Corporate Raiders Are 'Scourge' of Economy

Corporate raiders who use illegal means to seize companies and assets from their rightful owners are the main problem afflicting the country's economy, a group of political analysts said Tuesday.

"The seizure and redistribution of property has, unfortunately, become a typical Russian feature," Igor Bunin, the director of the Center for Political Technologies, said Tuesday at a news conference for the publication of the results of his research into the problem. "If this process continues, the country will always be in a state of chaos."

Bunin said part of the problem was that Russians don't see anything wrong when businessmen lose their property. In fact, he said, some people feel that those losing their businesses "got what they deserved."

"Here, there is no attitude of reverence toward private property like there is in the West," he said.

The number of attacks by raiders has risen in recent years, creating a problem of such magnitude that the State Duma is planning to consider legislation targeted at the practice and President Dmitry Medvedev pledged during his campaign that he would rein in the attacks.

"How can there be any initiative or motivation for an entrepreneur if he knows that he can lose his business any second as a result of gangster operations," Medvedev said in February.

Although the term "corporate raider" is borrowed from Western business language, it has taken on a different meaning in Russia. In the West, a stronger company legally takes over a weaker one, usually through a buyout, and both sides tend to benefit from the deal. In Russia, raiders use their links to corrupt government or law enforcement officials to seize businesses illegally.

The raiders often include former intelligence personnel, security service or police officers, lawyers or people with close ties to well-placed state officials. Through their control over judges, prosecutors and bureaucrats at all levels, they are able to order searches and inspections of businesses, gather background information about the owner, and falsify whatever documents are needed to take over.

Alexei Makarkin, the deputy director of the Center for Political Technologies, said the solution to the problem lies in providing the country's weak and corrupt judicial system with the support it needs to function independently.

"It is useless to pass new laws, which will be unable to take into consideration all the different kinds of attacks by raiders [in Russia]," Makarkin said. "You need to optimize law enforcement practices."

Both Bunin and Makarkin said that, while businesses in Moscow were the raiders' favorite prey in the 1990s, most of the victims now are in the regions, where they are less able to defend themselves than in the capital.