23 October 2003 03:15
Markets Tumble as Oligarchs Cry Foul
Markets tumbled for a second day Wednesday as the nation's largest companies closed ranks in a concerted appeal
to President Vladimir Putin to step in and stop prosecutors from "discrediting" Russian businesses.
A joint letter signed by representatives of three lobby groups -- the Russian Union of Industrialists and
Entrepreneurs, or RSPP, the OPORA small business union, and Business Russia -- slammed the ongoing legal assault on
Yukos without naming the company.
"Instead of fighting malicious tax delinquents, law enforcement bodies are harshly punishing those citizens who
had the courage to set foot on the path of open business and disclose information about their income," the groups
wrote in the letter.
Speaking on behalf of all three organizations, RSPP vice president Igor Yurgens said investigations into tax schemes
that were used under an earlier, burdensome tax regime would create an atmosphere that would encourage people to hide
their earnings.
Since the latest raids Tuesday, the benchmark RTS stock index has fallen nearly 8 percent. Taking the brunt of the
sell-off was Yukos, which has lost some $3 billion in market value.
"[Prosecutors] are reassessing the rules of the game from the previous generation," Yurgens said.
"Almost all of you at some stage received your wages in an envelope because businessmen couldn't pay the taxes
that suffocated every enterprise in the 1990s," he told reporters. "Any of you could be targeted."
Yurgens could not resist a chance to milk the Nord Ost hostage crisis, which began a year ago Wednesday. "We
know a person who is suspected of not paying 29 million rubles," he said, referring to Yukos-Moskva president
Vasily Shakhnovsky, who was charged with tax fraud Friday. "This person transferred a million dollars to Nord Ost
orphans without prompting and without even mentioning it. We don't believe that this is the kind of person who
would willfully hide $900,000."
Yurgens traced the roots of the Yukos affair, which began in June, to a report on corruption published earlier this
year by the Indem think tank that estimated that government officials take $37 billion in bribes every year.
"This [report] seemed dangerous to someone," he said. "And the arrow was turned to point at an
oligarch -- both for pre-election purposes and to take a little of the pressure off the state apparatus, which is a
receiver of these bribes."
As a result, a well-publicized study was released warning that the oligarchs were plotting a coup, he said, referring
to a report titled "The State and Oligarchy," which was published in June by an obscure group called the
Council of National Strategy.
"As you can see, this hasn't happened. [But] After this report, [prosecutors] went after specific
companies," he said. "When the president is here the situation is calm. When he goes away it gets
worse."
Putin is on a 10-day trip to Asia.
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