New twists in the alleged Iranian Revolutionary Guard Corp. assisted murders in Vancouver

By Christine Duhaime | December 9th, 2023

Vancouver’s most infamous heroin supplier, Naji Sharifi Zindashti, and his trial in Turkey involving Vancouver

Corruption, heroin, and murders

If you’re from Vancouver, you know the story of how, in 2016, two Vancouver local gang members, Harpreet Singh Majhu and Orosman Jr. Garcia-Arevalo, agreed to travel to Dubai and murder an international drug lord named “Cetin Koc” for money. 

After the hit, they fled back to Vancouver, and a month later, they were found dead in Vancouver. They were allegedly killed by individuals who are in business with the Iranian Revolutionary Guard Corp. in Vancouver. Or so Iran-watchers believe.

Cetin Koç, murdered in Dubai

The drug lord murdered in Dubai, Cetin Koc, was an Iranian who obtained Turkish citizenship under a fake name. 

Another Iranian drug lord – a more powerful one in the heroin trade – Naji Sharifi Zindashti (Farsi ناجی شریفی زندشتی) is accused of hiring the two Canadians to murder Koc, as well as organizing other murders and kidnappings around the world, some on behalf of the Iranian intelligence services, MOIS, and the Iranian Revolutionary Guard Corp.

Naji Zindashti

Naji Sharifi Zindashti was arrested in Turkey, charged, and mysteriously released from jail. Pay-offs and bribes to lawyers, prosecutors and judges, were alleged to have been behind his release. He now remains within the safer confines of Iran, Iraq and Azerbaijan. 

A wide-ranging murder trial involving multiple defendants, including Naji Sharifi Zindashti, and involving the murders and kidnappings, is slowly taking place in Istanbul after six years. 

But the trial has experienced a few new twists – one of the defendants brought a witness to the trial in Istanbul who is the real Cetin Koc – the drug lord killed by the two Vancouver killers in Dubai. 

The Court refused to hear from the alive Cetin Koc and referred the matter to the prosecutor to investigate. Because Naji Sharifi Zindashti is charged with hiring the two Canadians to murder Cetin Koc, if Cetin Koc is alive, that murder charge goes away. The revived Cetin Koc is not the drug lord; he is a shepherd. Cetin Koc used the identity of the shepherd in Turkey. The real name of the murdered drug lord was Parvis Kashavarz Omarabadi. 

So who did the two Canadians kill in Dubai if not Cetin Koc? Omarabadi? Someone else?

Another twist in the story is a massive corruption scandal involving the Turkish judiciary, which has throw a wrench in proceedings involving Zindashti and his alleged ordered hits in Canada and elsewhere.

A month ago, two reports were allegedly sent to the government about corruption of judges and prosecutors, including one from Turkey’s intelligence services, MIT. The Turkish government alleges the report sent to MIT does not exist. According to both reports, prosecutors and judges are accepting significant bribes to release or detain defendants, lose evidence, or render decisions favourable to whomever pays them. Journalists who were given copies of the reports noted a stark omission – the cases of Naji Sharifi Zindashti, and Orhan Ungan, and the judicial pay-offs and murders of witnesses connected to their trials.

The reports were commissioned in part because the person accused of murdering Zindashti’s daughter, Orhan Ungan, alleged that there is an organized gang within the judicial system, and that gang of judges and prosecutors accepted millions of dollars from Zindashti to keep Orhan Ungan behind bars for four years. 

The judicial corruption scandal threatens to undo the cases against Zindashti.

The cases against Zindashti are relevant to Canada because they offer the only visibility on how an international heroin trafficker hired the two Canadians, and the connection, if any, of the IRGC to their murders in Canada. According to Turkish authorities, the long arm of MOI and the IRGC extend into many countries for operations that are carried out with the help of Zindashti’s transnational criminal organization. In essence, what Turkey says is that where the Zindashti transnational criminal organization traffics to, and works in, is where they help MOI and the IRGC, and vice versa. 

One of the places where the Zindashti transnational criminal organization traffics to, and works in, is Vancouver. Zindashti’s cousin, Hussein Karimi Rikabadi, the so-called king of heroin in Romania, shares the Vancouver territory. 

To understand what is going on, and how heroin trafficking and the IRGC play a role in our Vancouver murders, we start at the beginning, with a look at who is who. 

The characters

Cetin Koc: An Iranian shepherd whose name was used by an Iranian heroin trafficker, Parvis Kashavarz Omarabadi, in Turkey. Omarabadi was murdered in Dubai. 

Harpreet Singh Majhu and Orosman Jr. Garcia-Arevalo: Two Canadians who traveled to Dubai and murdered Omarabadi. They were then murdered in Vancouver.

Arzu Sharifi Zindashti: The daughter of Naji Sharifi Zindashti. She was murdered.

Naji Sharifi Zindashti: A well-known international Iranian drug lord, who specializes in bulk heroin trafficking, tied to the Iranian Revolutionary Guard Corp. 

Orhan Ungan: An Istanbul-based drug trafficker, who is part of the Istanbul Mafia, and a rival of Zindashti. 

Ilhan Ungan: The brother of Orhan Ungan. He was murdered in Istanbul.

Kudbeddin Kaya: The lawyer of Orhan Ungan. He was murdered in Istanbul.

Habib Chaab: An Iranian dissident who was kidnapped in Istanbul and transported to Tehran. His real name was Saberin Saadi. He is dead.

Burhan Kuzu: A lawyer, prominent government official, member of President Erdogan’s AKP party, and advisor to President Erdogan of Turkey. He is dead.

Zekeriya Oz: A prosecutor who released Naji Sharifi Zindashti from jail in 2010.

Cevdet Ozcan: A judge who released Naji Sharifi Zindashti from jail in 2018. 

Murat Garki, Haci Osman Sezen, Turgay Akar, Ali Ekber Akgun, and Sjaak Burger: Drug traffickers murdered in Amsterdam, Istanbul and Panama.

Aliye Uzun: A member of President Erdogan’s AKP party, who allegedly provided a prostitution service. She was shot in Istanbul. 

Sedat Peker: A famous member of Turkish organized crime, who is now a YouTube independent reporter on organized crime and corruption in Turkey. If you are following our series on Voyager Digital, the Vancouver crypto outfit, the upcoming Part 4 on Russian organized crime in Canada’s mining sector also features Sedat Peker. 

The drug arrest

Zindashti first came to the attention of law enforcement in Turkey in 2007, when he was arrested in Istanbul with 75,300 kilograms of heroin. He was living in a mansion in Istanbul at the time, with his daughter, Arzu Sharifi Zindashti. 

He was detained pending a trial. In 2010, he was released and the drug trafficking case was halted by the chief prosecutor, Zekeriya Oz, after Zindashti agreed to become a witness in conspiracy trials being held against defendants accused of an attempted coup against the government. Zindashti alleged at the time that a criminal defense lawyer named Kudbeddin Kaya was paying-off prosecutors and members of the judiciary to dismiss drug cases. Some say Zindashti paid significant bribes to Oz for his release in 2010.

Today, Oz himself is on the run, for having allegedly joined a more recent coup attempt. He is believed to be in Germany.

Oz, now in Germany

The Greek heroin bust

When he was released, Zindashti returned to his mansion in Istanbul, and continued his heroin trafficking business. He also became an investor, and used the proceeds of heroin trafficking to invest in numerous businesses in Turkey. 

In 2011, he became acquainted with Aliye Uzun, a member of the AKP partyShe denied knowing or even meeting Zindashti but when pictures emerged of them together, she later said that she was hired by him as an immigration lawyer, to help him obtain Turkish citizenship, which she was unable to do because of his criminal record; she also then said that she was his girlfriend when other evidence emerged. Zindashti alleged that, at this time, she ran a prostitution service, procuring women for him and for Turkish members of the judiciary and of government.

Aliye Uzun with the President

That year, Zindashti met and became friends with Burhan Kuzu, President Erdogan’s constitutional law advisor and a leading member of government. 

By 2014, Zindashti’s daughter was attending the University of Istanbul; Zindashti’s nephew from Iran was living with them in the mansion, and he attended university with her. 

That summer, a Greek informant walked into a police station in Athens and reported that two tons of heroin were stashed in warehouses and airport hangers, and was about to be removed and trafficked across Europe. The Greek police went into action; 33 people were arrested; the drugs were seized. 

Behind the heroin operation was Cetin Koc in Dubai, aka Omarabadi, whom we are going to refer to by his stolen name to keep things simple. 

Cetin Koc came to believe that Zindashti was aware of the heroin operation in Greece, and that Zindashti had gone to prosecutor Zekeriya Oz with the information, and that Oz had alerted Greek authorities.

Zindashti (standing) and Burhan Kuzu (with tie)

Murder of Zindashti’s daughter

Cetin Koc wanted revenge against Zindashti for the loss of his shipment of drugs. He asked the two Ungan brothers – Orhan Ungan and Ilhan Ungan – to kill Zindashti in Istanbul. The Ünğans were his partners, and members of the Istanbul mafia.

In September 2014, Zindashti’s daughter, Arzu Sharifi Zindashti, and his nephew were gunned down in her car on their way to university. The hit was a miss – Zindashti was supposed to be in the car. 

Zindashti gave a short interview to the media in Istanbul and said that he had received death threats but did not think his children would be targeted. Before the murder of his daughter, his friend Esfendiyar Rigi disappeared in June of that year. 

After the death of Arzu Zindashti, an organized crime war of revenge started that would see at least 20 people tied to organized crime or their lawyers, killed; mostly they were tied to Cetin Koc’s operation, and people believe Zindashti was behind them.

War of revenge

On December 11, 2014, Murat Garki, a cocaine drug lord, was killed in Amsterdam.

Then, Haci Osman Sezen and Turgay Akar, who killed Garki, were killed in Istanbul. 

Two days later, Aliekber Akgun, another drug dealer, was killed.

The same day, Vedat Sahin and Ferdi Topal were killed in Istanbul.

And on December 31, 2014, Okan Fidan was killed in Amsterdam.

In January, in Panama, a drug dealer named Sjaak Burger, was killed. In Istanbul, Beyhan Demirci was killed.

In August 2015, Orhan Ungan was arrested in Amsterdam for organizing the murder of Arzu Zindashti, and extradited to Turkey. His brother, Ilhan Ungan was arrested in Istanbul. Orhan Ungan is not an unknown underground figure in Europe – he says that he ran a large vehicle theft and importation business, stealing cars from the West and reselling them in other countries, and he alleges that he worked for Dutch intelligence. 

We know what happens next from the Canadian side – Zindashti put feelers out for a paid hit on Cetin Koc in Dubai and two Vancouver organized crime figures answered the call. The operation was planned for over a year, and there was no last minute engagement of the two Canadians. When the time was set, they traveled to Dubai, where they were given weapons, ammunition, a vehicle, and the address and pictures of Cetin Koc. 

On May 4, 2016, the two Vancouverites killed Cetin Koc in his vehicle and fled Dubai. 

The United Arab Emirates quickly identified the two Canadians as the ones who carried out the hit. 

I was not following this story at the time but at a social event, I was told by a Canadian law enforcement person that they considered the two Vancouver hit men as having idiotically gone to Dubai to carry out the hit, not understanding with whom they were dealing or the risks to themselves. I do not know if the Canadian law enforcement person knew of Zindashti’s role at the time but I got the impression they knew that Koc was a significant international drug trafficker, and this was no ordinary hit. 

The order was then given to eliminate the two Vancouverites – Garcia-Arevalo and Majhu. The hits were carried out in British Columbia by professionals. Garcia-Arevalo was shot to death on May 11, 2016, and his body was found in a blueberry field. Majhu was found dead on June 10, 2016, in Agassiz, in a burnt-out vehicle. 

Why kill them in far away Canada? 

To get to the answer, we must realize that Vancouver is a well-known epi-centre of the confluence of three groups who work together – (1) the Hells Angels; (2) the Big Circle Boys from Guangzhou; and (3) wealthy regime families from Iran who are part of, or tied to, the IRGC, and work the heroin trade. The way the heroin trade works in Vancouver is that wealthy Iranians import heroin, the Hells Angels handle distribution, and the Big Circle Boys handle the money movements back to Turkey and Iran, using, among other methods, bulk cash shipments, crypto OTC brokers who operate in luxury hotel penthouses in Vancouver and Toronto, and Iranian money services businesses (one Chinese-owned crypto exchange in particular near the Iranian money services businesses, all situated in North York, Ontario). The two Vancouver murderers had to have been paid somehow, by someone, before they got on the plane to Dubai. 

Something about how they were paid and contacted in Vancouver, led back to Zindashti, his cousin Hussein Karimi Rikabadi, Iran, or the IRGC, and that’s why they were killed – it had to do with knowledge. Recollect that the operation was a year in the making – that was a lot of time for the two Vancouver gangsters to pick up information, and vice versa.

In Istanbul, other killings occurred, including the murder of Kudbeddin Kaya, the lawyer of Orhan Ungan, in November 2017. Kaya had been arrested twice before for bribing the judiciary, and being a terrorist. 

In Tehran, Koc’s brother was kidnapped. Allegedly, his body was then found in southeastern Turkey. 

And in April 2019, Ilhan Ungan was killed in Istanbul. His brother blamed the politician and lawyer Burhan Kuzu for his brother’s death, and launched a lawsuit against him, claiming that Burhan Kuzu accepted pay-offs from Zindashti to manipulate the system against the Ungan brothers.

Arrest of Zindashti

After Orhan Ungan was arrested for murdering Zindashti’s daughter, he alleged that the series of murders in Canada, Dubai, Panama, Netherlands, and Turkey were revenge or clean-up killings by Zindashti tied to the murder of Zindashti’s daughter. Turkish police say that they located evidence that it was Zindashti who hired and paid the two Canadians to kill Cetin Koc in Dubai. 

Orhan Ungan also alleged that Zindashti was an informant for the US government. We know this cannot possibly be true because he would have been executed in Iran for that. 

In April 2018, the Turkish police decided to arrest Zindashti in connection with all of the revenge killings. By now, he was living in a villa outside Istanbul, where he was arrested with nine other men on his team, some of whom were members of law enforcement. 

In October 2018, Zindashti was released by a judge named Cevdet Ozcan, who said at the time that there was no evidence tying Zindashti to the murders. That was untrue. Behind the scenes, another lawyer, and advisor of President Erdogan, was helping Zindashti. It was Burhan Kuzu, and it emerged that the only reason he even met Zindashti in the first place was because they were introduced by the lady figure – Aliye Uzun. 

And you know what comes next – there are allegedly sex tapes and pictures.

Zindashti released

When Zindashti was released, he returned to Iran. 

In Turkey, 20 men along with Zindashti, were eventually indicted related to 10 revenge murders, including those committed by the Canadians. The indictment alleges that law enforcement, as well as the judiciary, fed investigation information to Zindashti about his daughter’s murder to help him plan the revenge killings. It also revealed that Cetin Koc, the person killed by the Canadians in Dubai, had paid $5 million to the Ungan brothers to kill Zindashti. 

The Ungan brothers were also indicted for the murders of Zindashti’s daughter but Ilhan Ungan was then murdered during the trial, and in October 2019, Orhan Ungan was acquitted. The acquittal was overturned on appeal. 

In Turkey, people began to question why Zindashti was released, and also, how the Ungan brothers got released – all were charged with murders and being members of organized crime. 

Judge Cevdet Ozcan was investigated for ordering Zindashti’s release and accepting a bribe of $3.5 million, which was delivered to him in cash by a jewellery store in the Grand Bazaar in Istanbul (this in itself is interesting – heroin traffickers are making payments in cash using jewellery stores – it is coincidentally the same method used in Macau to move proceeds of crime at mega casino complexes). In that investigation, he said that a senior AKP politician pressured him to release Zindashti because it was necessary for relations with Iran. The “senior AKP politician” was Burhan Kuzu.

Note what Ozcan was saying – he was saying that he was told that it was important to the Government of Iran, and therefore Turkey, for Zindashti to be released to continue doing whatever it was he was doing for Iran. Note also the clear importance of Zindashti to Iran. This means the Government of Iran communicated with Turkey and asked for Zindashti to be released; Turkey’s government officials then contacted the presiding judge.

What was the valuable thing that Zindashti was doing, or did, for Iran? We’ll get to that. 

Blackmail and criminal pay-offs

In the meantime, it was leaked to journalists, including the organized crime figure turned YouTube journalist Sedat Peker, that Zindashti was pals with President Erdogan’s advisor, Burhan Kuzu

Kuzu denied knowing Zindashti or having any connection to him. He wrote this to a journalist: “I neither know that Iranian nor have I ever met that judge (Ozcan)…I am a constitutional law professor. I know very well what putting pressure on the judiciary means.”

Journalists then published photographs of Zindashti and Kuzu, and other photographs of them with the lady figure, Aliye Uzun. 

When the photographs came out, Kuzu then admitted he knew Zindashti, and he said the same thing as Aliye Uzun, that like her, he was hired to be his immigration lawyer to get him Turkish citizenship. 

Burhan Kuzu then contacted Sedat Peker and gave him an interview. He also shared information and texts with Sedat Peker; one was about dealings with Iranian regime people. 

For example, there was an exchange about moving a shipping container full of US cash to the West for a wealthy Iranian woman tied to the regime. That Burhan Kuzu even knew how to navigate the shipment of bulk cash stolen from Iran and get it to a Western country is astounding, let alone that it was something he seemed to do for underground people. It also speaks to the fact that Iranian regime people go through organized crime to move money because they have the established routes. 

Peker is the one who put forward the allegation that Aliye Uzun had a side-gig of prostitution, where she obtained young girls for sex for Istanbul’s establishment. Zindashti alleged also that she was paid by him for prostitution services to procure young women. Specifically, he alleged that he paid her €500 per prostitute and she supplied six or seven women for an event Zindashti hosted. 

According to Peker, in the beginning, Burhan Kuzu was being blackmailed by Zindashti and he had to keep doing illegal things for him. Later, when Zindashti was released, and after Kuzu was sued by Orhan Ungan, he then went to work for Ungan in order to make the lawsuit launched against him by Ungan go away, and he was also blackmailed by Ungan. What they both had over Kuzu was sex pictures or tapes – it is not clear – and allegedly evidence of bribery and pay-offs he had accepted to wave his magic wand and help make serious criminal cases against them disappear. 

A lawyer named Ilker Dagli, who was the protégé of Burhan Kuzu, became wrapped up in the warped world of Burhan Kuzu and Orhan Ungan. He was Zindashti’s lawyer at one time, and allegedly, Kuzu filed a report alleging, apparently untruthfully that Dagli planned the murder of the Ungan brother, Ilhan. That was done so that Zindashti presumably would have to change lawyers. Someone recorded a video of a conversation of Dagli being blackmailed: 

Blackmailer: “Kuzu has more things, brother, they have things … you understand?” 

Dagli: “To be honest, whether it is Kuzu or not, it doesn’t matter to me. I threw it  all away. Now I am asking myself – me – who they tried to kill, who escaped from them, will I have to pay the price for them?”

In 2020, Kuzu contracted Covid, was hospitalized and placed on a ventilator. He died of Covid, although some allege his ventilator was unplugged to kill him. Whatever secrets he knew about drugs, politicians, corruption, pay-offs, murder and sex tapes, died with him.

The Iranian dissident kidnapping

Then, in October 2020, an Iranian dissident named Habib Chaab, whose real name was Saberin Saadi, was convinced to travel to Istanbul to meet his ex-wife. He was an Iranian separatist who was living in exile in Sweden, from where he led a group called Harakat al-Nidal, which advocates for an armed coup in Iran to create a separate country carved out of Iran from the province of Khuzestan. Harakat al-Nidal is a terrorist organization under Iran’s laws.

When he got to Istanbul, Chaab was abducted by Iranians, anesthetized, shoved in a van, and driven to the Iranian border. In Iran, he was handed over to the IRGC and MOIS. Iran says that, in addition to planning an armed insurrection, Chaab was working with Mossad and Sweden’s intelligence agency, and was an informant for them. 

In Iran, Chaab confessed to being involved in a coup attempt, and received the death penalty, which was carried out in Tehran. 

The year before, another wanted Iranian who had fled Iran, Rasoul Danialzadeh, had been “returned” to Iran from Dubai in much the same way, with the help of Iranians in Dubai, presumably Iranian organized crime in the drug trade, working with the IRGC and Iranian intelligence. 

And just before Chaab was kinapped, Gholamreza Mansouri, an Iranian judge who was wanted in Iran for corruption, was found dead in Romania under suspicious circumstances. Some people have tied his death to Zindashti because his cousin, Hossein Karimi Rikabdi, the well-known heroin trafficker, set up an organized criminal ring in Romania. 

Circle back to Canada

Zindashti and twelve others associated with his organization in Istanbul, were accused of being involved in the kidnapping of Habib Chaab and working with the IRGC, using the Zindashti organized crime heroin trafficking ring in Istanbul to kidnap Chaab and transport him to the northern border. 

The Turkish government, pursuant to an investigation it carried out, determined that Zindashti’s men, on behalf of the IRGC and MOIS, kidnapped Chaab from Istanbul. Charges related to the kidnapping of Chaab were added to the existing murder charges against Zindashti. 

The gist of the new allegations are generally that, in order to carry out kidnappings or extrajudicial killings in other countries, the IRGC and MOIS use the services of local Iranian organized crime groups, and they work together to carry out hits and kidnapping around the world. And vice versa – sometimes the IRGC or MOIS will do the deed in a foreign country in support of the heroin trade.

That seems to explain what it is that Zindashti did, or does for Iran that prompted the Iranian government to seek his release in 2018. They need his transnational criminal organizations for operations. 

But we also need to recollect the incident of the Iranian regime woman who knew to contact Iranian heroin traffickers to move a shipping container of cash to the West. This is not an insignificant story; it shows us the close ties among money movements, regime Iranians who move to the West, and the Iranian heroin trade run by transnational criminal organizations. 

We know that Iranian transnational organized crime primarily is engaged in the heroin trade, and primarily from Turkey from where it is sent to Europe, and Vancouver, from where it is then distributed. The supreme leader of that worldwide activity is Zindashti. 

If this is how things work, if the IRGC and Zindashti are in bed together and support each others operations, then we have our blue print as to what happened in Vancouver in 2016, when a body was found in a blueberry field and another in a burnt out car.

Don’t take my word for it — see here about how General Qasem Soleimani (killed extra-judicially by the US) is alleged to have paid Zindashti for hits. But also here on how the reporter who alleged that bit of alleged news, was recently arrested by Turkey for disinformation and is being prosecuted. 

It circles back to Vancouver because the issue, the thing that doesn’t fit the puzzle, is not two young gangsters who were murdered; but what did they know, or receive, that ties back to heroin, Turkish organized crime, Iran, the IRGC, or Iranian organized crime that no one wanted anyone in Canada to find out? It’s not Zindashti – we know it ties back to him – its something else, something more significant. 

Maybe one day we will find out. 


Zindashti today

For all the heroin brought into Vancouver, these are the guys (below), who are sourcing it; who are at the top of that food chain; whom Vancouverites are funding.

Clip 1, below, is Zindashti in rural northern Iran. What is striking is the gun power, and expensive cars for that area.

Clip 2, below, is the funeral of Zindashti’s mother, and villagers are paying their respects to Zindashti because of the funeral (not in relation to any stature). The guns are less visible but you can see the large protection detail he has in Iran, and the body guards keeping villagers from getClip ting close to him.

Clip 3, below, is a series of videos where Zindashti was being received. Zindashti is wearing a black t-shirt; notice that Zindashti has a police vehicle escort, and notice from 0:22 to 0:24, the armed men in the background at the top of the mountain, guarding Zindashti.

Cold War : The CIA Says it Blew up a Russian Gas Pipeline in 1982 with Canada’s Help – Fact or Fiction?

By Christine Duhaime | October 21st, 2023

The true but untrue tale of spies, murder, economic warfare, and sanctions


In 2004, a most unusual story appeared in a spy book written by a person named Thomas Reed (“Reed”), who worked at the US National Security Council. The unusual story was that the CIA blew up a Russian natural gas pipeline in the summer of 1982, with the help of Canada, causing a 3-kiloton blast somewhere in Siberia.

According to Reed, the CIA signed-off on his book, and approved the revelation of this secret pipeline sabotage operation, including that Canada was in on it.

The pipeline in question is the famous Trans-Siberian natural gas pipeline, known as the Urengoy-Pomary pipeline (Трубопровод Уренгой-Помары) in Russia.

It’s a wild story but is it even true? Would two NATO countries, unprovoked, plot and plan to destroy energy infrastructure, blow up a Russian natural gas pipeline, and jeopardize the energy security of Western Europe?

And if the story is untrue, would NATO countries just make up lies about blowing up a Russian natural gas pipeline?

Both seem inconceivable.

To answer these questions, we need historical context, starting with the geopolitical history of that pipeline, and a Russian spy named Vladimir Vetrov.

Part 1: Historical Context

Chapter 1 The Trans-Siberian Pipeline

A win for everyone

In 1953, Russia discovered the West Siberian petroleum basin in Siberia, the largest hydrocarbon basin in the world which covers 3.5 million km2, more than twice the size of Alaska.

By the end of the 1970s, the Soviet Union has been exporting oil, and considered building a pipeline and energy infrastructure to export its natural gas from Siberia to Europe.(1)

Urengoy, the town that would be the starting point of the world’s largest pipeline.

With the discovery of the Western Siberian petroleum basin, the Soviet Government approved the construction a 4,500 kilometer pipeline to transport natural gas from the Urengoy gas fields to Western Europe, equal in length to constructing a pipeline from New York to Los Angeles. At the time, it was the largest engineering and construction project in the world, and when completed, it would be the longest gas pipeline in the world.

The pipeline was a win for everyone – when built, it would subsidize the economy of the Ukraine, and supply inexpensive natural gas to Western Europe, ushering in decades of Western European industrialization, growth, peace, and prosperity.

For the Soviet Union, the Urengoy-Pomary pipeline would generate a 40% increase in the Soviet Union’s gas production, triple its natural gas export capability, and boost its revenues. 

You can take a one-minute video tour by helicopter of the 4,500 kilometers during its construction in Siberia, below, filmed in 1983.

Construction of the longest pipeline in the world

To construct the pipeline, the Soviet Union needed financing, vast amounts of equipment, steel, pipes, compressors, and turbines, as well as services.

US economic war against Russia

According to legal and policy research conducted by Case Western University, since as early as 1962, the US Government had a foreign policy of preventing the Soviet Union from selling oil and gas, and to limit its ability to grow economically, the theory being that suppressing the economic development of the Soviet Union, would suppress its technological development, and ergo, its capability to advance militarily and in aerospace.

Back then, there was not much public transparency in real world politics to understand that foreign policy could be based on economic suppression of one country for the economic supremacy of another. Economic warfare may have been charged by one country or another at the time, but was not openly admitted. As we shall see, in the late 1990s and in 2004, the US Government admitted that in the 1980s, it engaged in economic warfare against the Soviet Union primarily to stop it from being able to build pipelines to generate oil and gas revenues to develop its economy.

There was an ideal, naïve though it perhaps was, of free and fair economic competition of every country as a matter of sovereignty, as part and parcel of an open and inclusive international system. In the months to come three key leaders, Margaret Thatcher, Pierre Trudeau and François Mitterrand, would fiercely and publicly battle the US Government to enforce those ideals. And the battleground was Russia’s Trans-Siberian pipeline.

When Jimmy Carter was President of the US, politicians lobbied him unsuccessfully to act against the proposed pipeline, arguing that the pipeline would give the Russians an increasing amount of foreign currency reserves, that they could use to buy technology, develop their economy, and advance military power.(2)

In January 1981, when Ronald Reagan became president, he was more receptive to such lobbying. He wholeheartedly embraced the idea of preventing the economic and social advancement of Russians and economic warfare as the method to make sure that happened. Top of his list was to prevent the natural gas pipeline from being built. That became one of his major foreign policy initiatives.(3)

“Chicken littles” and the secret NATO resolution

To stop the pipeline, the US Government took steps to prevent other countries from entering into contracts with the Soviet Union in a variety of direct and indirect ways, including ordering the International Energy Agency, and the OECD to intervene, and when that was not effective, it instructed NATO to pass a secret resolution to prevent member countries from contracting with the Soviet Union in respect of the pipeline.(4)

The Soviet pipeline team set up shop in Cologne, Germany, and went to work drafting engineering and other specifications for all components of the 4,500 kilometer pipeline. They then set up a system for suppliers and manufacturers from around the world to submit bids to build the pipeline.

A business reporter at the time wrote that there was fierce competition among industry to sell to the Soviet Union. “The race soon involved dozens of companies, competing for contracts, big and small, and the Soviets conducted it all themselves, as one businessman put it, “down to the last bolt””.(5)

In July 1981, the US Pentagon was bitterly at odds with the US State Department over the pipeline – the Pentagon wanted the US Government to do whatever was required to kill Russia’s energy infrastructure project, whereas the State Department advocated for a more cautious approach.(6)

Economic summit in Canada, July 1981 (Source: Ronald Reagan Presidential Library and Museum).

In Cologne, between September 1981, and December 1981, the Soviet negotiators announced the companies that were the winners of bids they had received to build the pipeline.

The CIA provided a secret report to the US Government about the pipeline, and the companies that won bids, which analyzed each contractor and the equipment or service being sold. It identified how much money Russia would earn, the prospect of its foreign currency reserves increasing, and that European supplies (pipes, compressors, and turbines) were going to go to Russia to build the pipeline.

Armed with the details on the identity of the contractors that won bids to build the pipeline, the US Government asked the countries where the contractors were located to interfere and prevent their industries from doing business with the Soviet Union. According to other accounts, they also worked on private company executives for the same purpose. Reagan’s approach to world leaders was not well received, especially in Britain, France and Canada.

On December 21, 1981, Reagan took the pipeline issue to a National Security Council meeting where he famously referred to Western European leaders as “chicken littles,” (an old-fashioned term which means a person lacks bravery), because they wouldn’t go along with the US Government and wanted to sell equipment to Russia, and be able to buy cheap energy from Russia.

Christmas sanctions for American companies

The US Government looked for ways to impose sanctions to stop the pipeline, aware that “it could not impose sanctions on the project without good reason. The only realistic option was to wait for a development that could serve as an excuse to impose sanctions on Moscow.”(7)

It “did not have long to wait … Reagan quickly seized the opportunity [of Poland] to impose sanctions on Moscow … to derail the construction of the Siberian pipeline.”(8)

On Christmas Eve 1981, the US Government announced a first set of sanctions to prohibit the export of US products and technology to the Soviet Union tied to its oil and gas industry. The reason given was Poland which had imposed martial law to quell civil unrest related somehow to the Soviet Union.(9)

Below the surface, the sanctions had nothing to do with Poland, and “were to prevent oil pipelines from entering Western Europe from Russia.”(10)

On December 29, 1981, the US Government then interfered to stop an $80 million contract bid won by Caterpillar Tractor Co., to sell 200 pipelayers for the pipeline, after it had granted the American firm an export licence months earlier.(11)

Illegal summer sanctions for European companies

On June 18, 1982, the US Government imposed a second set of sanctions to stop the Russian pipeline, with retroactive application, by preventing the sale of goods and services to the Soviet Union by foreign subsidiaries of US corporations, and by foreign companies under license from US firms.(12)

These sanctions targeted European companies and were retroactive because the winning bids had already been announced in 1981. To stop the pipeline, it had to tackle the pre-existing contracts.

The retroactive application of the law, vis à vis sanctions, had never been done before (and in fact, retroactive laws are not enforceable under common law) and another first was the application of US law (the sanctions) purportedly over corporations in other countries. “This was an illegal move; the US had no jurisdiction over foreign subsidiaries of American firms.”(13)

Illegal or not, the June sanctions made it clear that the US Government was prepared to use technology as the basis to stunt the economic growth of the Soviet Union by sabotaging its energy industry.(14)

Europe and Canada become hostile to the US

As a result of the second set of US sanctions, European and Canadian businesses became increasingly hostile to US Government efforts to interfere with their contractual relations with the Soviet Union related to the pipeline.(15)

World leaders came out fighting aggressively against what they said were unfair economic practices that did not respect their interests, imposed US foreign policy on them, forced them to choose sides, and infringed their sovereignty.(16)

On the same day that the US Government’s June sanctions took effect, the foreign ministers of the European Economic Community issued a statement that US sanctions were illegal. The British, French, German, and Italian governments told their companies doing business with the Soviet Union, to continue.

The US Government lobbied Western European leaders to impose their own sanctions against Russia on the promise that, if they did so, the US would relax the retroactive application of its sanctions law.(17)

G7 meeting in Versailles, June 6, 1982, with Pierre Trudeau, Ronald Reagan, Helmut Schmidt, Margaret Thatcher, Francois Mitterrand (Source: Ronald Reagan Presidential Library & Museum).

Mitterrand, for one, did not want French companies caught up in the US’ economic warfare against the Soviet Union.(18) On July 22, 1982, France issued a communiqué that it was rejecting US sanctions, which stated that “such measures cause the European companies undue commercial prejudice. Gas pipeline construction contracts concluded by French companies must be honored.”

On August 2, 1982, Britain’s trade minister announced that British firms would also ignore US sanctions, and would help the Soviet Union build the Urengoy-Pomary pipeline. German Chancellor Helmut Schmidt similarly told German firms to ignore US sanctions, and Italy followed suit.(19) Even Canada, on August 13, 1982, announced its objection to US sanctions, directing the government to investigate if US sanctions limited competition and violated the anti-trust provisions of Canada’s Combines Investigation Act.(20)

Undeterred, the US Government began watching, very closely, what large contractors in Europe who won bids, were doing.

In France, Dresser France SA, which had a contract to deliver pipeline compressors, continued with its contractual obligations to the Soviet Union.(21) On August 26, 1982, Dresser France loaded a shipment of compressors on board a ship in France, bound for the Soviet Union. Things were so intense that the French Government ordered the French police to guard the ship. But before the ship had even left the dock, the US Commerce Department issued an order, revoking its export license,(22) stopping it from delivering compressors the Russians had paid for.

Thatcher “deeply angry” and Mitterrand “deeply wounded” by US sanctions over Russia

In another secret report, the CIA reported back to the US Government that Western Europeans were “deeply angry” about US sanctions, especially the retroactive application and extraterritoriality, “which they regard as a serious infringement on their sovereignty.”(23)

Among Western European leaders, the CIA reported that President Mitterrand was the most adamantly opposed to the US economic warfare, believing that the US sanctions were an over-reach of the law.(24)

On September 1, 1982, Prime Minister Margaret Thatcher made a public statement declaring that she was “deeply wounded” by the US policy, promising to defy US sanctions. She stated that British firms selling turbines to the Soviet Union had her full backing, despite the threat of US retaliation. “I feel very strongly that once you have made a deal, you ought to keep to it,” Thatcher said.(25)

On September 7, 1982, Canada stepped up its anti-US sanctions position on the international stage. At an event with Brazil, Canada’s foreign minister called US sanctions an unconscionable, unilateral, extra-territorial application of US law. “Foreign companies operating in the US are expected to abide by US laws and policies. We, who are hosting US companies, demand no less respect for our domestic laws and policies”, the foreign minister said.(26)

Lawsuits and administrative proceedings were launched by several European countries against the US Government, challenging the sanctions.

To avoid public trials over the legality of the US sanctions regime, the US Government eventually repealed the sanctions and the lawsuits were stayed.(27)

It did not mean that the US Government ended its economic warfare against the Soviet Union because, as we shall see, it blew up the pipeline.

Pipeline construction begins

The construction of the pipeline began in mid-1982, and was completed in 18 months, way ahead of the projected five-year construction timeline.

In the Soviet Union, the US sanctions inspired massive Russian patriotism, with a workforce that became motivated to finish the pipeline by 1984, and to design, engineer, and manufacture their own turbines to replace Western ones.(28)

By July 15, 1983, all the pipes had been laid and installed, and the work began on installing 40 compressors that would pump natural gas through the pipeline.(29)

In January 1984, the pipeline was completed, and the first natural gas was transported to Europe.(30)

Chapter 2 False Claims of Forced and Slave Labor Camps

Auschwitz-like allegations bandied around

During the work to prepare for the pipeline, events took a dark political turn.

Two grave human rights violations appeared to emerge related to the Russian pipeline – forced labour camps and enslavement.

In June 1982, the US Government convened a committee hearing to look into the alleged use of forced labor by the Soviet Union to build the pipeline.

Who were the alleged forced labourers? People from Vietnam, who were allegedly sent to the Soviet Union against their will, in vast numbers, and held in forced labor camps.

The committee equated the use of alleged Vietnamese forced laborers being allegedly held in Siberian camps to both Auschwitz and to the American enslavement trade. In the latter, 13 million people were captured in Africa, enslaved, and trafficked to the Americas on an industrial scale.

The committee said it had to look into the issue of forced labour at the pipeline because, according to the committee, during World War II not one country in the world heard the cries of prisoners at extermination and concentration camps set up and operated by the Germans, especially in Poland at Auschwitz.

But now, the committee said it could hear the cries arising from behind the barbed wire in the Siberian forced labor camps filled with incarcerated Vietnamese, who could be heard asking of Americans: “You, our brothers, where are you? What are you doing to hinder this carnage?”

Historically speaking, the people from one country did hear the “cries of prisoners” at the concentration camp at Auschwitz – it was the Russians, who liberated its 7,000 prisoners on January 27, 1945.

According to the report of the hearing, countries and companies that were entering into contracts with the Soviet Union to build the pipeline would be “participating in the largest slave transaction in history.”(31)

The committee made this statement because the alleged use of Vietnamese men locked in camps were allegedly working forcibly, for free, hence in their minds this was equal to the American enslavement trade, only worse because it was allegedly a larger operation – the largest in the world.

Arctic testimony by non-Arctic people

To show that human rights abuses were being meted out against the non-existent Vietnamese laborers in Siberia, a witness from the Soviet Union was called to testify. He said that in temperatures of minus 50 degrees celsius (in which I have lived in Canada), such forced laborers have neither warm coats, nor felt footwear (felt footwear refers to winter boats which are lined with felt), and no warm underwear (warm underwear means, in reference to the Arctic, long underpants and long shirts that are layered under clothing). In this way, through the deprivation of winter clothing in the Arctic region, according to the witness, the Soviet Union was killing 500,000 young men every year.(32)

Although allegedly killing such young men, the Soviet Union was simultaneously allegedly enslaving them, and forcing them to build the pipeline.

The reality is, and I know this from having lived it in the north, a person living in the winter in the north, clothed in the manner described by the witness, would not be capable of working for more than an hour, at most, because of frozen extremities.

I referred to this hearing as representing a dark turn of events because the US Government knew there was no enslavement or forcibly imported labour from Vietnam incarcerated in barbed wire camps. In 1982, CIA spies or Russian informants, were in Russia clandestinely collecting information from various sources, including Vietnamese immigrants in Russia on work visas, regarding labor trends, hiring practices, and employment plans for the pipeline.

The CIA reported, among other things, that there was no forced labor going on, and while the pipeline company would likely hire foreign workers under work permits from many countries, it would be on a limited scale. Contrary to the alleged Auschwitz-like conditions, the CIA’s secret report noted that foreign workers had substantial material and financial benefits working in the Soviet Union because food was cheap, medical care was free, lodging was free, and if not free rent was low, and wages were higher than in the native countries of the foreign workers.(33) This information was the US Government’s own information, known to the committee.

To the Russians: “Die or change”

The fiction of forced labour, enslavement of workers in camps with barbed wire, and terrible work conditions where inadequately clothed men were allegedly forced to perform manual labour in Arctic conditions, was parroted by NGOs and some American newspapers with headlines such as the “pipeline holocaust.”(34)

Such headlines trivialized the horrors of the Holocaust, disrespected its victims, and our soldiers who sacrificed their lives to fight Germany in World War Two.  That didn’t seem to matter – the goal was to influence Western companies and Western governments against the Soviet Union for Germans atrocities.

It was hoped that allegations of human rights abuses, even if patently untrue, might stop money and supplies going to the Soviet Union and kill the pipeline. The economic warfare seemed to know no bounds, and while the ideal of free and fair economic competition of every country as a matter of sovereignty existed as words on paper, it didn’t exist so much when it came to Russia. 

The committee noted: “without money and goods from the West”, the Russians “will have to change or die.” 

Chapter 3 Vladimir Vetrov, the Spy

A KGB spy in Canada, and an RCMP spy in the KGB

Before we explore the story of how the CIA blew up the Urengoy-Pomary pipeline, we have to get to know a Russian man named Vladimir Vetrov because the explosion, if it happened at all, happened because of him.

Vladimir Vetrov (“Vetrov”) (Владимир Ипполитович Ветров), was a KGB agent with a high degree of instability.

Vladimir Vetrov’s KGB identity photo.

In 1965, Vetrov was assigned to his first foreign trip, and was sent to Paris as a spy, posing as an engineer. His job was to recruit mid-level human assets at French companies to be informants. One of his first recruits was at the French company Thomson-CSF, which comes up in our story later. Vetrov tried to recruit another employee at Thomson-CSF named Jacques Prévost, but Prévost informed France’s spy agency, the Direction de la Surveillance du Territoire (“DST”). So now Vetrov was on the DST’s watch list, and DST tried in turn to recruit Vetrov. 

Vetrov was recalled to Moscow. 

In 1974, the KGB sent Vetrov externally again, this time to Montréal, Canada,(35) to engage in spying activities. He barely lasted a year.

In the first instance, in Montréal, he became involved in reselling stolen jewelry, which came to light when he used his name at a pawn shop to sell the stolen goods. The run-in with law enforcement(36) over the jewelry trafficking drew undue attention to Vetrov. That wasn’t good for a spy; he was supposed to be undercover.

In the second instance, Vetrov attracted the attention of the RCMP. 

According to the US National Security Council, at that time, the KGB had an agent in the RCMP named Gilles Borey (meaning the US Government believed that Borey, a Canadian, was a double agent in the RCMP in Canada working for the KGB). Borey learned that the RCMP was targeting Vetrov to recruit him to become an informant. 

Borey told the KGB in Moscow about this, and the KGB pulled Vetrov out of Canada.(37)

Vetrov assigned to Department T

In Moscow, Vetrov was formally reprimanded and was not allowed to engage in foreign field work afterwards. He was moved to Department T, a scientific and technical intelligence gathering and analysis unit of the KGB, overseeing the analysis of data on aviation.(38)

In today’s world, Department T is comparable to a military innovation analysis center, which provides analysis on developing technologies, domestic and foreign, and a gap analysis. Many intel agencies in different countries have a Department T, especially for military purposes.

Vetrov was angry at the KGB and the Soviet Union for being banned from doing foreign field work. 

He decided he would get back at his country by giving Soviet intelligence to the West. He decided to approach France, because he figured it would be easier because no one gave intelligence to the French.(39)

In February 1981, at Moscow’s Expocentre, Vetrov met with an employee of a French  company with whom he was acquainted. Vetrov handed him a note for Prévost, with an invitation to meet to discuss an important issue.(40)

In April 1981, Vetrov met with his old Paris acquaintance, Jacques Prévost in Moscow. Vetrov explained he was prepared to provide Soviet intelligence to the DST. He was taken to meet Patrick Ferran (“Ferran”), a French spy working in Moscow.

It was agreed that Vetrov and Ferran’s wife would meet every Friday at the Cheremushkinsky Market, where Vetrov would make a document drop in her shopping basket.(41)

Vetrov becomes a double agent

Vetrov was now a double agent – working for the KGB, and working against the KGB for the DST. 

Over the next 9 months, Vetrov made document drops to Ferran’s wife, providing over 4,000 secret documents to the DST.

In those documents, the DST was able to glean the identity of informants and the identity of KGB agents who worked abroad.(42) Vetrov then provided copies of records with the personal data of KGB officers that he had taken from the KGB safe at the foreign intelligence headquarters in Yasenevo.(43)

The documents from Vetrov revealed the status of the Soviet Union’s technology and industrial progress, and revealed that the Soviet Union was purchasing radars, machines, and semiconductors (44)bfrom Western companies. The documents also contained Soviet Government decisions on military and industrial matters.(45)

A secret shopping list

Allegedly (and I believe this next part of the story to be partially, if not wholly, untrue), Department T created a long shopping list – like a wish list – that identified pieces of equipment and technology that the Soviet Union allegedly desired to buy from the West. This wish list was allegedly provided by Vetrov to the DST, who provided it to the CIA. 

The alleged wish list included semiconductors, and, relevant to the Urengoy-Pomary pipeline, turbines.(46)

Part of the reason why this story rings untrue is because of the formal bid process that was set up to procure services, supplies and equipment to build the pipeline.

The bid process was open, and every item needed, down to the bolts, was publicly itemized in tender documents, obviating the need for a secret wish list of equipment for the pipeline. Not only that, there was fierce competition around the world to sell to the Soviet Union at the time, thus there was no need to have a wish list – foreign companies were soliciting the Soviet Union for business, not the other way around.

Part 2: Pipeline Sabotage Plan

Chapter 4 Underground Plan to Destroy the Soviet Economy

Mitterrand offers Reagan summaries of Vetrov’s intel

In July 1981, at an economic conference in Ottawa, Canada, French President Francois Mitterrand informed President Reagan of the documents received from Vetrov, and offered to provide summaries of the intelligence to the CIA.

The French Government and US Government were not on ideal terms at this time, and France was hostile to the US sanctions over the Russian pipeline. 

The DST translated the 4,000 Russian documents from Vetrov into French, and then provided only reports summarizing the content to the CIA, starting in August 1981.

The CIA apparently gave Ferran a Minox mini spy camera that was smuggled into the Soviet Union, which Ferran gave to Vetrov to photograph the KGB documents.

Minox mini spy camera.

It could be that the CIA was expecting the film back from the camera, but DST continued to only provide second hand information in the form of reports of translated summaries of the material from Vetrov.

Vetrov’s plan was to be a paid informant and in writing, he asked the DST to pay him between 30,000 to 40,000 Rubles per year for his services. For reasons which are unknown, it appears that despite his value to them, no agency paid Vetrov. 

Retaliation plan to sell Russians defective machinery

In January 1982, Gus Weiss (“Weiss”), a policy advisor to the White House, met with William Casey, the head of the CIA, over the reports from French intelligence of Vetrov’s documents to come up with a retaliation plan against the Soviet Union because it was buying scientific and technological know-how from the West.(47) This was just after the US Government had imposed the first set of sanctions, and blocked the $80 million winning bid from Caterpillar.

William Casey is known because of the Iran-Contra affair, although long before that, he was better known as part of the OSS, which had deep ties to Canada and to Toronto’s Bay Street banking and bond community. 

The unrelenting economic war against the Soviet Union was about to go underground.

The retaliation plan would secretly sabotage the entire economy of the Soviet Union(48) by disrupting its ability to supply natural gas, and going after its foreign currency reserves.(49)

This is where the alleged shopping list from Vetrov came into play.

Reed alleged that it was agreed that the CIA would become a kind of a secret personal shopper for the Soviet Union.(50)

Whatever was on Vetrov’s alleged shopping list would be purchased by the CIA from American companies for the Soviet Union, except the items would be modified, flawed, or defective(51), (52) American companies would help to deliberately manufacture defective or inoperable machinery and equipment, and sell such items to industries in the Soviet Union.(53)

According to Reed and Weiss, this industrial sabotage was carried out for quite some time, resulting in the delivery to Russia of large quantities of defective machinery and equipment.

Chapter 5 Canada Gets Involved in Pipeline Sabotage

A KGB agent enters Canada to steal software

The retaliation plan focused on the Urengoy-Pomary pipeline, with a plot to blow it up,(54) revealed for the first time in Reed’s book.(55)

Until Reed’s book, the knowledge that the CIA blew up the Russian natural gas pipeline was a “closely guarded secret”.(56)

This plot, too, was tied to Vetrov’s alleged shopping list.

You see, the alleged shopping list included another item for the Urengoy-Pomary pipeline, namely software for a computerized control system to automate the operation of the pipeline, the pipeline pressure and natural gas flows. That software allegedly was so valuable, it was at the top of the shopping list.(57)

According to the New York Times, an American firm turned down a purchase order from Russia to sell it the system and its software. And when the Soviets allegedly could not buy the software anywhere else in the world, and were unable to write computer code for such requirements themselves, they then sent a KGB agent “to Canada to a company there to steal the software.”(58), (59)

Canada doctors the software to blow up Russian pipeline

However, before the KGB agent snuck in and stole it, the CIA worked with the Canadian company to program a Trojan horse into the software,(60),(61) exactly as Weiss described had been done with American businesses who made defective machinery and equipment, and sold it to Russia – same plan, only in Canada.

For this part of Reed’s story to be true, by necessary implication it means that the following occurred:

  • The CIA had visibility to know that a KGB agent in Canada was going to steal a piece of software from the Canadian company;
  • The CIA reached out to Canadian intelligence, as required for an operation on Canadian soil, and together, the two intel agencies communicated with the Canadian company and explained the situation;
  • The Canadian company agreed to deliberately manufacture a copy of its software that was not only defective but coded it with a Trojan horse to cause an explosion to energy infrastructure;
  • Back then, software that was to be transported in this way would have been saved on a floppy disk;
  • The Canadian company knew when and how the KGB agent would show up to steal the software, and presumably left the floppy disk out on the counter or some such place so when the KGB agent broke into the premises, he would know what to steal;
  • The KGB agent did break in and stole the defective software with the Trojan horse, and brought it back to Siberia;
  • Working backwards from the date of the explosion and the time the Trojan horse was in hibernation, the theft in Canada and the software installation had to have happened sometime in January 1982, mere days after Weiss met with the CIA for the first time over the Vetrov information; and
  • The computer scientist at the Urungoy-Pomary pipeline took the stolen software and download it to a computer system used to regulate and control natural gas pressure flows.

In sum and substance, combining all the statements Reed made to promote his book, the Canadian company altered the software by adding a few lines of code so that, once installed in Siberia, it worked for four to five months and then, one day, after that length of time, in the summer of 1982, the Trojan horse woke up from a hibernation, and mis-instructed the computers and pumps to increase the pressure in the pipeline so that too much pressure was produced, causing a “massive explosion” of the Siberian natural gas pipeline that was delivering gas to Western Europe.(62), (63), (64)

“The most monumental, non-nuclear explosion ever”

Such a huge explosion was caused to the Urengoy-Pomary pipeline that the US Air Force estimated it to be a 3-kiloton blast.(65)

When the Canadian software caused the Russian natural gas pipeline to explode, Reed alleged that NORAD feared that a missile had been fired from Siberia, or a small nuclear device detonated,(66) but Weiss reassured NORAD it was a US-caused explosion.  

The explosion was so massive, it was observed in space and recorded on satellite imagery, Reed said. In fact, it was the “most monumental, non-nuclear explosion and fire ever seen from space.”(67)

Canada helped end the Cold War

The explosion caused by the Canadian software installed on the computer systems of the Urengoy-Pomary pipeline was so bad, so “huge”, that it helped end the Cold War.(68)

In a review of Reed’s book, the Sunday Times summarized the story this way: the US Government’s campaign “to undermine the economy of the Soviet Union” included sabotaging Russia’s Siberian pipeline in 1982. “A vast explosion tore apart the pipeline, caused by flawed software sold to the Russians to wreck the pipeline.”(69)

In this version of events, although the explosion was still vast, and ripped apart the pipeline, the provenance of the software and the perpetrator of the deed is less James Bond – in this version, the sabotaging software was sold to the Soviet Government, and not stolen by a secret KGB agent in Canada. 

You may be wondering why the massive explosion was visible from far away in space, caught on satellites, and a handful of people in the US could see, presumably from the satellite pictures, that the pipeline was blown up and ripped apart but yet no one on Earth or in Russia, not even in Siberia, witnessed it. That is explained by an American newspaper in 2004 – it is because it happened up yonder in the Siberian wilderness,(70) where presumably no one lives. 

When the Urengoy-Pomary pipeline exploded, the Soviet Union was allegedly “red-faced” but could not complain;(71) they could not complain, we are told, because the software had been stolen from Canada, and complaining about the sabotage of its energy infrastructure caused by stolen software would be an admission of the KGB theft in Canada.

Chapter 6 Vladimir Vetrov, the Murderer

The spy murders a stranger

Back in Moscow, Vetrov had been having an extramarital affair with a KGB translator.

Sometime in March 1982, on a date-night, Vetrov tried to murder his girlfriend with a screwdriver in a parking lot. A random stranger, who heard her screams, intervened to stop the murder, and Vetrov then attacked him with the screwdriver, stabbed him in the heart and killed him.

Petrov’s murder screwdriver.

Vetrov was arrested and held in remand until his trial. It meant that the flow of KGB intelligence to France suddenly stopped, and French intelligence never heard from Vetrov again.

Vetrov was tried in November 1982, and convicted of murder.

Vetrov’s mug shot.

How Vetrov was revealed to be a double agent to Russia is unknown. 

Soviets discover Vetrov was a double agent

In prison, he told prisoners that he had engaged in espionage, but his statements were not believed. Eventually, Vetrov’s apartment was searched and authorities found the Minox mini spy camera, consistent with his story of having engaged in espionage against the Soviet Union, because those cameras were not available in the Soviet Union.(72)

He also wrote a letter from prison to his wife, asking her to contact the DST to look after her financially for his services to the DST, which was read by prison authorities.

According to a different, probably more plausible, version of the story, in 1983, the Soviet ambassador in Paris was summoned to a meeting and shown a document by the French that had clearly been leaked from Department T, which demonstrated that there had been a foreign breach of Department T. From that, the Russians deduced that Vetrov had given intelligence to the French. They were able to make that deduction rapidly because, for French intelligence to have revealed that it possessed that document, meant that the source was no longer providing intelligence to the West (they were burning Vetrov), and because they exposed that fact, it was easy to determine who had access, and who was now gone from Department T – it was Vetrov, who was in prison for murder. 

In August 1983, Vetrov was charged with treason. He confessed to handing over 4,000 documents that were classified as top secret to the French, including resolutions from KGB chairman Yuri Andropov, and notes from Leonid Brezhnev.(73)

He was found guilty of treason, and in 1985, he was shot to death.

Chapter 7 James Bond-Style Fiction

Fact or fiction?

You have probably guessed that Reed’s story that the CIA, with the help of Canada, blew up the natural gas pipeline cannot possibly be true.

We know that because, when the alleged “massive explosion” of the pipeline occurred in June 1982, the pipeline was not even built yet, and natural gas could not possibly have been flowing through it, for it to have blown up in the dramatic fire-infused James Bond way Reed described. It was not until early 1984, when the pipeline was built, that natural gas was pumped through the pipeline for the first time.

The date the Urengoy-Pomary pipeline opened is a known historical fact, and such date is 1984. Even the CIA, in a report dated August 1982, two months after the alleged explosion, wrote that the date for only the pipelaying completion was 1984.(74)

Secret CIA report on Urengoy-Pomary pipeline.

The imposition of sanctions also does not align with June 1982 alleged explosion that Reed claimed happened. When that pipeline was sabotaged was the exact time when the US Government was imposing its controversial second set of sanctions to stop the pipeline from being built. It was seeking to impose those sanctions because the pipeline was not yet built, to stop it being built. If Reed’s story is true, it means the US Government was imposing sanctions on a pipeline it had just blown up. 

There is also the political issue of Canada’s alleged involvement as the main saboteur. 

At the time, Prime Minister Pierre Trudeau was adamantly opposed to US sanctions, so much so that when the alleged KGB agent was stealing software in Canada as a controlled operation, Canada was looking at suing the US Government for anti-trust behavior in respect of the US sanctions. It seems inconsistent that Prime Minister Trudeau would agree to look the other way knowing that a KGB agent was entering Canada to steal software for the very pipeline the government was going to sue over to be able to help construct.

Prime Minister Trudeau was “deeply disturbed by the animosity between Washington and Moscow,” and in particular what he called the “overly hostile rhetoric of Ronald Reagan towards Moscow.” Trudeau devised his well-known peace plan at the time to be a catalyst for cooperation and peaceful relations over this very issue. It appears inconsistent with peaceful relations and with that peace plan for Canada to have sabotaged and blown up a Russian natural gas pipeline. 

Thomson-CSF enters the picture again

Another problem with Reed’s story is the computerized control system with the alleged defective Canadian software – it had not even been delivered to Russia in the summer of 1982.

According to a 1982 secret report by the CIA, France’s Thomson-CSF was the company that won the bid to sell the Soviet Union the computerized control system and software to control gas flows within the pipeline,(75) not a company from Canada. If the bid was won, why would a KGB agent need to sneak into Canada and steal the software?

According to Thomson-CSF itself, the project to install the computerized control system and the software to control gas flows took almost a decade to complete, and was finished only in 1991.(76)

News release from Thomson-CSF that it completed the pipeline computer system in 1991 for the 4,500 km Urgengoy-Pomary pipeline.

It is odd, though, that the computer contract went to Thomson-CSF, the company that Vetrov had connections to, who had introduced him to the DST when he wanted to become a double agent. The Soviet Union did not know this when the contract was awarded to Thomson-CSF, but the CIA did, and so did the DST. And so did Thomson-CSF. Remember that an American firm allegedly pulled out of the bid to supply the computer system and Thomson-CSF got the bid – was that because there was already an infiltration into the KGB through Prévost at Thomson-CSF and Vetrov, and the goal was to keep that door open? 

It’s possible – because of the scam perpetrated on Areva S.A. by the Canadian company Uramin Inc., and the resulting media and French government investigations into the Canadians behind that scam in France and Africa, the world learned how bid processes were used in China for foreign espionage. Its curious that Thomson-CSF is a common denominator – it was Vetrov’s DST contact when he was a double agent; it was the contractor for the pipeline; and it was in Vetrov’s alleged shopping list.

A little bit of high school science

In 2017, a Russian gas pipeline engineer looked into the allegation that the Urengoy-Pomary pipeline was blown up by the US Government.

According to him, gas pipelines are built to withstand pressure surges, and have pressure relief valves along the entire length of the pipeline, which operate independently of central control systems.(77)

If the pipeline existed in the summer of 1982, and had experienced a pressure surge, pressure relief values would have released the pressure, preventing an explosion.

Moreover, he explained that it is not possible to have a natural gas pipeline explosion of 3-kilotons because volumetric explosions, including volumetric detonating weapons, are limited in power, especially in open space, meaning that such an explosion could not, as a matter of pure physics, have been 3-kilotons, or have been visible from space,(78) as Reed alleged.

According to Reed, the 3-kiloton gas explosion visible from space destroyed the pipeline, but caused no other damage.

Let’s compare that to history. 

The largest non-nuclear explosion in history was in 1917, in Halifax, Canada, and it was also a 3-kiloton blast. The explosion in Halifax sent out powerful shockwaves that broke windows 50 miles away. An estimated 1,500 people were killed from the explosion and shockwaves, and 12,000 buildings within a 16-mile radius, were damaged.

Although Reed’s pipeline explosion was also a  3-kiloton blast, no house or office windows were broken, no one was killed, no shockwaves were felt, no buildings were damaged.

Another contrast – the 2015 explosion in Tianjin, China, was 0.75-kilotons.(79)

It left a crater in the Earth, whereas the 3-kiloton explosion of the Russian natural gas pipeline in Reed’s story left no mark. The video below of a 0.75-kiloton blast gives an indication of what a blast of over three times that might sound and look like.

Crater from 0.75-kiloton blast in China.

Fateh Vygasov, who worked at the gas pipeline construction headquarters in Western Siberia also assessed the story as impossible.

Among the reasons he cited were the pipeline’s compressor station shut-off valves, which would have been mechanically triggered during pressure surges. He stated that if an explosion occurred, it would only have demolished the ground strapping of a well, perhaps causing a fire, that would have burned out after a few hours.(80)

Chapter 8 No Answers

The true but untrue story hurts Canada

Reed said his book, and the details of how the CIA, with Canada’s help, blew up a Russian natural gas pipeline, was thoroughly vetted by the CIA, and approved for publication.(81)

That is true.

Former intelligence officers are required to obtain permission to publish books or articles about their former intelligence activities and to disclose state secrets.

Vis à vis Canada, it also means that Canadian intelligence had to have signed off on Reed’s book too because the blame for the actual sabotage, according to Reed, lies at the feet of Canada, whose software industry, he alleged, was part of the conspiracy to blow up the energy infrastructure of another country, with which it was not at war.

There are lots of mysteries and intrigue in the story of the blowing up of the Urengoy-Pomary pipeline but the most mysterious part of the whole episode is why would this fake story be created and published?

It’s hard to say; there are no answers.

Even though Reed’s story is not a true story, the whole world has believed it since 2004.

The story, although untrue, is endlessly harmful. 

We are left with a terrible permanent hit to the reputations of Canada and the United States as countries whose manufacturers create defective and inoperable machinery and equipment and sell to foreign companies, and as countries who willingly break international law and destroy pipelines that supply energy to millions of people in the world, and to businesses to keep industries growing, and economies flourishing.

The next time there is a sabotage or attack on energy critical infrastructure, or a natural gas pipeline, the world may point a finger at those who said they did it before, and even bragged about it in books and newspapers.

James Bond: “Great Soviet achievement”

Living Daylights (Source: YouTube)

The Urengoy-Pomary pipeline appeared in the 1987 James Bond spy film “The Living Daylights”, which showed a KGB agent defecting to the West inside the pipeline, miraculously surviving several hours under atmospheric pressures that can reach 1,400 psi.

James Bond calls it “a great Soviet achievement.”

Indeed it was – but it was more than that – it brought together the best of American, French, British, Italian, German and Soviet design, engineering, know-how and technology to build the world’s longest pipeline, which brought a long period of industrialization, peace and prosperity to Europe and Russia, alike. 

And it stands as an example of the employment of the international machinery for the promotion of the economic and social advancement of all peoples, as Roosevelt and Stalin envisaged so many years ago with the United Nations Charter. 



1 April 2016, “Pipeline Politics between Europe and Russia: A Historical Review from the Cold War to the Post-Cold War.” The Korean Journal of International Studies.

2 June 18, 1982, “Human Rights Consequences of the Proposed Trans-Siberian Natural Gas Pipeline.” Hearing before the Subcommittee on International Finance and Monetary Policy of the Committee on Banking, Housing, and Urban Affairs, United States Senate.

3 August 24, 1984, “Reagan: the Ayes Have It.” National Review.

4 “Pipeline Politics”, supra.

5 1985, “Soviet Negotiating Strategy, The East-West Gas Pipeline Deal 1980 -1984.” The Rand Corporation.

6 2023, “The Polish Crisis of 1981-82.” Margaret Thatcher Foundation Website.

7 2022, Agathe Demarais, “Backfire: How Sanctions Reshape the World Against US Interests.” Columbia University Press.

8 Ibid.

9 1983, “Taking Peacetime Trade Sanctions to the Limit: The Soviet Pipeline Embargo.” Case Western Reserve Journal of International Law.

10 2016, “The Reagan Pipeline Sanctions: Implications for US Domestic Policy and the Future of International Law.” Journal of International Affairs.

11 December 29, 1981, “Caterpillar Sale Blocked.” United Press International.

12 “Taking Peacetime”, supra. 

13 Desmarais, supra.

14 “Pipeline Politics”, supra.

15 January 27, 1984, “Business, Labour and the Anti-Communist Struggle.” National Review.

16 “Talking Peacetime”, supra.

17 Desmarais, supra.

18 Ibid.

19 August 2, 1981, “World News & Summary.” United Press International.

20 August 13, 1982, “External Affairs Minister will Host a Two Day Gathering.” United Press International.

21 “Talking Peacetime”, supra.

22 Ibid.

23 August 1982, “Outlook for the Siberian Pipeline”. CIA. 

24 August 1982, “Outlook for the Siberian to Western Europe Natural Gas Pipeline”. CIA.

25 September 1, 1982, “Prime Minister Thatcher Says She was Deeply Wounded”. United Press International.

26 September 7, 1982, “External Affairs Minister Called for an Urgent Reversal”. United Press International.

27 “Talking Peacetime”, supra.

28 August 2, 1982, “Europe: Imbroglio over a Pipeline.” Time Magazine.

29 August 27, 1983, “Tass says Gas Pumped Through Siberia Pipeline”. United Press International.

30 December 20, 2022, “Газопровод Уренгой – Помары – Ужгород”. RIA Novosti.

31 “Human Rights Consequences”, supra. 

32 Ibid.

33 June 1981, “Foreign Labor in the USSR.” Director of Intelligence, CIA.

34 August 17, 1982, “Calling it a Pipeline Holocaust, a Republican Senator Introduced Legislation.” United Press International.

35 2023, “Ветров, Владимир Ипполитович”. Wikipedia.

36 July 2, 2023, “Самый важный агент холодной войны”. Как офицер КГБ стал французским шпионом и сдал сотни советских разведчиков в Европе.

37 Ibid.

38 October 28, 2016, КГБ И Агенты Иностранных Разведок.

39 “Самый важный агент холодной войны”, supra.

40 Ibid.

41 Ibid.

42 April 23, 2004, “Полковник Ветров, Он Же Агент Farewell”. FSB Website.

43 “Самый важный агент холодной войны”, supra.

44 March 7, 2004, “Взрыв недоверия. Досье Farewell содержит ложь?”

45 “Самый важный агент холодной войны”, supra.

46 1996, “Duping the Soviets: Farewell Dossier.”

47 Ibid.

48 February 27, 2004, “Reagan Approved Plan to Sabotage Soviets”. Washington Post.

49 Ibid.

50 February 2, 2004, “The Farewell Dossier”. The New York Times.

51 “Reagan Approved Plan”, supra.

52 “Duping”, supra.

53 “Reagan Approved Plan”, supra.

54 Ibid.

55 Ibid.

56 Ibid.

57 “The Farewell Dossier”, supra.

58 Ibid.

59 “Взрыв недоверия”, supra.

60 “The Farewell Dossier”, supra.

61 March 28, 2004, “Soviets Burned by CIA Hackers?” Wired.

62 Ibid.

63 “Reagan Approved Plan”, supra.

64 “Взрыв недоверия”, supra.

65 “Soviets Burned”, supra.

66 “Reagan Approved Plan”, supra.

67 Ibid.

68 “The Farewell Dossier”, supra.

69 February 29, 2004, “Reagan’s CIA Blew up Pipeline Build by West”. Sunday Times.

70 “The Farewell Dossier”, supra.

71 Ibid.

72 КГБ И Агенты Иностранных Разведок, supra.

73 Ibid.

74 “Outlook for the Siberian to Western Europe Natural Gas Pipeline”, supra.

75 September 21, 1982, “The Soviet Gas Pipeline in Perspective”. CIA.

76 September 1, 1991, “Gasbedea Sobiet Batasunean”. Zienzia.

77 “Soviets Burned”, supra.

78 Ibid.

79 October 5, 2020, “Beirut Blast was Historically Powerful”. BBC.

80 “Взрыв недоверия”, supra.

81 2004, “Countdown to Zero Day: Stuxnet and the Launch of the World’s First Digital Weapon.” Crown.

Vancouver’s Dr. Death and our terrorism ties

By Christine Duhaime | July 27th, 2023

I’ve written before on the story of how a Vancouver public company’s main source of revenues was supplying the precursor drug which allowed Mexican drug cartels to cook crystal meth in underground factories in California, which started the crystal meth epidemic across the United States, and caused countless untimely deaths. 

As of 2021, 52,400 Americans had died from meth-related deaths. 

Our Vancouver anti-hero, Dr. Death, the person who opened the door for crystal meth mass production for cartels, and its resultant mass deaths, sleeps like a baby in one of several mansions in Vancouver and one in Morocco. 

I am told that he once had a sleepless night – the RCMP raided one of his mansions many years ago early one morning. Dr. Death and his wife, I am told, were highly irritated by the RCMP because a mansion was messed up; cushions were thrown around; drawers opened; papers looked at; trinkets from the homeland in Iran were touched. 

The Middle Eastern group involved in moving the supply of precursors from Dr. Death was sending the money earned directly to the Hezbollah. 

I knew there was a Middle Eastern terrorist organization benefiting financially from what little there is on the cases in the US court files (they are filed under seal as terrorism cases) but the Vancouver part of the case appears in a financial crime book published by a New York author. I called him, and according to him, it is the Hezbollah who was involved. 

Hezbollah is a terrorist organization tied to Iran and Lebanon. Its leader is Hassan Nasrallah. Dr. Death is Iranian. You probably guessed that.

Seems odd – terrorist financing was going on in Canada for Hezbollah using the capital markets, and the end result is that the precursor kingpin accumulates mansions, and moves to other public companies, raising more money to cure cancer. Or is it Covid-19? I’ll have to go back and check what the Hezbollah’s Vancouver securities lawyer wrote this month in Dr. Death’s public company’s investor material. 

In a million years, I never thought American authorities would allow a Vancouver capital markets guy who helped create the crystal meth epidemic, devastating their people, to keep going in the capital markets, becoming richer by taking even more from Americans by way of their investment capital in his public companies. I was wrong. 

I also never thought that you could be tied to financing the Hezbollah and be allowed to run a public company and raise capital from Americans. I was wrong there too. 

Let’s switch focus some 4,000 kilometers away to Uganda and Sudan.

On the border of Uganda and Sudan is a terrorist organization called Lord’s Resistance Army (“LRA”). 

The LRA has been labelled one of the “most brutal rebel groups,” frequently abducting young children whom it forces into sexual slavery.

The LRA forced an estimated 66,000 children to fight for them, and caused the displacement of over 2,000,000 people.

The leader of the LRA was a man named Joseph Kony. 

Joseph Kony has disappeared. 

Joseph Kony

The LRA’s number 2 man, and its chairman and financier was a man named Ladit Balgara. 

Ladit Balgara lived in a 10-bedroom mansion in Banstead, England. 

In 1998, Balgara was arrested by the UK federal police pursuant to an extradition request from the United States in connection with money laundering charges against him and several others. 

He and a British man named Ian Burns were accused of taking millions of dollars from an American municipality which was wired to the Canary Islands, then to Citibank in Spain in an account held by an entity named Lomoro Securities Inc. After that, the money disappeared into the hands of the LRA. 

The mysterious Ian Burns lived in Barcelona at the time. He has never been found and is a US fugitive, although it is possible that he is living right in front of us, active in the Canadian capital markets like Dr. Death, denying that he is that Ian Burns.

He could be anywhere – Jersey, Russia, Spain. 

Or Vancouver.

Lomoro Securities appears to have been a fictional company although there is now a Lomoro Securities incorporated in the UK operated by Balgara that post-dates these events. 

One of the other accused in the case was a man named Gabriel McEnroe, who was tied to the Trafficante Mafia in West Palm Beach, Florida. 

In its earlier days, the Trafficante family was recruited by the CIA in West Palm Beach to assassinate Fidel Castro (as described in the book “Mafia Spies: The Inside Story of the CIA, Gangsters, JFK, and Castro”). The plan was foiled because, on the 11th hour, it turns out that the Trafficante boys ended up being pro-Castro. The book describes how a few of those boys were then killed.

McEnroe was apparently a spy too – he disclosed that he was a casual agent for the US government, and provided intel to various agencies about activities in Russia. 

In Russia, he worked on oil and gas deals for third parties, similar to Ladit Balgara. 

Allegedly, McEnroe had ties to President Vladimir Putin in St. Petersburg, Russia, when Putin was a deputy mayor. Whether that is true or not seems debatable because he would be arrested if he was disclosing that he was providing intel on Russia to the US, while in Russia.

During the time that McEnroe was in St. Petersburg, Russian organized crime was consolidating around key crime leaders who would come to dominate much of commerce in Russia providing so-called “roofing” services. Foreigners and local business people had to work with Russian organized crime to conduct business in Russia.

An exception was George Cohen, the Canadian who brought the McDonald’s restaurants to Russia, whom I knew from thoroughbred horse country in Ontario and the Woodbine racetrack. When he encountered difficulties in Russia, he sought the assistance of Prime Minister Brian Mulroney. 

If McEnroe was in Russia doing business at that time, he would have had to have Russian organized crime ties.

It isn’t clear how they all worked together – Burns and Balgara were tied through Lomoro Securities, and Burns was in control of the bank account in Spain used for the LRA. But how McEnroe and the Trafficante Mafia were tied to Ian Burns, Ladit Balgara and the LRA back then is a mystery.

When Balgara was arrested, the UK police issued a news release stating that Ladit Balgara was using the name Powell Onen P’Ojwang in the UK. 

He is also a/k/a Paul Onen. I believe he is also a/k/a Powell Cotton, an alleged film director. 

In 2002, the US government announced it was dropping charges against Balgara because Balgara told prosecutors that he had “full blown AIDS” and not many more years to live. 

Turns out he’s fine, back living in a mansion, and brokering oil and gas deals. 

In May 2009, a US government Wikileaks cable stated that Balgara was pursuing destabilizing southern Sudan, and was close to then Sudanese president Omar Hassan Ahmad al-Bashir. 

Sudanese ex-president Al-Bashir

Then in 2011, Ladit Balgara incorporated a company called Global Partners Invest Limited, with a Vancouver man named Mohammed Janif. For what purpose seems unknown. How an African terrorist organization leader formed ties to Vancouver is also unknown. 

Balgara’s partner, Sudanese former president al-Bashir, mysteriously disappeared from a Sudanese jail a few weeks ago. Like Joseph Kony. Like Ian Burns. 

Al-Bashir could be anywhere – Uganda, London, West Palm Beach. 

Or Vancouver. 

Some people in the former intel community whom I spoke to about this, believe that a character in the case of Dr. Death and the Hezbollah, and a character in the case of the Lord’s Resistance Army, years later, came to cross-over through the same public company investment scheme. 

So, actors from two terrorist groups converging. 

Where, you ask? 

But why ask – we know the answer – in Vancouver.

The ludicrous story of the bombing of Nord Stream

By Christine Duhaime | March 11th, 2023

A scuba diving fairy tale

On March 8, 2023, several news organizations, including the New York Times, published a story emanating from an investigation they say they undertook in which they allege that the Nord Stream pipeline was blown up by six random Ukrainians working from a little sail boat. The story was populated in other newspapers, including The Guardian here.

The story is ludicrous. 

The theory of the story goes something like this: 

Once upon a time on the German island of Rugen, five men and a woman, dressed in sailor’s clothing, rented a little sail boat called Andromeda. It was the beginning of September, and the weather was rainy, cloudy and cold. 

The little boat allegedly used by elite scuba divers as the base to blow up Nord Stream 2.

The six bad actors were seen carrying food and water in shopping bags aboard the little sailboat. They then boarded and sailed away to the island of Christiansø in Denmark. 

One of them used a fake passport; the other five did not (which has to mean the identity of 5 of the alleged bad actors is known).

Around September 23, 2022, they left Christiansø, and sailed to the precise spot where the Nord Stream 2 pipes lay on the seabed floor, some 260 feet below in the black cold Baltic Sea. 

They threw the anchor overboard knowing, as all sailors do, that the 2,000 foot rope radius tied to the anchor would be a problem, shifting the little boat’s location continually within the rope radius, as the boat bobbed on the waves. This meant that the boat would be at a different place when they came to the surface.

They jumped in the water, with hundreds of kilograms of C4 explosives. Already we know that they are superhuman to be able to carry such weight overboard. They turned on their recreational helmet lights, and dove down 260 feet down in record time. When they reached the seabed, without the use of any buoyancy aides, or lift bags, they were miraculously able to carry, move and hold the hundreds of kilograms of C4 to fasten it to the cement-encased pipes. 

With what, string?

After each day’s work, they zoomed up to the surface. 

They did this for four days straight, for about 9 hours a day factoring in ascension time, without one intelligence agency, passenger boat, coast guard, surveillance air craft or satellite intel operator seeing them. 

Being impliedly superhuman unlike the rest of us, they didn’t need nitrogen in their tanks, didn’t have to contend with deep sea pressure problems and equalize the air pressure on the decent or ascent, and didn’t need or have a decompression chamber. 

By September 26, 2022, their mission was accomplished. 

The bad actors finished the last bit of work on the seabed floor, tying the C4 to the pipes, came up to the surface with no equalization problems whatsoever, pulled up anchor, and hurriedly motored away, detonating the C4 as they left. 


Diving below 150 feet requires humans to use mixed gas, and ergo the operation must have been a saturation dive. 

With sat diving, the divers live in a pressure chamber, pressurized to the depth of the seabed of the Baltic Sea. Any scuba diver going down in recreational gear without special equipment and air supply, as the story implies, would be incapacitated or dead when they reach a depth of 260 feet, and if they were not dead, they would be unable to come back to surface alive, and if they did, they would have a life-threatening case of the bends. 

In a sat dive, the divers go from a sat chamber to a diving bell which is lowered to the working depth. They then leave the bell and perform their tasks, while attached to the bell through a series of umbilical cords that deliver gas to the divers, hot water (to keep divers from freezing to death) and electricity, and which provide video and audio capabilities to communicate and which sends back real-time video footage of the divers’ work. 

Divers can work for about five to six hours in such conditions and once they have finished working, they enter the bell and are brought back up to the sat chamber. They live in the sat chamber and must remain there until depression is over. For 260 feet, human decompression takes at least 3 days. 

The divers who went down to the Nord Stream 2 pipeline to blow it up, needed to have a whole team of special technologists and life support technicians whose job was to provide the right gas mixture to them at all times, to monitor pressure and to keep them alive. There would have also been a communications team on-site to deal with audio and video communications so that the team on the ship could give instructions and directions to the divers working below.

The work of sat divers is incredibly hazardous, arduous, and mentally and physically challenging. If that work involves dealing with explosives on the seabed floor, its exponentially more dangerous. There aren’t that many people in the world who are qualified to do this work, and bearing in mind that they probably belong to PADI, and other elite social deepsea diving groups, the candidate pool is small. 

According to the New York Times, they are Ukrainian and one of those elite divers is a woman. 

If that is to be believed, de-cloaking the identity of the alleged six Ukrainian elite sat-experienced deepsea divers who blew up Nord Stream 2 should take a journalist or investigator about 2 hours to figure out. It’s super simple, right? Find 6 Ukrainians, one a woman, who are certified in advanced deepsea diving who have enough hours clocked and enough experience in sat dives with knowledge of explosives to pull it off. 

But there is an smaller pool of people involved than the pool of elite deepsea divers and it’s the life support technicians – the gas experts – who keep deepsea divers alive. Its super simple, right? Find a team of educated, qualified, experienced life-support technicians for sat dives in Ukraine, and you’ve found the bombers. 

Regardless of who blew up Nord Stream 2, the most important thing to keep in mind is this – because the operation had to be a sat dive, the entire deepsea operation was filmed, and the footage is storied in several places. 

Question is – where is it?

Russian Organized Crime in Canada’s Capital Markets – A Retrospective

By Christine Duhaime | February 12th, 2023

YBM was Canada’s Wirecard 30 years ago. It remains one of the most surreal criminal cases

30 years ago this month, in February 1993, Russian organized crime leaders set a plan in motion to infiltrate Western capital markets, steal investor funds and launder money.

The Russian organized crime group was the Solntsevskaya, and they had billions to launder from weapons trafficking, human trafficking, narcotics trafficking, prostitution, theft, and extortion.

Key leaders of the Solntsevskaya who came together for the con were Semion Mogilevich, Viktor Averin, Arnosha Tamm, and Sergei Mikhailov. They were joined by Mogilevich’s financier, Igor Fisherman and a Mogilevich associate, Jacob Bogatin.

Mogilevich was by now in Hungary, at the behest of Yevgeny Primakov. Under the plan, Mogilevich would set up and become the control person of a new public company and it would be in the rare earth elements sector, fictitiously manufacturing permanent magnets made of neodymium. 

And the customers? No problem, they would make them up.

And the lawyers? No problem, many came forward to provide legal advice and to bill doubly as directors, including former Ontario premier David Peterson.

The one remaining issue – whose capital markets to infiltrate?

Russian organized crime decided Canada was the ideal place because of the no barriers to entry.

And so the plan was set in motion.

In February 1993, Mogilevich wired US$100,000 in dirty money from his UK based money laundering front company, Arigon Co. Ltd., to Jacob Bogatin in the US to start the process.

In January 1994, Mogilevich wired more money to Bogatin to hire attorneys in Canada. Bogatin then wired some of Mogilevich’s dirty money to the trust account of a Calgary law firm. On March 16, 1994, Mogilevich’s attorney in Calgary registered a company for him in Alberta called Pratecs Technologies Inc. Between March and July, Mogilevich and his attorneys in Alberta worked on Pratecs to be approved as a capital pool company and once approved, the company then sold 4 million shares to investors.

In July, it merged with YBM Magnex Inc. and several members of the Solntsevskaya Russian organized crime group, including Mogilevich, Semion Ifraimov, Alexandr Alexandrov, Alexei Alexandrov and Anatoly Kulachenko, received 18 million shares of the new entity, YBM Magnex International Inc. (“YBM”). That transaction made them collectively the control person of the issuer, controlling 80% of the issued and outstanding stock of YBM Magnex International Inc.

Russian organized crime now controlled YBM and they had infiltrated the capital markets.

YBM acquired Arbat International Inc. (Mogilevich’s Moscow company), and Arigon (controlled by Mogilevich and Viktor Averin), which became subsidiaries. This suggests that Mogilevich was more confident than he should have been about the extent to which the FBI and RCMP were monitoring the Solntsevskaya. Arigon and Arbat were two of the Solntsevskaya’s main money laundering fronts, and they became more exposed by being enveloped into a North American company.

In April 1995, the FBI applied for a secret order to intercept and record phone conversations of the Solntsevskaya in New York. In support of the application, the FBI swore an affidavit (the “FBI Affidavit”) which described the members of the Solntsevskaya as including Vyacheslav Kirillovich Ivankov (“Yapochik”), Mogilevich, Sergei Mikhailov, Viktor Averin and Arnosha Tamm, and described how Arbat was used by Arnosha Tamm to wire large sums to Mogilevich in Hungary. It also described the extensive organized criminal activities of the Solntsevskaya, and identified Yaponchik as the Godfather of the Russian mob in the US.

Sergei Mikhailov (right) and Arnosha Tamm (third from left) in 2016. (Source: The Insider)

On May 16, 1995, the British police raided the London law firm that represented Arigon after an investigation showed that more than $50 million in Mogilevich’s proceeds of crime were washed through the law firm’s trust account. 

Two London attorneys, Peter Blake-Turner and Adrian Churchward were arrested.  The police also raided the homes of the two attorneys. The police seized Arigon’s corporate records which showed that the owners of the YBM entity, Arigon, were Russian organized crime leaders Mogilevich, Semion Ifraimov, Alexandr Alexandrov, Alexei Alexandrov and Anatoly Kulachenko. The police alleged that Russia organized crime was laundering money through YBM’s entities Arbat and Arigon. 

You may be wondering why these two attorneys? They worked at the same firm, and the spouse of Churchward was the Russian former girl friend of Mogilevich. The attorneys were not prosecuted because they had no knowledge that Mogilevich was Russian organized crime.

In the meantime, the FBI and UK police were investigating two London-based Russian bankers who were washing billions of dollars for Mogilevich and for Cali drug trafficking cartel leaders through an entity named Benex International Company Inc., although this investigation would not be made public until 1999. Benex was a fake supplier to YBM on paper but in actuality, it was a nominee shell with a valuable US bank account used to launder dirty money.

When the arrest of Arigon’s attorneys in London made the news, YBM issued a news release, and lied, stating that Arigon was not tied to YBM. 

In June 1995, an asset freeze application in the UK courts was filed against the YBM entity Arigon, and Mogilevich, on the basis that their assets were from Russian organized criminal activities. The government obtained a worldwide injunction. 

On June 27, 1995, Bogatin complained to YMB and Arigon’s attorney in London that the injunction was having a devastating impact on YBM, causing a suspension of its public offering of securities in Toronto. No disclosure of this was made to investors. 

Then suddenly, in July 1995, the UK proceeding against Arigon and Mogilevich magically ended when a law enforcement officer changed his evidence against them. 

When the London case ended, the issuer ramped up efforts to raise money from Canadian investors. By now, YBM and its attorneys understood Mogilevich was Russian organized crime, and he was laundering money through the YBM subsidiaries and controlled their bank accounts – they clearly understood this because of the UK proceeding.

On October 5, 1995, YBM closed a private placement for gross proceeds of $14 million. In the offering of securities, it represented to investors that, at the end of 1992, it had revenues of $17.7 million, net income of $2.5 million, and 133 employees. It was completely not true. YBM did not disclose to investors what was true – that it was a Russian organized crime-controlled company in Canada.

Ten days later, YBM issued a news release, falsely claiming to investors that it had sales it did not have. 

A red flag about YBM was its allegation that it was in the rare earth elements business, and the lack of disclosure about rare earth manufacturing. During this period of time, China was restricting rare earth exports and suspending domestic mining licences as it began a process of stopping illegal mining and centralizing mining permitting for rare earth elements. If YBM was making neodymium magnets, there would have been disclosure about the process of acquiring rare earth elements from China, supply chains, and of manufacturing neodymium magnets, and the attendant risks of those activities, including the risks of the suspension of licences from China and its environment liability risks from manufacturing. 

Even though YBM’s business was an illusion with known Russian organized crime figures linked to it, in January 1996, it was approved to be a reporting issuer in Canada.

When it became a reporting issuer, the directors and officers were Harry Antes, Jacob Bogatin, Kenneth Davies, Igor Fisherman, Frank Greenwold, R. Owen Mitchell, former Ontario premier David Peterson, Michael Schmidt and Daniel Gatti. 

Former Ontario premier, David Peterson, was YBM’s securities attorneys, as was an attorney named Lawrence D. Wilder.

According to the US Department of Justice, the YBM directors were directed and controlled by Mogilevich and Fisherman.

Then, in early 1996, things at YBM took an unexpected turn. Since 1994, the RCMP had been intercepting the calls of Vyacheslav Sliva, the brother-in-law of the Godfather Yaponchik, who lives in Toronto, and was sharing that intel with the FBI. They were aware that Mogilevich came to Toronto using an Israeli passport under a fake name in December 1995, to chill with YBM’s team.

In January 1996, two associates of Mogilevich in Hungary applied for a visa to enter the US for YBM business. The visas were denied on the basis that YBM engaged in unlawful activities. YBM hired a US attorney to challenge the visa denials. It is doubtful that they truly wanted to pursue the matter of having the employees travel to the US; more likely, Mogilevich wanted to know what the US government knew about his activities. He would have been worried about the Benex entity tied to YBM because it was being used to move billions of dollars through the Bank of New York. Politicians, the Department of Justice, the State Department and the FBI were all contacted by YBM for information.

When information from US authorities was not sufficiently forthcoming to YBM, it is possible that Mogilevich got spooked because in April, he transferred Arigon to a YBM related Cayman Islands entity and took back Arbat. 

On March 7, 1996, YBM’s stock began trading on the Toronto Stock Exchange.

Russian organized crime and YBM Magnex International Inc.

In August 1996, the directors, and officers of YBM were given an update on the visa denials and were told simply that the US government was investigating YBM. They formed a committee to investigate areas of concern stemming from the visa denials – but recollect that YBM knew, from the UK case, that Mogilevich was its control person and was Russian organized crime.

By this time, the FBI had conducted surveillance of YBM’s HQ in Pennsylvania and had determined that the so-called HQ was not capable of supporting the 165 employees, or $20 million in sales that YBM claimed in its disclosure to investors.

In August 1996, the FBI issued a report on Mogilevich’s Russian organized crime group, which included Viktor Averin and Sergei Mikhailov. It described the principal activities of Mogilevich as weapons trafficking, nuclear materials trafficking, prostitution, drug trafficking, dealing in precious gems and money laundering using, among others, Arigon as a front company, and described YBM as a Mogilevich company.

On November 1, 1996, YBM retained Fairfax Group to dig in and investigate the US government’s investigation.

In mid-December 1996, YBM obtained a copy of the FBI Affidavit, and given its content, by now there was no doubt at YBM as to Mogilevich being Russian organized crime. The directors decided to prepare a questionnaire for the mobsters controlling the issuer, in effect their bosses, for them to answer. In the communication to the mobsters attaching the questionnaire, they acknowledged having read the FBI Affidavit and stated that their job was to determine if the statements in the FBI Affidavit were true. They knew the statements were true from the UK case. 

They wrote this to the mobsters: “our securities lawyers tell us that we are very close to having an obligation to disclose these allegations to the general public. If this were to happen, our stock would be worthless in a short period of time.”

In fact, the obligation to disclose had arisen a year earlier but the directors were also shareholders and, as they knew, the stock would be worthless if they made a truthful disclosure to investors.

In March 1997, Fairfax gave an oral briefing to YBM and its securities attorney Lawrence Wilder on its findings. It reported that certain of its insiders and shareholders namely, Mogilevich, Anatoly Kulachenko, Semion Iframov, Alexandr Alexandrov and Alexei Alexandrov, were linked to the Solntsevskaya. Fairfax reported that those Russian organized crime figures controlled YBM, Arbat and Arigon, certain YBM records were falsified, YBM was doing business with companies that did not exist, were shell companies or were controlled by Mogilevich, and that Sergei Mikhailov, Viktor Averin and Arnosha Tamm had received money from YBM or its entities.

Fairfax also reported that the Solntsevskaya shareholders of YBM exerted considerable influence over the issuer, and there was indicia of money laundering in its operations.

Fairfax recommended that YBM directors cooperate with the US government. They refused.

At one of the Fairfax briefings, a director noted that if it became known that YBM had Russian organized crime figures as shareholders, the stock would have very little value.

Again, the fixation was on share price and obfuscating the true picture of the issuer, rather than on disclosure of material information to investors, as required by securities law.

On April 7, 1997, YBM’s securities attorneys published the MD&A, annual report, and financials on Sedar. The MD&A alleged that, in 1996, YBM had net sales of $90.3 million, a 79% increase over 1995, and that it was producing rare earth magnets. The annual report stated it had 536 employees and was making 110 tons of rare earth magnets that were sold in 23 countries. It was untrue.

On May 2, 1997, YBM’s securities attorneys published the AIF on Sedar. It contained no disclosure of Mogilevich, Viktor Averin, Arnosha Tamm, the Solntsevskaya shareholders, the front companies, the money laundering, or the investigation by Fairfax except, way under business risks, it stated that over the past two years, it had “became aware of concerns expressed in the media and by government authorities generally concerning companies doing business in Eastern Europe.” 

That was it – that one sentence was the extent of YBM’s disclosure of the Fairfax findings.

On June 1997, YBM’s prospectus was accepted for filing despite that its business was still illusory.

On August 21, 1997, YBM closed a private placement for gross proceeds of $48 million based on the prospectus. 

Things continued this way for another eight months until it was time for the annual financial statements to be prepared and audited by a new auditor, Deloitte LLP, for the year ended 1997.

In March 1998, Deloitte met with YBM and its Toronto securities attorneys and expressed concerns regarding certain YBM business partners. Deloitte also questioned approximately $160 million in alleged business transactions of YBM.

In response to Deloitte questioning transactions, a director admitted that certain YBM transactions, among other things, “created a condition where money can move in a circle” – e.g., round-tripping. Round-tripping means money that goes around and ends up at the same place but deceptively, so that it appears that new money comes in, when it’s the same money that re-enters an issuer. 

In April 1998, Deloitte then raised more concerns with YBM, when it learned that Russian organized crime did business with YBM.

Deloitte suspended its audit of YBM’s financial statements and told YBM and its securities lawyers to disclose to investors that the audit was suspended, as required by securities law. 

And this is pretty wild – they refused. 

On May 13, 1998, the FBI and INS executed a search warrant at the office of YBM in Pennsylvania. They seized share certificates of YBM that showed Russian organized crime figures Mogilevich, Semion Ifraimov, Alexandr Alexandrov and Alexei Alexandrov were shareholders of the issuer.

YBM’s stock was cease-traded. 

YBM then issued a news release alleging that it had received a report confirming no evidence of criminal activity was found at YBM.

A week later, Bogatin gave an interview to the Village Voice and admitted that Mogilevich “owns” YBM. The Village Voice article was the first media deep exposé on Mogilevich and his organized crime empire in the West. 

Mogilevich in Moscow, 2009 (Source: Russian News)

The FBI was still intercepting calls. In one of those interceptions, it learned that Mogilevich had ordered a hit on the journalist for US$100,000. The FBI recommended the journalist get out of New York City.

On June 2, 1998, Deloitte resigned as auditor and refused to certify the audited financial statements for the year ended 1997.

By then, the issuer was finished. As the directors had noted a year earlier, the stock of a public company run by organized crime was worthless.

In 1999, YBM pled guilty in US federal court to securities fraud, admitting that it had created and disseminated false and misleading disclosure to investors, and fraudulent financial statements from 1993 to 1998. 

In 2007, the US indicted certain defendants, including Mogilevich, Bogatin and Fisherman for securities fraud.

Nothing happened in Canada regarding prosecution for securities fraud. 

But on the civil side, at least five lawsuits were filed by Deloitte and by investors against the Toronto securities lawyers, brokers, underwriters, the issuer and its directors. The lawsuits settled for $120 million, which was paid in part by the lawyer regulator’s insurance.  

A Canadian securities regulatory action was commenced on several narrow issues of failures of disclosure in which the two securities attorneys were defendants, which found that because there was external evidence of organized crime in the issuer from a qualified intelligence firm, that information was required to be disclosed to investors.

In addition to being sued in the many civil litigation cases, one of the YBM securities attorneys, Lawrence Wilder, ran into difficulty after a regulator said he made untrue and misleading statements during the YBM investigation. That case was settled.

Primakov, who was now the Russian Minister of Foreign Affairs, pulled Mogilevich out of Hungary and back to Moscow. Mogilevich continued to build his empire in Ukraine and Moscow. He is now on the FBI’s Most Wanted List, and was part of the Netflix show “World’s Most Wanted.”

 Perhaps as a foreshadowing of events to come 30 years later, author Bruce Livesey in connection with the YBM case and the infiltration of organized crime in the Canadian capital markets, wrote:

“In British Columbia, the Hells Angels have a track record of laundering money through publicly traded companies in Vancouver and of using lawyers to help set up such companies.”

One can fast forward to today and query whether anything has changed – the SEC is currently alleging that 100 public companies controlled from Vancouver were frauds; a handful were headed by the Hells Angels using companies.

And if we look further beyond Canada, there is the Wirecard fraud in Germany – a replica of the YBM fraud on a much grander scale, where funds were round-tripped around the world to camouflage the fact that much of its business was illusory. 

YBM directors and officers, 1996 (Source: YBM)


(1) Mogilevich was moved to Hungary with agent Shabtai Kalmanovich under the sponsorship of Yevgeny Primakov, the then-head of the KGB who obtained the release of Kalmanovich from an Israeli prison to take the Solntsevskaya global. The Hungary group is what is sometimes called the “Mogilevich Russian organized crime group”. It was not an organization, per se, but rather a group established by Primakov for international activities for some members of the Solntsevskaya. To teach Mogilevich the ropes and clean him up, Kalmanovich was brought in. He instructed Mogilevich on how to run a sophisticated underground international organized crime operation and move money undetected. The involvement of Kalmanovich had another purpose – Primokov trusted almost no one else. The idea that Mogilevich was a criminal mastermind is inaccurate. The mastermind was Primakov; his prime student (agent) was Kalmanovich..

(2) A duty to warn arises when law enforcement receives information that is credible about a death threat to a civilian – often the threat is from organized crime and is received from intercepted calls.

The Canadian mining race for clean tech minerals – on land and in the deep-sea

By Christine Duhaime | February 6th, 2023

Canada is racing to become a mining superpower but will its investments be enough?

Clean Tech Energy Transition

Late in 2022, Canada announced a series of new strategies aimed at re-igniting the domestic mining industry for rare earth elements (REEs) and critical minerals needed for the energy transition from fossil fuels to renewable energy and the clean tech powering it. Batteries and magnets, including for electric vehicles (EVs), are key outputs of these minerals for clean tech.

To get to net zero, renewable energy capacity must be tripled and to achieve that, manufacturers globally need 500% more of some of these minerals. 

REEs and critical minerals are a finite resource, and while there is a relative abundance of such minerals on Earth now, there is not enough mining or refining capacity to meet demand.

China dominates REE and most critical mineral refining, as well as REE extraction, and is the largest consumer of REEs and critical minerals. The second largest consumer, the US, is transitioning away from buying refined REEs and critical minerals from China due to US geo-political concerns. Canada hopes to fill the vacuum by being the key supplier to the US. 

According to the US critical minerals list, the US is most dependant upon China and Canada for minerals. In addition to REEs and refined critical minerals, it relies upon China for arsenic, fluorspar, gallium, graphite, scandium and bismuth. It relies on Canada for refined aluminum (although it owns the aluminum refineries in Canada), potash, uranium, rubidium, niobium and cesium.

Demand from countries working to build clean tech to meet net zero goals and from the US voluntarily cutting off supply from China, has set off a global mining race for mineral sovereignty to secure future supplies. 

Rare Earth Elements and Critical Minerals

There are 17 REEs, such as lanthanum, cerium, promethium, terbium, and neodymium. Although referred to as “rare”, most REEs are widely available and some are more common than cooper or lead. All REEs except promethium, are more abundant than gold or silver.

Their rarity stems from the fact that REEs are found in low concentrations in other minerals. The extraction, isolation, processing and purification of them, therefore, is costly, time and resource intensive, and wasteful. For example, it takes 1kg of extracted iron to get 1 gram of refined neodymium. It’s like extracting one T-bone steak from each cattle in a herd, and throwing the rest away.

Critical minerals are not the same thing as REEs, although Canada has put them together in its 2021 list of critical minerals because the demand for REEs is critical. A mineral can be critical to one country and not to another. Lithium, for example, is critical to Canada but not to Australia or Argentina. Typical critical minerals include cobalt, zinc, aluminum and copper.

Countless products are made using REEs or critical minerals, and in some cases, both. They include AirPods, batteries, permanent magnets, disk drives, EVs, flatscreen monitors, vehicles, glass, wind power turbines, camera lenses, satellites, weapons, MRIs, and some cancer drugs.

Mineral Sourcing


The exploration, extraction and refining of REEs is relatively new, having occurred only in the past 100 years. 

Until a year ago, there was only one REE mine in the Western Hemisphere – in California – which was called Mountain Pass. It filed for bankruptcy in 2015, and recently completed a business combination to re-open its facilities. Australia has one REE mine for light atomic weight REEs, but sends the raw product overseas for refining. 

Only China currently extracts and refines valuable heavy atomic weight REEs. 

Canada does not extract REEs, and has one refining facility. However, there is an abundance of known REEs in Canada, particularly along the old mining route from Seven Islands to Ungava Bay. In the late 1940s and into mid-1950s, a significant amount of exploration was completed in the region (see below), which was abandoned.

Seven Islands to Ungava Bay was a historic well-known mining exploration route in Canada (Source: Québec government)

Critical Minerals

With critical minerals, it’s a different story. For that, we look to Canadian mining history – specifically, 1957.

By 1957, Canada was mining 30% of the critical minerals on its strategic minerals list. In the intervening years, however, critical mineral mining slowed in Canada.

In 1957, Canada was the world’s 2nd largest producer of cobalt, a key battery mineral. Now it ranks 8th, with negligible output compared to the Democratic Republic of the Congo, which has 70% of the extraction market. By 2030, the cobalt market is expected to be US$19 billion. China dominates processing and refining of extracted cobalt.

A similar story emerges with nickel. In 1957, Canada was the world’s #1 producer, with 60% of the global market. Canada now has only 6.7% of the market. Indonesia emerged from nowhere, historically speaking, and is on a path to be a leader in nickel extraction and refining. By 2030, the nickel market is expected to be US$59 billion.

In 1957, Canada was the world’s 2nd largest producer of zinc, with 12.9% of the global market – it now has 1.5% of the market, and ranks 11th behind China, Peru and Mexico. Projections vary widely but by 2030, the global market for zinc is expected to be over US$100 billion.

Those key minerals, once mined in Canada, are now mined in other countries that have social, political, or environmental concerns. 

In Indonesia and the Philippines, laterite mining of nickel takes place adjacent to rain forests, parts of which are being destroyed. 

Mexico and Peru, which licence zinc mines, have pervasive rule of law, corruption, bribery, organized crime and money laundering issues. Peru is in absolute chaos, with more than one new president in office every year since 2018. There have been daily protests and demonstrations against the government for months.

The quest for cobalt is no better – the Democratic Republic of the Congo has over 130 armed groups battling for territory, including ISIS. While the DRC has modern mining operations, it also has unlicensed mining operations run by local war lords, some by terrorist groups, where cobalt is extracted from rough pits or in narrow underground earth tunnels. The tunnel mines have no electricity, water or ventilation. In the unlicensed mining operations, women, men and allegedly little children, work up to 12 hours a day for a pittance.

Transparency in mining supply chains remain elusive and whether critical minerals in your iPhone or Tesla derive from the fruits of child labour, or whose extraction destroys rain forests, or funds ISIS or Mexican cartels trafficking fentanyl to Vancouver, is anyone’s guess.

The CCZ and EEZs

Mining activities shaded by child labour, corruption, civil unrest or rain forest destruction have compelled some investors to look for alternatives in a deep-sea area called the Clarion-Clipperton Zone (CCZ) in the Pacific Ocean.

The CCZ, an area larger than India, has grapefruit-sized polymetallic nodules resting on the seabed floor that formed over millions of years. The nodules contain cobalt, nickel, copper and manganese. Not just that – the CCZ has three times more cobalt, nickel and manganese than terrestrial sources combined. And unlike traditional mining, nodules are vacuumed from the seabed floor.

The foremost legal scholar in this area, the late UBC law professor Ian Townsend-Gault (my former law professor), played a significant role in the UN Law of the Sea Convention, marine jurisdiction over the South China Sea, and deep-sea natural resource exploration and exploitation rights, including in the CCZ, an area covered by the Convention. 

Importantly, Canada is a signatory to the Convention but not the US. Because Canada is a signatory, and the US is not, American companies cannot pursue a license to explore or exploit the CCZ for critical minerals. British Columbia companies can. 

CCZ Mining

And indeed, a British Columbia company, TMC The Mineral Company, is at the forefront of CCZ mineral exploration – in November, it vacuumed 4,500 tons of polymetallic nodules from the CCZ seabed floor as part of a pilot.

The CCZ is not the only deep-sea mineral resource area relevant to British Columbia. 

The EEZ off British Columbia has deposits of polymetallic sulphide, which contain copper and zinc, and it also includes part of the cobalt-rich ferromanganese crust, which contain cobalt, nickel, manganese, molybdenum, tellurium, platinum, vanadium and some REEs. 

The EEZ off Canada’s Arctic coast also has these rich mineral formations. 

Deposits within Canada’s EEZ fall outside of the jurisdiction of the Convention and potential mineral exploration or exploitation therein is up to the federal government of Canada. 

It sounds enticing – being able to collect valuable minerals without terrestrial mining concerns – except that no one knows what harm deep-sea mining on the seabed floor in the International CCZ or national EEZ will cause to the ocean, marine life, the environment or to us. 

The most authoritative and best NGO voice out there is Mining Watch – it has an excellent report here in respect of the risks to deep-sea mining in the CCZ.

Canada is being asked to ban deep-sea mining in its EEZs but it is very unlikely to do so. For one thing, it’s inconsistent with the new federal strategy for Canada to become a new mining superpower; and it would be geo-politically harmful because, with the US a non-party to the Convention, Canada’s key oceanic leadership voice in the world would be diminished.

Pressure against deep-sea mining is certain to increase in the months and years to come and such pressure raises the decades-old mining dilemma – namely, if Canada walks away from the deep-sea mining, who are we leaving it to? 

We should look no further than the illegal cobalt mining activities taking place in the Congo with child labour and terrorist groups taking larger pieces of the mining pie by force and extortion, to convince us that the mining sector is stronger with Canadian companies in it, than out of it.

Mining Industry Investment

With increasing global demand for REEs and critical minerals, the Canadian government is investing in helping mines get built and to improve refining capacity.

A major impediment on the build side is the mining regulatory process. 

It takes a commercially unreasonable amount of time – an average of 13 years – for a mine to be approved or rejected in British Columbia, which may explain why there are only 17 active mines in the province. In contrast, Ontario has 41 active mines.

Canada has significant FDI competition from the US Government, which is offering US$370 billion in grants and subsidies to local and foreign companies to relocate to the US and help America build its clean tech industry, and ramp up mining.

According to the French Government, the US perks are so generous, parts of Europe’s high tech manufacturing sector that is innovating in EVs, mineral recycling, and clean tech, is relocating to the US. The EU is contemplating its own €380 billion subsidy package to keep innovation in Europe.

All of these subsidies and grants are a welcome boost for clean tech innovation but expire in a few years. As a result, they may have little overall impact on competition with China because it has had a long head start and built innovation systems tied to university R&D programs into downstream products supply chains.

Unless we adopt a similar approach to China and commit to long-term support for the mining sector to bring it back to its 1957 global rankings, we will struggle with mineral sovereignty and may lose the opportunity to prosper in a decarbonized economy.

India seeking extradition of alleged listed terrorists in Canada

By Christine Duhaime | February 5th, 2023

Arshdeep Dalla 

The Government of India has designated Arshdeep Singh Gill (Gill) on its list of designated terrorists under the Unlawful Activities (Prevention) Act, 1967

Gill lives in Canada and is a/k/a Arsh Dala, a/k/a Arsh Dalla.

Arsh Singh Dalla

The Ministry of Home Affairs (MHA), which published the designation on January 9, 2023 in the Gazette of India, states that Gill is associated with the Canadian extremist organization Khalistan Tiger Force (KTF). 

The MHA states that Gill engages in terrorist financing [from Canada, presumably, where he is located] using hawalas, and has committed murder, extortion for terrorist financing, and engages in cross-border smuggling of drugs and weapons.

Hardeep Nijjar

According to the MHA, Gill operates terrorist modules for Hardeep Singh Nijjar (Nijjar), a Canadian who was listed as a terrorist by India in 2020. 

Two weeks after Gill was listed as a terrorist, his brother Baldeep Singh Dalla allegedly fled to Canada using a fake passport. He is alleged to have ran terrorist operations at the direction of his brother. 

The KTF is not a designated terrorist organization, according to terrorist lists in Canada and India, although its related entity, Babbar Khalsa International (BKI), is a listed terrorist organization in Canada and in India

KTF and BKI seek an independent Sikh state to be called “Khalistan” from India, and have engaged in armed attacks against critical infrastructure and public property for ideological purposes.

Gill’s associate Nijjar is alleged to be the leader of the KTF. According to an interview with TV Punjab in Vancouver, Nijjar said he is not a Canadian terrorist. Nijjar is alleged to have set up an arms training camp in Mission Hill, a small town in British Columbia, Canada, which he denied in a news report here.

Gurpatwant Pannun

Nijjar’s designation as a terrorist by India came at the same time as the terrorist designation of lawyer Gurpatwant Singh Pannun, a New York called lawyer but who is said to be in Canada, practicing law in British Columbia. Among other legal cases in British Columbia that he conducts is acting for Nijjar in Vancouver. Pannun is a Khalistani separatist. India alleges that he is an associate of BKI terrorists, and involved in terrorism. He is on India’s most wanted list but Interpol refused to list him. 

Pannun he has not been convicted.

The terrorist group BKI was formed by Sukhdev Singh Babbar and Talwinder Singh Parmar. Its first branch was set up in Vancouver in 1981. The former leader of BKI, Jagtar Singh Tara, founded KTF. 

1985 Canadian terrorist attack

Talwinder Singh Parmar is well-known to Canadians. He was the Vancouver mastermind behind the 1985 Air India terrorist attack that killed 329 people, including 280 Canadians. After the terrorist attack, he fled to Pakistan, and then India where he was killed by the Punjab police in October 1992. 

Jagtar Singh Tara was prosecuted for a 1995 suicide bomb attack that killed several people, including the chief minister of Punjab, Beant Singh. He is currently incarcerated in New Delhi.

Sukhdev Singh Babbar was killed in 1992 in the Punjab. 

Indian intelligence says that BKI is funded by hawalas and NGOs in Canada. 

Extradition sought by India

India is seeking the extradition of Gill, Nijjar and the lawyer Pannun, and may seek the removal of Dalla on identity theft and misrepresentation grounds tied to his entry into Canada using an alleged false passport. 

Terrorist financing is a money laundering predicate offence and the removal of Gill and Nijjar from Canada could include money laundering allegations.

Ontario member of parliament Deepak Anand, and Ujjal Dosanjh, a former British Columbia premier and federal cabinet minister, stand out as two politicians in Canada who have objected to the celebration of terrorist figures like Parmar. 

A potpourri of bribery, Canada, Russian organized crime, Russian Oligarchs and money laundering

By Christine Duhaime | January 16th, 2023

How organized crime used to work in Russia

This is not a story but a potpourri of interesting events involving bribery, extortion, attempted murder, banking, Russian organized crime, Oligarchs and Canada. 

We start with Russian Oligarch Vladimir Ivanovich Yakunin (Владимир Иванович Якунин), a high level politically exposed person. 

Yakunin was a former KGB agent and Soviet ballistic missile specialist, before becoming president and chairman of the state-owned Russian Railways from 2005 to 2015. He is currently sanctioned by the United States. Among the many mansions that Yakunin owns, people say one is allegedly near Russian President Putin, although that seems doubtful. 

Drones over Norway

Yakunin was recently in the news because it is his son, Andrei Yakunin, who was the Russian national arrested in Norway’s Svalbard area in the high Arctic, and charged with flying drones around restricted infrastructure in the country, a charge of which he was later acquitted

The assumption was he’s a spy, who was using drones to gather granular intel for Russia. He says he was on a holiday sailing trip and just wanted to fly drones. 

Yakunin’s wife ‘saved’ by the Russian mob

Before the appointment of Vladimir Yakunin at the helm of Russia’s largest utility company, Russian Railways, his wife Natalia Yakunin (Наталья Якунин), was kidnapped. 

A Russian named Andrey Krapivin (Крапивин Андрей Викторович Источник), was called upon to negotiate her release with Viktor Averin (Виктор Аверин), one of the leaders of the Russian organized crime group Solntsevskaya (Солнцевская). Averin and the Solntsevskaya were tied to Canada’s capital markets. We’ll get to that later. Krapivin and Averin heroically secured Natalia’s release from captivity, and legend is, they killed the kidnappers. 

Viktor Averin, first from the right, with Simeon Mogilevich, third from the right in 2017 (Source: Spanish Police) 

When you owe the Russian mob 

Yakunin was now in the debt of the Solntsevskaya and Krapivin. That debt was allegedly re-paid in recurring contracts from Russian Railways to Krapivin’s private companies, KUM LLC (КУМ OOO) and the 1520 Group. 

The website of the 1520 Group is here — they make, coincidentally, industrial drones to take photographic evidence. 

Drones by 1520 Group (Source: 2020 pitch deck of the 1520 Group)

Entities set up to collect the debt

The second entity, KUM LLC, is an acronym of the last names of Krapivin, Boris Efimovich Usherovich, (Ушерович Борис Ефимович) and Valery Anatolyevich Markelov (Маркелов Валерий Анатольевич). 

The Instagram account of the former girlfriend of Markelov is here. She leads a very Oligarch sponsored life.

Alena Vodonaeva

She used to travel the world on private jets, favouring the US, Italy and Turkey. 

Markelov, although connected to Russian organized crime boss Averin (and Russian organized crime boss Simeon Mogilevich), allegedly had a deal in Canada with Bombardier to be its middleman (see here). Averin and Mogilevich are childhood friends and “vory v zakone” – thieves in law.

Markelov’s daughter, who uses the name Kristina Orsa, sings on YouTube here, and does a Fashion TV stint here

Russian mob banks

Back to Krapivin, Usherovich and Markelov. 

They owned at least two Russian banks with a Russian Oligarch named German Gorbuntsov. Those banks were Interprogressbank (Интерпрогресс банк) and Capital Trade Bank (Столичный торговый банк). Gorbuntsov also owned Interusbank (Интерусбанка) and Industrial Credit Bank (Индустриальный кредит банка). 

Gorbuntsov was known in Russia as a “black banker”, which means a banker you go to to launder large sums of money or if you are part of major organized crime. The Solntsevskaya was one of its customers. 

Much of the information in this potpourri is taken from an affidavit sworn by Gorbuntsov in 2017, for a litigation he is pursuing in Russia, available on the website of Русский Криминал. 

$3 billion and counting

KUM LLC set up numerous shell companies in Cyprus, such as Rogenial Limited, to conduct business with Russian Railways. While payments were made to the KUM LLC shell entities, no services were rendered to the Russian government-owned utility. 

By 2005, Gorbuntsov says he was told by the KUM partners that they had over US$3 billion in shells outside Russia, primarily acquired by payments from Russian Railways. 

Markelov managed KUM LLC’s deal with Russian Railways. He built relationships with federal employees in the infrastructure, procurement, real estate and building divisions, paying employees bribes or threatening them with harm or blackmail, to ensure KUM LLC was awarded contracts and paid, whether the work was done or not. Often, trade-based money laundering was used whereby fictitious invoices were submitted so that KUM LLC could get paid.

Blackmail and extortion

In order to keep prosecutors at bay, KUM LLC blackmailed local prosecutors, allegedly paying a Moscow prosecutor US$10,000 per month to serve their interests, after setting him up with a sexual encounter with an underage girl at a Russian bathhouse. The encounter was recorded, and after that, the prosecutor became indebted to KUM LLC. 

The role of Usherovich was to bring federal law enforcement agencies on board to support the activities of KUM LLC across Russia. If there was a property or a business the KUM LLC wanted, Usherovich brought in muscle from the Solntsevskaya and federal law enforcement officers on payroll, to forcibly take over the land, assets or business from the owners. 

KUM LLC acquired business assets at discounted prices or for free, through threats and intimidation. Usherovich allegedly boasted to Gorbuntsov that KUM LLC acquired a whole block of industrial buildings, including manufacturing plants and a construction company by forcing its owners to sign ownership over to them using Russian federal law enforcement officers. 

Police krysha services

One such federal law enforcement officer was Sergey Stanislavovich Derevyanko (Сергей Станиславович Деревянко). He held senior positions at the GUSB of the Ministry of Internal Affairs and the GU MVD for the Central Federal District. He provided krysha services to the KUM LLC.

Krysha, which means a roof, is protection money paid to organized crime, law enforcement or corrupt government officials to operate a business. In its simplest terms, they provide a roof over your head (protect you) and you pay for that roof. In Russia, the state provides krysha for Russian Oligarchs; with organized crime, the Oligarchs then provide krysha to lower level businesses in a massive pyramid scheme. 

Sergey Stanislavovich Derevyanko

In 2007, Derevyanko was appointed deputy chief of Internal Security. 

Decree appointing Derevyanko Deputy Chief, 2007 (Source: Russian Government website)

Derevyanko was paid US$300,000 per month from KUM LLC for his underground law enforcement roofing services. The funds came from Gorbuntsov’s Capital Trade Bank. Payments were couriered first to former FBS officer Yuri Mikhailovich Vasilyev(Васильев Юрий Михайлович), who delivered the payments to Derevyanko. 

Watches, mansions, Swiss bank accounts

Derevyanko was also gifted luxury goods and real estate. If Derevyanko wanted a luxury watch for his US$300,000 monthly protection pay-off, Vasilyev ordered it from Safoniev Sergey Vladimirovich (Сафониеву Сергею Владимировичу) in Moscow. According to Gorbuntsov, Derevyanko has over 100 luxury watches bought from Safoniev’s shop with roofing proceeds of crime. KUM LLC gifted Derevyanko a house in Lapino in the Odintsovo District of Moscow.

Another federal law enforcement officer who provided protection services for KUM LLC was Dmitry Viktorovich Zakharchenko (Дмитрий Викторович Захарченко). 

Zakharchenko worked in the construction crime department of the Russian Ministry of Internal Affairs. He was well-known in the construction industry because he invented legal problems for builders, and then forced them to pay him to make those fake problems go away. 

KUM LLC paid him €150,000 per month for roofing services, and he also took a cut of profits from construction projects acquired by KUM LLC using his extortion efforts.

In order to pay Zakharchenko under the table, Gorbuntsov helped him set up two companies – Bachelor Group Inc. in Panama and Ancillmar Ltd. in Cyprus, with his father, Viktor Dmitrievich Zakharchenko, as the fake director. 

Gorbuntsov flew Zakharchenko and his father on his Canadian-bought Bombardier private jet from Russia to Switzerland and helped them open a bank account for their laundered money at the Dresdner Bank Ltd., now called LGT Bank (Switzerland) Ltd., located at Rue du Rhone 21 in Geneva. The LGT Bank (Switzerland) Ltd., deposed Gorbuntsov in his affidavit, provides private banking services to Russians without asking questions. Gorbuntsov wired Zakharchenko proceeds of crime equalling US$800,000 to the Swiss bank account of Ancillmar Ltd. to pay his first roofing invoice.

When the Russian mob is done with you

At this point in his career as a banker for dirty money in Russia, Gorbuntsov either knew too much or wasn’t making his roofing payments up the chain of command to stay alive in Russia, and had to go. 

In April 2009, he says that he was summoned to a meeting with Averin at the Café Denis on Mozhaiskoye Highway in Moscow. At the meeting were each of the KUM LLC partners – Krapivin, Usherovich and Markelov, as well as Solntsevskaya leader Averin, Evgeny Grigoryevich Khokhalkov (Евгений Григорьевич Хохальков), a former general with the FSB and Pyotr Chuvilin (П.Ю Чувилин). 

Gorbuntsov was told that he owed money to KUM LLC and was ordered to pay it back, otherwise there would be life or death consequences. Days later, they appeared at Gorbuntsov’s bank, forced him out – with armed members of the Solntsevskaya – and informed staff that he was no longer the bank’s owner. 

Zakharchenko then met with Gorbuntsov and warned him that he was about to be arrested and charged with the murder of Ruslan Yamadayev and the attempted murder of Alexander Yurievich Antonov. 

Flee and leave your wife to deal with the mob

After that meeting, Gorbuntsov says he drove to Moscow’s private jet hanger, Vnukovo-3 Airport, and left Russia for Moldova, leaving his wife and son behind to deal with Russian organized crime. 

When he was in Moldova, KUM LLC took over his businesses. In order to gain control of his banks, they brought his wife to a meeting with the Solntsevskaya and demanded that she sign notarial documents to assign his shares and assets to KUM LLC.  She was told that if she signed the papers, she would be allowed to leave the meeting alive. If she did not, she would be killed and they would kill her son. 

She went for the “stay alive” option and the banks became the property of KUM LLC and presumably, the Solntsevskaya, as the silent partner. 

Gorbuntsov stayed in Moldova until 2010, when he moved to London. In 2012, there was an assassination attempt on his life in London, which he survived. He claimed asylum in England, alleging that he was in Putin’s inner bank circle, and would be killed if he returned to Russia. 

He has since been accused of money laundering in Moldova and in Russia; charges that he denied. He was allowed to remain in the UK.

Russian revenge

Gorbuntsov, allegedly with no ties to Russia, managed to stir the pot in Russia’s highest circles to get the leadership of the federal government interested in the money flows to the KUM LLC and its partners, except the Solntsevskaya leaders Mogilevich and Averin – it’s still hands off for them. 

In 2016, one of Zakharchenko’s apartments was raided and police say they found US$123 million in cash at the apartment. He was convicted of taking bribes from Markelov, Usherovich, Ivan Stankevich and Dmitry Motorin.

In 2018, Markelov was then arrested for his role in the bribery scandal and also convicted. Usherovich fled to one of his mansions in Europe. 

The KUM LLC partners were gone. 

Markelov in detention, 2018 (Source: Русский Криминал)

Derevyanko went on to become head of the Main Directorate of the Ministry of Internal Affairs for the Central District, but was removed from his post by Putin in 2014, along with 18 other employees under him, but not before he was able to accumulate significant assets, including a 60 metre yacht called “Anna” in France, a villa in the French Riviera, five mansions in Moscow and mansions in Znamenskoye and Lapino (the mansion bought by the KUM LLC for him).

Russians began to ask how it was possible that federal law enforcement officers were Oligarchs, with mansions in France, yachts, private jets and billions of dollars in assets parked overseas. 

Someone like Derevyanko being paid US$300,000 per month under the table earns US$36 million in ten years but that’s just for one client. If he had 100 clients, he’d be fast-tracked to Oligarchy.

Ties between Ukraine, Russia and Canada

And Derevyanko did have other clients. At least one tied to Canada. 

According to Russian media, Derevyanko is involved in several corruption-related litigations, apparently as a witness, in connection with roofing payments he received from the Ukrainian business partner of a wealthy Canadian businessman. Those payments included $3 million and free plots of land for fixing criminal cases with Natalia Agafieva and selling undervalued Russian state assets through the Sberbank (sanctioned by the United States). Another US$5 million was paid to him for helping obtain mining rights in Russia. This is all allegedly. 

Moreover, allegedly before the murder of Vyacheslav Ivankov (known as Yaponchik), Derevyanko assisted this same partner of the Canadian to negotiate a US$10 million payment in cash to Yaponchik. 

Yaponchik was a partner of Averin and Mogilevich. To have Yaponchik, Averin, Mogilevich and Derevyanko allegedly involved in a dirty deal involving Canada is a concerning cross-over – not the least of which is the fact that Derevyanko was a Russian federal officer (e.g., an agent) at this time. What’s he doing tied to Canadian business interests, allegedly collecting bribery payments? 

Below is a photo provided to a Russian media site, allegedly showing part of the payment to the Russian mob, routed through Derevyanko (the Putin-appointed government official) as middleman, that was from the partner of the Canadian. The Russian media site says that everyone in the office took a photo with the bribery money – proceeds of crime really – because no employee had ever seen so much US cash. 

Part of US$10 million roofing-related fee allegedly paid to Derevyanko (Source: Русский Криминал)

Russian securities fraud

Mogilevich and Averin are relatively known to Canadians and Americans. With other members of the Solntsevskaya Russian organized crime group, they set up a company in Canada called YBM Magnex International Inc. to infiltrate the capital markets, steal from investors and launder money. 

According to St. Petersburg insider and journalist Dmitry Zapolsky (mysteriously murdered), who wrote the definitive book on the Russia’s gangster state from personal knowledge called Putinburg, Averin and Mogilevich were sponsored and bankrolled by KGB chief Yevgeny Primakov to set up in Hungary and take the Solntsevskaya global, where they would steal from foreign countries and open up new navigation routes to move dirty money from Russia.

Financial crime trends in 2023

By Christine Duhaime | January 12th, 2023

Predictions for 2023 in financial crime

Where is financial crime heading? Where will enforcement be focused?

With financial crime costs rising for law enforcement, investigations, compliance and reporting, and the number of predicate criminal offenses and sanctions lists increasing, the ability of financial crime sector organizations and governments to respond is shrinking.

2022 changed the financial crime space

2022 ushered in new geo-political realities which will shift the entire financial crime space. For example:

  • The Russian invasion of Ukraine is causing significant increases in sanctions compliance and investigations into Oligarch source of funds.
  • The US focus on China as a geo-political risk with Russia, shifted the focus of Western nations and their resources from addressing external terrorism threats, and correspondingly, away from counter-terrorist financing. Terrorism is increasing in several African countries so the threat remains but geo-political shifts have caused shifts away from terrorism.
  • The pervasive fraud in the crypto sector finally trickled down after several years, overburdening law enforcement and investigations teams worldwide, as well as financial crime experts, pulling them away from other financial crime work. Banks went back to blanket de-risking crypto companies as too high-risk and expensive from a compliance view. The explosion of international payments fraud, generally, has overwhelmed financial crime sector participants.
  • The US-driven initiative to “shore-up” rare earth elements and critical metal supplies, and the supply-chain for the US market in anticipation of the energy transition (what the US calls “friend-shoring”), means that the corruption-infused mining industry will become a big focus.
  • This will cause a focus on securities fraud outside the US (and on to Canada and Africa), because the mining sector will become too important to tolerate systemic fraud. Investor trust will have to be assured for the US policy of friend-shoring in Canada and other countries to succeed.
  • Climate change is going to result in global food insecurity in conjunction with climate-driven mass migration, which will impact the sourcing of food resources, especially fishing.
  • This in turn will cause Western enforcement agencies and policy agencies to tackle the shipping industry and insurance from a financial crime and beneficial ownership perspective to stop IUU fishing and fish laundering (see here about laundering fish).

National crypto systems

In the back drop of the above, the plans of Islamic countries (Shia and Sunni alike) to complete their previously-announced shared crypto systems to enable them to operate outside of the US dollar financial system, may take shape in 2023, but even if it does not, countries subject to US sanctions, or at risk of US sanctions, will likely continue to cooperate together to develop their own crypto solutions at national levels to eradicate those risks.

We knew this was coming since 2014, but it has never been determined to be a national security risk of the US or its allies.

A worse-case scenario would be if the Islamic countries’ crypto plans, and the crypto plans of heavily sanctioned countries converge into a shared new financial system bubble, with most of the world’s growing populations opting-into their own system. There’s always a danger of over-using sanctions and its a delicate balance that the US Treasury considers when it makes its designations. Not all nations align on sanctions and its not realistic to expect that they will, given national sovereignty.

Singapore, which has the FATF presidency for the next two years, has declared that its focus will be on asset recovery but its day has come and gone. Five years ago, movement on asset recovery for financial crimes was really needed – now there are greater priorities. Unfortunately, the FATF and some FIUs that issue risk assessments have wholesale not addressed IUU fishing or shipping vessel flagging and regulation gaps that allow blue crimes to grow, threatening global food security.

Decrease focus on other areas

With resources that are limited, governments and law enforcement agencies cannot possibly tackle all the financial crime that arises and choices will be made to prioritize areas that correspond with new geo-political risks and climate change, above all else, and to de-prioritize others.

Areas that will gradually decrease in terms of small to mid-sized money laundering investigations, enforcement and cases in 2023 and beyond will include organized crime, real estate laundering, human trafficking, drug trafficking, money laundering in the gambling sector, corruption (except in the mining sector tied to Africa) and terrorist financing.

2023 will be a year of greater visibility on the new hot button items, leading into 2024 where we will being to see the reporting of predicate offenses and large financial crime investigations of IUU fishing (deforestation as well), mining corruption, securities fraud, fraudulent flagging of vessels, and climate-related crimes. A few of these areas are tied to state actor conduct, which is inconsistent with how anti-money laundering compliance works so changes will likely be made to enable the refocusing of risks on such actors and the reporting thereof.

The global nature of these areas of investigation mean that FIUs will improve the quality and quantity of information sharing. The move to revealing the identity of shareholders of private companies (the so-called beneficial ownership initiative) will undergo a significant shift to the shipping sector for investigations into IUU fishing. The reality is that with food security causing global hardship, governments will care less about who controls the bank account of a shell entity of a drug trafficker and more about who controls ships engaged in IUU fishing.

None of these changes to the financial crime sector will happen overnight, but they are happening.

Shoring up for a different financial crime future

In the interim, shoring up for a different financial crime future by understanding the following will prepare one for financial crime policy shifts: IUU fishing and its risk areas; the difference between rare earth minerals and critical minerals and where they are mined, and processed, as well as their financial crime risks; corruption tied to the mining sector and its risks; securities fraud in the mining sector and its risks; and how the flagging and registration of ships occurs and the gaps that exist.

Thoughts on Mercenaries and Private Military Contractors

By Christine Duhaime | January 2nd, 2023

They have been called many things – mercenaries, irregular forces, private military contractors (PMC), and private security companies (PSC) – whatever the phrase, PMCs have been around for a very long time. 

The war in Ukraine recently brought the use of private soldiers into focus – Russia has hired at least three such groups, the Wagner Group, Redut, and Patriot Private Military Company, to fight in Ukraine. 

PMCs are a growing international business. 

There are private military contractors from all over the world, including the US, Russia, Iran, Canada, and South African. Many are former elite military combatants, more skilled than local forces. The biggest contractor of PMCs is the US government but that may have changed with the Ukraine war. 

PMCs in history

The most well-known example of PMCs in the world was the military group who worked for a woman pirate named 石陽, Queen Shí Yáng, also known as 鄭嫂. Queen Shí Yáng had 70,000 men who worked for her aboard more than 1,600 vessels. In the early 1880s, they controlled the South China Sea and Pearl River Delta, routinely defeating the Qing Dynasty navy in coastal battles. 

Illustration of Shí Yáng (Source: Wikimedia Commons)

Shí Yáng’s group earned revenues in a variety of ways, including as mercenaries for warring Vietnamese rulers, by controlling the importation of salt into China, by collecting navigation taxes, and looting foreign vessels entering China’s waters. Mercenaries were paid 20% of all the loot collected by Shí Yáng. 

The Roman Empire had PMCs called the Praetorian Guard. They were private soldiers who, for over 300 years, protected powerful generals and politicians. Wealthy families often had thousands of praetorians safeguarding their family, land and business affairs. Praetorians became a powerful group in Rome, and the more powerful among them, at one time came to control who would succeed as emperor of Rome. 

YouTube channel of Invicta

Medieval Europe had a booming conflicts market, and PMC were used to engage in wars, steal land or to protect businesses for the wealthy.

Byzantine emperors hired Norse PMCs known as the Varangian Guard. In the 11th Century, nearly half of William the Conqueror’s army was made up of PMCs, and King Henry II hired PMCs to deal with the rebellions of 1171–1174. The Pope’s Swiss guards, now part of the Swiss Army, used to be PMCs. 

An obvious example of the use of PMCs, but the least discussed, was the use of PMCs in the enslavement trade. Henry Bath, in his book series “Travels and Discoveries of North and Central Africa”, which describes his mission to several countries in Central Africa in 1856, details the use of local armed private forces hired by foreigners to capture humans in Central Africa for enslavement. 

Illustration of Enslavement (Source: John William Frost’s book Broken Shackles)

PMCs, in one form or another, have always been part of the culture in manufactured and real conflict zones, hired to protect legal and illegal commerce for private enterprise, organized crime and in some cases, for governments. 

The Wagner Group is owned by Russian oligarch Yevgeny Prigozhin. Prigozhin became acquainted with Putin when Putin was a municipal politician in St. Petersburg. Murdered Russian organized crime leader Shabtai Kalmanovich, was part of the same circle in St. Petersburg. Before Kalmanovich was horse-traded back to Russia from an Israeli jail, he used PMCs to engage in diamond and minerals trafficking in Sierra Leone, and to protect Joseph Momoh. 

Defending extraction rights

PMCs continue to be frequently used to protect mineral resources for private enterprise, including in large part, by Canadian owned extraction industries. 

Some PMCs act as intermediaries for black bag deliveries. Black bag deliveries (called black suitcases in Europe and Asia) are corruption / bribery payments made to politically exposed persons (often politicians), a common occurrence in the mining and extraction industries in Africa. 

The Wagner Group is one of the PMCs operating in the Central African Republic on behalf of the government, and to protect private mining companies.

PMCs remain the protectors of mining assets and mining rights in most conflict areas of the world because they are effective at what they do for private commerce. Many public and private enterprises could not operate in conflict zones without PMCs because the risks to assets, investments, manpower, infrastructure and executives are extremely high. PMCs mitigate risks. 

The mining company Freeport-McMoRan hired the PMC company Triple Canopy to protect its mining rights and mining operations in Papua, Indonesia, against local insurgents. In South Sudan, DeWe Security provides PMC services to protect the contractual rights and operations of the China National Petroleum Corporation. 

PMCs also operate in Syria, to protect oil and gas assets, and in Mali, under contract with the government.

YouTube channel of VOA Africa

PMCs can be effective

PMCs can be effective. 

PMCs from South Africa and Eastern Europe were hired by Nigeria for a search and destroy mission to eliminate the terrorist group Boko Harem from Nigeria. They drove out Boko Haram in weeks – something the Nigerian military had not been able to do in six years. 

Another PMC group, Executive Outcomes, was paid US$1.2 million a month to successfully contain and quell a rebellion in Sierra Leone. In comparison, the United Nations went through US$47 million for one month in Sierra Leone with zero impact. 

In Somalia, PMCs hired by the UAE and the Somalian government effectively eliminated the piracy problem in the waters off the coast of Somalia. According to Lloyd’s of London, there have been no attacks on merchant vessels off Somalia for the last four years, saving US$6 billion in costs. 

In the 2011 clip below, PMCs from the Trident Group, open fire on Somali pirates and prevent a pirate attack. 

YouTube channel of Inbound Logistics

PMCs used to obstruct justice

PMCs also provide intelligence and pre-litigation services. 

In Canada, the Israeli groups Tamara Global and Black Cube, run by former Mossad agents, were used in a litigation connected to Ontario lawyers, to come to Canada to obstruct justice and defeat the rule of law in a civil proceeding. 

The mission? 

To locate an Ontario Supreme Court judge named Frank Newbould, who presided over a key litigation, and once located, to lie to Newbould so that he agreed to a meeting. And at the meeting to engage him in a conversation under false pretenses, to egg him on to make anti-semitic statements, which would then be used as grounds for appealing a court decision. 

The mission was successful except for the last part because Newbould did not make anti-semitic statements at the meeting. 

The use of foreign PMCs in the obstruction of justice in Canada is probably less shocking than the fact that nothing happened to the lawyers involved in the plot. 

Dangers of PMCs

The use of PMCs is growing throughout the world and there are dangers associated with their growth, beyond manipulating courts and interfering with the administration of justice. 

The attractiveness of PMCs to those who hire them is that they provide deniability, which means they act in a foreign country in a vacuum outside the rule of law. 

Among the dangers is that the super rich, the fortune 500 executives, will be able to buy power, leading to a situation where, with private armies, they become more powerful than some countries. The super-rich will become superpowers, and above the law. 

Another danger is that while PMCs are stateless (meaning the men and women who sign on to be PMCs can come from any country), locals see them as a representative of a country. Blackwater, for example, was seen by the Iraqis and Iranians are being the US military, as opposed to simply PMCs. The Wagner Group has more than just Russian nationals engaged to perform PMC work, but locals in African countries, and in Syria tend to see them as tantamount to the Russian military.

For example, a PMC group comprised of contractors from France in Serbia will be viewed by Serbians as if they are an arm of the French government, even though they are a private group whose paymaster may be a private sector company. Any unlawful, menacing or inappropriate conduct will be attributed to the French government, which harms its international reputation.

There is also the danger that wars could be started without states. In the CAR, for example, and specifically, it is not beyond the realm of possibilities that another PMC group is hired to battle the Wagner Group and, among other things, to attempt to gain control of the mining infrastructure they protect for their clients, or to destabilize existing mining activities for another actor whom that PMC is fronting for. 

This is a risk for many African countries that, hiring PMCs to support economic growth and protect foreign investment, may cause other non-transparent actors to use PMCs to engage in commerce-related warfare to gain competitive advantages illegally, especially those with viable deposits of rare earth elements and critical minerals. 

Most countries use PMCs, and allow them to operate – tacitly or overtly. With armed non-state private military actors assuming more control in more areas around the world, state power will decline, which has the potential to upend international relations as we know it.