[Joint House and Senate Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
111th Congress Printed for the use of the
2d Session Commission on Security and Cooperation in Europe
______________________________________________________________________
BEYOND CORPORATE RAIDING: A DISCUSSION OF ADVANCED
FRAUD SCHEMES IN THE RUSSIAN MARKET
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
NOVEMBER 9, 2010
Briefing of the
Commission on Security and Cooperation in Europe
______________________________________________________________________
Washington: 2015
Commission on Security and Cooperation in Europe
234 Ford House Office Building
Washington, DC 20515
202-225-1901
[email protected]
http://www.csce.gov
Legislative Branch Commissioners
SENATE HOUSE
BENJAMIN L. CARDIN, Maryland, ALCEE L. HASTINGS, Florida,
Chairman Co-Chairman
CHRISTOPHER DODD, Connecticut EDWARD MARKEY, Massachusetts
SAM BROWNBACK, Kansas LOUISE McINTOSH SLAUGHTER,
SAXBY CHAMBLISS, Georgia New York
RICHARD BURR, North Carolina MIKE McINTYRE, North Carolina
ROGER WICKER, Mississippi G.K. BUTTERFIELD, North Carolina
JEANNE SHAHEEN, New Hampshire JOSEPH PITTS, Pennsylvania
SHELDON WHITEHOUSE, Rhode Island ROBERT ADERHOLT, Alabama
TOM UDALL, New Mexico DARRELL ISSA, California
EXECUTIVE BRANCH COMMISSIONERS
MICHAEL POSNER, Department of State
ALEXANDER VERSHBOW, Department of Defense
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* * * * *
ABOUT THE ORGANIZATION FOR SECURITY AND COOPERATION IN EUROPE
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* * * * *
ABOUT THE COMMISSION ON SECURITY AND COOPERATION IN EUROPE
The Commission on Security and Cooperation in Europe, also known as the
Helsinki Commission, is a U.S. Government agency created in 1976 to
monitor and encourage compliance by the participating States with their
OSCE commitments, with a particular emphasis on human rights.
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with
parliamentarians, government officials, representatives of non-
governmental organiza-
tions, and private individuals from participating States. The website
of the Commission
is: .
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BEYOND CORPORATE RAIDING: A DISCUSSION OF ADVANCED FRAUD SCHEMES IN THE
RUSSIAN MARKET
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November 9, 2010
WITNESS
Page
Alexei Navalny, Founder, Minor Shareholders Association................
3
PARTICIPANT
Kyle Parker, Policy Advisor, Commission on Security and Cooperation in
Europe.................................................................
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BEYOND CORPORATE RAIDING: A DISCUSSION OF ADVANCED FRAUD SCHEMES IN THE
RUSSIAN MARKET
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November 9, 2010
Commission on Security and Cooperation in Europe
Washington, DC
The briefing was held at 2:00 p.m. EST in 1539 Longworth House
Office Building, Washington D.C., Kyle Parker, Policy Adviser, Helsinki
Commission, presiding.
Mr. Parker. I'd like to call the briefing to order. Welcome
everybody, on behalf of our chairman, Sen. Ben Cardin, to today's
briefing at the Helsinki Commission entitled, ``Beyond Corporate
Raiding: A Discussion of Advanced Fraud Schemes in the Russian
Market''. We are very happy to have Alexei Navalny here as our featured
panelist.
This is a public briefing. It is being recorded and will be
transcribed and result in an official government transcript, much like
a hearing. We are able to take public questions. So please, while you
listen to the presentations, be thinking of good questions. One of my
favorite parts of a briefing is that we really can have almost an
informal, focused, guided discussion.
Before we begin, I just wanted to mention a couple quick things
about the commission. We were founded in 1976 by an act of Congress,
and our mandate is to monitor the implementation of the Helsinki
Accords and subsequent commitments; and with particular focus on the
third dimension, which is the human dimension.
As the basis for our work, one of the commitments, the 1991 Moscow
concluding documents, states, ``The participating states emphasize that
issues relating to human rights, fundamental freedoms, democracy and
the rule of law are of international concern. As respect for these
rights and freedoms constitutes one of the foundations of international
order, they categorically and irrevocably declare that the commitments
undertaken in the field of the human dimension of the CSCE are matters
of direct and legitimate concern to all participating states, and do
not belong exclusively to the internal affairs of the state
concerned.''
So that's sort of the framework and the basis in which we operate.
The topic of this briefing sort of grew out of a lot of our focus this
year on rule of law, corruption, transparency, good governance issues--
particularly in Russia. And certainly, the past few weeks, there's been
no shortage of items in the news.
I also just wanted to read into the record a couple quick
statements on the issue of corruption in Russia from three Russian
leaders, and the first is from President Yeltsin: ``I know that you
have some doubt in our victory over corruption. But I have resolve and
political will, and your support in this fight. I will fight this to
the end. People will be afraid to misappropriate public funds and take
bribes.'' That was in 1997.
Something from Putin: ``I make this point now because despite all
the efforts we have made, we have still not managed to remove one of
the greatest obstacles facing our development--that of corruption.''
And now, a couple words from President Medvedev: ``Corruption is
the greatest enemy of a free and democratic society.'' And a little
more at length here, in an address to the Federal Assembly in 2009--
President Medvedev again:
``Personal success, encouragement of initiative, a better quality
of public discussion and zero tolerance of corruption should become
part of our national culture, an intrinsic part of who we are. In
Russia, we often say that there are a few cases in which corrupt
officials are prosecuted.
I want to cite a few figures: In just six months of this year, we
have received more than 4,500 cases of corruption, convicting 532
officials of government authorities and local self-government bodies,
and more than 700 law-enforcement officers.
These figures unfortunately show the extent to which corruption has
infected our society. However, simply incarcerating a few will not
resolve the problem. But incarcerated they must be. To successfully
combat corruption, all spheres of government must become more
transparent, including the activities of public authorities, courts and
other judicial bodies. We shall overcome underdevelopment and
corruption because we are a strong and free people, and deserve a
normal life in a modern, prosperous democratic society.''
I thought it might be helpful to put those out. I know we're quite
familiar with statements of legal nihilism and other things, but to
have some of that before us in a little bit more detail.
Today's briefing also features some testimony for the record from a
couple people who unfortunately could not be with us today. The first
one is Yana Yakovleva, who is a Russian businesswoman. And she had an
experience of being arrested under false pretenses and spending the
better part of a half of a year in jail; a phenomenon that's
unfortunately all too common in the Russian market. And she now
continues her work at her company; as well, splits her time with a new
NGO called Business Solidarity.
She has worked with Olga Romanova, who is the editor of Forbes
Russia, which I might remind people is the publication that the late
Paul Klebnikov worked for. She worked with Yana to compile a list of
cases that they are working on, and that's been distributed out of the
table and will be made part of the record.
Olga's husband is currently in jail, in one of these similar types
of extortion schemes, and it has only recently been discovered what
facility he was in. For some time, she was not aware of his whereabouts
or whether he was even alive. He is alive, and I believe he, with the
help of some people on the outside, have started an award-winning blog
called the ``Butyrka blog''. And Butyrka is an infamous Russian
detention facility in Moscow.
So please do take a look at their submissions. And I know Alexei is
quite familiar with a number of the cases that are in those
submissions, so should questions arise--we also have something for the
record on the case of Fedor Mikheev. Only last Thursday--first time in
the public domain, again, a similar story of kidnapping, extortion, all
manner of, all manner of, well, I don't quite know what you'd call it.
I guess, these advanced fraud schemes.
And there is a submission, it's out there on the table. It goes
into a lot more detail than the Financial Times article did. One of the
interesting things is, the people involved in this particular case--
again, Fedor Mikheev is currently in jail--are almost, to a person, the
same people who were involved in the fraud against Hermitage Capital
Management and the death of attorney Sergei Magnitsky.
I am happy to have permission to include an article by Thomas
Firestone, who was our resident legal advisor at embassy in Moscow. Tom
may be joining us today, and certainly there is really nobody who knows
this issue better in the U.S. government than Tom. And so please, if
you have a chance, his article ``Armed Injustice'' is on the table and
will be included in the record.
With that, I would like to turn it over to our featured panelist,
Alexei Navalny, whose bio is on the table. Alexei was nominated, I
believe, last year, as ``man of the year'' by Vedomasti. And a little
humorously, just shortly ago, was elected mayor of Moscow in a virtual
election that took place online----
Mr. Navalny. Virtual one. Virtual mayor.
Mr. Parker. A virtual one, yeah. But what did you get, something--
35,000 votes or 55 thousand?
Mr. Navalny. It was 75 percent.
Mr. Parker. And his leading contender was against all. So Alexei
sort of, in a sense represents a generation that has been locked out of
politics and have taken to other means. And Alexei has made extensive
use of new media and other modern technologies to advance his message
and has come all the way from New Haven to be with us today. And with
that, I would like to turn it over to Alexei.
Mr. Navalny. Thank you, Kyle, and thank you very much for this
president's votes. It was funny. It was theory. And I'm going to talk
about practice.
Thank you very much for having me here, and I would like to thank
Sen. Cardin and Rep. Hastings for the opportunity to brief the U.S.
Helsinki Commission on Russian efforts to battle corruption in Russian
financial markets and on the implication of our efforts for American
investors large and small.
I will also highlight the ways in which white-collar crimes leads
to broader human-rights violations. And finally, I will outline a few
possible strategies for international cooperation that would resonate
with our efforts.
Over the past 10 years in Russia, political changes have given
government officials broad reach in power. As a result, some of them
have become involved in shady criminal business dealings, graft, fraud,
embezzlement and money laundering. It can be very difficult to track
these white-collar crimes, to expose them and to address them.
Difficult, but not impossible, if one knows the lay of the land.
My law practice focuses on the shareholders' rights. We work within
the corporate system by pressing management to maintain transparency,
to respect the law and to abide international standards of
accountability. We use both traditional media and grassroots methods,
especially blogs, to rally public interest in corruption.
My personal blog has about 50,000 readers daily and has proven very
efficient and effective change. In other cases, we alert minority
shareholders about corruption and offer them free proxy advice. We also
apply legal pressure from outside of corporate system; specifically, we
initiate formal investigation and file class-action suits in high-
profile cases. We also work as activists to foster systemic change.
I will now review a few salient example of corruption and the
strategies we have been applying in dealing with them. Because energy
is a big business in Russia, I will focus on energy industry in
choosing my examples.
First, let's consider the misappropriation of funds dedicated to
the construction of major natural gas pipeline. Two pipelines--they
look exactly the same. One in Russia, one in Germany. And actually,
they are the same. They are both part of the one big pipeline. But
despite the relatively high cost of labor and metal ore in Germany,
cost of the Russian part of pipeline is approximately three times the
cost of German parts, mile for mile. Why?
Because one, on the Russian project, money appears to have gone
missing. Look at this funny couple. A construction company was engaged
to build the Russian part of pipeline without even bidding. This
company belongs to Vladimir Putin former judo coach Arkady Rotenberg.
He and his brother were named the main constructors for Gazprom, the
largest company in Russia.
You can see the official data from the Gazprom reports. These
brothers became billionaires in short order. And Gazprom is refusing to
disclose any information how the Rotenbergs got the contract. Actually,
they get enough information--disclosure of information is a big change
for the shareholders activists.
And Gazprom is not alone in hiding their dealing from public
scrutiny. This is a very short and visual example for work to disclose
their information. Normally, within a year, company should produce a
tall stack of minutes as VTB Bank does, whose minutes you can see on
the left.
Gazprom, Russian biggest corporation, produced the meager center
stack. And Sugutneftegaz: very big company. The third Russian oil
company produced just a couple of--literally a couple of pieces of
paper. And they were really reluctant to give even these documents.
I was the first shareholder for all history who succeeded to force
them to produce these couple of pieces of paper. And the content of
this minutes indicate that board meet only a couple of hours throughout
the entire year.
Turning to another natural resource, I draw the commission's
attention to a case involving the petroleum trade. Russia is the
biggest oil exporter in the world. We have five major oil companies,
all publicly traded. Four of them were forced to sell an undisclosed
percentage of their oil through Gunvor.
Gunvor is a small, privately held middle-man trading company based
in Switzerland. Gunvor trades more oil than any other single entity in
the world. As a minority shareholder I sent demand letters to all four
companies seeking disclosure of how much oil they sell through Gunvor,
under what conditions, at what prices and whether Gunvor received any
preferential choice.
All companies refused to give any information about their
cooperation with Gunvor. So I filed suit alleged on disclosure.
Finally, the judge held all Gunvor's documents to be privileged and we
can understand pretty well the real reason of this decision because the
only one piece of information about Gunvor is well-known. That one of
the owners of this middle-man company is Gennady Timchenko, old friend
and colleague of Vladimir Putin.
His position allows him to skim a small percentage of the top of
each of millions of barrels sold and all legally. Very good business
and he's a billionaire as well. Actually, it's a very interesting
Russian phenomenon why all friends of Vladimir Putin who wants to be in
business they became billionaires so soon.
My third example also comes from the world's energy resources. In
Russia, a company called Trasneft has a monopoly on the transportation
of oil. According to the official records, Transeft not only a
transportation monopoly but also the biggest charitable donor in
Russia. They give half-a-billion dollars in charity over to U.S. Sounds
good, indeed, but the problem is that no one knows who received the
gifts.
After exhausting considerable efforts we were able to locate just
two recipients of these mysterious charities. One of them is Kremlin
Line Foundation Kremlin Line was created by the former secret service
officials and we have uncovered sufficient ground to allege that this
so-called charity is just a fraud through which Transneft pays bribe to
secret service when Transeft want to squelch an investigation.
This strategy works for them. In our case we spent two years
pressing the interior ministry to investigate this classified charity.
After several months when the ministry had a deadline to announce the
result of the investigation the representative came to the hearing and
said, oops, we lost the file. There is no case anymore.
And of course it was a huge scandal, we sued them successfully and
we forced them to start an investigation again. A couple of weeks ago
when another deadline came and they were supposed to announce the
result of investigation the representative came to the hearing and
said, sorry, we lost the file again. Of course, this will set up a huge
scandal so our work at least accomplished that.
Transneft still operates in shadows and is still hiding the
identity of the recipient of the so called charity. But our litigation
drew attention to the cover ups so the government was pressured into
reinforcing our rules of transparency for Transneft. The company has
been forced to disclose their own incrimination--even more
incrimination information about their work. So we managed to use the
system against the system to protect investors' interests efficiently.
I described just three, very typical, examples of the corruption
among the dozens we are investigating. So why does it matter for you?
Corruption in Russia effects share pricing for shareholders around the
world which hurts corporate portfolios and the retirement funds of
little American guy. It also made a hit to your tax base and your
economy because U.S. funds have invested billions of dollars in Russian
companies.
Not only do we fight to reduce the damage suffered by American and
other investors but our work, also, draws attention to human-rights
violations. When we expose corruption officials try to hide their
tracks. At times some of them have resorted to violence and degradation
to protect their careers.
In this connection I remind the commission of the chilling story of
attorney Sergei Magnitsky who was jailed, tortured and left to die in
the prison cell for his role in exposing corruption. He wasn't an
activist, he wasn't a politician, he was just a lawyer investigating
the crime against the state.
We are all grateful for emergent congressional support for the
Justice for Sergei Magnitsky Act of 2010 sponsored by Sen. Cardin.
Passing the bill will garner attention and we activists will all sleep
more soundly. I found myself especially encouraged that Congress will
be considering this bill in the light of recent events back home.
This weekend journalist Oleg Kashin was assaulted. Kashin is a
friend of mine as he is a prominent Russian journalist. Here's the
clipping from the official website of United Russia Youth League, a
pro-Kremlin youth movement. The author has the words to be punished
over a photo of journalist.
Within a matter of a month, he was attacked. The attackers broke
his legs, his arms, his jaws; they smashed his hands. He lost finger as
a result. He also sustained serious injuries of the head and has fallen
into a coma. And actually, he's still in a coma.
The assault is presumed to be tied to Kashin's criticism to the
Kremlin and their pro-Kremlin youth movement. The attack on Kashin
highlights the connection between corruption and politically motivated
violence. Kremlin officials are afraid of political change. So power is
hard to let go--so is money.
The careers of corrupt officials are funded by graft. We are really
eager to know who's funding the pro-Kremlin youth movement. If corrupt
officials and private managers who are conspiring with them are forced
to disclose this information any ties to pro-Kremlin organizations will
be exposed. The Russian people and worldwide human-rights organizations
will take notice.
If you're operating on emerging markets, you will hear a million
times that all your attempts to fight corruption and to change the
situation abroad are fruitless because of deep cultural roots of
foreign corruption. I'm here to tell you that this is not true. We have
very powerful tool to fight corruption in Russia. And because Russian
corruption has passed laundered money through the United States we hope
they will be prosecuted here, too.
I'm not a dissident; I'm an activist. I consider investment in
Russia to have very high potential. I hope Americans will continue to
invest in Russia but we need a little more political leverage to
protect those investors.
I do not presume to ask commission to support any particular
project or agenda. But I do hope Congress will take steps that will
benefit both of our countries. I will leave the commission with a few
additional thoughts about the battle against corruption. I'll start
with a general principle, the principle of the carrot and the stick.
Trust the carrot. Russian companies note that the greater transparency
translates into the higher rating of their agencies such as American
agencies such as Standard & Poor's, which means that they can borrow
cheap money more easily.
Unfortunately, they also know that America tends to overrate
Russian transparency. This tendency needs to be watched by Securities
and Exchange Commission and, perhaps, legislated. Our efforts are
bolstered by the Foreign Corrupt Practices Act in U.S. and the Bribery
Act in the United Kingdom. Many of us dedicated to the anticorruption
agenda are pleased to see these developments.
We also need to give the Russian corruptionists the stick. American
investors should always listen carefully to what competent advisors
says about specific Russian investments. These are such Risk Metrics,
ICC; Glass-Lewis; Lincoln Jones and so forth.
Where the concerns arise, fund managers may need to pull out and
allow the Securities and Exchange Commission to investigate or even
initiate legal action in the United States. The SEC must remain fully
empowered to tackle this problem.
The stick needs to be applied in another area, too. Almost all
Russian state-controlled companies have ADR--American Depositary
Receipts--here in the U.S. The privilege of issuing American Depositary
Receipts should be tied to the rights of American investors,
international investors and Securities Exchange Commission to bring
suit and cases of fraud and embezzlement whether the alleged white-
collar crime was committed in the United States or abroad.
Additional monitoring and enforcement of ADR rules is always a good
thing. Although the Russian legal system is not free of corruption we
Russian activists are able to make the system work. However, we need to
see the U.S. develop a strategy for prosecuting crimes committed by
corruptionists on U.S. soil.
I do not want to see U.S. act like a world police force. I'm not
asking Congress to be involved itself in policing cover up within
Russia. However, in my opinion, the United States could do a better job
of investigating the trail of stolen money and enforcing consequences.
An enormous amount of money stolen from investors have been invested in
the U.S. real estate, bank accounts, American and European stocks.
This is money laundering and this is a violation of your federal
law. In order to battle money laundering efficiently the Justice
Department, the FBI, the Securities Exchange Commission, Homeland
Security, State Department and so on may need to pool their sources in
a new way and to be found to do so.
Making this a high priority would help investors, including
Americans, recover billions of dollars per year--improving the economy
of both our country and expose corruption that leads to human-rights
violations and abuses. Thank you.
Mr. Parker. Thank you, Alexei, for your testimony and for all of
those examples. I'm glad you mentioned the Kashin case which is
something--I don't know how many have seen the video. There is a video
out there.
Mr. Navalny. This is horrific. This video is horrific.
Mr. Parker. Particularly a brutal again, I don't even know the
words to describe the type of brutality that's seen in the video and
then another journalist on Monday. And there's another journalist who
was involved in opposing this project who is partially paralyzed now
and facing a libel suit from a regional official.
So you had mentioned this little stamp that was on the page. I just
would note that it's no longer to be found on the website. I believe
it's Muldi Aguardia.
Mr. Navalny. Yes. This is Muldi Aguardia but----
Mr. Parker. It's been taken----
Mr. Navalny. Fortunately with Internet we can find----
Mr. Parker. I'm actually highlighting that someone took it down.
I'm not questioning that it was there and is well-meant to telling us a
little bit more about Gannady Timchenko and Gunvor.
I brought here an article. I used the Congressional Resource
Service to get because Timchenko sued--and successfully sued The
Economist when there was a piece written on him. The piece had
something--the title was something to the effect of ``Grease My Palm''
or something like that in The Economist in 2008.
Mr. Navalny. Actually, he wants to sue them but they decided to
have a peaceful agreement.
Mr. Parker. They had some agreement and, again, and what I have
here it's not clear. But it's clear that this stuff is sensitive and
that somebody doesn't want this, want this information in the public
domain. As well, Alexei, thank you for mentioning the Magnitsky case.
Just as I was on my way over to this briefing I discovered that two
of the lead people who--this is a press release we put out in April
when Sen. Cardin sent a letter to the secretary of state asking that
these people be barred from entering the United States. Well, we're
almost a year later; no one has been brought to any justice or held
accountable despite voluminous evidence.
Additionally, a number had been promoted and not only promoted but
today I see in this announcement here--and I just had time to do a
quick Google translation--that two investigators Pavel Karpov and Oleg
Silchenko--Silchenko, I believe, is the person who the Moscow Prison
Oversight Committee in their report on the Magnitsky case, sort of,
argued was the most culpable--received today ``best investigator''
awards from the ministry of internal affairs of Russia.
And I don't know where to start. I have all kinds of questions. I
hope a number of people out in the audience do. One thing I want to ask
is, just on your work in Moscow and the corruption: Does the dismissal
Luzhkov; do you expect that, that will disrupt some established,
corrupt relationships, corruption networks? Is this something that's
going to be severely disruptive or is it just?
Mr. Navalny. You mean in Moscow city?
Mr. Parker. Yeah, in and around Moscow. I'm just wondering if this
is there any bright side in this, at least, in the near term while
people rearrange their position or the balance of power is worked out?
I would imagine having been in office for so long that there were a
number of things that--people got pretty comfortable and relationships
were established.
So how disruptive do you think that the change will be to corrupt
networks and relationships?
Mr. Navalny. I'm pretty skeptical about the possible changes with
this Luzhkov dismissal because we have a very clear signal for the new
Moscow authorities. And one of the signals is that Mr. Resin who's
actually, kind of, symbol of Moscow corruption is still mayor deputy.
This is the person who supervised all construction building and all
these relationships in Moscow.
He's the person who has a hand watch which cost more than $1
million and all his life he was an official. He never was involved in
the kind of business and so on. And as this operation to replace Mr.
Luzhkov is just an operation to connect the federal corrupt practices
and Moscow corrupt practice because Moscow is a very big and very tasty
piece of money. And it's just an operation of corruption--integration
of corruption.
Mr. Parker. Interesting. What about the recent raid over the
weekend on Lebedev's bank? Is he done? How serious is this? What do you
expect?
Mr. Navalny. Alexander Lebedev is--sometimes he's very aggressive
in disclosing of corruption as in talking about corruption. And he
actually did a big job to disclose information about corruption
practices in Moscow. But he's a business man and he's involved in
business himself. And he's a very easy target.
He has guys to support him, of course and he's playing in this game
using rules of this game. But he's--maybe this attack on his office is
the signal for him and to prevent some of his ideas to investigate new
cases because he's--he's a really easy target to attack.
Mr. Parker. Like I said, many stories that have been out in the
past couple of weeks is the possibility that WikiLeaks may be on the
verge of a massive dump on, sort of, corrupt Russian officials. Are you
hearing much in the blogosphere on that? And Russia is a tough
audience. What's it going to take to shock the Russians?
Mr. Navalny. Of course I heard about it. But this statement of the
WikiLeaks founder didn't have any impact on Russian audience because
actually, for example, in Russia we have site compramot.ru. And we have
a lot of very evident information. A lot of real information about the
real crimes and a lot of proofs. And using just information from this
website, we can put to jail half of Russian officials.
But the problem is that we have a real low barrier of tolerance to
the information about corruption. So people are just accustomed to this
information. They are taking their morning newspapers and reading,
okay, another $1 billion was stolen. Let's go to their culture
department. We are just too accustomed to this information. So that
WikiLeaks information cannot bring something new, something shocking
for the Russian audience.
Maybe they have some information about, for example, about Gunvor
because this area still is pretty closed about this mysterious third
owner of Gunvor because we know that one of the owners of Gunvor is
Gennady Timchenko, another one is a lawyer from Finland, I guess. And
the third shareholder is Hedin and no one knows him.
Some people think that this is Mr. Putin. I don't think so. But I
do believe that maybe all owners of Gunvor they're just nominal owners
and real owner of Gunvor and person who got real benefits from this
company is Mr. Putin, himself.
Mr. Parker. I guess just sort of your take on--you want Americans,
foreigners to do business in Russia, just to explore that a bit. I'm
looking in this Washington Post piece--just late October: ``Russian
corruption takes on a life of its own''. And this is a piece that came
out around the new Transparency International ranking, which showed
Russia slipping some at least numbers.
Although the sense that I heard from, sort of, digesting a lot of
the ink that was spilled was that, probably, really not significantly
worse than it had been. Certainly, probably not, better. But Sergei
Markov, political analyst and member of the lower house is quoted in
here saying Russia's leaders have been tentative about fighting
corruption because they don't want to upset the stability that the
country has finally achieved and stability is the main threat to
economic growth. And corruption is not contradictory with economic
growth.
Additionally he says, investors won't pay attention to Transparency
International. They pay attention to their own experience. Some of them
are quite cynical, for some of them corruption is good.
How important is this issue? Certainly, I don't imagine anyone
would argue in favor of instability in Russia. And I guess, sort of,
taking the whole environment as a whole and understanding, I guess,
what's possible, what's realistic; what would you say to Markov?
Mr. Navalny. In Russia we have, very basically, two parties who are
struggling now in corruption and fighting corruption is a hot issue in
their fight. Some of the most advanced managers and officials they
realize now that it's much more profitable to be transparent. That,
actually, you can get much more money if you're transparent, if you
have a good business.
But other part, basically, we can isolate with Mr. Putin. They
really want to be engaged--still engaged in these heathen practices.
They prefer this scheme of enrichment which I described. It's
overpricing of construction, it's the, kind of, very strange charity
schemes and so on and so forth. They don't want to mind in new styles.
They still don't realize that if, at least, they shift their
corruption to the most sophisticated case it would be much easier for
them. They still prefer to just classify all the information to just
come to the company and take, literally, bags with the cash from the
companies.
But other parties, as I mentioned, they have a real political reach
to fight corruption. That's why I'm addressing to the U.S. and ask for
their help because I believe that some force that you can apply it here
in America will help Russian party to fight corruption.
As I mentioned, this idea of prosecuting Russian officials who are
laundering money here in America will be real powerful tool and will
bring real, positive change in Russia very soon because, now, officials
and managers with whom I'm talking with they just are asking me,
Alexei, please explain--give us at least one reason to be more
transparent.
We're absolutely fine without corruption. There is prosecution
here. There is no prosecution abroad. And the, kind of, potential
danger for them will be created here in America, in Europe or in
London. This will be a very powerful tool because they are stealing
money in Russia but they invest it abroad.
They are buying luxury condos in Miami, Florida, in New York, in
London. Their children are living here. They have education here and so
on. So creating this potential danger will be very positive to Russia
and to Russia parties to fight corruption. And I do believe that,
actually, these efforts that you can apply here are not opposing to the
Obama strategy of reset button because reset button doesn't mean that
we should just ignore any corruption or should we just forget
everything.
Reset button means that America is not going to policing in the
Russian cases. We don't want you to invade Russian political area or
something. You can use your own legal system to protect your own
citizens and your own companies and through it help the Russia.
Mr. Parker. Thank you. Questions from the audience? Please. We have
a mike right there, we have some time. If you could just identify
yourself and your affiliation and keep it sort of brief and make it a
question. Do we have anyone? John, you have a question?
Questioner. Hi. Thank you for coming and speaking. My name is John
from Georgetown University and I have two quick questions. A lot of the
cases that you worked with dealt with a lot of the high-profile
companies like Gunvor and Gazprom.
But I'm sort of interested on a lower level how pervasive is this
corruption on, I guess, smaller companies or even on a more local
provincial level? And are there regional differences in Russia as well?
And my second is, you spoke about, sort of, the political will of
who would find it more profitable to be more transparent. Are there
people in the duma or even in the government right now that currently
have that belief? Are they silent about it and is waiting for someone
to come and sort of push this? Or where is this kind of sentiment and
where does it hold most? Thank you.
Mr. Navalny. Okay, thank you. About lower level of companies--it's
interesting because the fight for their minority shareholder's rights
or fight with corruption on the lower level could be more efficient in
Russia because there's no political agenda. For example, when I come to
Russian court and I'm trying to sue Rosneft for their dealing with
Gunvor. It's a kind of taboo for all judges. They're just afraid of
hearing this word.
So this is a political issue. If you're going to sue Gazprom
because of their corruption practices that everyone understand that
actually you're suing, personally, Mr. Putin because it's his people
making all of this corruption. And lower level you can--we can use
successfully and we do use successfully a Russian legal system to fight
corruption.
Sometimes on the lower level we can--much more violence,
especially, in the regions. And if police or our special service
involved in these crimes they can act much more violent because of lack
of media attention to these cases. But anyway, we can succeed and
people who are fighting corruption with this company they can succeed
their aims.
About people in duma or in government who are--now who want to
fight corruption. We have such people. And we can, generally, isolate
them with Mr. Medvedev. I don't want to push this idea of bad president
and good president so I--actually it's not true that we have a bad Mr.
Putin and good Mr. Medvedev.
But anyway, around them--around Mr. Medvedev there are some people
who really understand. They're open-minded and they understand that
it's much more profitable to be more transparent. You can attract
cheaper money and you can attract more investors and so on and so
forth.
For example, Mr. Barkovich and actually Mr. Medvedev, himself--they
are promoting the idea of replacing all officials on the company
boards--replacing them by the independent members of the board. They
are promoting the idea privatization of companies. Of course companies
is extremely reluctant.
For example, they hid an idea to privatize Transneft which I
mentioned here. But Transneft was powerful enough to cancel this idea.
And a couple of weeks ago the government declared that they are not
going to privatize this company.
But anyway, the Russian people who are really making it a tough job
to fight corruption. But they have a lack of real levers because all
the energy industry is under the cover of Mr. Putin and his colleagues.
Mr. Parker. Along those lines--those questions. A quick point the
Russian legal system, really, is a mixed bag. They're really some very
good parts of it where lots of progress has been made in terms of rule
of law and setting things up. And then there are other parts of it
where you certainly wouldn't want to find yourself alone at night.
And also on the duma, I'd like to ask you, Alexei, what about
Grishankov? Mikhail Grishankov who, I believe--at least, I know for a
long time was associated with the Duma Security Committee. He has--was
also in FSB or SVR or something like that. And he's someone we have met
with and talked to over the years.
He's taken part in a lot of exchanges that have happened between
our parliaments. And I notice him in this Wall Street Journal article
on Yana Yakovleva's story, being quite supportive. Is there anything
you can say about Grishankov's efforts or other like-minded deputies?
Mr. Navalny. I cannot say something about Grishankov personally.
But for example, duma's comments on the property are--they attract me
as an expert, which was very surprising for me because sometimes I'm
considered to be, kind of, official enemy of the state-controlled
company.
And they ask me to give them some proposals. How to make company
transparent and what kind of changes should be applied. And they are
really open-minded now. And this project of a bill that they are
preparing is a real revolution in these relationships.
The problem is that when these theoretical ideas would be applied
to the particular company, the company realized that it would be a
tragedy for them. And all officials who are connected with the
companies who are sitting on the board of the companies; they support
the idea of transparency in theory. But then they are thinking about
the practice that we should disclose all this charity. What
consequences would it be?
No one knows who gave these billions of dollars--millions of
dollars to charity donors. We should disclose all the information about
Rosneft, we should disclose all documents, we should play in the rules.
And this is real money for real people. And of course, people who got
this real money, they are absolutely reluctant to these new ideas.
So people who are sitting in duma and who are not engaged in the
companies who are just making papers; they are ready to promote this
idea. People in the government who should approve this idea; they are
reluctant because they're connected and they are living by graft. Does
that answer your question?
Mr. Parker. Yes, no, very good. Other questions? Please.
Mr. Navalny. There's a question.
Mr. Parker. Oh, okay. Yep. Tom? Yeah, if you don't mind. It just
helps the transcribers get it better. I'm sure we'll all hear--and then
Tom.
Questioner. Hi. Richard White, Hudson Institute. Two questions.
One, to what extent do these ties extend across the former Soviet
republics? I'm particularly interested in the Caucasus and Central
Asia.
And second, I have heard some of the people here worry that there's
actually another problem that we're, perhaps, overlooking in that the
Russian authorities have, sort of, a power to provide kompromat to
Western and international institutions against people they don't like.
And so for example, we are placing them in a position of, say, if they
are having problems with a business person having them tell us that
he's actually engaged in terrorism or corrupt practice and so on.
And knowing how energetic our U.S. Treasury, that means that person
loses all access to international business and so on, so that in a way
we're empowering the authorities to do something like that. And I've
heard that just mentioned as a theoretical possibility from people. So
I was curious if this is actually a problem.
Mr. Navalny. It's Kazakhstan and Turkmenistan. People with a very
closed economy and a very well-connected with the Russian companies.
Actually, Russia gave infrastructure for these countries to transport
their oil and gas and so on and so forth through Russia.
And all this industry of transportation of their gas and oil is
absolutely hidden and closed. A lot of cover ups in this area. And
like, in Gazprom for example. I investigated several cases of how they
are dealing with the gas--the natural gas of independent production
companies.
And this area of just giving infrastructure but buying gas and oil
from the independent production company is very corrupt and very hidden
and it's all about middle man, about overpricing and so and so forth.
So did that answer your question? Okay.
And second was about--I'm sorry.
Questioner. The possibility that because there's only certain
bodies they can tell business people so you better do what we tell or
we're going to tell the West that you're financing terrorism and
therefore that means you won't ever get.
Mr. Parker. Sort of the notion that there's credible kompromat on
everybody or that kompromat is fabricated easily--or both?
Questioner. Right, theoretically being both because, I mean, as we
know in the 1990s it was hard to make any money with filing then laws.
This actually for modeling this at Brookings. And I'm curious.
Mr. Navalny. I agree. Now, the thing works like this. It's a kind
of bargaining. Everyone has a kompromat on everyone and okay, if you
oppress us abroad with our accounts in Switzerland, we will press you
here and we will press your company because they are engaged in
corruption. And we can press American company. We can reveal some
information about American companies which means that they will be
prosecuted because of the Foreign Corruption Practices Act and will be
fined over billions of dollars.
Now it works like this. It's a kind of bargaining. That's why I
really think that we should eliminate this system because it just leads
to increasing of corruption. We should apply real formal process and we
should formalize all the system. If some American companies involved in
criminal practices in Russia this company must be prosecuted in U.S.
and without any--without any swaying and so on.
And U.S. officials, they should not afraid that pressing on Russian
companies and Russian officials will bring some bad consequences for
American companies. Because if any bad information about American
companies exist, it would be revealed anyway. So it's better to play in
a fair game.
Mr. Parker. There's a question over here. Tom?
Questioner. Tom Firestone. I'm with the U.S. Embassy in Moscow and
I'm assigned there by the U.S. Justice Department. I worked as a
prosecutor for many years here and I wanted to follow up on, make a
comment really, on some of the--what you had said about the importance
of prosecuting corrupt Russian officials in the United States.
It's a very good idea, and the Department of Justice has been
pushing in that direction. Their organized-crime section came out with
a new, international organized-crime strategy in 2008 which recommends
exactly what you have recommended in your talk today: a new focus on
international money-laundering cases, domestic prosecutions of foreign
government officials for all the reasons that you've mentioned.
The problem with these cases and the reason more of them are not
brought, it's not because any American prosecutor is necessarily afraid
of the consequences for U.S.-Russian relations. It's just extremely
difficult to make these cases in the United States.
To prosecute somebody--if you take a corrupt Russian government
official from Krasnoyarskaya who's stolen money from the budget through
a rigged privatization and then taken that money and moved to the
United States--prosecuting him for money laundering in the United
States essentially requires the prosecutor to prove all of the corrupt
actions from Russia.
That's very difficult because you're going to have to get all the
evidence from Russia. If the guy still has influence there, he can
prevent the delivery of the evidence. Even if you do get the evidence,
you're going to have to get witnesses from Russia to come here and
testify, and you're going to have to convince an American jury that
there was a crime committed. And you're going to have to explain to an
American jury what the privatizations rules were in Russia in the
1990s, whenever he did this; why it's a fraud, what the money was lost.
And it's just extremely difficult. And it's faced with the choice
of doing that kind of case or prosecuting some drug gang that's running
around in the neighborhood terrorizing people in your backyard. Most
prosecutors are going to do the latter kind of case, and it's an
understandable decision. It doesn't mean these cases shouldn't be
pursued. I agree with you. But it's just difficult. It's not as easy as
it may sound.
What I do think is promising--but you didn't mention it explicitly
in your talk--is private litigation at the international level. We've
seen a lot more of this in recent years. Yukos brought a $100-billion
claim against the Russian government in the European Court of Human
Rights because the European Convention protects companies, not just
individuals. Yukos investors have filed arbitration claims in various
European arbitration fora.
Gene Burd, who's here today, has been involved in civil litigation
brought on behalf of people who claim to be victims of corporate
raiding in Russia here in the United States. What do you think of
private--and it seems to me that those cases might be easier to make
because the plaintiffs in those cases, having been involved in these
businesses, are already in possession of a lot of the evidence which
U.S. prosecutors are going to have to get through official channels.
What do you think of private civil litigation?
Mr. Navalny. Okay, thank you for question. First of all, about
difficulties in prosecution of this white-collar crime. As I said, yes
of course, is difficult to treat them and to address them, this white-
collar crime. But anyway, you have here in America some very successful
examples. When you have a political wish, we can remind Mr. Borodin
case, Mr. Adamov case. And American regulation by this very efficiently
had a deal with these guys.
Questioner. I was the prosecutor on the Borodin case. First of all,
we didn't prosecute him; Switzerland prosecuted him for money-
laundering. He was arrested here and extradited to Switzerland to face
the charges, and they let him go for a small fine right away. So we
never made any domestic case against Borodin.
The Adamov case, we did bring charges. He was arrested in
Switzerland, at which point Russia brought its own charges against him
and got him extradited to Russia----
Mr. Navalny. Yeah.
Questioner. So that he never faced the charges here in the United
States.
Mr. Navalny. But then you--wait--you launched this process, and
these people had some nice experience to be in jail.
Questioner. There was some justice, yeah. I guess you could say
some justice.
Mr. Navalny. But anyway, it was very powerful and it was a huge
impact inside of Russia. So of course, white-collar crimes is very
difficult to investigate. But we should start it.
For example, Daimler case. Everyone knows about it. Daimler was
fined here and there was no investigation at all in Russia. But all
money, which were paid like a bribe from Daimler to Russian officials--
actually Daimler paid on the foreign accounts, to the offshore, in the
offshore countries and so on.
And I do believe that all this money which Daimler paid like a
bribe, now here in U.S. or in United Kingdom. So we should just put
more efforts here.
What about private litigation? Yes. I do believe that it could be
most efficient. As I mentioned, if some new regulation will give
opportunity for the American investors--or for Russian investors, for
example--bring class-action suits, that would change everything.
Now, for example, if you are American and if you invested some
money in company, and you have real grounds about the money embezzling
in this company. You will sue them next day. And you can sue them very
efficiently here in America. Why we cannot do the same for the Russian
company, which have ADR here in America?
Because Russian company, they connect it very well with American
system. They borrow money from America and so on and so forth. And if
we can figure out how to use American legal system, civil system, to
sue companies here, that would be verily huge impact. Because the way
how they're stealing money now, it's very simplistic. Very evident. And
with this proof and with these grounds, if we will find the way to sue
them here, we can put a real pressure on all these corruptionists.
But it's not very easy. For example, it's very difficult to
persuade American huge investment funds like Black Rock and other just
to be engaged in these cases and to start this war because they
consider all these like a kind of political story. They don't want to
be involved in the kind of political investigation because all big
corruption in Russia, it's corruption in company and in government.
So big companies--American companies--they be afraid about it and
they don't engage with politics. And sometimes they--for example,
American mutual funds: they don't even vote on the shareholders'
meeting. They just ignore what's going on in Russia. And it's our
common task to encourage them to realize that it's the part of their
corporate social responsibility to investigate and to put pressure on
Russian company where they invest some money.
Questioner. Thank you.
Mr. Navalny. Thank you.
Mr. Parker. Gene.
Questioner. Gene Burd. Law firm, Marks & Sokolov; Philadelphia.
Alexei, I just heard discussion--your discussion and Tom's discussion
regarding private action in connection with corruption in Russia. And
our firm brought several actions here in the United States in
connection with various misdeeds of certain individuals in Russia.
One of the issues that we're facing in the United States with
respect to the private course of action is the doctrine which exists
here in the United States, which is called ``forum non conveniens,''
which essentially prevents us of bringing private actions here in the
United States where the events, where the witnesses, where there is
other factors took place outside the United States and where United
States court would find, that it is most convenient for the justice,
that this type of action is not brought here in the United States.
That is why some of the actions get dismissed. Some of the actions
are going through in U.S. courts with significant friction. There is,
however, there is also another recent impediment which was brought in
the United States court system. I don't know if you've heard, but there
is the Morrison case which was decided this year by the United States
Supreme Court which severely limited application of the Securities Act
outside of the United States.
My understanding is there is a current legislative proposal which
is being moved here in the United States to provide specific language
to the Securities Act to allow prosecution of crimes and violations of
the Securities Act here in the United States, prosecution by the SEC
and the Department of Justice. There is also proposal which hopefully
will be, which will be supported here on the level of the commission
and perhaps of the Congress: a proposal for the private right of action
to allow the Securities Act--private right of action for cases where
events took place outside the United States.
Finally, with respect to the FCPA, for the Foreign Corrupt
Practices Act, there was a positive development in the United States.
In the summer, the Foreign Corrupt Practices Act was amended to provide
for the whistleblower provision. I don't know if you're familiar with
that but essentially, at this point of time, any person with
information--which relating to the corruption, the corrupt activities
by U.S. companies or companies subject to jurisdiction under Foreign
Corrupt Practices Act--can provide this information to the Securities
and Exchange Commission and the Securities and Exchange Commission will
consider this information for prosecution. And this whistleblower would
be prosecutors.
So there are certain devices--there are some certain devices which
are available here in United States for a private fight with corruption
in Russia. But there are certain things that can be done and which,
perhaps, should be done to give more ammunition to private lawyers to
be able to defend interests of their clients. Thank you.
Mr. Navalny. Thank you. I absolutely agree with you. And yes, we
have some tools which we can apply right now here in U.S. But we have a
lack of jurisdiction. That's a big problem and a big issue. And I saw
the statistic of the class-action suits against--class-action suits in
America and amount of class action against foreign issuers is
increasing.
So it's a good signal. Not just against Russian but all of foreign
issuers. But anyway, I agree with you that we have connect all
interests and connect all efforts, from the regulation budget, from
Congress and from the private sector. Because we should realize that
each--this is a problem, not just a Russian problem. The American
investment funds--they are the same victims like me.
So the managers who are embezzling money from the countries: They
are stealing money from the small American guy who have his retirement
fund in the mutual fund invest company. And we should connect interests
on these enormous and big American investment funds, and connect
interests of American lawyers who can act very efficiently, how we
know, and interest of the Congress and other regulation bodies.
And interest of Russian shareholders who are ready to give proofs,
grounds, papers and so on and so forth here in America to prove this is
the corruption. This is a fraud, this is money embezzlement.
Questioner. Thank you.
Mr. Parker. Anyone else? Another question? I wanted to ask just
quickly, Alexei--what prospects or promise and maybe how effectively
are the mechanisms being utilized, that are provided for by the UNCAC,
the Convention against Corruption? As well, I believe, there's a
Council of Europe group on corruption that has mechanisms that could be
used. And then also, what if any effect could WTO membership for Russia
have on corruption writ large?
Mr. Navalny. I have never, ever seen the real consequences of these
acts--of these organization. They are very--not reluctant, they just
don't care about what's going on. They just don't care about what's
going on.
And now, maybe we have some opportunities to use this act and this
organization are now vital. But now, it doesn't work, and I cannot see
how it could work in the future. They have some--in theory, they have
some tools to fight corruption, but it's very vague and unclear, and no
one--it couldn't be an engine or a vehicle to fight corruption,
unfortunately.
Mr. Parker. What about WTO membership? Will that have any effect at
all?
Mr. Navalny. I don't think so. For example, China and India and
other countries, they are members of the WTO but they have the same
problems like Russia. And WTO didn't give some additional opportunities
to fight corruption.
Mr. Parker. What about this new hotline, I believe, that the
investigative committee has set up? I saw it was in the press some
weeks ago where people could call in and open investigations,
corruption. Is that something you're hearing much about?
Mr. Navalny. I didn't hear. What kind of hotline?
Mr. Parker. It's a new number, a hotline that I believe----
Mr. Navalny. Oh, oh. This is ridiculous. We're establishing these
hotlines every single year, and every single year, they are starting
another campaign to fight corruption, and they are establishing
hotlines.
Mr. Parker. I'm wondering if you in the activist sector can find
innovative ways to make use such mechanisms. Whether it be simply
symbolic protests, mass call-ins----
Mr. Navalny. Actually, we used this opportunity. We don't use
particular hotlines, but we use campaign of mass complaint. For
example, we mentioned Daimler case. When I appealed my supporters in
the Internet and blogs to write complaints about this case, Russian
persecution office got more than 1,000 complaints. And it's really,
actually, a press for them not because they should have investigated
more accurately, but because it just bring more attention from the
media, from the public and so on.
And so, like a method to attract media attention, it works.
Mr. Parker. Media attention does not seem to--at least in a number
of the occasions we've watched, blistering, withering media attention
and has seemed to been powerless to sort of disrupt what looks very
much like a culture of impunity around a lot of these cases.
That said the media intends--needs to be there for the record and--
--
Mr. Navalny. Yes, of course, media attention, it's not a kind of
universal appeal, but sometimes it works. And, anyway, it works better
when you have media attention than when you don't have it.
Mr. Parker. Yeah. What strikes me is how, even the smallest, even
symbolic efforts--and I'm thinking particularly of Sen. Cardin's appeal
regarding simply the privilege to visit this country or whether or not
U.S. banks would be required to freeze ill-gotten gains that even these
very small, limited measures have been able to provoke as much of a
howl as they have provokes drawing reactions from Russia's foreign
ministry, drawing--so it seems to me that we really need to think
there's a variety of sort of plains and realms of the battlefield.
There's the legal realm, the political realm, the media realm.
Again, they're all important----
Mr. Navalny. I absolutely agree with you. And my main point is that
you cannot fail a fight against corruption totally. Any efforts will
bring some positive results, any efforts. So it looks like it's
absolutely useless but, actually, it works.
We should just reinforce our efforts and be flexible and invent new
mechanisms and new ideas how to fight corruption.
Mr. Parker. Yes? Shelly.
Questioner. Hi. I'm Shelly Han with the Helsinki Commission. And I
just wanted to draw your attention to something that our commission
heads, Sen. Cardin and Sen. Lugar, changed the provision in the
securities law this summer as a part of the Dodd-Frank financial reform
bill. And part of the purpose of that provision is to give investors a
bit more of a voice in the oil and gas and mining industry.
Specifically, what it does is requires companies that are listed on
U.S. stock exchanges and, also, have ADRs to report in their SEC
filings the amount that they've paid for extractions of oil and gas and
the foreign government and, also, in the U.S. as well to the U.S.
federal government. So that's one tool that we think is going to be
helpful. It's still being--the rules are still being written by the
SEC.
But we've also started trying to expand that jurisdiction by
getting the London stock exchanges to do the same thing because one of
the companies that is not covered by U.S. stock exchanges is Gazprom,
and so we'd like to see Gazprom, which is listed in the U.K.--we'd like
to see them make this type of reporting, and that would be useful for
investors as well to have that type of transparency.
Another thing that I wanted to ask you about is to see if you're
familiar with the extractive industry's transparency initiative. Are
you familiar with that? It's an international initiative where
countries sign up to have their own companies and their government
itself to--basically for the companies to publish what they pay to the
government. And so it's a way of reconciling within a certain country--
for example, Azerbaijan--(inaudible). And what they do--all the
companies that are working in Azerbaijan make a report on a regular
basis as to what they've paid for extraction to the government, and
then the government is then reporting, and then the public--it's a
transparency mechanism.
We're working as commission to try to get the U.S. to do the same
thing because we think that transparency is good for everybody, not
just other countries. But we'd also like to see Russia do it. And I'd
like to ask, as an investor, if you think that type of initiative would
be helpful to address some of the concerns that you mentioned in the
extraction industries.
Mr. Navalny. Thank you. I am not very familiar with this last
initiative that you said which works in Azerbaijan. But people from
transparency international actually told me that it works very good in
Azerbaijan. So we can try to apply it in Russia.
As for your first idea, your first bill you mentioned about more
regulation for the company which has ADR it would be great. It would it
be very powerful. And I believe that more regulation of the ADR,
especially if you will be able to transform it to London, where most of
the countries have leasing, it will be really powerful because Russian
companies--we should understand it very clearly--they cannot just
escape to Hong Kong.
Questioner. But Hong Kong----
Mr. Navalny. Oh, great.
So anyway, they cannot just ignore it or go out from the stock
exchange all over the world. We should just frame it, and we should
just make their area for corruption more narrow from every step.
If you will succeed to accept this bill, it would be very, very
powerful tool.
Mr. Navalny. I mean, if you will be able to transfer to London.
Questioner. Yeah.
Mr. Parker. Yeah. It passed this summer.
Any last quick questions? We're winding down here on time. Does
anyone have one last before we close up the record?
I certainly would like to thank everybody today. It's been an
interesting discussion. This really is a massive topic, and I sort of
am left still scratching my head wondering if it's as bad as it seems;
has it always been this bad; is there any hope for it getting better.
On the one hand it seems like just picking up the newspaper that
things have gotten so bad that could we be at sort of the proverbial
darkness before the dawn or thinking of this as a frog in the water and
somebody's just spiked the temperature and maybe something's going to
change because sort of the universal recognition of the problem.
On the other hand, there's always sort of the turn towards
increased cynicism and apathy. So again, it's hard to know. From our
perspective, beginning it back to what we do here, the human dimension;
it's certainly one thing to lose money in a country, and it's one thing
to have wealth destroyed. It's another thing to lose your life.
And very sadly, in too many of these cases, there's really an
incredible and a heartbreaking human cost of corruption. Whether that
be in the many people who are wrongly accused who fill Russia's jails,
which is part of the problem of overcrowding is the fact that there are
a lot of people sitting in jail who shouldn't be sitting in jail, or
whether it's that, there's a lot of material on the table there that
will be in the hearing record here that we have not been able to even
get into today. And I really urge you to take that, like I said, Tom
Firestone's article, ``Armed Injustice,'' the story of the Mackievs,
Romanova and Yakova's submission.
I mean, these are heartbreaking cases. Mrs. Mackiev is a mother of
two, and her husband is up in Komi Republic in jail still. And this
whole criminal network has been exposed. We've known about it for a
number of months. It was in the Financial Times on Thursday. We are
releasing some additional information on the story, and yet today, as I
said, on my way here, some of the lead players are awarded best
investigator.
So what does this mean? And they know this is being discussed here.
I mean, our hearings, what we do here is on the record. We put out
press releases. So really, that's something I just would like to
underscore, from our perspective of the human dimension. There's
corruption around the world, and I don't think any of us are naive
enough it think that we're going to end corruption.
But can it be limited? Can be it moved from a sector where it does
more damage to a sector where it does less damage? Can it be less
brazen and in-your-face? I don't mean to set our sights too low and say
we're prepared to accept a certain amount of corruption, but it is a
reality. Human nature is a reality and, certainly, we're not changing
that any time soon.
We'll have a video and a transcript of this event up very soon,
probably today or tomorrow. And before we go, I would like to draw your
attention--we do have a notice outside, and many of you maybe have seen
the poster we have up--next week, an event that the Helsinki Commission
will convene one week from today at 5 o'clock in the Capitol. We will
do the world premiere of the film ``Justice for Sergei''. It's just
under an hour. It's a very moving film, particularly highlighting sort
of the human costs of corruption. Everybody is invited. Please tell
your friends and neighbors. The more the merrier. We have a big room,
and we have a very interesting lineup of speakers to offer remarks
before the event.
And I also mention that Olga Romanova, who submitted testimony for
today's event, is in the film. So you didn't get to see her today, but
come next week and see her. Her husband happened to share a cell with
Sergei Magnitsky during his incarceration. And so she offers some very
personal insights to what it was like for Mr. Magnitsky during his
year-long detention.
With that, we'll adjourn the briefing. And, again, I thank you all
for coming.
[all]
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