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Russia: Stand-Off At Vodka Distillery Continues

Over the weekend, Russia's leading vodka distillery was raided by two separate armed gangs within 24 hours. The gangs, acting respectively on behalf of the distillery's current and former directors, were still occupying the site today. RFE/RL Moscow correspondent Sophie Lambroschini visited the century-old Kristall distillery and filed this report about the latest instance of Russian corporate warfare.

Moscow, 7 August 2000 (RFE/RL) -- At a recent meeting with President Vladimir Putin, some of Russia's leading businessmen pledged to go about their work under new, more civilized rules. But the current stand-off between two opposing shareholder groups at Moscow's Kristall distillery -- producer of Stolichnaya and other well-known vodka brands -- shows that old habits die hard. In the past decade, force has become a common way of imposing influence and redistributing property in Russia's few and therefore precious profitable factories.

Both Kristall's present director, Aleksandr Romanov -- who was appointed with the government's consent -- and former Director Aleksandr Svirsky, have now spent three nights at the distillery. With their respective security forces, each is occupying different parts of the building. Each has warned that the other may use force. This morning, the private NTV channel showed one security man taking an order for weapons to bring in case of a raid -- truncheons, tear gas, and a gun.

The atmosphere at Kristall first turned tense Friday evening (Aug. 4), when the tax police raided the distillery and demanded documents as part of an investigation into an alleged tax debt of almost $1 million (2.5 million rubles). A few hours later, distillery director Romanov and his combat-uniformed security men arrived, forced their way into the building, and blocked former Director Svirsky and his security team from entering the main wing.

The rival directors represent different blocs of shareholders. Romanov, who said he had come to "re-establish the state's control" over the distillery, was recently elected Kristall's director by a majority of shareholders -- including the state, which controls 51 percent of the shares. The state's shares have been given in trusteeship to the Moscow municipality, which openly supported Romanov's election. Today, Romanov's security men still controlled the factory's management offices.

But Svirsky says that the shareholders' decision was illegal. Svirsky is considered the representative of Kristall's private shareholders. He is a supporter of Kristall's former longtime director Yuri Yermilov, and he took over as acting director when Yermilov was ousted at the end of May. Svirsky's men today controlled the production facilities.

Svirsky argues that both Yermilov's dismissal and Romanov's appointment were illegal. In support of his claim, he cites a June 17 Moscow court decision against the change of directors.

"We developed the factory, we're giving the state and the country fuel, in the form of liquid energy (vodka), we pay our taxes -- and all of the sudden they decide to change the leadership. We don't understand what happened. There was a court decision and the court said that was illegal. "

While all this was transpiring, according to workers at the factory, vodka production went on as usual. Our correspondent reports that in an almost hospital-like atmosphere of cleanliness, conveyor belts today carried clanking empty bottles to automatic filling stations and further on to packing facilities. But one man, who was busy transferring empty vodka bottles from boxes to a conveyor belt, seemed uncertain of the future.

"I don't know whose orders we're obeying -- some director or other. Maybe they'll kick us all out. We don't talk about it [the conflict], we don't have time, we do everything manually, as you can see. We don't have time, we have to make a lot of vodka, our job is to work, to work and that's all. "

The stand-off at the Kristall distillery may turn out to be only the first of several such conflicts triggered by President Putin's avowed plan to regain control of one of Russia's most profitable and also most criminalized economic sectors -- the making of hard spirits. In many of Russia's cash-strapped regions today, vodka is still perceived as a stable currency -- making it a business as profitable as diamonds or oil.

Bootleg vodka production has become a good source of revenue for organized crime groups -- and also for regional governors. In fact, says political analyst Nikolai Petrov, many of the distilleries themselves are major bootleggers, selling most of their produce illegally.

Petrov says vodka has recently become an important political tool that the state must bring under control if it is to effectively submit the regions to a central authority. Centralizing political authority is a main project of Putin's, and Petrov says that's why Putin took two key measures on vodka last spring. First, the president announced the creation of Rosspirtprom, a state holding-group that will take over the 50 distilleries in which the state has a controlling stake and the 20 more where it is a minority shareholder. The second measure was a plan to transfer state control over the distribution of vodka trademark licenses to a government structure.

The new mechanism of state control was bound to disturb long-established bootleggers. Some analysts see the Kristall conflict in those terms, noting that that former long-time Kristall Director Yermilov had been considered an opponent of the Rosspirtprom state monopoly.

Soyuzplodimport, one of Kristall's private shareholders, has also complained about state pressure. The company recently accused the state of ordering police raids to force it to give up its vodka licensing business.