Fear takes over Russia's businesses
By Claire Bigg and Kevin O'Flynn
MOSCOW - Vladimir Romanov looks forward to celebrating his company's birthday
this month. The small family start-up he created a decade ago has since grown
into a sprawling business with more than 300 employees. Today, the firm
provides mobile-phone services and leases payment terminals from a dozen
offices across Russia.
Proud of his success, the 34-year-old Moscow entrepreneur never misses his
company's anniversary. This year, the festivities have taken on special
significance.
"Thankfully, I can celebrate this 11th anniversary," he says. "I spent my own
birthday, on March 5, in the town of Mozhaisk - not
in a restaurant, but in pre-trial jail."
Romanov is one of hundreds of Russian business owners who face prison each year
for alleged financial misconduct. And like him, most accuse corrupt police and
investigators of trumping up charges to extort money from them or to take over
their businesses.
Not all are innocent. But the number of criminal cases against businesspeople
has grown so sharply in recent years that entrepreneurs are now taking action
to combat what they say is a vast campaign of racketeering by law-enforcement
officials.
Fighting 'repression'
Business-Solidarity, a non-governmental organization that defends the rights of
entrepreneurs, has organized a dozen street rallies in Moscow since the
beginning of the year. The group's chairwoman, Yana Yakovleva, says not a week
goes by in Russia without entrepreneurs getting arrested. Official graft, she
says, has spun out of control.
"It has become so severe in Russia that entrepreneurs live with the fear of
being arrested," she tells RFE/RL. "It has become a way of making money [for
law-enforcement officials], a kind of conveyor belt."
Yakovleva, who spent eight months in prison on what she claims were false fraud
charges, says the unrelenting legal assaults on the country's business
community can safely be described as repression.
Many in Russia share her view. "That's the way our law-enforcement system
functions, with the protection of the FSB [Federal Security Service] security
services," says Yelena Lukyanova, a law professor at the Moscow State
University.
"A trend has swept the country, and it already has a name: criminal-legal
repression," she continues. "It is a state within the state. This system has
long cut loose and turned against the population, but now it has cut loose even
from the federal authorities."
The recent deaths of businesswoman Vera Trifonova and Sergei Magnitsky, a
lawyer who had accused Interior Ministry officials of corruption, further
incensed business circles. Both died in pre-trial detention after being denied
medical care.
Afraid to meet the same fate in Russia's notoriously brutal prisons, some
entrepreneurs are resorting to desperate measures.
Yury Fink, a businessman charged with fraud, posted two online appeals to
President Dmitry Medvedev in April and May.
Fink accuses officials in the Investigative Committee of the
Prosecutor-General's Office of trying to take control of his company, which
develops and sells transportation safety systems. He faces up to 10 years in
prison.
In the clips, he says he fears for his life if convicted. "I know that I can
end the same way as murdered Sergei Magnitsky and Vera Trifonova," he says. "I
don't wish to repeat their silent participation in this process. I want to name
my future killers, I want to make their names public so there won't be any need
for an investigation after my death."
Too little, too late?
The Kremlin is well aware of the problems faced by small- and medium-sized
business, despite having done little to solve them. Medvedev has pledged to
fight police corruption, support entrepreneurs and improve Russia's investment
climate. In April, he signed new legislation prohibiting the detention of
suspects accused of economic crimes pending trial - a move welcomed by
entrepreneurs as a step in the right direction.
For entrepreneur Romanov, the decision came too late; he had just won a release
on bail in court. After seven months spent in detention, he is nonetheless
grateful for the knowledge that he can now stay home with his family right
until his trial.
He could spend as much as 32 years in jail if found guilty of all the charges
against him, which include illegal banking activities and money laundering. The
arrest of an investigator caught red-handed extorting money from Romanov's wife
has not led to a revision of the charges. Lawyer Sergei Magnitsky died after
implicating senior officials in a fraud case.
Seated behind his desk in his office, based in a somewhat rundown two-story
building on the northern edge of Moscow, Romanov relentlessly maintains his
innocence. The raid on his office last autumn, he recalls, came as a complete
shock.
"A man entered my office and identified himself as a police officer. He told me
to place my hands on the table and shut down my computer," he recalls. "At
first I thought it was a joke, but then several people entered the room armed
with machine guns. More than 50 people were involved in the operation. That's
when I realized I was in trouble, in big trouble."
Large-scale bribery
Romanov claims more than US$300,000 in cash was stolen during the raid on his
office and accuses police of placing wash towels on his surveillance cameras to
cover up the theft.
He says investigators offered to free him in return for a large sum of money
just a few weeks following his arrest. After refusing to pay the bribe, he
says, investigators turned against his wife Margarita, threatening to throw her
in jail and to place the couple's child in an orphanage. It wasn't long before
she caved in to the pressure.
"I had no connection whatsoever with the business activities that were causing
Vladimir problems. It all sounded crazy to me," she says. "But when I started
receiving threats on my home and mobile phones, it became very real. And by the
time these people started calling one of my friends, I was ready to give
anything to make them back off, to make all of this end."
Margarita Romanova ended up paying $400,000 in return for her husband's release
on bail, but investigators failed to honor the deal. When they asked for
another $500,000 to prevent additional charges from being brought against him,
she reported the case to the Interior Ministry's internal crimes unit. One of
the corrupt investigators was soon detained after a sting operation.
But things only got worse for Romanov. He was transferred to another prison
outside Moscow and placed in a tiny cell with hardened criminals in what he
believes was retaliation from investigators. Today, he considers himself lucky
to be alive and out of jail, at least until his trial begins, for which no date
has been announced.
Romanov, who now spends much of his time preparing his defense, says he remains
upbeat about his chances in court. But for all his optimism, the young
entrepreneur is planning to change careers if he walks free.
"You run your company for 10 years thinking that you are acting lawfully, that
everything is fine, that you are being useful to society," Romanov says. "And
then you find out you could go to prison for a long, long time and all your
relatives will suffer. It doesn't really make you want to continue in that
profession."
(RFE/RL's Russian Service contributed to this report .)
Copyright (c) 2010, RFE/RL Inc. Reprinted with the permission of Radio Free
Europe/Radio Liberty, 1201 Connecticut Ave NW, Washington DC 20036.
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