The legal basis of flash-like expropriation

Frankfurter Allgemeine Zeitung about the atrocities of о the Russian capitalism

The informational war around the property of Ilim Pulp Enterprise is going on. Now the conflict has taken the international scale. The interest of foreign business to the Russian pulp and timber industries is rather large. The conflict with the Kotlas Pulp and Paper Mill is getting more and more serious. Now this controversy might cause damage to the image of the Russian state in the whole world. But is it that important?

Spokeswoman for the Council of Federation at the Russian Ministry for Justice, Tatiana Konovalova, stated yesterday that Ilim Pulp was misleading the society. The investment schedule of Kotlas Pulp and Paper Mill has not been executed. Therefore, the lawsuit from a small minority shareholder and the court decision on that suit were legal and legitimate. Ilim Pulp’s General Director Sergey Kostylev said in his interview to the German newspaper Frankfurter Allgemeine Zeitung that he was feeling robbed as a result of the flash-like “expropriation on legal basis.”

Sergey Kostylev said to the German newspaper that he addressed to a well-known firm of attorneys Courdert Brothers. As he stated, attorneys estimated the conflict as some sort of a litmus paper. This paper tests the actions of the Russian government, which were meant to control the negative events of the new Russian economy. It goes about the legal abuse, particularly on the part of those companies, which register joint-stock companies.

Frankfurter Allgemeine Zeitung cited the opinion from the head of Courdert Brothers’s representative office in Russia, Richard Dean. He declared that Ilim Pulp was a Russian enterprise with very good perspectives. There are 30 thousand people employed at the Kotlas Pulp Mill, it is the largest enterprise in Europe. The production output at the enterprise made up 4.4% over the first seven months of 2002. Kotlas Pulp Mill belongs to Ilim Pulp Enterprise since 1995. This is the leading producer of cardboard and cellulose in Russia. There are 49 thousand people employed at Ilim Pulp. The company controls pulp and paper mills in other cities of Russia. Ilim Pulp Enterprise’s share of cellulose production in Russia is 61%. The share of cardboard production of the enterprise is 77%. As a matter of fact, this is the pulp monopoly. This monopoly has a foreign capital in its assets, the company is well disposed to the mutually beneficial cooperation with foreign partners.

The German newspaper did not count the numerous compromising material against the administration of Ilim Pulp Enterprise. The newspaper describes the development of the conflict as a real Russian action movie of 1991, when corrupted officials and an aggressive oligarch conspired to get hold of the prosperous business of the respectable company. Of course, the law-abiding owners of the business cannot do a thing about the guileful and mean methods of the new Russian mafia. One has to admit that such a story can bring a lot of harm to a lot ofWestern businessmen that are not very well acquainted with up-to-date Russian reality.

The newspaper cited Frank Graves, the chief operating officer of Ilim Pulp Enterprise. He affirmed that the company suffered losses as a result of the conflict, the losses were evaluated in hundreds of thousands of dollars. The wood-working industry is vital for the entire Arkhangelsk region (this is the region, where the Kotlas Pulp Mill and Ilim Pulp are located). The industry supplies the region with one-third of all budgetary revenues. However, even the governor of the region refused Ilim Pulp in his support. He was definitely afraid of the mafia. The company was forced to write a letter to President Putin.

Vladimir Putin was not elected for wiping the noses of all offended businessmen. The Russian president can not provide the normal way of holiday allowance payments to teachers. Furthermore, practically all Russian officials and courts claim that the company Siberian Aluminium got hold of the control shareholding of pulp and paper mills in Kotlas and Bratsk absolutely legally. They also say that Ilim Pulp’s management was not running the business well, violating the terms of the investment agreement. This was allegedly the reason for the Russian Fund for Federal Property to put Ilim Pulp’s shares on online auction. Russian oligarch Oleg Deripaska happened to show up in the right place at the right time, that’s all. He just thought that it would be good to purchase a couple of pulp mills, he had a lot of money for that. At the end of the day, why mustn’t Vladimir Putin believe his own electors? Why not trusting officials and oligarchs, who voted for him at the presidential elections?

What could a foreign newspaper do? Understand all nuances of the current political and economic situation in Russia? Russia’s economy is actually in a critical position, despite all those affirmations of its progress and growth. Both Russian and foreign experts agree that the present situation is very similar to the one of 1997, when no one even thought about a possibility of a crisis. Next year will be remarkable for its huge foreign debt payments. This will also be the year of the elections to the State Duma of Russia. This means that all candidacies will feel sorry for the yearnings and sufferings of their electorate. Presidential elections will take place a year after. If there is no money in the treasury, then the situation will exacerbate even more. Those people, who helped Putin to come to power, might change their preferences. The Russian state will continue the policy of “obtaining the welfare.” The state will entrust this to the people, who managed to prove their abilities and loyalty to the incumbent president. There is no other way.

We wish Russian courts could make fair judgements. We wish property conflicts could be settled without dirty methods. But the state treasury is in need of money. They don’t know a better way for that except for a flash-like expropriation.

Dmitry Slobodanuk PRAVDA.Ru

Translated by Dmitry Sudakov