EDITORIAL: The Naked Fraud of the Russian Stock Market

EDITORIAL

The Naked Fraud of the Russian Stock Market

“You get your meager dividends — a couple of rubles a year, your tea and sandwich at the annual meeting, or if you decide to fight it all, you get a lot of headache — this is all you can get in Russia for owning stocks.”

That was Russian attorney Alexander Navalny, speaking to the Associated Press last week, condemning the naked fraud that is the Russian stock market.  When Navalny visited the annual meeting of Surgutneftegaz, of Russia’s third-largest oil company, and asked the CEO who owned the company, he was told by the company’s boss that he did not know and could not find out.

There was nothing surprising in this answer.  Crusading businessman Mikhail Khodorkovsky struggled valiantly to throw open the locked doors of Russian corruption and bring Western transparency to Russian business. For his trouble, Khodkorkovsky was thrown in to prison, likely for life.  He was lucky; when attorney Sergei Magnitsky tried it, he was killed outright.

Latynina in Brooklyn

Yulia Latynina at the Brooklyn Public Library

Other Russia reports:

On May 8, 2000, Vladimir Putin took office as president of the Russian Federation. Since that day, Russia has acquired $1.5 trillion in oil and natural gas revenues. As a country suffering from severely neglected infrastructure and in desperate need of development and modernization, Russia has been in an ideal position to benefit from such staggering windfall profits. At a talk earlier this month at the Brooklyn Public Library in New York City, award-winning Russian journalist Yulia Latynina spoke about how all of this money is actually being spent, and what condition Russia now finds itself in as a result.

“A modern transport infrastructure is the real road to Russia’s future,” said then-President Putin to a gathering of highway construction workers in the city of Krasnoyarsk in late 2007. And yet, not a single highway or expressway and only a smattering of smaller roads have been built in Russia over the past two decades. By comparison, China has laid more than 40,000 thousand miles of high-volume roadways over the same amount of time. “Naturally,” said Latynina, “this raises the question: Has anything been built in Russia with this money? And if yes, then what?”

It turns out that something was.

Exposing the Potemkin Fraud that is the Putin Economy

Paul Goble, writing in the Moscow Times:

Officials in Moscow are misreading last weekend’s protests, viewing the relatively small size of the demonstrations as evidence that the population is “satisfied” with its situation rather than understanding that any decline in popular participation reflects the increasing “alienation” of the people and government.

That is the conclusion offered by the editors of Nezavisimaya Gazeta in a lead article published on Tuesday. And they add that unless Moscow understands this reality and unless the government takes steps to overcome this “alienation,” Russia’s future will be anything but bright.

Russia after the Subway Bombings

Paul Goble, writing in the Moscow Times:

When a terrorist incident occurs in Russia, a Moscow commentator says, it is unlikely to cost even those officials whose responsibilities included preventing it their jobs, but experience with earlier cases suggests that such incidents will likely cost the Russian people their freedoms without providing them with any additional security.

In a commentary in Wednesday’s Novaya Gazeta, Andrey Lipsky wrote that where governments see themselves as the servants of the people, a terrorist incident is likely to lead to “a rapid change of political power” — or at least the ouster of officials responsible for security — as well as to “serious measures for increasing the security of citizens. And often both together.”

But in a country like Russia, he continues, officials view terrorist acts as another reminder that they “are not in a position to fulfill their chief function — the defense of their fellow citizens” and consequently are convinced that at the very least they should exploit the situation to retain their “own control over the country.”