Organized Crime Hits Soviet Union : Black market: KGB chief says boom is helped by foreign-backed private companies.

MOSCOW —  KGB chief Vladimir Kryuchkov said today that organized crime in the Soviet Union is booming with the help of foreign-backed private companies.

“Organized crime has assumed a scale we could never have expected a couple of years ago. . . . Brutality, violence and sadism have become widespread,” he told a news conference.

The head of the Soviet security police said criminals are taking advantage of political disarray as the country tries to move to a market economy. Chronic shortages have bred a thriving black market controlled by organized bands operating across frontiers, he said.

Joint ventures--private enterprises set up with foreign backing under President Mikhail S. Gorbachev’s reform program--have become a front for large-scale crime, Kryuchkov said.

“We are young businessmen, we don’t have experience, our firms don’t have their own intelligence and counterintelligence,” he said.

“But we’ve got to come to grips with them (joint ventures) because our state suffers great losses. You just can’t imagine how much. I estimate it runs into billions of dollars,” he added. The formulation of tight laws regulating the activity of joint enterprises must be a high priority, he said.

Hundreds of joint ventures have been set up, largely with West European and North American companies.

Interior Ministry officials say raids on some private companies have yielded vast hauls of contraband goods, guns, flak jackets and even explosives.

Interior Ministry officials say some joint enterprises and purely Soviet-owned private cooperatives are used as fronts to smuggle abroad valuable Soviet goods such as caviar. Computers and other scarce equipment are then smuggled into the country where they fetch high black market prices.

The operations drain the country of much-needed foreign currency.

Kryuchkov said the Soviet Union’s recent entry into the international police organization Interpol could help the battle against organized crime.

“We are working very badly in this battle against organized crime,” Interior Minister Vadim Bakatin told the same news conference.