Publication: Monitor Volume: 5 Issue: 36

Another apparent step in the latest anticorruption drive came on February 18, when the Prosecutor General’s Office handed the Interior Ministry’s investigations committee a criminal case involving alleged large-scale embezzlement and tax violations at the state-owned AvtoVAZ car factory in Togliatti. The charges may involve AvtoVAZ’s former and present top executives, including Vladimir Kadannikov, who served as Russia’s First Deputy Prime Minister in 1996 and is now the chairman of AvtoVAZ’s board of directors.

This latest criminal case is the result of an ongoing investigation into the factory, which investigation began in 1996 and has been carried out jointly by the Interior Ministry, the State Customs Committee and the State Tax Service. Investigators found that eight criminal groups had used dealer firms to seize control of 80 percent of the shipments of Lada cars produced at the plant. They also found that many of the dealer companies belonged to relatives of AvtoVAZ officials, of local law enforcement officials and of local legislators. The investigation has already resulted in more than 100 criminal cases (Kommersant daily, Segodnya, February 20).

The AvtoVAZ case may also be connected with Prime Minister Yevgeny Primakov’s war against CIS Executive Secretary Boris Berezovsky. Several years ago, Berezovsky’s LogoVAZ car dealership allegedly used a scheme by which it received cars from AvtoVAZ for export prices (because of their lack of competitiveness, a Lada for export is several thousand dollars cheaper than one to be sold inside Russia) but sold them domestically, making a profit of several thousand dollars on each car. According to one newspaper, Berezovsky devised the scheme, but “it would have been impossible to realize it without the support of the AvtoVAZ leadership, particularly the chairman of the factory’s board of directors Vladimir Kadannikov” (Kommersant daily, February 20).

Togliatti is located in the Samara region in southern Russia, and a fire early this month at the region’s Interior Ministry headquarters reportedly killed many of the investigators involved in the AvtoVAZ investigation–more than fifty people died in the blaze–and destroyed documents relating to it. Officials, however, now say the fire was the result of faulty electronics, not arson.