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. Last Updated: 07/27/2016

RSPP: Prosecutors' Zeal Hurts Russia's Image

The union representing the nation's wealthiest businessmen called on prosecutors Tuesday to free two Sibur executives and accused the Prosecutor General's Office of tarnishing Russia's reputation by jailing them.

"Russian business is worried by some of the methods currently being used in investigating economic crimes in the country," said Arkady Volsky, president of the Russian Union of Industrialists and Entrepreneurs, or RSPP, whose members' enterprises produce 60 percent of the nation's gross domestic product.

Volsky was referring to Yakov Goldovsky and Yevgeny Koshchits -- respectively the president and vice president of Sibur, a giant petrochemical subsidiary of Gazprom -- who are currently awaiting trial for abusing authority and face five years in prison if convicted. They were incarcerated Jan. 8 and charged late Friday as part of an ongoing probe of asset theft at Gazprom.

The case revolves around the sale of a gas refining plant in Surgut that was sold to oil major Surgutneftegaz for 2.6 billion rubles ($86 million). Sibur executives allegedly used the proceeds to try to shrink Gazprom's 51 percent stake in the company via a controversial share emission.

"We want to know if it is an individual case or changes in the general policy of law enforcement agencies with regard to enterprises," Volsky said. "The sudden moves of law enforcement agencies may easily undermine trust in the reliability of Russian enterprises and the Russian economy as a whole, which is being restored with great difficulty.

"With a few more arrests of this kind we can forget about the success achieved in improving the investment climate over the past two years, and Russian business, due to 'advertising' by foreign competitors, will finally acquire its criminal reputation," he said.

In a letter sent to the prosecutor's office Monday, the RSPP asked Prosecutor General Vladimir Ustinov to meet with top businessmen to discuss "pressing issues" in the relations between companies and law enforcement agencies.

"The forms and methods of law enforcement agencies' work remain the decisive factor guaranteeing a favorable investment climate, which is being resolutely created by the president, the government and the State Duma," the RSPP wrote in the letter.

The actions of the General Prosecutor's Office are "being viewed by Russian and foreign business communities as improper and incongruous with the degree of the threat coming from the arrested managers," the letter said.

"[After our last meeting with the Prosecutor General's Office we managed] to come to an understanding and all these mask-shows, with armed OMON and other attributes of the relationship between law enforcement and business, disappeared for a while," Volsky said, referring to a meeting in December 2000 regarding the treatment of Media-MOST founder Vladimir Gusinsky, who is now living in exile.

"So, we need to have a meeting to make sure we still understand each other and that the process ... has not turned back," Volsky said.

"All the world now believes that they cannot talk with any head of a serious, big Russian company -- now executives can be turned into dust and thoroughly slandered with just one move [from prosecutors]," said Vladimir Sherbakov, a former deputy chairman of the Soviet Cabinet of Ministers who is now an entrepreneur and RSPP member.

Ironically it was RSPP member Alexei Miller's Gazprom that requested that prosecutors look into the case against Sibur executives, including Gazprom first deputy CEO and Sibur board chairman Vyacheslav Sheremet, who was also detained for several days before being released on the condition that he not leave Moscow.

Volsky said that 23 of the union's 27 members signed the letter sent to Ustinov on Monday and all of them are ready to give "their personal guarantee" that Goldovsky and Koshchits will not flee the country if released from custody.

He declined to say, however, whether Miller was one of them.

"At the next RSPP meeting we will ask Miller: if young entrepreneur Alexei Miller thought about what will follow from his appeal to the prosecutors. It is easy to start up this machine, but not easy to stop it," said Oleg Kiselyov, CEO of Metallinvest and RSPP member.

Another high-profile target of prosecutors who has been accused of wrongdoing, disgraced tycoon Boris Berezovsky, offered his two cents on the RSPP's appeal.

Berezovsky, whose television station TV6 was forced of the air as part of a liquidation case against it, said on Ekho Moskvy radio Tuesday said that after the authorities close down TV6, their next step will be to place business completely under their control.

He said that authorities were following a consistent and definite "procedural logic." First, he said, they set up a vertical line of power and then introduce a dictatorship of the law and concentrate that power in their hands. He said he was confident that the authorities would not stop until all businesses are under their control.

"The authorities have already made such steps -- take the story of Gazprom, Sheremet and others. This is only the beginning," said Berezovsky.

Several analysts polled Tuesday, though not supporters of Berezovsky, agreed with him to a certain extent.

"The Prosecutor General's Office is obviously a political tool," but the state is just protecting its property," said Alexei Mukhin, director of the Center for Political Information think tank. "Sibur was the first phase of the whole operation. The next one will be Gazprominvestholding and its head Alisher Usmanov," he said. "Goldovsky and Usmanov both have protectors in Gazprom top management and were using all their methods to strip Gazprom of its assets."

"It is a pure truth that the reputation of Russian business will not seem better after this. But the thing is that the problem is with Russian business itself," said Boris Kagarlitsky from the Institute of Comparative Politics.

"There were no clean hands during privatization," Kagarlitsky said.

"The RSPP understands very well that any one of them might be next. To protect themselves they are trying to prove themselves to be a serious political force," he said.