Publication: Monitor Volume: 8 Issue: 98

The ongoing battle for control over Slavneft shows the degree to which powerful financial-bureaucratic clans continue to use law enforcement organs and the courts as weapons in internecine power struggles, just as they did throughout the Yeltsin era. Indeed, the Slavneft controversy is not the first controversy of its kind this year. In January, Yakov Goldovsky, president of Sibur, a subsidiary of Gazprom, the natural gas monopoly, was arrested on charges of abusing his position. In February, Sibur’s board of directors named Vyacheslav Skvortsov the company’s acting president. Skvortsov became full-fledged president the following month (see the Monitor, January 10; Kommersant, May 20). Last month, Yukos, Russia’s second-largest oil company, used local police to take control of part of the offices belonging to Rospan International, a Siberian natural gas producer. Yukos, which holds a majority stake in Rospan, was fighting TNK, Rospan’s main creditor, for control over the company (Kommersant, April 6).

The Putin era was supposed to bring such battles to an end. Indeed, during a July 2000 meeting in the Kremlin with twenty-one leading business tycoons, President Vladimir Putin promised that the results of the controversial privatizations of the Yeltsin era would not be overturned, but also insisted that it was unacceptable for competing companies to use the state apparatus, “including the power structures,” as the “main argument in the competitive struggle.” For their part, the oligarchs agreed that the “most important condition for the effective development of the economy” was for the authorities to maintain equal distance from competing businesses (see the Monitor, July 31, 2000).

Now, in the case of Slavneft, in which a reputed ally of Mikhail Kasyanov is the target of a criminal investigation, it is no surprise that the prime minister is suddenly expressing grave concern about the interference of law enforcement organs, above all the Prosecutor General’s Office, in business disputes. Indeed, Kommersant reported today that unnamed members of Kasyanov’s team believe that criminal investigations of top businessmen and former government ministers have caused a loss in value of the shares of Russian companies and capital flight and present an obstacle to the Russian economy’s growth. The newspaper, citing members of Kasyanov’s inner circle, reported that the prime minister remains convinced that the criminal cases against Nikolai Aksenenko, the former railways minister, and Yevgeny Adamov, the former atomic energy minister, were launched with insufficient grounds. Both men were widely viewed as two of the more corrupt members of the Yeltsin-era inner circle.

Meanwhile, Deputy Prosecutor General Vasily Kolmogorov said yesterday (May 19) that the new Criminal Procedural Code coming into effect on July 1 will make it possible to impound property abroad belonging to Media-Most founder Vladimir Gusinsky. The new code transfers the power to order the seizure of property from prosecutors to the courts, which is likely to make foreign governments more sympathetic to requests from Russia for such actions (Radio Ekho Moskvy, May 19). In late 2000, Gusinsky was charged with large-scale fraud and money laundering and arrested in Spain at the request of the Russian authorities. However in April 2001 a Spanish judicial panel ruled against extraditing Gusinsky, saying his failure to repay his debts to Gazprom, Russia’s state-controlled natural gas monopoly, would not constitute a crime under Spanish law and citing “questionable circumstances and peculiarities” in the efforts by Russian law enforcement to prosecute the media magnate (see the Monitor, April 19, 2001).

Shortly after the first police raid on the Moscow offices of Gusinsky’s Media-Most in May 2000, Kasyanov denied that the actions were politically motivated (see the Monitor, June 2, 2000). Indeed, the prime minister’s current reported concern about the possible negative effects of criminal investigations on the economy and business was not evident then. In June 2000, Kasyanov defended Gusinsky’s arrest and incarceration, arguing that the Prosecutor General’s Office had “weighed up very carefully its options before taking a decision” (CNN, June 14, 2000; see the Monitor, June 14, 2000). The following month, Kasyanov defended the law enforcement authorities’ decision to probe the AvtoVAZ carmaker, Oneksimbank and Lukoil, telling The Wall Street Journal Europe that the investigations showed the oligarchs had “no immunity” (see the Monitor, July 13, 2000).