Russia’s War on Business, Small and Large

According to Masha Gessen, a renowned journalist and author of the new biography of Vladimir Putin titled “The Man Without a Face: An Unlikely Rise of Vladimir Putin”, about 15% of the current Russian prison population is comprised of the small and middle-size business owners who were thrown to jail by the corrupt authorities who either had direct interest in their enterprises or were refused the bribes they have coerced from the entrepreneurs for their assistance.  Such instances of state-sponsored persecution are unlikely to get as much media attention as certain high profile cases, such as, for example, the imprisonment of oil magnate and political activist Mikhail Khodorkovsky, who is currently serving a seemingly endless sentence in a distant Russian prison colony, while his oil and gas empire has been effectively taken over by the Kremlin officials and companies directly affiliated with them. There have been reports, however, of the Russian businessmen not nearly as prominent as Mr. Khodorkovsky falling prey to the insatiable appetites of the state authorities and brutality of the Russian prison system. It is not surprising then, that, according to the Global Entrepreneurship Monitor, among the emerging economies Russia has the smallest number of people who desire to start their own business (3.6% against 24.7% average). Starting business in today’s Russia is simply dangerous and you may pay with your life for not following the unforgiving rules put in my place by the current regime.

Here are just a few names and cases of the Russian business owners or employees whose lives were crushed by the rapaciously inhuman system of the corrupt Russian state:

• Sergey Magnitsky (8 April 1972 – 16 November 2009) was a Russian attorney employed by the Hermitage Fund, an international venture capital company. Mr. Magnitsky has uncovered a criminal plot by which the Hermitage Fund’s companies were stolen from its rightful owner and the tax fraud scheme which cost the budget of the Russian Federation more than 200 000 000 US Dollars. Mr. Magnitsky’s findings did not land the perpetrators in jail; they landed Mr. Magnitsky in jail where he died in great pain on November 16, 2009, because the doctors were not allowed to attend to his failing health. Mr. Magnitsky discovered a number of high ranking officials involved in this shameless fraud scheme. He paid with his life for his honest work.
• Vera Trifonova was a Moscow-based business woman who died in the pre-trial penitentiary on April 30, 2009, from the combined effects of diabetes and kidney failure. Although her lawyers petitioned the court numerous times to release Ms. Trifonova from detention because of her deteriorating health, the judges continued issuing orders extending Ms. Trifonova’s incarceration.  In fact, Ms. Trifonova – accused of fraud by her competitors with connections in the Russian law enforcement  — was offered a guilty plea bargain by the Prosecutor’s office in exchange for her release. She maintained her innocence and passed away in horrific prison conditions. The treatment of Ms. Trifonova by the Russian authorities may well be considered torture. She never even had a chance to present her case in the court of law.
• Dmitry Malov owned a dairy business in the vicinity of Kostroma, a Russian city some 190 miles from Moscow. In 2009, as his business grew successful, he began receiving visitors from the local FSB office (Russia’s omnipotent interior security office), who demanded that he sell his booming enterprise for a fraction of its price to a certain buyer. The FSB officers threatened Mr. Malov with imprisonment if he refused to go ahead with the proposed deal. Still, he refused to be robbed this way. The security agents kept their promise. Mr. Malov was charged with fraud, and even though he fought the charges in court, he was sentenced to 5 years in prison. Two of his employers were also charged and sentenced to prison terms, but theirs were suspended. As a result of the stress endured, Mr. Malov’s wife developed serious health problems and had to undergo a brain surgery in his absence.
• Alexei Kozlov, a Moscow businessman and a spouse of a political activist Olga Romanova, was convicted of fraud and sentenced to 5 years in prison right after Vladimir Putin was re-elected to the highest office in Russia. Mr. Kozlov was sued by his former business partner Vladimir Slutsker, who happens to be a former Senator and a highly influential politician in the Russian Federation. Mr. Kozlov had already been convicted of the same charges and the Supreme Court of the Russian Federation has previously reversed the guilty verdict. The charges were brought up against him again, however, in the height of his wife’s political activities, and he was sentenced again and shipped off to prison. The Russian authorities have clearly manifested that they will tolerate neither dissent nor insubordination from their citizens, even as successful and prosperous as Mr. Kozlov.

 Again, these are just a few cases which have received the media attention. Many more individual entrepreneurs in Russia have been robbed of their businesses, large or small, and continue suffering in silence. Ever since Vladimir Putin came to power in 2000, there has been a constant flock of Russian businessmen fleeing their homeland out of fear of persecution and illegal corrupt prosecution by the state. Our office handled several such cases and we expect more talented entrepreneurs to seek refuge from the draconian repressive Russian state machine in the West.

By Ivan Savvine, Senior Paralegal @ The Law Offices of Grinberg & Segal, PLLC.

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