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. Last Updated: 07/27/2016

Agents Search Yevroset Bosses' Apartments

Interior Ministry agents Wednesday searched the apartments of executives of Yevroset, the country's largest mobile phone retailer, suspected of possessing contraband, a Prosecutor General's Office spokeswoman said late Wednesday.

Citing an ongoing investigation, the spokeswoman declined to elaborate on the results of the searches or exactly what kind of contraband the agents were looking for.

Yevroset co-owner and chairman Yevgeny Chichvarkin said by telephone Wednesday evening that he could "neither confirm nor deny this news."

An Interior Ministry spokesman declined to comment on the ministry's involvement.

"This is the prosecutor general's party," the spokesman said. "They're handling it."

But citing a law enforcement source, Interfax reported that the central Moscow home of a Yevroset vice president had been searched, as had the home of the company's head of security.

More than 10 apartments were searched in connection with the investigation, the source said, Interfax reported.

Andrei Bogdanov, a telecoms analyst with Troika Dialog, said the searches came as a surprise because most of the country's leading mobile phone retailers now import all of their handsets legally.

"The large mobile phone retailers, especially Yevroset, have incentives to stay clean before the law because they are all public companies thinking about IPOs," Bogdanov said. "They simply cannot afford to do things the old way."

Bogdanov said the relationship between law enforcement authorities and leading mobile phone retailers and telecom operators was strained at best, noting media reports that testify to a cat-and-mouse relationship.

Last month, for example, the Association of Computer and IT Enterprises accused police of raiding retailers to confiscate merchandise and proceeding to either extort bribes to return the goods or to have them sold by friendly companies, Vedomosti reported.

Officers demand bribes ranging from 20 to 50 percent of the value of the seized merchandise from the targeted retailer, said the organization's head, Alexander Onishchuk, Vedomosti reported.

Onishchuk accused officers of the Interior Ministry's high-tech crime department and city police's economic crime department of carrying out such raids, Vedomosti reported.

Onishchuk did not name the officers. City police declined to comment, while the ministry's high-tech crime department denied the accusations, the report said.

But Sergei Kupeyev, a telecoms analyst with Alfa Bank, said there had indeed been complaints recently from consumers that some handsets sold by Yevroset did not have the correct documentation because they had not gone through proper customs procedures.

A disgruntled consumer could have tipped off authorities, who then decided to act, Kupeyev said.

"The problem is not with the quality of the handsets," Kupeyev said. "It is a question of whether they were brought in with proper documentation."

Chichvarkin said he was unaware of any complaints by consumers about handsets purchased in Yevroset outlets.

"We have one of the best service centers as well as the least number of defective handsets compared with other retailers," Chichvarkin said.

Yevroset has had past run-ins with the law over what police suspected to be illegally imported merchandise.

In March 2006, Interior Ministry agents impounded 167,500 Motorola handsets destined for Yevroset after they cleared customs at Sheremetyevo, claiming they had been illegally imported.

Six months later, authorities returned 116,500 handsets to Yevroset while the remaining devices were destroyed after being damaged, according to Motorola.

Ekho Moskvy reported Wednesday evening that the searches were related to the Motorola case, quoting unidentified investigators.

Yevroset, which has about 41 percent of the country's handset sales, expects to have 5,100 outlets by the end of the year.

The company said last month that its revenue could increase 21 percent to $3.5 billion in 2007, Bloomberg reported.

Yevroset has been gradually expanding its operations outside Russia, with India being the latest in the list of countries where it plans to open stores.

At the end of June, it had 4,883 stores in 11 former Soviet republics, Bloomberg reported.

Yevroset said earlier this year that it planned to sell around 20 percent of its shares in a Moscow initial public offering planned for 2008.