Asian Business Systems

Final Report

RUSSIAN MAFIYA
Analyzing the Worlds Most Powerful Parallel Business System

Asian Institute of Management

MBA-2012 | Cohort-7

Learning Team 1 A
Darshak S J Madhuranath R Tanmoy Dey Vincent Bermejo

Flow of Analysis
ORIGIN
History, Culture, Uniqueness

BUSINESS SYSTEMS
Illegal & Legal Businesses

BUSINESS COMMERCE
Economic Impact
TRANSFORMATION

New age crimes

FUTURE

Madhuranath R

ORIGIN
What are the cultural and historical factors that make the Russian Mafiya a unique system?

Tracing the Roots

TSARs + COMMUNISM + GULAGs RED MAFIYA
Suppression of people since Tsarist times; serfdoms thrive in Russia

1900s
Gulags create notorious yet loyal thieving brotherhoods Vory

1920-1990
Lenin, Stalin, Khrushchev & Communism make people poorer

Communism & Organized Crime

Vory organize into Bratva; offer protection, arms, drugs, prostitutes 1990 till now

Mafia spreads globally; bigger; more organized; more businesses

Uniqueness
RUSSIAN
Org. Unit
Org. Structure Reach
Brotherhood Amorphous

ITALIAN
Family Hierarchical

TRIADS
Clan Hierarchical

COLUMBIAN
Gang Hierarchical

Global 8,000 Bratva

Arms Assassination Drugs Extortion Gambling Protection Prostitution Money Laundering Cyber Crime

Europe / America Few 1000s

Assassination Extortion Gambling Protection Prostitution

Asia / America Very large

Assassination Drugs Extortion Gambling Protection Prostitution Money Laundering

South America / Africa / Asia Few 100s

Assassination Arms Drugs Gambling Prostitution

Size

Businesses

Control

Centralized yet Dissipated

Centralized

Centralized per Clan

Centralized per Gang

Critical Success Factors

Govt. support & military collusion

Loyalty to Brotherhood (Bratva) Amorphous & Dispensable Bratva

Continuous Innovation in Business Diversification & Legalization

Tanmoy Dey

SYSTEM
What is the underlying business system framework that the Russian Mafiya operates in?

Core Illegal Businesses

Online & Offline media. Threats, damage to property & life. Celebrities , glam shows & events, sports events.

Terrorist organization funding & Drug cartels. 3 million regular takers, 2.1% of Russian youth population. Prime overseas markets UK, West Europe, US

Fake ads, mail order bride catalogues, casual acquaintances. Sexual exploitation, debt bondage, forced labor. To Middle-East, SEA, West Europe

Extortion
Supply to paramilitary groups , terrorist organizations and exchange to drug cartels. Prime markets- Latin America, US, East Europe

Human Trafficking

Drug Trafficking

Prostitution
Arms Trafficking

Prime hubs- Israel, Ukraine, UK, Czech $ 3000-5000 on each sale Cheap service tariffs Girls cannot escape, blackmailed

Counterfeit

7% of illicit world trade Easy money from fake products. Funded to terrorist organizations, triad gangs, mafia hubs. Cohesive global network

Business System
Counterfeit $ 120 billion Oil & Gas
Human Trafficking $ 100 billion

Funds from illegal businesses used to fuel stakes and interests in legal businesses

Banking

Drug Trafficking $ 25 billion

Automotives

Prostitution $ 25 billion

Electronics

Arms Trafficking $ 20 billion

Extortion $ 6 billion

Proceeds from stakes in legal holdings re-invested and laundered into illegal dealings.

Food & Agriculture

Information Technology

Vincent Bermejo

COMMERCE
What is the economic size and impact of the Russian Mafiya?

Economic Exposure
The Economic Situation
10% Territory (including old Russian States) 25% Economy (US$ 450B) 40% State-Owned Corporation (influence on policy making & justice system) 80% Banks (taken out of the EUs white list) 90% SMEs (protection fees are cheaper compared to paying the government exorbitant tax rates)

The Economic Impact

Channeling billions of dollars out of the economy Bypassing legal procedures stealing tax revenues needed to sustain an economy robbing the country of aid discouraging foreign investors and domestic businesses from starting up

If it was not for the mafia there would not be an economy. They are a major driving force behind what goes on in Russia.

Criminal Syndicate Industry

DISTRIBUTION LEGAL

Red Mafiya

BUSINESS VENTURES

VALUE CHAIN

PRODCUTION

ILLEGAL

MARKET REACH
LOCAL GLOBAL

Darshak S J

EVOLUTION
How did the Russian Mafiya evolve with the changing global environment?

TRANSFORMATION
2009- FRAGMENTED

2012- ORGANIZED

Digitalization of the Russian Crime 2011 saw consolidation of individuals to form 6 potent groups. Growth of internal market- C2C services. Expansion of cybercrime in the international market. Lack of proper cyber laws. No jobs for Young IT Engineers. Ease of entry and difficult to be caught. Doubling of cybercrime in 2011 from 2010.

CYBER CRIME in $
$4.7 Billion
Russian Speaking Cyber Crime

Type Of Crime
Online Fraud
Spam Internal Market C2C DDoS Attacks Others

Revenue
$ 940,000,000
$ 830,000,000 $ 230,000,000 $ 130,000,000 $ 168,000,000

% of total
41%
36% 10% 5.6% 7.4%
Source: Ib report

The Binary Numbers Games Distribution

Spam
Internal Market Consulting

Online Banking fraud

Online Piracy

Brand Attack

DDoS

Malware Fake Drugs Fake SW

Measure of perceived damage to the organization

Low
High

Madhuranath R

FORECAST
What will be the future trajectory of the business system of Russian Mafiya?

ORGANIZATION
PAKHAN
GODFATHER

SOVIETNIK
COUNCILOR

OBSHCHAK
BOOKMAKER

AVTORIYET
AUTHORITY

BOYEVIK
WARRIOR

KRISHAS
ROOF/COVER

TORPEDO
KILLER

BYKI
BULL

Bases of Social Power

COERCIVE POWER
INFORMATION

Attraction
Resistance

POWER

REWARD POWER

RUSSIAN MAFIYA
EXPERT POWER REFERENT POWER
LEGITIMATE

POWER