Following Robert Amsterdam’s speech at the Economic Club of Toronto last week, there has been some significant media coverage (see the CBC segment regarding Petro-Canada and Gazprom). One of the more extensive pieces covering the speech was just published today in Canadian Business by Jeff Sanford.
In Russia, a deal with the devil By Jeff Sanford Canadian Business Online, February 4, 2008 Robert Amsterdam, the London-based Canadian-born lawyer of imprisoned Russian businessman Mikhail Khodorkovsky, returned to his home country last week and blasted Canadian political leaders and businessmen who insist on doing business with the corrupt regime of Russian President Vladimir Putin. In a speech to Toronto’s National Club — an institution founded shortly after Confederation for businessmen who considered themselves part of the “Canada First” movement — Amsterdam was unstinting in his criticism of those in league with state-owned, Kremlin-controlled companies like oil and gas giant Gazprom. “It’s distasteful to see Canadian politicians and companies having dealings with these people. They are selling out Canadian values,” the lawyer said.
Amsterdam pointed in particular to Petro-Canada, which is in talks with Gazprom over a proposed liquefied natural gas link, and Frank Stronach’s Magna, which has sold a major stake in the auto-parts company to Oleg Deripaska, a Putin-connected Russian billionaire. In an interview just before his appearance at the National Club, Amsterdam criticized both of these organizations for doing business with the Putin regime. “Petro-Canada shareholders should be angry if the company does a deal with Gazprom,” he said. “It’s dangerous to call Gazprom a company. Not only is it the Russian state, but one of the most corrupt organizations on Earth.” He had similar comments for Magna. “I don¹t know what it is about the ego of Western businessmen that they think they can go in there and navigate this world to their advantage. But it is ridiculous to put the assets of Magna at risk like that. Stronach is putting Magna at risk.”Amsterdam would be one to know. There are few people in the world that have a better seat from which to view the dark side of the New Russia. Chess master-turned-opposition politician Garry Kasparov calls him from jail, and his most famous client is Mikhail Khodorkovsky, the former CEO of Russian oil and gas firm Yukos, who has been imprisoned for either fraud and tax evasion or being a political threat, depending on the source.It was back in the late ‘90s that former members of Russia’s security forces, the FSB (formerly the KGB), dictated to Boris Yeltsin that he appoint Putin president of Russia. The mob of individuals who took over has now effectively become the politburo of the country and Putin stands as its public face, according to one version of history.One of the first orders of business was to reclaim Kremlin control over the country’s various oil and gas assets, which it was assumed were sliding into foreign control under Yeltsin and Western-friendly oligarchs like Khodorkovsky. The Kremlin went ahead with a series of so-called velvet re-privatizations that saw the state use some sort of regulatory lever, say a tax ruling or an environmental permit ruling, to knock down a company’s value and leave it open for takeover by a state-controlled firm.In the case of Yukos, the company was hit with a multi-billion-dollar tax bill that it would have no chance of paying except by splitting itself up and selling off its parts. Yukos was forced to sell off the production core of the company, a unit called Yuganskneftegaz, which subsequently ended up in the hands of state-owned Rosneft in a rigged auction. For his part, Khodorkovsky, considered someone friendly to the West, was put in jail — as an example of what would happen to those who didn’t get with the Kremlin’s new program, according to critics.What is amazing to Amsterdam, however, is the way the West has played along with all of this. Not long after Yukos was busted up and Khodorkovsky imprisoned, Rosneft went public with the world’s fifth-largest IPO on the London Stock Exchange. Yukos filed a lawsuit claiming the IPO was sale of stolen property and therefore couldn’t go forward. But in a ruling handed down the morning of the IPO, a British Court said it couldn’t “second-guess” the decisions of a “friendly nation” like Russia and allowed the IPO to go ahead.That was before the murder by radiation of Russian ex-spy Alexander Litvinenko in downtown London, so presumably there would be less naivety toward the intentions of the Kremlin today. But the fact that the sale went ahead and Western investors bought in suggests a moral vacuity on the part of the West, says Amsterdam. “This is disgusting what’s going on. This isn’t even nationalization. That suggests something of a political process. This is just outright thuggery,” he says. “We have to stop thinking of Russian elections as elections. They are not. And we have to stop thinking of Gazprom as a company. It’s not. It’s the state.”Of course, critics will point out that Khodorkovsky was no angel himself. It’s well known that anyone who became a Russian oligarch in the ’90s could only have done so through nefarious means. So for Khodorkovsky to complain that he is being hard done by under the rule of law is more than a little hypocritical. Amsterdam admits his client was less than saintly, and he works to minimize that charge. “He was one of the only ones to admit that what happened in the ‘90s wasn’t ethical and that things needed to be cleaned up,” says Amsterdam. Nevertheless, the lawyer insists the West needs to stand up for the rule of law in the Khodorkovsky case. To not do so, he says, is to sell ourselves out. Amsterdam saves his most critical comments for politicians like former German chancellor Gerhard Schroeder, who, two weeks after stepping out of office, got himself a seat on the board of Gazprom.Presumably Schroeder was thinking in terms of realpolitik, that it’s better that Germany engage with the organization that directs the movement of natural gas from Siberia to Europe — and provides anywhere from 10% to 100% of that energy source in various countries — rather than leave it to the Russians entirely. And that’s a good point. The CEO of Shell, Jerome Van de Veer, recently suggested in an email sent to thousands of employees around the world that global energy demand would begin to outstrip global production in 2015, and therefore practical questions around energy are going to become more pointed, and that’s going to make it harder to say no to Russia. Has the West come to be held in check by our consumption patterns? It looks like it, and we may increasingly have to make a choice between claims to moral authority and keeping warm. But Amsterdam, to his credit, will have none of it. This is appeasement in his book.“Schroeder is a whore,” declares Amsterdam. “By playing to Russia he assists in the Russian capture of Europe. When our leaders go to Russia and kiss the ring of Putin, they give him legitimacy. But we can’t worship this false god of stability. As business people we have to have an interest in human rights, the rule of law. It is essential to commerce.” Adds Amsterdam: “We need to demand that people like Schroeder stop this kind of engagement. Western politicians and businesspeople that engage these people are complicit in undermining the values of the West.”Not only that, but businessmen who think they can negotiate the current landscape of Russia are sadly mistaken, says Amsterdam. “The Communist party used to provide a bit of control in the country. But that’s gone now. What is going on now is basically a shoot-out between various factions of the Russian FSB for control of the country.” Explains Amsterdam: “So contentious is the power struggle that Putin’s chosen successor, Gazprom president Dmitri Medvedev, now has his own special presidential police force to protect him, the FSB no longer being considered a safe protectorate for him. The FSB is controlled by a Byzantine network of clans who are all fighting for power. People have been getting murdered around Saint Petersburg. They’re murdering each other. This is a dangerous time in the Kremlin. I think Putin just wants to get out.”For shareholders of Magna who have seen their company sold into one of these clans, this should be a worrying prospect. Better hope Frank Stronach’s guys win. But the bigger point is that our own values are being eroded, says Amsterdam. “We need to ask these things when we see people like Stronach doing these things. How does Petro-Canada get to give up Canadian values about human rights in an appeal to stability? They’re also doing stuff in Syria. I’d rather see them in Syria than in Russia,” says Amsterdam. “One thing I learned from Anna Politskovaya [the murdered Russian journalist] … do not engage in accepting the grammar of the Kremlin. Let us not call the crowning of one man an election. This is a country that has put the Mothers of Beslan on trial for anti-state activities, kills journalists and harasses the political opposition.”For his part, Amsterdam doesn’t go to Russia anymore. He hasn’t been back since the night several security personnel visited his apartment at 1:00 a.m. and tried to get him to come with them. “I know how that story goes,” says Amsterdam. He wouldn’t leave and had a local Russian lawyer get over to his place immediately. His passport was eventually held and he was given 24 hours to get out of the country. As for his most famous client, it’s getting worse as Khodorkovsky waits for his show trial, on new charges of embezzlement and money laundering, to get underway. Not only has he been imprisoned in a jail built over an old uranium mine and stabbed in the face, but he is now on a hunger strike as well. The Russian prosecutor bringing Khodorkovsky to trial is withholding life-saving drugs from a former Yukos official, Vasily Aleksanian, who refuses to testify against his old boss. Khodorkovsky has decided to starve himself in protest.It’s easy to fall into cynicism these days about the West, especially in the wake of the botched U.S. election of 2000 when democracy withered and an administration came in that launched a resource war on the back of propaganda about weapons of mass destruction. But if you need proof there’s still something good about the West, at least we don’t withhold life-saving drugs from prisoners who don’t testify in sham trials. Not yet anyway.