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Russia Report: May 20, 2004

20 May 2004, Volume 4, Number 19
In the past, it was not uncommon for a governor to face a criminal investigation after he was no longer in office. For example, the administration of former Krasnoyarsk Krai Governor Valerii Zubov was subjected to close scrutiny once Aleksandr Lebed became governor. More recently, the trend has been for prosecutors to target sitting governors.

This week, Saratov Governor Dmitrii Ayatskov went on administrative leave while a criminal case against him is concluded. The oblast prosecutor, Anatolii Bondar, has already filed charges against Ayatskov for abuse of office and exceeding the authority of his position. In 1998, Ayatskov allegedly authorized the payment of 70 million rubles ($2.4 million) from the oblast budget to cover customs duties on some imported harvesters that a local company, Agroton, was unable to pay, RFE/RL's Saratov correspondent reported. The company had been hit by the fall in the ruble during the financial crisis that year.

Ayatskov maintains that he is being investigated for political reasons. Ayatskov is up for re-election for his third term next year, and he was quoted by "Izvestiya" on 18 May as saying that it is not accidental that his former deputy governor, State Duma Deputy Speaker (Unified Russia) Vyacheslav Volodin, was in Saratov on the day criminal charges were filed. Volodin is considered a likely contender in the election. In an interview with "Gazeta" the same day, Volodin said that his appearance in Saratov really was just a coincidence. He also refused to confirm or deny that he would run for governor, saying that any answer that he gave now would necessarily be tentative since the election is more than a year away.

Volodin's name has been bandied about as a possible gubernatorial candidate since as early as 1999. While Volodin was still deputy governor of Saratov Oblast, Ayatskov reportedly tried on at least two occasions to place Volodin in a federal ministry in Moscow. Ayatskov labeled these efforts an attempt to establish a pro-Saratov lobby in the federal center, but less charitable sources interpreted his desire to transfer Volodin to Moscow as an attempt to eliminate future competition.

Fast forward several years, and it is Volodin and his backers who are suspected of trying to eliminate Ayatskov as competition by unleashing the prosecutor's office against him. If the sudden investigation of a five-year-old "victimless" crime has indeed been ordered up, Ayatskov can perhaps learn from the examples of fellow governors who also faced prosecutorial scrutiny during the lead-up to a re-election bid. In the past year, Tver Oblast Governor Vladimir Platov and Koryak Autonomous Okrug Governor Vladimir Loginov both fought re-election campaigns while under investigation.

Tver Governor Platov failed to even make it past the first round in the election held in December. And this week, the Prosecutor-General's Office sent a criminal case on abuse of office against Platov to the court. In Koryak Autonomous Okrug, Loginov was luckier. He managed to win re-election in the second round, defeating his main challenger, okrug prosecutor Boris Chuev.

While the battles between prosecutors and governors reached some kind of closure in Tver and Koryak, the governors of Kamchatka and Ivanovo oblasts find themselves in a predicament similar to Ayatskov's. Like Ayatskov, both maintain their innocence and link the investigation to politics. In Ivanovo, the oblast prosecutor announced an investigation of oblast Governor Vladimir Tikhonov's real-estate transactions in March 2003; however, the allegations about Tikhonov's apartment first surfaced during the December State Duma campaign. At the time, Tikhonov charged that Unified Russia was trying to discredit him both as governor and as a Communist, "Nezavisimaya gazeta" reported on 5 April. Tikhonov challenged investigators to prove their allegations. And last March, they seized documents from the oblast administration relating to how the construction of Tikhonov's apartment was financed. They might be rising to his challenge.

In Kamchatka, the prosecutor's case against Communist Governor Mikhail Mashkovtsev seems to be moving more quickly. On 17 May, he was summoned to the oblast prosecutor's office. The prosecutor has also assigned a monetary value of 7.18 billion rubles ($247 million) in damages caused by Mashkovtsev's 2002 decision to lift quotas on salmon, reported on 12 May. Mashkovtsev is facing re-election in December; but if he is actually convicted, he might not merely forfeit the chance at a second term but face 10 years in prison. (Julie A. Corwin)

The Interior Ministry's directorate for the Northwest Federal District revealed that a director of one of the republican government's departments funneled budget money to a local organized crime group, Interfax and RIA-Novosti reported on 11 May. The director, whose name has not yet been disclosed, signed various agreements amounting to tens of millions of rubles in 2000 and 2001 for work that was never done. The damage to the republican budget is estimated to total more than 41 million rubles ($1.4 million). JAC

The legislature of the Republic of Khakasia adopted a resolution on 12 May asking President Vladimir Putin to intervene in its dispute with Unified Energy Systems (EES) over the Sayano-Sushensk dam and electricity complex, reported the next day (see "RFE/RL Newsline," 6 May 2004). The catalyst for the legislature's appeal was an announcement by EES Chairman Anatolii Chubais that the dam may be re-registered in Krasnoyarsk. The plant is located on the border between the two regions. If this happened, Khakasia would lose its biggest taxpayer. EES shareholders will meet on 21 May to decide whether to re-register Sayano-Shushensk. In addition, Deputy Economic Development and Trade Minister Andrei Sharonov announced on 13 May that EES may file an appeal with the Supreme Arbitration Court challenging an earlier decision by the Arbitration Court of the Siberian Federal District declaring the 1993 privatization of the dam illegal. JAC

EES has recently rebuffed an offering by the republic to settle the dispute. Khakasian Republic leaders signaled that they are ready to drop their legal action challenging the dam's privatization, if the EES agrees to cut its electricity rates, "Vedomosti" reported on 12 May. EES spokesman Andrei Yegorov told the daily, "We do not see a possibility of reaching a peace agreement, because we consider the privatization of Sayano-Shushensk to have been absolutely legal." According to "The Moscow Times" on 13 May, Russian Aluminum is the dam's chief customer, using up to 70 percent of its electricity. Khakasia Republic President Aleksei Lebed is considered a close ally of Base Element head Oleg Deripaska (see "RFE/RL Russian Federation Report," 3 January 2001). Base Element owns 50 percent of Russian Aluminum. JAC

The president of Khakasia Lebed was hospitalized and underwent surgery for arterial thrombosis, RIA-Novosti reported on 19 May. The president's press service did not confirm this report, noting only that Lebed is on vacation until 27 May. Lebed will be sent to Moscow for further medical treatment. Lebed has been under some stress lately: "Rossiiskaya gazeta" reported on 19 May that Lebed fears that Unified Energy Systems shareholders may decide at a meeting on 21 May to re-register the Sayano-Shushenskaya power plant and dam in Krasnoyarsk rather than Khakasia. JAC

Krasnodar Krai Governor Aleksandr Tkachev's declared intention to attract new, young, ambitious people to his administration and to banish nepotism has not yet taken a firm hold, "Krasnodarskii kurer," No. 16, reported. Tkachev has named all of his new department directors, and many of them are connected by family ties or long-standing friendships to various local political leaders. For example, the new director of industry and forest resources, Aleksandr Dyachenko, is the brother of the new Deputy Governor Nikolai Dyachenko. The new director of the social protection department, Liliya Yegorova, is the daughter of the former krai governor Nikolai Yegorov. She is also reportedly married to a relative of Governor Tkachev's. The new director of the mass-media department, Yevgenii Filimonov, is a long-time friend of Deputy Governor Murat Akhedzhak. Filimonov, the former editor of the newspaper and "krai administration mouthpiece" "Kubanskie novosti," wrote a declaration about participating in a competition for vacant government positions. This competition was overseen by Akhedzhak. JAC

Yelena Baturina, the wife of Moscow Mayor Yurii Luzhkov, has joined the list of Russia's 100 richest businesspeople compiled by "Forbes" magazine, REN-TV reported on 12 May in advance of its publication on 13 May. "Forbes" estimated Baturina's fortune at $1.1 billion. The magazine also noted that no other city in the world besides Moscow has such a large concentration of billionaires. According to "The Moscow Times," "Forbes" found that the wealth of Russia's 36 billionaires equals one-quarter of the country's gross domestic product, or $110 billion. JAC

Meanwhile, "Gazeta" reported on 11 May that Baturina's company, Inteko, has obtained a 100 percent stake in the company Pikalevskii Cement, the largest cement producer in the Northwest Federal District. With its new acquisition, Inteko will be able meet 15 percent of Russia's cement demand and enter into the housing-construction market in St. Petersburg. Inteko now ranks second in terms of cement production in Russia. Analysts of the construction market, whom the newspaper did not identify, predicted that Inteko will enter the St. Petersburg housing market within the next six months. JAC

In an interview with on 13 May, Samara Oblast Governor Konstantin Titov said that he believes that the State Council and Federation Council have outlived their usefulness. He noted that the State Duma's party of power already has a 300-plus majority, leaving the Federation Council little to do besides appoint judges and prosecutors and declare war. "When it was created, the State Council was -- and I understood this -- a 'shelter' for governors," he said. The governors had once served as senators, but under the new rules of formation for the Federation Council, they had to appoint representatives instead. Titov concluded that it is not necessary to return Russia to a country of councils, but to build democracy according to an accepted pattern through the separation of representative, executive, and judicial powers. He also said that he supports the process of enlarging regions through mergers, and suggested that the optimal number of regions in Russia will ultimately be linked to the reform of the government service and administrative system. "If we have [seven] federal districts, then we can divide them into three to four parts, which would be 21-28 federation subjects, or if we break them up into five parts, that would be 35." JAC

Indem Foundation released a report this week advising the Russian government to raise the salaries of state officials by 300-500 percent and to introduce a progressive scale for pensions taking into account the length of their service in the government, "Vedomosti" reported on 18 May. According to the daily, the authors of the report contend that the lower the level of corruption, the less money is spent on the upkeep of the state apparatus, insofar as the elimination of bribes will indirectly increase public wealth. According to Indem's researchers, President Putin's April decree raising wages for state officials did not increase them enough, and the difference of cash rewards of various ranks is not high. They argue that the "material stimulus" for state officials might be no less than 20 times the difference between the minimum and maximum wages. The table below shows that while Russia fares poorly in terms of Transparency International's (TI) corruption index with a score of 86 (1 being the least corrupt), Russian officialdom, in particular its prime minister, earns quite a bit less than other countries' top leaders. JAC

Country__Prime Minister's Salary______Rank of Country
________in U.S. Dollars_______________in TI Corruption
_______________________________Index for 2003

Hong Kong_____$628,326_______14



Great Britain___$318,782________11

New Zealand___$304,996________3













Czech Rep._____$17,475________54



Source: "Skolko zarabatyvayut premer-ministry," "Kommersant-Daily," 29 March 2004.

OUT: The presidium of the Communist Party decided on 18 May to expel Gennadii Semigin, State Duma deputy and chairman of the People's Patriotic Union's Coordinating Council, ITAR-TASS reported. The reason given for the expulsion was "Semigin's activities introducing dissension into the party's rank and undermining the party's reputation." In January, Zyuganov issued an official party press release accusing Semigin and his ally, party Secretary Sergei Potapov, of trying to "buy" the secretaries of several regional party organizations (see "RFE/RL Newsline," 14 January 2004). Semigin countered by blaming Zyuganov for the party's poor performance in Duma election in December 2003.

OUT: Prime Minister Mikhail Fradkov has dismissed from their posts First Deputy Minister for Property Relations Yurii Medvedev and Deputy Minister for Economic Development and Trade Mukhamed Tsikanov, Prime-TASS reported on 13 May. The Property Relations Ministry was liquidated under an earlier decree and its functions were transferred to the Ministry for Economic Development and Trade and the Federal Agency for the Administration of Federal Property.

IN: Yelena Baturina, the wife of Moscow Mayor Yurii Luzhkov, has joined the list of Russia's 100 richest businesspeople compiled by "Forbes" magazine, REN-TV reported on 12 May in advance of its publication on 13 May. "Forbes" estimated Baturina's fortune at $1.1 billion.

IN: The Federation Council on 12 May approved the appointment of former Federation Council First Deputy Chairman Valerii Goreglyad as an auditor with the Audit Chamber, RosBalt reported. Goreglyad stepped down as first deputy chairman of the upper legislative chamber in January, but remained a representative for Sakhalin Oblast. Senators also confirmed two candidates for the Russian Supreme Court, Valentina Yemysheva and Galina Gulyaeva, ITAR-TASS reported. Both women served previously in the Moscow City Court.

20 May: EU delegation headed by EU Trade Commissioner Pascal Lamy will visit Moscow to discuss Russian entry into the WTO

20-21 May: Conference of mayors of European and Russian mining towns to be held in Rostov

21 May: Russia-EU summit will be held in Moscow

21 May: A delegation of the Russian Orthodox Church Abroad will visit Yekaterinburg, where they will pray at the site where Tsar Nikolas II and his family were killed

21 May: The results of the Audit Chamber's check on the activities of Chukotka Autonomous Okrug Governor Roman Abramovich will be announced, according to Audit Chamber head Sergei Stepashin on 15 May

21 May: The Council of CIS Defense Ministers will meet in Yerevan

21 May: Women's world chess championship will be held in Elista, Kalmykia

21 May: Unified Energy Systems shareholders will consider whether to re-register Sayano-Shushenskaya power plant and dam in Krasnoyarsk rather than Khakasia

21-22 May: The Federation Council's Committee on Questions of Local Self-Rule together with the State Duma Committee on Local Self-Rule will hold a joint seminar in Cheboksary on implementation of the federal law on "general principles for organizing local self-rule"

22-23 May: The New Rightists political movement will hold a founding congress in Moscow

22 May: Russian Finance Minister Aleksei Kudrin will take part in a meeting of G-8 finance ministers in New York City

23 May: The presidents of Russia, Belarus, Ukraine and Kazakhstan will meet in Yalta

23-25 May: Russian Writers' Union will meet in Orel

24-25 May: Georgian Prime Minister Zurab Zhvania will visit Moscow

24-27 May: Russian Air Force Commander Vladimir Mikhailov will visit France

27-29 May: Egyptian President Hosni Mubarek will visit Russia

30 May: Date by which prosecutors must either complete their criminal investigation of former Yukos head Mikhail Khodorkovskii or ask a Moscow court to extend his period of pretrial detention

30 May: Passenger train route between Moscow and Grozny will begin operations

End of May: Date before which President Putin will deliver his annual message to the State Duma and Federation Council

June: Shanghai Cooperation Organization will meet in Tashkent

June: Tentatively scheduled for President Putin to give his annual address to the Federal Assembly, RosBalt reported on 30 April

1 June: State Duma will hold hearings on possible ratification of the CFE treaty

1 June: New deadline for exchanging Soviet-era passports for new Russian passports

1 June: The armed forces will begin forming a permanent peacekeeping brigade based in the Volga-Urals Military District

1 June: The presentation of the seventh volume of the Orthodox encyclopedia will be held in Vatican City

2 June: Prime Minister Fradkov invited to speak to the Duma on the topic of wage arrears

3 June: Communist Party will hold congress to hear reports and elect leadership positions

7 June: President Putin will visit Mexico

7 June: The trial for the murder of State Duma Deputy Galina Staravoitova will resume in St. Petersburg

8-10 June: G-8 summit will be held in Sea Island, Georgia

14-18 June: Eighth annual St. Petersburg International Economic Forum will be held

Late June: The Supreme Shaman of Siberia, Toizin Bergenov, will visit Moscow in order to conduct a ritual purging of the State Duma building of evil spirits, Interfax reported on 6 May

20 June: Former Beatle Sir Paul McCartney will perform a concert in St. Petersburg's Palace Square

20 June: Union of Rightist Forces will hold party congress

25 June: Gazprom will hold a shareholders meeting

27 June: International Atomic Energy Agency chief Muhammad el-Baradei visits Russia.

28-29 June: President Putin expected to attend NATO summit in Istanbul

1 July: First anniversary of the creation of Federal Antinarcotics Agency

2 July: End of State Duma's spring session

4 July: Vladivostok will hold mayoral election

1 August: Deadline for the Finance Ministry to present a draft 2005 budget to the government

26 August: Deadline for the government to introduce draft 2005 budget to the State Duma

September: St. Petersburg's Hermitage Museum plans to open the Hermitage Center, which will exhibit works from the Hermitage's collection, in the city of Kazan

5 September: Presidential elections are tentatively scheduled in Chechnya

15-18 September: The third international Conference of Mayors of World Cities will be held in Moscow

October: President Putin will visit China

31 October: Presidential elections in Ukraine

November: Gubernatorial election in Pskov Oblast

22 November: President Putin to visit Brazil

December: A draft law on toll roads will be submitted to the Russian government, according to the Federal Highways Agency's Construction Department on 6 April

December: Gubernatorial elections in Bryansk, Kamchatka, and Ivanovo oblasts.