In what was initially called an apparent suicide, a senior level banker of the powerful state-owned financial group VTB was found dead in a pool outside his luxury country home in the Odintsovo District. Oleg Zhukovsky, who held the title of corporate managing director at VTB and was in charge of considerably large timber leasing deals, reportedly had his home broken into by unknown individuals, was tortured, possibly suffocated with a plastic bag, and left behind a suicide note which read “I am very tired of life. It is nobody’s fault.” Despite having been found drowned with both his hands and feet bound, VTB board member Vasily Titov surprisingly commented “Police officials are doing their work. We have no evidence of murder.” (though it’s unlikely this quote was taken in context).
Like many other natural resources industries, timber has become quite the booming sector in recent years in Russia. Participants in the sector include Oleg Deripaska’s Basic Element, Nikolai Makarov, and Mikhail Fridman. Even Leo Hambro, son of mining magnate Peter Hambro (who’s no stranger to bureaucratic corruption in Russia), is planning a big flotation on the London Stock Exchange’s AIM market of Tynda Forest Holdings, which has cutting rights to an area the size of Wales. (Kommersant has an excellent, if somewhat dated, backgrounder on the sector.)Reports point out that the forest leasing contracts that Zhukovsky handled must all be annulled and rewritten before the end of next year under a new law (click here to see the new Forestry Code). “The regulations themselves are very murky, and all this is being done at least partially outside the law. … This has indeed helped to make it a very criminalized business as groups compete over these leases,” said Alexei Yaroshchenko of Greenpeace.The government has acknowledged the criminal element in the timber industry. On May 15, Natural Resources Minister Yury Trutnev reported to the president on the implementation of the new Forestry Code, and revealed that more than half of the wood in Russia is obtained through illegal means:
NATURAL RESOURCES MINISTER YURY TRUTNEV: First of all I would like to report that work on bringing the forestry code into force is proceeding. We had to develop and adopt 23 government cabinet resolutions. And at the present time all have been completed. Every month we gather together all the leaders of the Russian regions and listen to all their comments. We try to ensure that legislative changes do not affect work in the forestry sector.In addition, we are working on issues relating to theft in the forestry sector. We are monitoring the entire territory of the Russian Federation for these purposes. Today one of the most acute problems exists in the Chita region. Unfortunately, the amount of wood obtained through illegal means is greater than the amount that is obtained legally. We have uncovered two private customs points and more than 250 loggers. A significant amount of wood stolen from other regions passes through the Chita region. On Saturday we are going to fly to the region with the Interior Minister [Rashid Nurgaliyev], a large team that includes customs officers and the FSB, and examine all these problems.PRESIDENT VLADIMIR PUTIN: The adoption of a new law, the Forestry Code, should have a positive influence on the forestry sector.YURY TRUTNEV: Naturally.
However the latest news out of the Kremlin reflects an urgent desire to accelerate the industry, and achieve a technological parity with competitors. Just a few days ago while visiting a trade fair in Vologda, Prime Minister Viktor Zubkov called for more exports in processed timber, and invited foreign investors from Canada, Finland, and Sweden, among others. The murder of Zhukovsky also comes right on the heels of Zubkov’s announcement that he will head up a new special council on the management of the Russian forestry sector. Are we witnessing a return of the forest wars?So far this is not enough information to know what’s really going on here, but anytime an influential player at a state bank is murdered so close to an election, I tend to pay attention. Please speak up if you have information or insights to share