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Unfiled February 23, 2007
Did Frenkel Kill The Reformer?
By Yasha Levine Browse author Email

If there's one big, juicy story that's slipped through the cracks of the Western media establishment in Russia so far this year, it's the one about accused murderer Alexei Frenkel. You may remember Frenkel as the scrawny 36-year-old banker nabbed for the hit on Andrei Kozlov, the second-in-command at the Central Bank of Russia (CBR). Since Frenkel's arrest on January 11, the story has evolved from a high-profile murder case into a full-on kompromat tittie-twister.

The story begins on September 13, 2006, when Kozlov was gunned down in broad daylight by two hitmen as he was leaving a soccer game at the Spartak sports center. Almost no one in the West had heard of Kozlov until that day. Yet just a few hours after his death, the New York Times, Moscow Times, BBC and just about every other news outlet with a local stringer came out with identical Kozlov obituaries depicting him as a true reformer - quite possibly the only honest Russian government official - trying to bring Western-style improvements to Russia's notoriously shady banking sector.

Was this picture of Saint Kozlov correct? It's true that after being appointed to the post of vice deputy chairman of the CBR in 2002, Kozlov made revoking bank licenses his personal hobby. During his tenure, the CBR put hundreds of banks out of business, with more than 50 shut down for money laundering in 2006 alone. The hit job was obviously connected to Kozlov's banking reforms, probably carried out on behalf of a disgruntled mafia goon whose mega-million-dollar revenue stream got choked.

Is this really true? On closer inspection, no. A bit of research outside of the fawning-Western-press reveals a different and less heroic yet more familiar Kozlov: a corrupt banker who played a major role in Russia's 1998 financial crisis. Still, the Reform vs. Corruption, Good vs. Evil, and Western vs. Russian cliches were too pretty to pass up, and so Kozlov's dark past never surfaced in the Western press.

Then Alexei Frenkel was arrested in connection with Kozlov's murder.

Like Kozlov, Frenkel was a complete unknown until his arrest on January 11 - a small fry who ran a two-bit bank called VIP. The two came to know each other in 2005, when the CBR denied Frenkel's bank entrance into a newly created deposit insurance system (basically Russia's version of the FDIC) on the grounds that VIP was involved in money laundering. Kozlov didn't have any evidence to support the claim, but he put VIP out of business on a personal hunch. That's how the Central Bank of Russia operates. But Frenkel didn't take Kozlov's verdict sitting down. He appealed the CBR's decision in court.

Frenkel won a few appeals, but failed to make any real progress. As the case dragged on, Frenkel became impatient. According to various banking insiders, Frenkel was convinced that if he could only meet Kozlov in private, they could square away their differences and put VIP Bank back in business. Frenkel made every attempt to seek out the central banker at social events, but Kozlov avoided his pursuer like the plague, and the two never met.

A short while later, Kozlov was dead. Three months later, Frenkel got picked up for the hit.

Even though Frenkel has maintained his innocence, his case has looked pretty hopeless. Not only did Frenkel have a clear motive for the murder and a record of unhinged behavior, the General Prosecutor's office had Frenkel's friend, Liana Askerova, willing to testify that she helped him recruit the contract killers. He was as good as guilty and he knew it. With no way out, Frenkel brought out his secret weapon: three letters, authored by him, totaling 50 or so pages, full of kompromat material exposing CBR's corruption. Frenkel wrote the letters two months before his arrest, stashed them with a friend, and gave the signal to leak them to Kommersant only after he was placed in solitary confinement.

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Yasha Levine is an editor at The eXile. You can contact him at

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