Bastrykin Reaches Out to Wary Investors

The country's top investigator said crime and corruption are hurting the investment climate and that the best solution would be to update legislation and create a new agency to tackle financial crime.

The rare admission from a law enforcement official was all the more unusual because it came from Investigative Committee chief Alexander Bastrykin, whose own agency has been accused of harming the investment climate by conducting corruption-inspired investigations against businesses.

President Dmitry Medvedev has made the fight against "legal nihilism" a hallmark of his presidency and has criticized law enforcement agencies for "nightmarizing" businesses.

But observers said Bastrykin's suggestions would do little to assuage investors' concerns that the law is being applied selectively.

Bastrykin, in an interview published Tuesday in Rossiiskaya Gazeta, the government's official mouthpiece, said his agency had a task to improve Russia's investment climate, but it could not do it alone. He proposed that a new agency be created to fight financial violations.

"Maybe it would be good … to create a unified government agency, for instance on the basis of the Financial Monitoring Service," Bastrykin said.

Alternatively, he suggested setting up subunits in existing ministries and agencies.

He quoted a report by PricewaterhouseCoopers last year that ranked Russia as the world's leader in economic crime.

"What frightens foreign investors most in our country is the risk of their assets being taken away. That is what 64 percent of respondents said, and 48 percent were worried about corruption," Bastrykin said.

He also complained that a lack of definitions in the Criminal Code allows for a wide range of wrongdoing. As an example, he cited Article 159, which deals with fraud.

"You can detect 'an abuse of trust' in a lot of actions if you want," he said.

He suggested that white-collar crime should no longer be punished with prison sentences. "One should not equate murderers and rapists with people who have committed economic crimes," he said.

Alexander Nadmitov, who heads a Moscow-based law firm specializing in corporate cases, said the main problem is that the law is not consistently enforced. "I can only welcome the decision to fill in holes in the current legislation. The more detailed the laws, the better. However, there should be no exceptions in how laws are applied," he said.

Investors have frequently pointed to Khodorkovsky and his oil firm, Yukos, which was forced into bankruptcy and snapped up by state companies five years ago, as an example of how courts apply the law selectively.

Khodorkovsky's lawyer Yury Shmidt said Bastrykin had failed to address concerns that there is no rule of law. "One can write more laws, but they will not solve the problem of legal nihilism," he said by telephone from St. Petersburg.

He said the main problem is that laws are applied in an atmosphere of corruption and without an independent judiciary. "So far the government is not prepared to sacrifice its own interests for the sake of the rule of law," he said.

Valeria Kasamara, a political scientist at the Higher School of Economics, said nothing would change as long as the state controlled the country's civil society structures. "What we have is a scheme of corrupt lobbyism where no one apart from the state is standing up for the interests of business," she said.

Analysts also questioned the logic of setting up a new agency to combat economic crime, saying it would only fuel cumbersome interagency rivalries. "The Interior Ministry has a special department for this and so does the Federal Security Service. Prosecutors also deal with economic crimes and, of course, the Investigative Committee itself," said Vladimir Pribylovsky, head of the Panorama think tank.

"But maybe Bastrykin is just looking for a new job," he added.

Nadmitov, the lawyer, said the Investigative Committee has enough authority to fight economic crimes. "They should be freed from smaller matters to devote more attention to this," he said.

Since its creation in 2007 as a semiautonomous body under the Prosecutor General's Office, the Investigative Committee has featured prominently in reports about rivalry between law enforcement agencies. Only last month, Prosecutor General Yury Chaika suffered a defeat against his rival Bastrykin when he unsuccessfully tried to fire the head of the Investigative Committee's Moscow branch, Anatoly Bagmet.

One of Bastrykin's top investigators, Dmitry Dovgy, is serving a nine-year prison sentence for bribery. Dovgy, who claims that the case against him is politically motivated, has accused Bastrykin of ordering him to open high-profile investigations despite an absence of evidence.

Another senior investigator, Andrei Grivtsov, was arrested Jan. 16 on suspicion of extorting a $15 million bribe from the president of Rosenergomash, a leading electrical engineering manufacturer, in exchange for not opening a criminal investigation against him.

Bastrykin made no comment about corruption allegations involving Investigative Committee officials.

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