Another Prisoner of the Clan Wars, Another Asset Grab

On this blog we have followed very carefully the ups and downs of the clan wars, which has pitted a group of hardline siloviki led by Igor Sechin against a collection of other groups within the Kremlin power structure. Earlier this fall, the economic crisis appeared to prompt some interesting movements from within this confusing internecine struggle, as a Moscow court suddenly relented and decided to release of former deputy finance minister Sergei Storchak, who is generally seen as finance minister Alexei Kudrin’s #2 man. Whether or not this meant that Kudrin’s stock vis-à-vis Sechin was rising or falling, or whether the release of this clan war hostage meant that certain bailouts from the federal piggy bank would end up destined for friends of Sechin’s choosing, is difficult to say for sure. But what we do know is that there are many high ranking bureaucrat-businessmen very eager to tap into the stabilization fund which Kudrin has so carefully (and rightly) guarded under strict financial orthodoxy. But if the release of Storchak was viewed as good news (and really, in today’s Russia, the release of any political prisoner is good news), then today’s developments are decidedly more pessimistic. Russian Lieutenant-General, former head of the Federal Drug Control Agency, Alexander Bulbov (C), is escorted into the Moscow City Court on November 12, 2008. Bulbov is accused of illegal wire-tapping of telephone conversations as well as giving and receiving bribes. (Photo: AFP/Getty Images)

The media is reporting that a judge at the Moscow City Court refused direct requests from the Prosecutor General’s office to release the federal anti-narcotics officer Alexander Bulbov on bail after three days of deliberations in court. Bulbov, though not an extremely high ranking individual within the security services, has become well known as the focal point and origin today’s clan struggles – the outcomes of which have affected everything from the presidential selection to the management of the economy and foreign policy. (read more about how the whole mess got started here)So Bulbov stays in jail, and Igor Sechin becomes more entrenched. Perhaps not coincidentally, this all appears to be happening around the same time the authorities step up the pressure on the potash mining company Uralkali – which appears to be headed right toward a signature Sechin asset grab in the style of Yukos. According to the Reuters report, London-traded shares in the company have fallen more than 70% ever since Sechin re-opened the mining probe, sending harrowing memories of the Mechel experience through the markets. Really it’s a win-win for Sechin’s clan. Either they end up forcing the takeover of the company at bargain rates, or hedge themselves with cheap stocks to enjoy the bounce once the group is given a sudden and fortuitous clean bill of health from the authorities… not that a few more hundred million for these gents will exactly help out Bulbov’s prison conditions.We’ll have to wait to see what happens next, but like the Russian economy, I think things are about to get worse before they get better…