic market.
British oil group hopes to sell 50% stake in TNK-BP in return for cash but power struggles in Moscow look as uncertain as ever
It’s goodbye to the oligarchs and hello to the Kremlin. That seems to the gist of the latest twist in BP’s Russian adventure. BP, it is reported, will sell its half-share in TNK-BP to state-backed Rosneft for $15bn in cash plus $10bn in shares. This, it is assumed too casually, represents an excellent trade for BP. A more hard-headed appraisal would be: if things go well, it’s the least bad option; if things go badly, BP will have leapt out of a Russian frying pan into a Russian fire.
The logic behind exiting TNK-BP, Russia’s third largest producer, is obvious. The oligarchs at AAR have proved troublesome partners in the joint venture, skillfully squashing BP’s plan last year to explore the Arctic with Rosneft. And, since the breakdown in the relationship is permanent, a clean break is a natural solution.
Fine – but the details of the deal with Rosneft will be critical. BP shareholders are unlikely to applaud wildly if their company really does intend to accept $10bn of Rosneft paper as part-payment for the TNK-BP stake. If they like the price of Rosneft shares, they are free to buy a few themselves rather than sub-contract the task to BP chief executive Bob Dudley.
The company’s probable explanation, of course, will be that BP and Rosneft are forming a new and improved strategic alliance in the Arctic. And maybe they are, since Russia clearly still has an appetite for western drilling expertise (BP’s Macondo disaster notwithstanding). But remember the context in which this deal is being struck: Dudley is desperate to get out of the TNK-BP venture and Rosneft is the only buyer in town. Easy riches from the Russian state are unlikely to be on offer.
Instead, BP could be signing up for another long campaign at a time when the outcome of power struggles in Moscow look more unpredictable than ever. BP’s gamble may prove successful – and big oil companies, it is argued, have to make such political bets to reinvent themselves. But, equally, it is not hard to imagine a moment in the future when BP’s investors reflect wistfully on the days, all too brief, when TNK-BP was a beautiful cash machine.
Communist leader committed to democracy in post-Franco Spain, but whose party found little electoral support
A key player in the transition to democracy in Spain, Santiago Carrillo Solares, who has died aged 97, was the the longest-serving secretary-general of the Partido Comunista de España (PCE). However, the changes he was so keen to promote in the country’s political system ultimately marginalised the party: he was left a commentator outside it, respected by some, hated by others, notably for his controversial involvement in the darkest episode of the Republican defence of Madrid during the civil war.
While the dictatorship of Francisco Franco had governed unchallenged since the end of that conflict in 1939, its response to the grave social problems caused by the 1973 energy crisis proved inadequate. Carrillo, formal leader of the PCE since 1959, had been in exile, mostly in France, and began to push for what he called “the pact for liberty”, a broad opposition front. During Franco’s illness of 1974, Carrillo launched the Junta Democrática in an attempt to ensure communist dominance of such moves.
He also published two works, Demain l’Espagne (Spain Tomorrow, interviews published in Paris in 1974, though banned in Spain till 1976) and Eurocomunismo y Estado (Eurocommunism and the State, 1977), aimed at proving his moderation. They established him as a leading theorist of Eurocommunism.
Franco died in November 1975, King Juan Carlos became head of state, and the following February a heavily disguised Carrillo returned secretly to Spain. By the time the police detained him for eight days in December 1976, he had already played a crucial role in pushing Adolfo Suárez’s interim government in the direction of reform.
The PCE was legalised in 1977, and Carrillo was able to lead his party into Spain’s first democratic elections since 1936 that June. It gained 9% of the vote, coming third after Suarez’s short-lived Unión de Centro Democrático (35%) and the Partido Socialista Obrero Español (PSOE, 29%): Carrillo himself became a member of the Congress of Deputies.
This was a considerable achievement, but Carrillo had already passed his zenith. In October 1976, he had called a general strike in the hope of provoking what he called the ruptura democrática (democratic break) – a scenario like that which had seen the collapse of the dictatorial regime in Portugal. The failure of the strike had opened the way to the more moderate scenario of the ruptura pactada (negotiated break) advocated by the socialist leader, Felipe González.
In fact, the transition to democracy proceeded along the lines of negotiated consensus between the democratic opposition and the most progressive elements of the Franco regime. The PCE was wracked by demands for reform, the authoritarian habits of the aged, exiled leadership sitting ill with the young intellectuals of the internal resistance to Franco.
In response to proposals for the reincorporation of the reformists (known as “renovators”) that he had previously expelled, Carrillo resigned as secretary general in the summer of 1982. With elections imminent, he was persuaded to reconsider, but the collapse of the PCE vote from the 11% of 1979 to 4% as González’s PSOE came to power in October 1982 ensured that he did indeed resign. When his successor, Gerardo Iglesias, sided with the renovators, Carrillo was dropped from the central committee in April 1985.
He formed a new workers-communist unity party, the Partido de los Trabajadores-Unidad Comunista, and stood unsuccessfully for parliament in the 1986 elections, in the 1989 European elections, and for parliament again in 1989. Two years later, Carrillo agreed to the mass incorporation of the Partido de los Trabajadores de España into the PSOE. He did not go with it, on the grounds that his long track record as a Communist prevented him from playing an active role in the PSOE. However, his wife, Carmen Menéndez, did join.
Born in Gijón, on Spain’s northern Atlantic coast, Carrillo had in fact started his political life in the PSOE, in which his father, Wenceslao, was a prominent figure. The teenage Santiago was drafted into the party’s youth movement, the Federación de Juventudes Socialistas (FJS), and was a particularly vocal advocate of ultra-revolutionary responses to rightwing obstruction of reform in Spain’s Second Republic. Accordingly, in 1934 he was elected secretary-general of the FJS, which became the most radical section of the socialist party.
The most dramatic fruit of socialist radicalisation was the uprising by miners in Asturias in October 1934. After it was defeated, Carrillo was put in prison in Madrid. From there he denounced the moderate and centrist sections of the PSOE, and called for the “bolshevisation” of the party. However, he accepted the entry of both the PSOE and the PCE into the electoral alliance known as the Popular Front. When he was released from prison after its victory in the February 1936 elections, Carrillo was invited to visit Moscow, where he was brought into the communist orbit.
On his return, he promoted the formation, in April, of the Juventudes Socialistas Unificadas (United Socialist Youth), through which the PSOE lost the FJS to the Communist party, of which he was probably already a member. By then, the civil war had broken out, and Carrillo’s energy and organisational skills were at the service of the republican war effort.
The PCE played a crucial role therein. In early November 1936, with Franco’s African Army at the gates of Madrid, the republican government was evacuated to Valencia. Carrillo, now 21, was made councillor for public order in the Defence Junta left behind in the capital, an indication of his special relationship with the Russians. On the same day he announced publicly that he had joined the PCE.
He immediately faced a terrible problem. The insurgent General Emilio Mola declared in a radio broadcast that the four rebel columns converging on Madrid would be joined by a “fifth column” of nationalist sympathisers, prompting official removals of rightwing and suspect army officers from Madrid’s prisons on a large and horrific scale. Carrillo was technically responsible for these prisoners; Russian advisers insisted that they be evacuated. Thus about 2,000 were taken by bus and shot at the villages of Paracuellos del Jarama and Torrejón de Ardoz.
The greatest single atrocity in Republican territory during the war, exact responsibility for Paracuellos remains obscure. Communist claims that the buses had been waylaid at anarchist control posts on the outskirts of Madrid were unconvincing. Inevitably, Francoist propaganda built on it to create a picture of “red barbarism”, and thereafter lost no opportunity to saddle Carrillo with the blame. In fact, the evacuation was a deliberate military decision, taken collectively by various authorities of which Carrillo was only one. However, he was a crucial element in the organisation of the process and his protestations of ignorance were untruthful.
In France at the end of the civil war, Carrillo ingratiated himself further with the communist hierarchy by writing an open letter denouncing his father for joining the junta set up by Colonel Segismundo Casado in a vain attempt to negotiate with Franco. From September 1939, Carrillo spent six months in Moscow as secretary to the Communist Youth International. After working for the Comintern and with PCE exiles in Cuba, Mexico and Argentina, he returned to Europe to work for the reorganisation of the party within Spain.
In the autumn of 1944, many of the Spanish maquisards who been prominent in the French resistance began to drift to the Spanish border. That October, the PCE delegation in France under Jesús Monzón authorised an over-optimistic and inadequately prepared incursion through the Valley of Aran in the Pyrenees. Snowbound most of the year and sparsely populated by shepherds and woodcutters, it was no place to pick up support. With Franco’s well-equipped army on the point of annihilating the invaders, Carrillo turned up with sufficient authority from Moscow to order the abandonment of the operation.
Thereafter, Carrillo was de facto leader of the PCE in France, the most important section of the exiled party after that in Moscow, where Dolores Ibárruri (La Pasionaria, the passionflower) was secretary-general. In 1948, he was part of a three-person delegation interviewed by Stalin about the situation in Spain. The Soviet leader recommended the abandonment of guerrilla action against Franco in favour of infiltrating the Falangist trade union organisation.
Carrillo had separated from his first wife, Chon, in Cuba in 1944. He met Carmen Menéndez, a party militant in 1947, and he married her (or openly acknowledged her as his partner) in Moscow in 1949. She was to be his faithful – and equal – partner until his death. Back in France, they lived as Monsieur and Madame Giscard, and had three sons, Santiago, José and Jorge. From the immensely powerful position of organisation secretary, Carrillo began to work towards taking over the PCE by presenting himself as an advocate of internal reform.
In 1954, he called for a renovation of party structures, as a result of which the central committee was expanded to include cadres from within Spain. A showdown came at the end of 1955: when the bulk of the PCE leadership denounced the United Nations’ incorporation of Spain, Carrillo praised it as a triumph for the Soviet policy of coexistence. His gamble was justified when La Pasionaria eventually threw her weight behind Carrillo after Nikita Khrushchev denounced Stalin in his “secret speech” of February 1956.
Carrillo pressed his advantage, and that summer successfully got the PCE to accept a new policy of “national reconciliation” to facilitate alliance with the new non-communist opposition to Franco. He was now virtually acting secretary-general of the PCE, and the post formally became his in December 1959, when La Pasionaria was elevated to the symbolic post of party president.
Convinced that his new policy would quickly promote a great national alliance against Franco, Carrillo came into conflict with two erstwhile allies in the struggle for internal reform. Fernando Claudín was the PCE’s most acute thinker and Jorge Semprún the intrepid organiser of the secret networks within Spain: both believed that economic growth in Spain would increase support for the regime.
After a bitter debate, Carrillo had them expelled in early 1965, only to spend the next few years incorporating their ideas into his many writings, particularly his book of that year, Después de Franco ¿Qué? (After Franco, What?).
Carrillo’s move towards a more liberal position was dramatically accelerated by the Soviet invasion of Czechoslovakia in August 1968. To maintain the PCE’s credibility as a moderate democratic segment of the anti-Franco opposition, he was forced to condemn the Russians. In 1970, Carrillo simply expelled those hard-line Stalinists who opposed him.
After the upheavals of the 1970s and 80s, Carrillo made a living as a writer. Although he was never a sophisticated theorist, Eurocommunism and the State had made him an international reputation. He wrote an account of his year on the run, El Año de la Peluca (The Year of the Wig, 1987) and of his role in the transition, Memoria de la Transición (1983). In 1993, he scored a huge commercial success with his lengthy but disappointingly anodyne memoirs. Other volumes followed, on the Second Republic and the civil war, but he never gave away the secrets which could have done so much to illuminate the history of the period. In late 2000, he published ¿Ha Muerto el Comunismo? (Is Communism Dead?).
Carrillo also became a regular interviewee on television and radio, recognisable by a gruff, knowing voice that reflected seven decades of chain-smoking. He attributed his iron constitution to the advice given him in Moscow in 1936 to take an aspirin every day.
As Spaniards began to investigate the crimes of Franco, the consequent backlash made Carrillo the target of ultra-rightwing attacks. A wall adjacent to his apartment block was scrawled with the words “Carrillo, murderer, we know where you live.” In October 2005, when the Universidad Autónoma de Madrid granted him an honorary doctorate, proceedings were disrupted by militants chanting “Paracuellos Carrillo asesino!”
He shrugged it all off. In private, his affability and sharply droll conversation belied his background as a party disciplinarian. Then, too, he would recount anecdotes that showed that from the age of 15 until his death he was a cunning old fox, a thoroughly political animal.
• Santiago Carrillo Solares, politician, born 18 January 1915; died 18 September 2012
Airline intends to fly daily from London to the Russian capital should it win slots BA has to give up after bmi takeover
Virgin Atlantic intends to start flying from Heathrow to Moscow next year as part of plans to build a broader network of short and midhaul flights connecting at the London hub.
The airline said it would operate daily flights to the Russian capital should it win the slots British Airways has to give up at Heathrow.
The merger of the two British airlines which served Moscow, bmi and BA, means a competitor will be given rights to start services, and Virgin’s announcement shows it believes it is pole position. Traffic between the two cities has trebled in the last 10 years and demand on the route continues to grow.
Steve Ridgway, Virgin Atlantic’s chief executive, said the airline believed it should win all 12 remaining slots: “Linking these two cities will be an important part of our strategy to run short haul flights into Heathrow thus feeding our long haul network. It will also radically improve competition on the route.”
Edmond Rose, Virgin’s director of commercial and revenue planning, said Moscow was ideal for Virgin as “its booming market demands the best quality of service for both business and leisure”.
The European commission has said International Airlines Group, British Airways parent company, release 14 of the 56 slot pairs it acquired at Heathrow after the purchase of bmi from Lufthansa. Virgin, which had made repeated, unsuccessful attempts to block the deal, expects to win at least some of the remedy slots to allow it to expand into Russia. Two have already been allocated to Transaero, the Russian airline.
Virgin claimed its march on Moscow would increase competition at Heathrow. Ridgway said: “Our core flying has always been across the Atlantic but we have been clear that we will also continue to grow our routes to emerging markets if given the slots at London Heathrow. Moscow would be our third Bric country and we think it is imperative for British trade that we are operating in these economies.”
Virgin is due to relaunch its route to Mumbai in October, allowing the airline to connect passengers from India to its own US-bound services at Heathrow.
Douglas McNeill, an analyst at Charles Stanley, said: “A midhaul flight is something of a departure for Virgin. But like all resource-rich economies it’s an attractive business market – and now there’s a growing middle class who want to travel.”
Ridgway was adamant that Virgin would also begin services to Scotland, despite doubts cast by analysts and IAG boss Willie Walsh on how serious Virgin was in its intention to fly loss-making bmi routes. Ridgway insisted that planned Virgin flights, to Aberdeen and Edinburgh, would be profitable as a “bolt-on to an existing business which is lean and well-run, without bmi’s overheads”.
Meanwhile Sir Richard Branson, chairman of Virgin Group, accused the government of “pricing working class people out of holidays”. Branson estimated that air passenger duty, a tax that has united airlines in opposition, would cost passengers an estimated £600m over the summer months, nearly £10m every day.
Speaking at a press conference in Mexico after Virgin’s inaugural flight on its Cancun route, Branson announced that his airline would be stepping up its campaign by adding a message on all e-tickets telling customers “you have just paid the highest air passenger tax in the world to the British government”, and asking them to email their MPs.
Branson said a family of four was now being asked to pay £325 in air passenger duty to take a holiday to Cancun. “It used to be possible for working-class families to go on a holiday to long-haul destinations. It’s now increasingly tough.”
He added: “There comes a time when tax goes too far.”
The duty was originally announced as a green tax under the last Labour government and rises in bands from £13 per passenger for a short haul flight to £92 for long haul flights – and double that in premium seats.
A Treasury spokesperson said: “The government took action by freezing air passenger duty last year and the majority of passengers will only pay an extra £1 as a result of April’s rise. Unlike some other European countries, the UK does not levy VAT on domestic flights and aviation fuel is not taxed. The aviation industry will also benefit from the record low corporation tax rate.”
John Stewart, of Airport Watch, said: “Air passenger duty would have to rise fourfold to cover the tax breaks the aviation industry enjoys through tax-free fuel and paying no VAT.”
Branson also weighed in to the Heathrow expansion debate, saying Virgin would “not participate” in the anticipated government consultation on air capacity if it excluded a third runway. He said it would be “very surprising” if they eventually came up with any other answer but an extra runway. And he added that without action, “In time it will turn us into a third world country.”
•Virgin Atlantic provided the Guardian’s travel to Cancun