05.04.2000 In a Russian Region Apart, Corruption Is King

If President-elect Vladimir V. Putin is going to fight corruption and lawlessness in Russia, as he has vowed to do in the wake of his election last month, he might start here on the southern shore of the Baltic Sea.
This territory of rolling farmland where Mr. Putin's wife, Lyudmila, grew up and where the 18th-century philosopher Immanuel Kant devoted much of his life to the study of morality is about as corrupt as any in Russia.
A region the size of Connecticut that was seized from Germany during World War II, Kaliningrad was a closed city until 1990, serving as the headquarters of the Soviet Baltic Fleet. Now separated from the rest of Russia by 300 miles of Lithuanian and Belarussian territory, the region and its capital, formerly known as Konigsberg, are today ruled by Gov. Leonid P. Gorbenko, a political boss who is built like a refrigerator and is a law unto himself.
To many here, he is simply known by the Russian diminutive term that translates roughly as ''Pappy,'' or maybe ''Big Daddy.''
In the years after the Soviet collapse, the rough-hewn and hot-tempered Mr. Gorbenko rose from the waterfront, where he ran the docks as port manager. Despite press coverage that he was under investigation for embezzlement, he won election in 1996. Since then, he has issued a decree as governor to take personal control of the cigarette, auto and liquor import trade, positioning himself as the essential middle man in the region's business. Here, importers of duty-free goods must be licensed in an auction process controlled by his office, which invariably rewards the governor's friends.
When the local parliament accused the governor of frequently breaking laws of fiscal accountability and of illegally seizing budget money, members of parliament said he simply turned off the electricity of the parliament building for eight months last year and stopped their salaries.
The parliament members who audit the budget said that tens of millions of dollars of government funds had disappeared during the governor's tenure, and that each year's audit had been sent to the state prosecutor with a request to investigate irregularities and missing funds.
''It is an unfortunate fact that in Russia today the governors have turned into untouchable barons reminiscent of feudal times where they swear an oath to the sovereign but then do whatever they want,'' said Nikolai P. Tulayev, a former naval officer who serves as the deputy chairman of the Law and Order Committee of the Kaliningrad Duma, or regional parliament.
Added Aleksandr G. Khmurchik, editor in chief of Kaliningrad's largest newspaper, Kaliningradskaya Pravda, ''What we have here is an authority that is tied to criminality and does not function as an authority elected by the people, but as a power that works for itself and protects its own interests.''
And therein lies the challenge for the newly elected Russian president. Mr. Putin cannot lay the foundations for the rule of law or make the country safe for foreign investment or usher in a new era of economic development without doing something about the corrupt regional overlords like Mr. Gorbenko.
Even if Mr. Putin chooses to act, the task will not be easy, because the governor, and many other regional officials like him, are not exactly outsiders. Mr. Gorbenko, for instance, is one of the founding members of the Unity Party, a coalition of governors, mayors and other regional leaders who last fall formed a new bloc to support Mr. Putin's candidacy for president and to create a pro-government majority in the national Parliament.
''What frightens us is that so far, Putin has not taken any strict measures against Gorbenko,'' said Igor Rostov, a television executive whose news programs have exposed corruption and criticized the governor during the last three years. ''And because Gorbenko is a member of Unity, it gives him the right to say that any attack on him is an attack on the president.''
Mr. Rostov is also frightened because he believes that the governor and his men have been behind attempts to silence criticism in the news media through threats and intimidation, an accusation the governor has denied.
One evening in November, Mr. Rostov said he was walking from his car to his apartment when a man wearing a hat pulled low over his brow approached with a dog on a leash, and then wheeled suddenly to bash Mr. Rostov on the back of the head with a iron pipe.
A second man appeared and slammed another pipe against Mr. Rostov's head, and the two assailants pummeled him as he screamed for help. Had his wife, Olga, not heard his cries and come running to put the attackers to flight, Mr. Rostov said he is sure that he would have been killed. As it was, he spent three months recovering from his wounds.
It was the third such assault on journalists who have documented allegations of corruption against Mr. Gorbenko and his deputies. The offices of New Wheels, a newspaper, have twice been damaged, once by a pipe-bomb planted just outside, and once by firebombs that failed to explode when they were thrown through office windows.
Police officials, who report to the governor, have dismissed those acts as ''hooliganism'' and ''street violence.''
Mr. Gorbenko declined requests for an interview.
He just returned last week from Moscow, where he delivered a tough speech to the upper house of Parliament calling for amendments to Russia's press law that would make it easier for public officials to use the courts to silence their critics.
Among the governor's declared enemies is the Moscow-based NTV television network, whose reports about corruption in Kaliningrad and attacks on journalists have been distributed to a national audience.
In December, Mr. Gorbenko agreed to an interview with the network's reporter, Eduard Petrov, but minutes into the taping session, he became outraged at the tone of Mr. Petrov's questioning, which focused on the governor's political migration to the Putin camp and away from the Fatherland -- All Russia Party formed by former Prime Minister Yevgeny M. Primakov and Mayor Yuri M. Luzhkov of Moscow.
''Do not interrupt me! That's it. End of discussion,'' Mr. Gorbenko said angrily as he threw down his pen, removed the microphone and walked out of the interview.
Even more surprising, one of the governor's deputies, Vasily Kotov, then reportedly offered to pay $300,000 for the videotape showing the governor's eruption. Mr. Kotov has denied making such an offer, but in February the NTV crew returned to Kaliningrad and upon encountering Mr. Kotov on the street, recorded him on videotape saying: ''I thought you would be afraid to come over here. I offered you $300,000, but you showed such horse manure.''
In tackling corruption, Mr. Putin will have to walk the fine line between respecting the autonomy of duly elected regional officials, some of whom have strong popular support, while insuring that such officials do not flaunt the law. Some Russian political leaders have advocated a consolidation of power under a strong president like Mr. Putin, one empowered to appoint and remove governors. For the moment, that idea has been beaten back by those who prefer preserving a federal system where regional leaders remain accountable to local voters.
Either way, Mr. Putin is woefully lacking in tools to enforce anti-corruption standards across Russia's 11 time zones.
The local police, prosecutors and judges -- in the absence of federal financing -- are slavishly dependent upon governors to pay their salaries and even to provide housing.
''To hold governors accountable is difficult for both Moscow and for localities,'' said Mr. Khmurchik, the newspaper editor. ''Moscow is afraid to lose support of the regions, and here in the region, everyone walks in the shadow of the governor, and it is difficult to overcome their dependency on him.''
Even where there is proof of corruption, added Mr. Tulayev of the Law and Order Committee, ''we are still lacking in an honest and independent judicial system.''
The Kaliningrad parliament is now considering legislation that would set out clearly defined procedures for removing a corrupt governor, but some opposition leaders here are privately hoping that Mr. Putin and the central government will step in to conduct an investigation that, in their view, would provide grounds to remove Mr. Gorbenko.
Hopes were raised last week when an inspection team of 50 officers from the Ministry of Internal Affairs and the Federal Security Service arrived here for an unspecified but large-scale investigation. The mandate of this investigative swat team remains a mystery, but it is headed by Gen. Gennadi Y. Marshkov, who publicly denounced Mr. Gorbenko's administration as corrupt before leaving the territory last summer.
''It was probably the only time in history that the local head of the F.S.B. criticized the governor in the open pages of the newspapers,'' Mr. Rostov said, referring to the general and the Federal Security Service.
By any measure, Kaliningrad holds the potential to become a rich entrepot like Hong Kong on the northern rim of Europe. The region is generously endowed with a deep water harbor, a well-educated labor force, one of the world's largest deposits of natural amber, rich farmland and endless beaches. There are also modest crude oil reserves.
But since Mr. Gorbenko's election in 1996, foreign investors have fled the territory while organized crime figures who run the smuggling, drugs and prostitution businesses have increased their influence. A drug epidemic now rages here, fueled by high unemployment and the ready availability of cheap heroin passing through on the way to big markets in Europe. And Kaliningrad leads the nation in H.I.V. infections, a by-product of drug addiction and prostitution.
After four years in office, Mr. Gorbenko has delivered on few of the promises he made to voters to work on their behalf, and it appears that he has lost a great deal of trust.
In an encounter with school teachers on hunger strikes last year, one irate teacher complained to the governor that ''children are not being fed at schools.''
''I have no money to feed them,'' Mr. Gorbenko snapped back. ''Nobody is paying taxes. They have destroyed everything, eaten everything and sliced everything up. How can I get their money?'' Then, to the horrified teacher, he added: ''I want to ask why you allowed them to destroy everything. I will now stand up and leave.'' This exchange was also broadcast on national television.
One prominent albatross still clinging to Mr. Gorbenko's neck is a fiasco surrounding his chicken ranch. Last year, in violation of all fiscal controls, he personally arranged for a $10 million loan from a German bank to finance a poultry processing enterprise. But no sooner had the loan been issued than the enterprise declared bankruptcy and the money disappeared. Now the regional government is saddled with paying on the debt. That case, too, has been sent to the prosecutor.
No sooner had the chicken ranch controversy calmed down than someone in the governor's administration leaked the text of an exclusive agreement he had signed with an Israeli company, Eurotech Industrial Ltd., granting the company exclusive rights to develop the amber industry, oil business and tourism in the territory. Instead of applause, the agreement was greeted here by a howl of protest because it had been negotiated in secret without bidding and had granted the Israeli company such sweeping guarantees and tax exemptions that the local taxpayers would end up covering any losses.
And just before the presidential election last month, Mr. Gorbenko flew to Moscow hoping to win Mr. Putin's endorsement for an extraordinary scheme to renationalize Kaliningrad's major industries -- oil, amber, shipping, fishing, rail and air transport -- under one super corporation to be headed by the governor.
This scheme prompted Mr. Khmurchik to ask whether one morning the citizens of Kaliningrad might wake up to find the name of their region changed to Gorbenkograd.
''The first thing President Putin can do in the face of a governor such as ours is conduct an investigation so that he will be held responsible for what he has done before the coming elections,'' Mr. Khmurchik said, referring to the gubernatorial elections in the fall in which Mr. Gorbenko is seeking a second four-year term.
Aleksandr Slisarenko, an opposition politician from the Yabloko Party, warned that ''Any further criminalization of the government authority must be stopped'' before criminals gain complete control of Kaliningrad's economy.
And so, like many Russians, they say they are waiting for Mr. Putin.
Photos: Gov. Leonid P. Gorbenko, above, is called a law unto himself in Kaliningrad. Igor Rostov, below, a TV executive who has exposed graft, was beaten in an attack that he believes the governor's men were behind. (Kaliningradskaya Pravda); (James Hill for The New York Times) Map of Russia shows the location of Kaliningrad: Kaliningrad could become a Hong Kong on Europe's northern rim.
PATRICK E. TYLER, New York Times, 05.04.2000 In a Russian Region Apart, Corruption Is King

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