Organised crime has major role in goods exports to Russia

Up to 80 per cent of electronics crosses border illegally

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Russian organised crime has taken a solid foothold in goods transport from Finland to Russia.
     According to the National Bureau of Investigation (NBI) as many as 150 to 200 forwarding agencies operating in Southern Finland are involved in criminal activities in exporting goods to Russia.
     "We share the view with the Russians that they are part of securing the criminal logistics", says Pekka Sailio, head of the Kouvola unit of the NBI.
     
The role of the forwarding agent in the shady activity is to arrange double billing for lorries and trains, as well as other activities with to evade Russian import duties and taxes.
     "These are run by well-known criminal circles in Russia, because so much money is involved", says Juha Niskanen, head of the anti-crime unit of Finnish Customs.
     
From Russia's point of view the smuggling amounts to billions of euros in lost tax revenue each year. The transport business generates revenue for criminals, and for those who are caught, sentences are light compared with the drug trade, for instance.
     Russian authorities have estimated that more than 80 per cent of electronics, such as television sets, crossing the border into Russia involve some kind of crime.
     In addition to unpaid taxes and duties, stolen goods also move from Finland into Russia. The NBI suspects that boats and outboard motors stolen in Finland are taken to Russia and sold in St. Petersburg. However, it is not easy to trace the routes.
     
It is also difficult for Finnish authorities to intervene in the activities of forwarding agencies run by Russians, because they do not necessarily violate any Finnish laws. The sheer volume of traffic is another factor that makes enforcement difficult: more than 1,000 trucks cross from Finland into Russia every day.
     In some cases companies have been caught giving forged documents to Finnish officials, or losing goods in the paperwork; in one case there was no record of 260,000 mobile telephones that were transported to Russia.
     Customs authorities say that one possible way to deal with the problem would be to pass a law establishing a new crime called "customs declaration crime". However, the Ministry of Finance opposes such a move.
     
Researcher Ilmari Larjavaara, who wrote a doctoral dissertation on Russia, points out that it would be fairly easy to put a stop to the double billing by establishing a system in which information would cross borders electronically.
     However, such reforms have been blocked by a corrupt system that wants to keep everything on paper. The results of the slow paperwork are the constantly growing lines of lorries waiting on the Finnish side to cross the border into Russia.
     Larjavaara began to investigate road haulage of goods to Russia a decade ago. There have been few changes in this time, and he does not believe that corruption is likely to decrease soon.
     The Bank of Finland and the Russian Central Bank estimate that about one third of the value of the goods disappears at the border. The percentage has declined in recent years, but the total volume in euros has increased, thanks to the growth in the volume of traffic.
     The value of Finnish exports to Russia and goods from other countries which pass through Finland in transit to Russia totalled nearly EUR 31 billion last year. According to the estimate of the two central banks, this would mean that Russia loses customs duty revenue on commerce worth about EUR 10 billion.
     
Police and customs authorities see goods traffic as an opportunity for Russian organised crime to infiltrate Finland. The NBI's Pekka Sailio is concerned that the operating methods have already begun to take foothold in this country.
     "Rules of commerce and transport are getting to be reminiscent of what they have been in Russia for a long time", he says.
     "If this ethic comes here, there will not really be any way back."
     Sailio says that many Finnish export companies have deliberately sought to avoid Russian import duties by using dishonest forwarding agents.
     Ilmari Larjavaara says that in many cases, Russian importers are the instigators.
     "The setup in those cases is that you have to be involved: the Russians will not buy if the Finns are not in on the double billing."
      Simon-Erik Ollus of the Bank of Finland says that the three main problems with the double billing system is that it opens Finnish companies to dealings with organised crime, it advances corruption, and it distorts competition.


Previously in HS International Edition:
  Russia proposes lorry parking facility on own side of border (15.10.2007)
  Expansion of green line to ease backlogs at Russian border (2.10.2007)
  Customs authorities detain several Outokumpu employees (16.3.2007)
  Minister Huovinen: Lines of trucks caused by inefficiency of Russian Customs (10.11.2006)

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