There exists a significant danger that the “anything goes” attitude of Russia in the 1990’s could recur if steps are not taken to protect businesses and entrepreneurs by creating a safe business environment with fair practices.
New York, NY -- (SBWIRE) -- 10/10/2012 -- In an effort to address this ongoing concern, President Vladimir Putin appointed “Delovaya Rossiya” pro-entrepreneur lobby group leader Boris Titov as overseer of entrepreneurs’ rights on June 21, 2012 and charged him with establishing a strategy to safeguard the rights of both Russian and foreign entrepreneurs. As owner of Russia’s biggest wine making enterprises, Titov believes that Russia should encourage entrepreneurship and protect the rights and integrity of those doing business in Russia. Titov appears to be aware that many of the ghosts of the Soviet Union era continue to haunt the country today and mars the investment attraction of Russia and its image of a state actively conducting democratic reforms.
During the upheaval of the country in the 1990's, the Russian government did not establish law and order or even pretend that Russia and the former the republics of the Soviet Union were preparing to benefit from any so-called economic reforms in the vast country. Instead a sophisticated criminal industry developed cloaked in the flag of a new era. Much of the media in Russia parroted the prescribed political rhetoric and created false heroes that hid behind a political agenda concealing the truth. More often than not the new business “leaders” that emerged from the rubble of the Soviet Union were nothing more than bandits who lied, cheated and stole their way into riches snatching as their own money, projects, companies and the ideas of others, working hand in glove with the media and government to bury many hard working honest businessmen in prison at best, at worst – in the ground.
Approximately 13,000 people currently sit in jail for economic crimes in Russia today. Many of these individuals are guilty only of being victims of false media reports orchestrated by their enemies and business rivals. It is estimated that another 120,000 businessmen and entrepreneurs have fled Russia, many of whom were falsely charged with economic crimes, and who were fearful of joining those 13,000 jailed as cut-throat opponents seek to blacken their names in the media and elsewhere in pursuit of wealth and power.
Now it appears that Titov, with Putin’s backing, wants to right the wrongs of the past. In concert with Russia’s pledge to create a better economic climate for foreign investors and its commitment to protect corporate rights and crackdown on corruption, Russian’s newly appointed regulator for entrepreneur rights announced that he will propose to President Putin that he grant amnesty to the approximately 13,000 people jailed for economic crimes – many of whom are believed to be innocent of all charges. “The injustice that some guilty people will be released is much less of an injustice than when you have innocent people in prison,” Titov said. “Better release guilty people than keep innocent people in prison.”
Although former president Dmitry Medvedev envisioned this position, protecting the rights of entrepreneurs has not been a priority in Russia in years gone by. During the collapse of the Soviet Union, huge fortunes were made – and huge fortunes were lost. Throughout this chaotic time, Russia’s natural resources were divvied out in complex backroom arrangements that were rarely documented in writing. While President Yeltsin’s main reformers and guardsmen including Vladimir Shumeyko, Alexander Korzhakov, Mikhail Barsukov and others became wealthy beyond their dreams in a very short period of time, they also became trusted advisors and cashiers to the country’s leadership. Anyone who did not support the regime were blacklisted or convicted of manufactured economic crimes.
The more humane criminals that sat close to the throne of power, demanded fantastic sums of money in the form of kickbacks for protection from the local hardworking businessmen. How could a country develop when all of the profits were diverted to kickbacks? The answer is simple – it could not. The more famous the protector - the larger the kickback. The “protection” of Boris Berezovsky is said to have been worth a twenty-five percent vig. The protection of the modest Prime Minister Misha was worth two percent - for which he was given the nickname Misha Two Percent. It may seem a scanty figure, but it was from the whole of Russia, not from individual entrepreneurs.
And what about those who were compelled to provide such a sweet life for the great and powerful? What about the hard working businessman or entrepreneur that had their livelihood and fortunes seized? It’s very simple. If they were deprived of their property and remained alive but forced to go abroad, they were lucky. If they were imprisoned, it was a narrow escape from greater problems.
Asset seizure and false imprisonment were tools of the old Russia. But there were other ways to that were also deployed to destroy emerging entrepreneurs in the 1990’s. Enter the “independent” journalist. Money hungry media whores with an army of public relations experts did not use a gun or a club to kill their victims, nor were they ever charged with a crime. However, with a broad stroke of their pen they simply erased the goodwill and reputations of honest men and women. The media became a mighty weapon during the 1990’s as reporters served as lackeys for a corrupt government intent on seizing wealth and power during the tumultuous collapse of the Soviet Union.
There is no exaggeration here, except we have missed one point: all this is still in existence. Echoes from the chaos of the past still hurt and destroy honest hardworking business men, entrepreneurs and potential project developers in Russia. We need not look far to see this practice even today. Media smear campaigns are a formidable and often invincible weapon as was seen in the case of Sergei Magnitsky, who paid the ultimate price, his life. Because of the vestiges of the past, the Russian government that declared war on corruption - however it has not yet freed itself from the shackles of the past.
A familiar example is Artem Tarasov, one of the first successful Soviet entrepreneurs in the new Russia. Tarasov founded one of the first cooperative societies in the USSR and in recognition of his achievements in small business development, was named the First Vice-President of Cooperative Union of the USSR in 1989 and, among other things, served as Deputy of the RSFSR in 1990. However, when he openly spoke in Parliament against the government, Gorbachev pressed charges against him for insulting the President of the USSR and appealed to the Supreme Council to allow Tarasov to be prosecuted. At the same time, a number of criminal cases involving Tarasov were fabricated. His offices were searched and his apartment broken into. In 1991, he fled Russia in fear for his life and knowing that nobody could protect him in his country. Although he was tried and convicted in Russia of economic crimes in absentia, he later successfully sued the government – clearing his name of many of the false charges.
Another Russian entrepreneur that was also victim of the manipulated Russian media and faced a situation similar to Tarasov is Boris Birshtein. Like Tarasov, in the 1980’s and 1990’s Birshtein had made a fortune many times over and, among other profitable projects, partnered with the Russian government in a large fertilizer consortium. Boris Birshtein also developed successful business enterprises in the Ukraine, Kyrgyzstan and Moldova and was credited as a key player in ending the military conflict in Transnistria in 1992. The reason for the termination of his business operations in Russia was an open conflict with the entourage of Boris Yeltsin, who pursued his personal selfish interests. Like Tarasov, Birshtein chose to leave Russia in fear of government reprisals, leaving his fortune behind. Although later cleared of all charges, the stigma of the falsehoods and manipulated media reports follows Birshtein to this day.
Birshtein emigrated to Canada in 1985, where he wrote The Russia of Great Upheavals a book that was published in 2000. In it, Birshtein predicted "The year 2000 has come. The master in the Kremlin has changed. With the leadership of Vladimir Putin, we can now stop the ongoing debate of whether the current government will allow the disintegration of Russia. Under Putin’s leadership, the answer is definitely no! Russia will not disintegrate – it will grow and become prosperous again. With Putin at the helm, we now have an important chance for Russia to follow the path of revival ... A issue that concerns the global position of Russia not only today, but in the future."
Titov is familiar with the use of false accusations and media manipulation to gain advantage. His organization, Delovaya Rossiya, cites a number of egregious cases, and it appears that he is already making great strides. “We’ve had numerous discussions with the President concerning the incarceration of entrepreneurs on the stage of preliminary investigation. As a result, over 300 changes have been made to the penal code, in one way or another concerning the interests of entrepreneurs” reports Svoy Business in its cover story for its June 2012 issue.
Boris Titov’s resolve to right the wrongs of the past and to protect the rights of those who wish to do business in Russia should be applauded. Titov, like many in Russia, are looking for change and working to better the business environment and reputation in Russia. It is hoped that his work will encourage and protect entrepreneurial growth in Russia by creating a safe business climate with fair practices.
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