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The Russian Racket

"Open" joint stock company....
"Open" joint stock company....

Novaya gazeta” this week reported the surprising information that on April 13 the son of Rosneft Vice President Mikhail Stavsky (also named Mikhail) was kidnapped. According to some information, the kidnappers are seeking 50 million euros in ransom, while other sources say no demands have been made in the nearly two months since the abduction.

As the newspaper reports, kidnappings among the Russian business elite have been booming in recent years, almost approaching the levels seen in the lawless days of the 1990s. The paper lists nearly a dozen cases since 2005.

But the Stavsky case is shocking because Rosneft is controlled by Deputy Prime Minister Igor Sechin, the shadowy figure usually portrayed as being at the dark heart of Russia’s secret-services-based kleptocracy. Stavsky, being a senior member of Sechin’s team, is about as close to the center of power as one can get. If he is vulnerable, what does that mean? As “Novaya gazeta” writes, “either the criminals have once and for all lost any sense of fear, or they have such highly placed protectors that they feel they can go after the senior managers of the largest Russian companies.” A former Federal Security Service source told the newspaper that the person who ordered this kidnapping “fears nothing and has total confidence in his power.”

The fact that two months have passed without a resolution to the crisis would also indicate that Sechin’s hands are tied. Commentator and analyst Yulya Latynina has a nice piece arguing that the growing lawlessness in Russia is a sign that there is no such thing as a "power vertical." Maybe it is time to rename this blog?

The paper also reports that, according to its investigations, nine such cases out of 10 are carried out by former and active agents of the state security organs – the FSB, the Interior Ministry, the Defense Ministry, and so on. “And not just ordinary operatives,” the paper writes. “As a rule, these people are perfectly informed about every step being taken by investigators and in their telephone conversations they refer to investigators and agents working on the cases by name. In addition, they have modern special technology for eavesdropping and access to police databases containing confidential information about their victims and their families.”

The same issue of “Novaya gazeta” reports on another way corrupt elements in the secret services skim off the top – the establishment of “charitable funds” and nongovernmental organizations to support, you guessed it!, the secret services. The paper reports about 20 such organizations are registered in Moscow alone and that state companies (including major ones like Sechin’s Rosneft or Gazprom) are among their major supporters. Of course, Russian law does not force state companies to reveal how much of their money goes to support such “charitable” work, but minority-shareholders representative Aleksei Navalny is pushing to force them to open their books. (Navalny's blog.)

He is not only concerned about how much money these companies are spending in this way, but also about the likelihood that such donations are given in exchange for officials turning a blind eye to other, much grander corruption within the companies’ finances.

Interestingly, one of the charitable funds discussed in the “Novaya gazeta” report is devoted to arranging exotic hunting trips for members in Siberia and Altai, regions where officials in recent months have been caught up in outrageous poaching scandals involving slaughtering endangered animals from helicopters with high-powered rifles.

The “Novaya gazeta” investigation makes interesting reading. Although everyone is closed-mouthed about these funds, what they do, and how they are financed, the report traces circumstantial associations between people involved in them and companies such as Germany’s Ruhrgas (involved in a lucrative little energy deal in Sochi connected with the 2014 Winter Olympics) and individuals such as notorious arms merchant Viktor But.

-- Robert Coalson

About This Blog

The Power Vertical
The Power Vertical

The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It offers Brian's personal take on emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or


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