- The Washington Times - Thursday, September 14, 2006

MOSCOW — Russia has suffered a heavy blow in the fight to clean up its crime-ridden banking system with the brazen killing of a Central Bank official who had led a crusade against money laundering and other financial crimes.

Central Bank First Deputy Chairman Andrei Kozlov died in Moscow early yesterday after gunmen shot him in the head and chest Wednesday night.

Mr. Kozlov, 41, had been in charge of an ambitious effort to fight criminality in Russian banks and had shut down dozens of institutions suspected of illegal activities.

His killing was the highest-profile assassination in Moscow during the six years President Vladimir Putin has been in power and a blow to Mr. Putin’s efforts to convince the world of Russia’s political and economic stability.

“This was a reminder of the risks that still exist in Russia,” said Peter Westin, chief economist at Moscow’s MDM Bank. “The financial community is shaken and the government’s response is going to be crucial. It has to find out who was behind this.”

Two gunmen opened fire on Mr. Kozlov as he emerged late Wednesday from a Moscow sports arena where Central Bank employees had been playing soccer. His bodyguard was killed and Mr. Kozlov was rushed to a nearby hospital. He underwent emergency surgery before dying early yesterday.

Though not as common as in the turbulent 1990s, contract killings of prominent figures still occur frequently in Russia, and officials said they have little doubt Mr. Kozlov’s slaying is connected with his work.

Finance Minister Alexei Kudrin said that Mr. Kozlov had “repeatedly infringed upon the interests of dishonest financiers” and praised him as “a very courageous and honest person who was at the forefront of the struggle with financial crime.”

Anatoly Chubais, the head of Russia’s electricity monopoly who was targeted in an assassination attempt last year, called the killing “a blatant challenge to the entire Russian government system.”

“This is a case when the authorities must respond in a tough manner, promptly and mercilessly,” Mr. Chubais said. “[Mr. Kozlov] was one of the most professional people in the entire Russian banking sector.”

A meeting of the Russian Cabinet yesterday began with a moment of silence in Mr. Kozlov’s memory, after which Interior Minister Rashid Nurgaliyev promised a top-level investigation.

Analysts said Mr. Kozlov had made a lot of enemies since becoming first deputy chairman at the Central Bank four years ago.

“His team was having a substantial impact,” said Richard Hainsworth, chief executive officer of RusRating, an independent bank rating company in Moscow. Mr. Kozlov’s efforts had substantially driven up costs for money laundering, bribery and other crimes, Mr. Hainsworth said.

From a peak of nearly 3,000 in the mid-1990s, the number of banks in Russia has dropped to about 1,200, and analysts say many are little more than fronts for criminal organizations.

MDM Bank’s Mr. Westin said that Mr. Kozlov had been shutting down two or three banks every month.

Mr. Kozlov had also been in charge of introducing a deposit insurance plan aimed at restoring the public’s faith in the banking system after thousands lost their life savings during Russia’s 1998 financial crisis.

He had refused to allow dozens of suspicious banks to take part in the plan.

At a banking forum in the southern city of Sochi last week, Mr. Kozlov had called for bankers found guilty of money laundering to be banned for life from owning financial institutions.

“There is no place for this in the banking sector. It disgraces the banking system,” he said.

The last comparable high-profile killing of a Russian official occurred in October 2002 when Valentin Tsvetkov, the governor of the Far Eastern Magadan region, was gunned down as he walked with this wife and bodyguard down a popular shopping street.

Mr. Tsvetkov was said to have made enemies with his attempts to impose more control on the granting of lucrative fishing licenses. Two suspects in his killing were arrested earlier this year in Spain.

Mr. Kozlov began his career at what was then the Soviet central bank at age 24. He rose swiftly in the ranks and became a deputy chairman in 1997. He left the bank for two years to work in the private sector before rejoining it in 2002.

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