Three international court cases confirm that the legacy of the Russian government’s illegal actions during the past decade will haunt the Russian people for many years to come. At the forefront of those in Russia who sought to flout international law and selectively apply Russia’s own laws is the General Prosecutors Office.
Few weeks ago US tech giant Hewlett-Packard’s Russia subsidiary pleaded guilty to paying bribes to officials in the General Prosecutor’s Office to win a large technology contract with that Office. Court papers confirm that the illegal payments to the faceless Russian officials in the Prosecutors Office continued for many years.
US Justice Department Deputy Assistant Attorney General Bruce Swartz was very clear about what the US firm had to do to keep the bribes secret as they breached the Foreign Corrupt Practices Act. In his statement he said “Hewlett-Packard subsidiaries, co-conspirators or intermediaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash” . Obviously, the crooks in the General Prosecutor’s Office did not want to be discovered.
According to US officials and the court records, the bribes were paid to the Prosecutor’s Office between 2000 and 2007. All-powerful, the General Prosecutor’s Office while taking bribes on one hand was at that time also fabricating allegations about others to secure a bigger home-grown scalp. In 2003 the Prosecutor’s Office under the guidance of Igor Sechin began its illegal, selective and draconian pursuit of YUKOS Oil Company. Alleging tax fraud and corruption by senior managers and company representatives, the full force of the Prosecutor’s office was unleashed on YUKOS after the arrest of Mikhail Khodorkovsky. Its methods were unrelenting, its actions illegal and the repercussions tragic for individuals, families, the business and investment community in Russia. That very same office was also colluding at the same time with a US company to receive very large bribes.
Most Russians know the double standards of the General Prosecutor’s Office. However, now the two faces of the Prosecutor are exposed to the West thanks to courts in The Hague, Strasbourg and the US who have shone a spotlight on its duplicity. On 18 July 2014 the Permanent Court of Arbitration ruled that Russia must pay over USD 50 billion in damages to former Yukos shareholders. The illegal actions of the General Prosecutor’s Office feature heavily in the 650 page damning ruling. In the same manner on 31 July 2014 the European Court of Human Rights (ECHR) ordered Russia to pay shareholders in Yukos about USD 2.5 billion. Both of these awards were record breaking in the history of these courts confirming the YUKOS expropriation as the world’s largest state sponsored theft.
Russian government statements that these verdicts are purely political and related to the current Ukraine situation are laughable and designed to mislead the Russian public. The cases were started many years ago before the Ukraine crisis ever came into the political picture, and were concluded by independent international courts with a high level of both sophistication and international standing. Russia had the opportunity and did fully plead its case in the Permanent Court of Arbitration in The Hague. Russia also had a sitting judge on the ECHR panel who could have exerted influence on the other panel members, and Russia also has a permanent representative to the court who could have tried to influence the court. The YUKOS parties in the ECHR had no such ability; communications with the court were only written pleadings based in fact. Despite that, the courts both ruled against Russia – and rightly so for ignoring both its own laws and international law.
However these two awards are just the first of many that Russian people are going to learn about in the future. Thanks to an independent rule of law there really will be no hiding place for those in the Russian government and General Prosecutor’s Office that live ‘special lives’ and enjoy huge wealth and power all secured through corruption, malpractice and theft. While it has taken these courts to expose such illegal acts, those that lead Russia still foster and support a climate in which such corruption flourishes; sharing in the ill-gotten rewards and ultimately even encouraging it as ‘common practice’. What better way to secure loyalty?
Following the disclosures of illegal activity by the Russian government and the General Prosecutor’s Office in the YUKOS and the Hewlett Packard cases, and the declining Russian investment climate as a result of recent rulings and sanctions, many would have thought that the Kremlin would learn from its many mistakes. It appears not. Is it greed that means it disregards the lessons of the past as it still deploys skills it honed 10 years ago on YUKOS? Whatever may come of the investigation relating to Vladimir Evtushenkov, chairman of Sistema, it is likely that the corrupt General Prosecutor’s Office will be leading the march to deliver the bidding of the corrupt Russian leadership. As the value of the rouble plummets and the international community once again chooses to shun investments in Russia, there is one certainty, thanks to international rule of law foreign courts are not afraid to join the dots to paint the real picture. The past sins of Russian officials will come back to haunt them years later. Sadly, it will probably not be the corrupt individuals in the Russian government and General Prosecutor’s Office who may or may not ever be brought to justice, but rather the Russian people, paying the price for greed, corruption and the disgraceful acts of the ruling elite and its henchmen.
Bruce Misamore
Original: Novaya Gazeta, 10/06/2014 (in russian)
