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. Last Updated: 07/27/2016

EDITORIAL: Thou Shalt Not Steal Purneftegaz




There are a million reasons why the West should look Yevgeny Primakov in the eye and tell him not to expect any more aid money. But here's just one: Purneftegaz.


The Moscow Times has for months tracked the bizarre fate of this oil producer. Purneftegaz pumps millions of tons of crude out of the Russian ground each year, and last year had revenues of $800 million.


But two months ago, in a secretive arrangement, the state surrendured control over Purneftegaz to four obscure companies - for just $10 million. For comparison, these days Purneftegaz is bringing in revenues of about $12.5 million each week.


Some might see such an obvious sweetheart deal as the moral equivalent of theft from the Russian nation - also known as a violation of the first of the Bible's Ten Commandments, also known as a sin. But as reporter Gary Peach chronicled in Tuesday's Business Extra, this is an unusually blessed insider deal: All four of those obscure companies have links with International Economic Cooperation, or IEC, an oil export company founded by the Moscow Patriarchate of the Russian Orthodox Church.


Exactly why the Orthodox Church needs its own oil companies is an excellent question, one too rarely asked in today's Russia. The official explanation is that proceeds from IEC go to restore churches and other causes.


This was the same explanation put forward in 1996 when discussing customs tariff exemptions on cigarettes and alcohol enjoyed by the Moscow Patriarchate, the National Sports Fund and funds for Afghan war veterans. It took an assassination attempt on a sports fund official, then a cemetery bombing that killed 14 at the burial of an Afghan veteran fund leader, before the nation noticed duty-free alcohol and cigarettes had become so profitable - and criminalized.


The International Monetary Fund and World Bank asked why Western taxpayers should lend Russia money if it would only subsidize an untaxed, criminalized alcohol and tobacco trade. The Kremlin promised to end those exemptions.


Years later, and what has changed? After President Boris Yeltsin spoke out in anger on the matter in October, courts returned some (but not all) of the 38 percent controlling stake in Purneftegaz bought on the cheap.


But it's hardly a victory for justice. Purneftegaz had been part of the enormous oil holding Rosneft, and the tug of war between IEC and the state has undermined hopes of privatizing Rosneft successfully. That may be just as well, too - ultimately what the Purneftegaz tale demonstrates once again is that when valuable assets are involved, the Russian government is incapable of selling them off honestly.