Mikhail Chernoy

Mikhail Chernoy (Michael Cherney, Mikhail Chernoi, Mikhail Chorny, Misha Tschernoy) is one of the so-called Russian oligarchs and a reputed organized crime figure known for brutally taking control of Russia’s aluminum sector in the mid-1990s. The ruthless struggle was so violent that Russian newspapers eventually referred to the period as “The Aluminum Wars.” The Moscow Times Chernoy has been suspected of large-scale fraud, racketeering, tax evasion, embezzlement, money laundering, and conspiracy to commit murder. Living in self-imposed exile in Israel, Chernoy is rumored to be an important figure in organized crime throughout Europe, the United States, and the former Soviet Union and is barred from entering a number of countries including the United States and the United Kingdom.

Affiliations with Organized Crime Figures Although Chernoy has recently sought to position himself as a philanthropist and legitimate businessman, his documented association with major organized crime figures seriously undermines such claims. Chernoy is known to have a close relationship with Sam Kislin, an American-citizen from Ukraine tracked by the FBI for organized crime. A 1996 Interpol report confirms one of Kislin’s companies was used by Chernoy and his brother Lev to launder millions of dollars. The FBI considers both Chernoy and Kislin to be members of the American Russian mob headed by imprisoned godfather Vyacheslav Ivankov, who was recently released. Center for Public Integrity Report

Chernoy is also a known associate of Russian mobster, Alimzhan Tokhtakhounov, a shadowy figure in Russia implicated in serious crimes such as arms dealing and smuggling. Tokhtakhounov was also charged with bribing figure skating judges in the 2002 Winter Olympics. A 2002 New York Times article reported that Tohktakhounov introduced Michael Chernoy to the “famous Russian mob leader, Anton Malevsky,” who is a contract killer and head of the Izmailovskaya gang. Malevsky met an untimely death in a parachute accident in South Africa in 2001. New York Times

Center for Public Integrity Report

Early Years Mikhail Chernoy was born on 1st January 1952 in Uman, Ukraine. Two years later, his family moved to Tashkent, Uzbekistan, where Chernoy’s younger brothers Lev and David were born. Chernoy established a reputation as an athlete early in his youth, particularly in boxing and volleyball. He worked at a factory and joined the Uzbek army when he was nineteen. After leaving the army, he studied engineering while coordinating all school sports teams in Uzbekistan, which would later form the foundation of his criminal network. In 1985, Chernoy studied business and began sourcing raw materials for his brother Lev’s business.

In 1987, Chernoy relocated to Moscow, where he quickly entered into business. Two years later, Chernoy entered the coal and steel sector through a partnership with Sam Kislin. Center for Public Integrity Report on Kislin Kislin, Chernoy, and his brother, Lev, began operating in partnership through the Transcommodities Company.

The Trans-World Years In 1992, Chernoy and his brother, Lev, forged a partnership with David and Simon Rubin to establish the Trans World Group. Like many of Chernoy’s business ventures, Trans World Group consisted of “hundreds of constantly shifting” shell companies registered in Cyprus, the Bahamas, the Cayman Islands, and ultimately the United States. Fortune Magazine Article

In the early 1990s, Trans World invested heavily in Russia and the former Soviet Union. Trans World acquired a number of aluminum factories and implemented the exploitative process known as tolling, which continues today. Designed to encourage investment and revive the aluminum sector, Russian authorities approved a system in which individuals could essentially rent factories. Raw materials were imported, processed, shipped, and sold overseas without having to pay any taxes. In exchange for facilities and cheap labor, the plants received minimal payments to sustain the labor force. Jamestown Foundation Article

By 1994, Trans World was already charged with numerous criminal acts, such as fraud and racketeering, prompting Michael Chernoy and his brother Lev to flee Russia. One of the key charges involved the theft of more than $100 million dollars from Russia’s central bank by a number of separate criminal groups. A portion of the $100 million was used as start-up capital for Trans World in 1992. Center for Public Integrity

The process through which Trans World obtained control of Russia’s aluminum sector resulted in so many accusations of large-scale fraud, racketeering, and murder that Russian aluminum was finally considered a “no-touch product in the secondary trading market.” Fortune Magazine Article

The Krasnoyarsk Murders In 1994, the manager of Krasnoyarsk, the largest aluminum smelter in Russia, openly stated that 20% of Trans World’s stock had been purchased improperly by the the Trans World Group. This constituted a formal challenge to Trans World’s authority and set off a four year struggle for control of the plant that resulted in the deaths of several individuals. The victims included the government supervisor for the metals sector and Alexander Borisov, Lev Chernoy’s associate who had intimate knowledge of the central bank theft. As the central bank case progressed, the star witness and primary competitor for the tolling business at Krasnoyarsk, Felix Lvov, was abducted at Moscow’s airport by two men identifying themselves as intelligence officers. Lvov’s corpse was discovered the next day with numerous gunshot wounds. Kommersant News Article

Another victim of the Krasnoyark conflict was journalist Vadim Birukov, founder of Business in Russia, the first independent magazine that exposed organized crime in the aluminum market and often attacked the Chernoys. In 1997, Birukov was found dead in his garage, badly beaten and his mouth taped. Although nobody was convicted for the killings, it has been noted that nobody associated with Trans World Group ever fell victim to the violence. Fortune Magazine Article

By 1997, the aluminum industry was seen as “one of the biggest arms of the Russian mob.” Fortune Magazine Article Furthermore, Russian officials determined that the aluminum industry needed to improve its reputation lest the violence start to deter foreign investment. Accordingly, Chernoy’s business partners offered him $400 million dollars to withdraw from the company entirely. Chernoy, reportedly feeling underpaid and humiliated, organized a faction of Trans World plant managers to combine shares with his and gain control the company. In 1999, Chernoy and the leading rebel plant manager formed an alliance with the Sibneft group to create a single cartel which controlled 75% of Russia’s aluminum industry. Some speculate that the Chernoys defrauded Russia of some seven billion dollars before leaving Trans World. The Guardian UK

Bulgaria Chernoy’s activities in Bulgaria, though perhaps less violent than those in Russia, follow a similar pattern of questionable transactions, illicit partnerships, and government concern and action. There are four specific incidents in Bulgaria, one of which led to Chernoy’s expulsion from the country in 2000.

Mobiltel Beginning in 1998, Chernoy invested in Bulgaria by creating the Mobiltel Company, which quickly became the leading cellular provider in Bulgaria. In 2000, the Bulgarian government launched an inquiry to determine who the shareholders in Mobiltel were and what proportion of the shares they owned. The government seemed concerned about the company, particularly its involvement with organized crime figures. Problems with corruption were considered obstacles to entering NATO and later, the European Union. The government investigation revealed that Chernoy owned 95% of Mobiltel through an off-shore investment fund called Eastern Telecom Market Fund. The government, anxious to limit Chernoy’s presence, forced him to sell his controlling stake in the company or have his operating license stripped.

The Democracy Fund Bribes Press articles from 2001 revealed that then Bulgarian Prime Minister Kostov accepted illegal contributions from Chernoy to his party’s Democracy Fund. Kostov publicly denied having received $200,000 dollars from Cherney, who countered that he had been blackmailed into making the payment. Haaretz Daily

BulgarTabac In 2002, 80% of the capital in the Bulgarian State-owned tobacco company, Bulgartabac, was placed on the market. Chernoy put together a three-partner consortium to bid for Bulgartabac. At the time, the Bulgarian government was under pressure from other nations and allies to reduce corruption and organized crime, a situation that prompted the U.S. Ambassador to Bulgaria to warn a local newspaper that the buyer of Bulgartabac should not be affiliated with organized crime. As a result, the local press surmised that Bulgaria might jeopardize its chances of admission to NATO should it permit Chernoy to purchase the tobacco company.

Undaunted, Chernoy planned to purchase Bulgartabac by establishing the Metatabac Consortium, which was created in April of 2002. Ownership was structured between three groups: the Russian firm Soyuzcontracttabac, which owned 35%, MCG Holdings, a firm owned by Chernoy, which owned 35%, and another 30% held by a Cypriot company named Metacontact Ltd. Bulgarian Media on Corruption

Anti-corruption monitors revealed that Chernoy used his ownership of the Bulgarian daily newspaper the Standart to aid his cause. The Anticorruption Coalition Article

Many speculate that Chernoy knew his bid would not be successful and withdrew in order to file a complaint blocking the sale. As predicted, Chernoy immediately filed a complaint in September of 2002 when his primary competitor, Tobacco Capital Partners, was awarded the contract. To date, the sale has not been successful.

Planned Assassination Attempt In 1999, Atanas Atanasov, the Director of the Bulgarian National Security Service (NSS) conducted an investigation ordered by the Prime Minister to expose high ranking government officials involved in corrupt practices. As part of the investigation, Atanasov received intelligence from Israeli National Police stating that Chernoy was involved in a plot to murder the son of an unnamed Bulgarian cabinet minister. As a result, Chernoy was deemed a threat to national security and barred from entering Bulgaria for a period of ten years, effective August 18, 2000. Central Europe Review Chernoy countered that the expulsion was politically and economically motivated by his business rivals.

Ban Revoked and Reinstated In May 2003, Chernoy succeeded in having the ban revoked by the Sofia City Court. That October, it was reinstated after an appeal by Chief Secretary of the Ministry, general Boyko Borissov and Director of the National Security Service, Ivan Chobanov. On January 16, 2004, the ban was once again rescinded by the Bulgarian Supreme Court. Many suspect this was due to backchannel lobbying by Chernoy and his associates.

Israel Chernoy left Russia in 1993, first to the United States, then to Poland and Switzerland, both of which refused to grant him a visa. He immigrated to Israel in 1994. Chernoy’s presence in Israel has not been without conflict. In particular, he was charged with deliberately concealing an attempt to purchase the Israeli state-owned telecom company Bezeq, a charge he denies. In this affair, Chernoy allegedly arranged to have Israeli businessman Gad Zeevi purchase 20% of the Israeli telecom using money provided by Chernoy. (http://www.globes.co.il/serveen/globes/docview.asp?did=479152&fid=1327) The two were indicted in June of 2002. Globes Online

After the Bezeq scandal, Israeli authorities launched an investigation into Chernoy’s activities in Israel. The Israeli police’s request for a warrant to investigate Chernoy lists suspicions of conspiracy for committing crime, murder, and drug dealing. Filing of Israeli Warrant Although the Israeli police collected hundreds of hours of recordings, Chernoy reportedly paid one of the Russian language transcribers working for the police to steal the transcripts and flee to Canada where he subsequently charged the director of the Investigation with wire fraud. Karmalised Blog

Attempted Legitimization Chernoy has recently launched an aggressive PR campaign to improve his image abroad. Posturing as a philanthropist and legitimate businessman, Chernoy established the Michael Chernoy Foundation, which holds events claiming to address concerns of Israel’s security and international terrorism. Interestingly, few legitimate politicians are willing to associate with the foundation or accept donations. Those who do so out of ignorance are quick to deny any involvement with Chernoy once they learn about his criminal background. Soapblox Blog

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Mikhail Chernoy

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