Russia Perfects the Art of Corporate Raiding

Moskva Hotel.jpgLooking back on the Kremlin’s decidedly clumsy and messy theft of the Yukos oil company in ’04 (nobody thought it might look bad to sell half of the largest oil production to the unknown Baikalfinansgroup, which registered an address at a vodka shack in Siberia?), the art of corporate raiding in Russia has become incredibly sophisticated, adapting itself from the lessons of the past.  Nowadays, when the state or its friends in the private sector use the instruments of the government apparatus to separate an individual from their property, they implement a complex scheme to acquire debts, falsify documents, file a litany of frivolous civil suits with guaranteed verdicts, and orchestrate a pre-emptive black media campaign against the owner.

That’s precisely what Duma member Ashot Egiazaryan claims is happening to him as a result of being on the wrong side of the Moskva Hotel dispute involving former Mayor Yuri Luzhkov, his wife Yelena Baturina, and the billionaire Suleiman Karimov.  Now that the tables have turned and Luzhkov is out, his wife’s company Inteko getting picked apart by the vultures, and Karimov jumping ship to acquire a big stake in VTB while Bank of Moscow goes down, Egiazaryan is facing a vote in the Duma which will reinforce an arrest warrant on counts of embezzlement – which is quite strange because the Investigative Committee had already issued the arrest order even before Duma approval.

Today Yegiazaryan takes to the pages of the Moscow Times to get his side of the story out:  “Corporate raiding in Russia is no longer based solely on the gangster model of the 1990s. It has become a more sophisticated and insidious form of organized crime that camouflages fraud by using seemingly legitimate legal actions. (…)  After I started to fight back against the scheme to steal my assets, the authorities opened a criminal case against me, heightened physical threats against me and my family and initiated a vicious PR campaign branding me as a criminal.  It is a tragedy that Russia has created a business environment that is so open to abuse, one that has ruined the country’s investment climate.