The KGB Investigates the Soviet Shadow Economy in the 1960s

• In Event: Law and Legality I: Crime and the Courts in the Russian Empire and the Soviet Union

Abstract

This paper will assess several investigations of major Soviet shadow economy cases undertaken by the KGB in the 1960s, discussing their impressive strengths, important weaknesses, and long-term implications. The investigations this paper will examine were centered in several different Soviet republics. The KGB undertook detailed study of cases, often using dozens of forensic accountants and investigators to reconstruct large schemes, which were typically interwoven within various types of state enterprises. Yet despite extensive inquiries, for a variety of reasons and in several critical ways, the KGB leadership often misconstrued the phenomena their agents were studying. Based on KGB reports to the Central Committee and some investigative materials, the paper will reflect on these how misunderstandings and incorrect assumptions may have contributed to the expansion of the shadow economy in the final decades of the Soviet Union.

Author

• James W. Heinzen, Rowan U