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. Last Updated: 07/27/2016

Prosecutor General to Clamp Down on Raiders

MTThe proprietors of a store on Sushchyovsky Val attempted to attract attention to their plight at the hands of raiders.
Across the front window of an average-looking grocery store on Sushchyovsky Val a huge banner publicizes the owners' plight.

"We are being attacked by raiders! Help us!" the banner reads.

Inside the shop, all is dark and the proprietors are nowhere to be seen.

Conjuring up images of pirate attacks or stagecoach heists, reiderstvo, or raiding, is the term used for the long-standing practice of illegally taking control of a business and ousting its owners, often with the aim of acquiring desirable real estate.

"What is a raider? A raider is an organization or an individual that seizes control of some company and its property," said Andrei Sokolchuk, a lawyer with legal firm Pravoviye Initsiativy XXI Vek.

In a sign that the authorities are keen to turn up the heat on this criminal activity, the Prosecutor General's Office announced last Monday that it was getting involved in the attempt to curb this phenomenon.

"The Prosecutor General's Office has taken the regional prosecutors' task of counteracting the illegal seizure of businesses through criminal takeovers under its own control," a statement said.

"Raiding combined with corruption damages the interests of the state -- which seeks to protect the rights of individual legal entities and citizens -- by undermining the basis of private property and business," the statement said. "Raiding often accompanies the procedures carried out in connection with the bankruptcy of companies."

Initially associated with the takeover of large businesses in the 1990s, a new breed of raiders has increasingly turned its attention to the easier prey of small- and medium-sized businesses.

Carried out through a series of spurious legal challenges aided by corrupt officials and backed up by the threat of physical intimidation, the real targets for the raiders, especially in larger cities, are often not the actual businesses themselves but the properties they occupy.

The properties housing these businesses, many of which were acquired cheaply in privatization deals in the early 1990s, have seen their value soaring as the country's real estate sector continues to enjoy a boom. Consequently, they have become prime targets for criminals seeking a quick return.

"In Moscow, [raiding] is more often than not connected with real estate," Sokolchuk said.

Emphasizing the distinction between the legal takeover methods used elsewhere and the illegal blackmail techniques employed by raiders, Sokolchuk said the process often involved the forgery of documents and other confidence tricks.

"In one year, I would say that there are 10,000 such raids. It's difficult to give a precise figure because there are no statistics and people tend to deal with the problem in their own way," said State Duma Deputy Gennady Gudok, who is currently part of a Duma working group on the issue of raiding.

"In Moscow, about 500 such attacks happen on properties every year," Gudok said.

"Obviously, it's good that the Prosecutor General is getting involved, but it is already high time; they could have done something five years ago."

The moves from the Prosecutor General are the latest in a series of steps being taken towards clamping down on the practice of raiding.

Last February, President Vladimir Putin spoke out on the subject, arguing that raiders acted to undermine investor confidence and curb the much-needed expansion of small- and medium-sized businesses.

"Honest business people and property rights should be protected," Putin said at a meeting of prosecutors.

At the end of November, the Russian Chamber of Commerce and Industry proposed a series of legislative changes intended to close up legal loopholes exploited by raiders and toughen penalties.

"The legal situation at the moment is very vague and it needs to be clarified," Sokolchuk said.

Because corrupt officials are usually at the heart of the problem, however, there is little likelihood that any alterations to the legal system would radically change the situation, he said.

"I don't think that any big raids could happen without the help of officials. They all need support from somewhere," Sokolchuk said.