Yegiazaryan: Another Notch on Putin’s Gun

Ashot Yegiazaryan

Ashot Egiazaryan, who served as deputy from the Liberal Democratic Party in the State Duma since 1999, writing in the Moscow Times:

On Wednesday, a plenary session of the State Duma is to confirm a warrant for my arrest on allegations of embezzlement. The vote is of little consequence since the Investigative Committee placed me on Russian and international wanted lists earlier this year. This was retaliation for my efforts to contest the theft of my stake in the Moskva Hotel through a conspiracy orchestrated by politically connected individuals.

The Duma vote is nothing more than bureaucratic “tidying up.” Since I am a deputy, the Duma should have agreed to the Investigative Committee request before the arrest order was issued by the committee, not after the event. This marks the latest act in a Kafka-esque drama that makes a regular crime thriller seem like dull reading.

Corporate raiding in Russia is no longer based solely on the gangster model of the 1990s. It has become a more sophisticated and insidious form of organized crime that camouflages fraud by using seemingly legitimate legal actions.

Perverting the judicial system to abuse private property rights is, of course, not uncommon in countries with weak rule of law. But in Russia, it has been raised to an art form through a heavily centralized political system and a fusion of business and state interests clouded within an opaque environment. The loss of a distinction between personal interests and state interests at such a high level makes corporate raiding more efficient and devastating.

In a seminal 2008 article, “Criminal Corporate Raiding in Russia,” Thomas Firestone, legal adviser for the U.S. Justice Department at the U.S. Embassy in Moscow, writes that Russia’s raiding relies on “criminal methods such as fraud, blackmail, obstruction of justice and actual and threatened physical violence.” He notes that the raiders “rely on court orders, resolutions of shareholders and boards of directors, lawsuits, bankruptcy proceedings and other ostensibly ‘legal’ means as a cover for their criminal activity.”

Firestone defines the typical corporate raid in Russia:

• the acquisition by the raiding company of a substantial portion of the target company’s debts;
• the corrupt acquisition of control over the target company by falsifying internal corporate documents;
• the filing of civil suits and “contracted” criminal cases against the target company;
• the use of siloviki, including the police, private security forces, court bailiffs and hired thugs;
• the transfer of illegally seized assets to a “good faith purchaser”’ using shell companies;
• “black PR” involving the distribution of false information about the target through the media.

These tools will be sharpened and applied with greater vigor if the target tries to resist. After I started to fight back against the scheme to steal my assets, the authorities opened a criminal case against me, heightened physical threats against me and my family and initiated a vicious PR campaign branding me as a criminal.

It is a tragedy that Russia has created a business environment that is so open to abuse, one that has ruined the country’s investment climate.

This model of government-organized crime is doomed, and the efforts to modernize Russia are a sham used to mask the status quo of rampant state corruption. To create a genuine basis for development, Russia urgently needs to separate business from executive power.

A press release from Egisaryan provides further information:

MOSCOW, March 9 2011 – Ashot Egiazaryan is in no doubt that today‟s session of the State Duma will support the request of the Russian Investigative Committee for his arrest, according to a written statement to members of parliament that was banned from distribution by Chairman of the State Duma, Boris Gryzlov.

When Egiazaryan‟s assistant tried to distribute the statement unofficially to members of parliament, security officials removed her from the Duma chamber. An earlier attempt by Egiazaryan to address the Duma by video link was also refused.

Describing the Duma‟s discussion of the issue “as absurd in form and senseless in content”, Egiazaryan points out in his statement that the Investigative Committee already ordered his arrest in absentia in violation of the Russian Constitution on January 31 2011.

The issue was never raised by the Duma and for good reason, Egiazaryan says: “This system has strangled and continues to strangle anyone who tries to change the current state of affairs where the “rules of the game‟ in politics, society, business and the state are formed and upheld not by democratic institutions but by the needs of the moment of those high up in government… in my case, in place of a parliamentary investigation, there is murder, black propaganda, falsifications and fabricated criminal persecution.”

Noting the steady growth of dissatisfaction in Russian society identified even by sociological polling organizations loyal to the current government, Egiazaryan says that it is impossible for Russian citizens to defend themselves when judicial decisions are dictated by executive authority and those opposed to the people in power are attacked with lies and dirt in media controlled by the government.

Egiazaryan points out that the development of political and economic competition in Russia is impossible with only a single dominant party and a handful of “friends like Rotenberg” with accumulated capital in excess of USD200bn. Yet anyone who dares to raise this issue is automatically classified as an “extremist”, a “nationalist” and a carrier of “hostile western democracy”. In Russia a more fierce and efficient battle is being fought against dissent than against terrorism.

Egiazaryan says that Russia is close as never before to a turn of events on an “Eastern scenario” and that this can only be denied by people who are deluding themselves about political stability in the country and the supposed absence of an alternative choice.

Addressing President Medvedev, Egiazaryan proposes that he gives a real signal to society showing that he is the President of the Russian Federation or resigns. “Either way will be a heroic act.”