How to Earn Putin Points and Survive in Russian Business

I was taken aback the other day to open up the Moscow Times website and find an glowing opinion article written by Brian Zimbler, a Moscow based lawyer of the firm Dewey & LeBoeuf.  The article, which heaped praise upon Russia as an improving working environment for the legal profession, argued that the Kremlin is “bucking the trend” and taking “serious steps” toward fighting legal nihilsm. 

I do not know Zimbler, and I think that we must keep in mind that it is possible that this article was composed before the murder by medical blackmail of Sergei Magnitsky and therefore held no intention in this regard.  It is possible the article is entirely unrelated to the Hermitage events.  But the timing of its publishing – coming only six days after the death – is in poor taste.  Writing at Am Law Daily, it seems Brian Baxter was also intrigued by the timing and tone of the article, prompting him to punch up a balanced report on the topic.  It is a must read.

If this were indeed a case of opportunism – an attempt to please the Kremlin, gain points with Putin and guarantee the survival of one’s business and the guarantee of lucrative future clients, then it would mark the lowest point in Russian law to date in the Putin era, and that’s saying a lot. 

There is plenty to agree with in Zimbler’s innocuous but poorly timedarticle (such as the impressive legal skills of young Russianattorneys), but respect for rule of law has been rapidly eroding – not improving.  My own experience is sometimes cataloged inthis regime’s attack against lawyers, and I admittedly got off veryeasy – arrested and expelled without reason from the country in themiddle of the night in relation to the first showtrial of Mikhail Khodorkovsky.  Worse still, however, are the examples ofKuznetsov, Markelov, Alexanyan and many others.

A complimentary article about how wonderful the Russian government behaves toward the legal profession hits especially poorly right now, only some 24 hours after the news breaks of death threats to other Hermitage lawyers in London via text message, some of which may have presaged the death of Magnitsky.  Then today we have the Interior Ministry claiming that they never even knew that Magnitsky was sick … which appears to contradict a number of documents which Hermitage says were filed and even sent to Yuri Chaika.

What is most disturbing about rule of law, corruption, and judicial independence in Russia today is not that the country is losing its ability to compete with China, India, and Brazil (at the current rate of judicial erosion, the BRIC will become the BIC), but rather that in dealing with politically sensitive cases, we are seeing a new methodology of medical blackmail to extract confessions become a regular occurence.  Everything that was done against Vasily Alexanyan to force false testimony against Mikhail Khodorkovsky, appears to have been done to Magnitsky … and these are the cases which we hear about.

This practice of private sector businessmen and some politicians standing up as lobbyists and pitchmen for the Russian government is a longstanding practice, and one which ironically contributes to the arbitrary nature of executive power over the law.  It is the quickest way to earn political currency with the Putin regime, which is the only currency accepted to solve business disputes. 

Let’s recall former chancellor Gerhard Schröder going out on a limb to declare Putin a “dyed in the wool” and “flawless” democrat (such a statement is richly hilarious now).  Later he won a cushy board seat as an employee for Gazprom on the Nord Stream pipeline to the tune of 390,000 euros per year.  There was the regrettable groveling before Putin’s throne by the former CEO of BP (but they ended up stealing from them anyways). Royal Dutch Shell did the same thing – and found themselves thanking Gazprom for stealing their investment at Sakhalin.  Because that’s how business is done in Russia, is what so many people will tell you.  Your investment is only safe when you publicly support the leadership and/or make the recommended investments in certain state enterprises (hello Yukos auctions and Rosneft IPO).  Bill Browder of course was formerly known as one of Russia’s most positive and vocal advocates, but these efforts did not save Hermitage from the scourge of state theft.

Let’s hope that one day we can all wake up in the morning and realize that this kind of capitulation and complicity is the true engine of legal nihilism.  There’s no point in pressing Medvedev to do something for rule of law so long as this obedience continues.