Amnesty for business leaders as Moscow tries to attract more foreign investments
Despite a growing economy, Russia has attracted only one-fifth the investment of China and Brazil and half that of India in the past three years, this according to EPFR Global of Cambridge, Massachusetts.
Experts believe that this relative failure is the result of policies under President Vladimir Putin, which led to the arrest of foreign investors on a number of pretexts as part of a power struggle within Russia.
Yana Yakovleva, owner of Moscow chemical distributor Sofex Co, spent seven months in jail awaiting trial in 2006-07 before she was acquitted of trafficking in dangerous substances.
“The current environment is like swimming with crocodiles in a pool of sulphuric acid,” she told Bloomberg. “There’s a war on business people in Russia, and it’s purely business for officials. They can charge you with any crime and incarcerate you to extort money.”
Russia’s justice system is partly a remnant from Soviet times, geared towards repression with police and courts exerting wide powers.
Andrei Nazarov, deputy head of the committee that handles civil and criminal legislation in the lower house of parliament, said that the amnesty will not come as “one law but as a series of legal changes”.
“At least 100,000 businessmen will be released from prison or will have to spend less time in jail. This will happen within the next year and a half,” he explained.
President Medvedev wants to show that the legal rights of foreign investors will be protected. About one fourth of the 900,000 people in Russian jails are accountants, entrepreneurs, legal advisers or mid-level managers.
For the purpose of greater transparency, all court documents will be available on the Internet as the result of a law that took effect on 1 July.
A case in point is that of Mikhail Khodorkovsky, former CEO of the Yukos Oil Co. Once regarded as Russia’s richest man, and number 16 in the world, he is now serving eight years for fraud and tax evasion.
After his arrest in 2003, Yukos went bankrupt and the government sold its assets to recover more than US$ 30 billion in taxes when current Prime Minister Vladimir Putin was president.
Khodorkovsky has always maintained that his company was in good financial health, and that he was targeted because he opposed Putin.
What happened to Sergei Magnitsky was even worse. A lawyer for London-based Hermitage Capital Management Ltd, Magnitsky was arrested in 2008 for tax evasion after he had testified that tax officials, bankers and other powerful Russian figures had been involved in tax fraud against the Russian treasury.
He was held in prison and denied proper medical care. He died on 16 November 2009, eight days before the one-year limit detention without trial expired. The cause of death was the rupture to the abdominal membrane, followed by a heart attack.
Despite the proposed changes to the law, many experts remain sceptical. For them, tinkering with the legal framework will not earn Russia greater international respect; what is needed is an entire overhaul of the way justice is delivered, including real respect for legal rights.
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