Kremlin Gold Paves Way to Billionaire Fortune for Tito Valet

behgjetpacolliOn a cool evening in early September, Kosovo construction tycoon Behgjet Pacolli threw open the doors of his walled compound to celebrate his birthday with 20,000 “Facebook friends.”

The guests, many of them too young to remember communism or the wars that followed the breakup of the former Yugoslavia, assembled as he seeks to build fresh support for a political party he’s backing in his fledgling home state. They swarmed the vast estate he built 20 minutes south of the capital Pristina to hear top Albanian pop stars and DJs.

“Such a nice party, such beautiful youth,” Pacolli, 65, said three days later over breakfast and cigarettes on his terrace, which overlooks a Versailles-styled garden that slopes hundreds of meters down to the property fence.

Behgjet PacolliPhotographer: Agron Beqiri/AP Images
Fluent in Italian, Albanian, German, Russian and English, and with a knack for schmoozing, Pacolli has spent almost three decades building engineering and construction business Mabetex Group, while also dabbling in diplomacy with now deceased dictators such as Slobodan Milosevic and Muammar Qaddafi.

The Lugano, Switzerland-based company has landed contracts that helped restore czarist glory to crumbling Kremlin palaces and build a futuristic city in Astana on the steppes of Central Asia. It’s grown into a regional powerhouse with 1.5 billion euros ($1.6 billion) of annual revenue, according to the company’s website. Pacolli has shaken off probes by Russian and Swiss investigators into some of those early contracts and turned the conglomerate he founded a quarter century ago into a fortune valued at $1 billion by the Bloomberg Billionaires Index.

Asked what he thinks of being a billionaire, he said, “It’s no different. I was a simple person and I believe I am a simple person in my heart today.”

Tito, Yeltsin

Once an army valet to Josip Broz Tito, the charismatic strongman who ruled Yugoslavia for most of the Cold War, Pacolli’s big break in business came decades later in the service of another titan of geopolitics: former Russian President Boris Yeltsin.

In 1993, after Yeltsin shelled the White House in Moscow to flush out lawmakers seeking his ouster, he tasked Kremlin property chief Pavel Borodin with the repairs. Borodin, who’d helped Pacolli gain a Russian foothold when he was mayor of Yakutsk in Siberia, hired Mabetex to do the work, followed by even more lucrative assignments to renovate both houses of parliament.

But it was the next and priciest job, restoring some of the most iconic rooms in the Kremlin, that solidified Pacolli’s reputation as a can-do contractor in tough terrain. Mabetex finished a revamp of the presidential palace that required hundreds of craftsmen and 50 kilograms (110 pounds) of gold on time in 1996. It also triggered an international corruption probe that undermined Yeltsin’s grip on power before Vladimir Putin was in position to succeed him.

As Russia careened toward default in 1998 and Kosovar rebels battled the forces of Yeltsin’s ally Milosevic, a Swiss prosecutor, Carla Del Ponte, arrived in Moscow. She came armed with reams of confidential bank records that allegedly showed Mabetex had paid millions of dollars in bribes and kickbacks to Borodin and Yeltsin’s family for billions in contracts, according to Yury Skuratov, her Russian counterpart at the time.

Brief Meeting

Paccoli said Del Ponte visited him, too, and the meeting was brief. He told her that he’d done nothing illegal and that all his deals were won fairly, and then walked out leaving his deputies to answer Del Ponte’s remaining questions, he said during a 2 1/2 hour interview on Sept. 13 at his villa.

“If I had done this, I would have done more so that you would never find it,” Pacolli said he told Del Ponte, who would later prosecute Milosevic for war crimes in The Hague. Del Ponte, who is now a member of a United Nations panel probing human rights abuses in Syria, declined to comment. The Swiss attorney general’s office declined to comment on the details of the investigation.

Skuratov tells a different story, one that he published in book form in 2010. In it, he said Pacolli first came to the attention of Russian law enforcement officials in 1997 when he and a brother flew into Moscow on a private jet with “a briefcase and bag full of undeclared dollars and pounds.” They were detained, he said, until Borodin arranged their release. The bank documents that allegedly show wrongdoing, Pacolli said, stem from a misunderstanding over his role in helping introduce credit cards to Russia.

Edy Grignola, a lawyer for Pacolli, said by e-mail on Dec. 6 that Skuratov’s claims aren’t true, and that the Russian and Swiss investigations into Mabetex uncovered nothing irregular in its operations.

After Del Ponte’s visit, and another by a whistle blower from a Swiss bank Pacolli used, Skuratov said he pursued the case until he was ousted in 1999. His downfall came after state television aired a video of “a man resembling Skuratov” cavorting with what was alleged to be two prostitutes. Putin, then head of the main successor to the Soviet KGB, sealed Skuratov’s fate when he announced that the man in question was indeed the prosecutor general.

Geneva Judge

“Pacolli understood very well how to do business in Russia,” Skuratov said during a Nov. 15 phone interview from the foundation he now runs in Moscow, XXI Century Legal Practices.

A Geneva judge in 2002 found Borodin guilty of receiving 38 million Swiss francs ($37.6 million) in kickbacks and fined him 300,000 francs. Swiss officials then dropped their probe into Mabetex and Pacolli. Borodin, 70, who gave Putin his first job in Moscow when he hired the St. Petersburg native as a deputy in 1996, declined to comment.

Grignola said in the Dec. 6 e-mail that any actions against Borodin don’t concern Mabetex or Pacolli.

Pacolli withdrew from Russia a decade ago to focus on Kazakhstan, where he’s been billing President Nursultan Nazarbayev, a longtime Putin ally, about $1 billion a year to help transform Astana, which replaced Almaty as the capital of the oil-rich nation in 1997. From the presidential palace to the Astana Opera House, the results have been stunning. Now, though, with crude prices floundering, the boom is coming to an end, so he’s turning his attention back home, both to diversify his business and rebuild his political brand.

Earning the trust of a majority of his fellow 1.8 million citizens won’t be easy. The ethnic Albanian’s ties to Serbia and Russia, both of which oppose Kosovo’s independence, have made some Kosovars suspicious of his motives.

Bomb Sweeps

In 1998, for example, on his own initiative, he met in Belgrade for eight hours with Milosevic -- a reviled figure to many Kosovars. Pacolli said he was trying to avert the coming Kosovo War, which claimed more than 11,000 lives. When he died in 2006, Milosevic was being tried on charges including the forcible deportation of 800,000 ethnic Albanians from Kosovo. That year, the U.S. Embassy in Pristina said Pacolli’s Serbian and Russian dealings made him “unpopular and distrusted,” according to Wikileaks.

As one of the most controversial -- and richest -- men in an impoverished region with a long history of violence, security is never far from his mind. Even a car from his own fleet was checked for bombs when it returned to his estate.

“Kosovo is safe now, but it’s good to be careful,” he said.

Pacolli found enough support to win parliament’s vote for president in 2011, though more than 50 lawmakers boycotted the contest and the results were quickly annulled. Months earlier, he flew to Libya to urge Gaddafi to recognize Kosovo. Gaddafi, who was later overthrown and murdered, said he wouldn’t do so as long as it was run by “American poodles,” the Economist reported at the time.

Rebuilding Bridges

Now Pacolli, whose business card says, “Former President of Republic of Kosova,” is preparing his New Kosovo Alliance for elections in 2018 on a platform of economic integration and jobs. He said he’s already recruited three brothers and a cousin to help Mabetex build hospitals, airport terminals and hotels across eastern Europe and Central Asia. Mabetex has no debt, he said.

About a quarter of the company’s 14,000 workers are based in Kosovo, a ratio Pacolli is trying to increase by expanding his banking business and moving into insurance, pipes and food processing. He says he’s also working on a $1.5 billion resort next door in Albania that he said will create scores of jobs and dwarf current projects along the booming Adriatic coast.

Earning about $4,500 a year on average, Kosovars and Albanians are among the poorest people in Europe, according to European Union statistics, so they have few places to go economically but up. It’s a journey the billionaire said he wants to help them make if they’ll agree to rebuild bridges in the Balkans, a region synonymous with conflict.

“My idea is to eliminate borders,” Pacolli said. “The key is economics, only economics. The time for patriotism is over.”

Bloomberg, 08.12.2016


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