COMMISSION ON SECURITY & COOPERATION IN EUROPE: U.S. HELSINKI COMMISSION
BEYOND CORPORATE RAIDING: A DISCUSSION OF ADVANCED FRAUD SCHEMES IN THE
MINOR SHAREHOLDERS ASSOCIATION
THE HEARING WAS HELD AT 2:00 PM IN 1539 LONGWORTH HOUSE OFFICE BUILDING,
WASHINGTON, D.C., KYLE PARKER, POLICY ADVISER, HELSINKI COMMISSION, MODERATING
TUESDAY, NOVEMBER 9, 2010
KYLE PARKER: I’d like to call the briefing to order. Welcome everybody, on
behalf of our chairman, Sen. Ben Cardin, to today’s briefing at the Helsinki
Commission entitled, “Beyond Corporate Raiding: A Discussion of Advanced Fraud
Schemes in the Russian Market”. We are very happy to have Alexei Navalny here
as our featured panelist.
This is a public briefing. It is being recorded and will be transcribed and
result in an official government transcript, much like a hearing. We are able
to take public questions. So please, while you listen to the presentations, be
thinking of good questions that really – one of my favorite parts of a briefing
is that we really can have almost an informal, focused, guided discussion.
Before we begin, I just wanted to mention a couple quick things about the
commission. We were founded in 1976 by an act of Congress, and our mandate is
to monitor the implementation of the Helsinki Accords and subsequent
commitments; and with particular focus on the third dimension, which is the
And one of the things that I’d like to start right out, just sort of to – as
the basis for our work – one of the commitments, the 1991 Moscow concluding
documents, states, “The participating states emphasize that issues relating to
human rights, fundamental freedoms, democracy and the rule of law are of
international concern. As respect for these rights and freedoms constitutes
one of the foundations of international order, they categorically and
irrevocably declare that the commitments undertaken in the field of the human
dimension of the CSCE are matters of direct and legitimate concern to all
participating states, and do not belong exclusively to the internal affairs of
the state concerned.”
So that’s sort of the framework and the basis in which we operate. The topic
of this briefing sort of grew out of a lot of our focus this year on rule of
law, corruption, transparency, good governance issues – particularly in Russia.
And certainly, the past few weeks, there’s been no shortage of items in the
I also just wanted to read into the record a couple quick statements on the
issue of corruption in Russia from three Russian leaders, and the first is from
President Yeltsin: “I know that you have some doubt in our victory over
corruption. But I have resolve and political will, and your support in this
fight. I will fight this to the end. People will be afraid to misappropriate
public funds and take bribes.” That was in 1997.
Something from Putin: “I make this point now because despite all the efforts
we have made, we have still not managed to remove one of the greatest obstacles
facing our development – that of corruption.”
And now, a couple words from President Medvedev: “Corruption is the greatest
enemy of a free and democratic society.” And a little more at length here, in
an address to the Federal Assembly in 2009 – President Medvedev again:
“Personal success, encouragement of initiative, a better quality of public
discussion and zero tolerance of corruption should become part of our national
culture, an intrinsic part of who we are. In Russia, we often say that there
are a few cases in which corrupt officials are prosecuted.
I want to cite a few figures: In just six months of this year, we have
received more than 4,500 cases of corruption, convicting 532 officials of
government authorities and local self-government bodies, and more than 700
These figures unfortunately show the extent to which corruption has infected
our society. However, simply incarcerating a few will not resolve the problem.
But incarcerated they must be. To successfully combat corruption, all spheres
of government must become more transparent, including the activities of public
authorities, courts and other judicial bodies. We shall overcome
underdevelopment and corruption because we are a strong and free people, and
deserve a normal life in a modern, prosperous democratic society.”
I thought it might be helpful to put those out. I know we’re quite familiar
with statements of legal nihilism and other things, but to have some of that
before us in a little bit more detail.
Today’s briefing also features some testimony for the record from a couple
people who unfortunately could not be with us today. The first one is Yana
Yakovleva, who is a Russian businesswoman. And she had an experience of being
arrested under false pretenses and spending, I think, the better part of a half
of a year in jail; a phenomenon that’s unfortunately all too common in the
Russian market. And she now continues her work at her company; as well, splits
her time with a new NGO called Business Solidarity.
She has worked with Olga Romanova, who is the editor of Forbes Russia, which I
might remind people is the publication that the late Paul Klebnikov worked for.
She worked with Yana to compile a list of cases that they are working on, and
that’s been distributed out of the table and will be made part of the record.
Olga’s husband is currently in jail, in one of these similar types of extortion
schemes, and it has only recently been discovered what facility he was in. For
some time, she was not aware of his whereabouts or whether he was even alive.
He is alive, and I believe he, with the help of some people on the outside,
have started an award-winning blog called the “Butyrka blog”. And Butyrka is
an infamous Russian detention facility in Moscow.
So please do take a look at their submissions. And I know Alexei is quite
familiar with a number of the cases that are in those submissions, so should
questions arise – we also have something for the record on the case of Fedor
Mikheev. Only last Thursday – first time in the public domain, again, a
similar story of kidnapping, extortion, all manner of, all manner of, well, I
don’t quite know what you’d call it. (Chuckles.) I guess, these advanced fraud
And there is a submission, and it’s out there on the table. Goes into a lot
more detail than the Financial Times article did. And one of the interesting
things is, the people involved in this particular case – again, Fedor Mikheev
is currently in jail – are almost, to a person, the same people who were
involved in the fraud against Hermitage Capital Management and the death of
attorney Sergei Magnitsky.
I don’t want to delay us much more. Oh, one last thing in the record. I am
happy to have permission to include an article by Thomas Firestone, who was our
resident legal advisor at embassy in Moscow. Tom may be joining us today, and
certainly there is really nobody who knows this issue better in the U.S.
government than Tom. And so please, if you have a chance, his article “Armed
Injustice” is on the table and will be included in the record.
With that, I would like to turn it over to our featured panelist, Alexei
Navalny, whose bio is on the table. Alexei was nominated, I believe, last
year, as “man of the year” by Vedomasti. And a little humorously, just shortly
ago, was elected mayor of Moscow in a virtual election that took place online –
ALEXEI NAVALNY: Virtual one. Virtual mayor.
MR. PARKER: A virtual one, yeah. (Chuckles.) But what did you get, something
– 35,000 votes or 55 thou?
MR. NAVALNY: In percents, it was 75 percent.
MR. PARKER: Right, right. And his leading contender was against all. So
Alexei sort of, in a sense represents a generation that has been locked out of
politics and have taken to other means. And Alexei has made extensive use of
new media and other modern technologies to advance his message and has come all
the way from New Haven to be with us today. And with that, I would like to
turn it over to Alexei.
MR. NAVALNY: Thank you, Kyle, and thank you very much for this president’s
votes. It was funny. It was theory. And I’m going to talk about practice.
Thank you very much for having me here, and I would like to thank Sen. Cardin
and Rep. Hastings for the opportunity to brief the U.S. Helsinki Commission on
Russian efforts to battle corruption in Russian financial markets and on the
implication of our efforts for American investors large and small.
I will also highlight the ways in which white-collar crimes leads to broader
human-rights violations. And finally, I will outline a few possible strategies
for international cooperation that would resonate with our efforts.
Over the past 10 years in Russia, political changes have given government
officials broad reach in power. As a result, some of them have become involved
in shady criminal business dealings, graft, fraud, embezzlement and money
laundering. It can be very difficult to track these white-collar crimes, to
expose them and to address them. Difficult, but not impossible, if one knows
the lay of the land.
My law practice focuses on the shareholders’ rights. We work within the
corporate system by pressing management to maintain transparency, to respect
the law and to abide international standards of accountability. We use both
traditional media and grassroots methods, especially blogs, to rally public
interest in corruption.
My personal blog has about 50,000 readers daily and has proven very efficient
and effective change. In other cases, we alert minority shareholders about
corruption and offer them free proxy advice. We also apply legal pressure from
outside of corporate system; specifically, we initiate formal investigation and
file class-action suits in high-profile cases. We also work as activists to
foster systemic change.
I will now review a few salient example of corruption and the strategies we
have been applying in dealing with them. Because energy is a big business in
Russia, I will focus on energy industry in choosing my examples.
First, let’s consider the misappropriation of funds dedicated to the
construction of major natural gas pipeline. Two pipelines – they look exactly
the same. One in Russia, one in Germany. And actually, they are the same.
They are both part of the one big pipeline. But despite the relatively high
cost of labor and metal ore in Germany, cost of the Russian part of pipeline is
approximately three times the cost of German parts, mile for mile. Why?
Because one, on the Russian project, money appears to have gone missing. Look
at this funny couple. (Laughter.) They have – a construction company was
engaged to build the Russian part of pipeline without even bidding. This
company belongs to Vladimir Putin former judo coach Arkady Rotenberg. He and
his brother were named the main constructors for Gazprom, the largest company
You can see the official data from the Gazprom reports. These brothers became
billionaires in short order. And Gazprom is refusing to disclose any
information how the Rotenbergs got the contract. Actually, they get enough
information – disclosure of information is a big change for the shareholders
And Gazprom is not alone in hiding their dealing from public scrutiny. This is
a very short and visual example for work to disclose their information.
Normally, within a year, company should produce a tall stack of minutes as VTB
Bank does, whose minutes you can see on the left.
Gazprom, Russian biggest corporation, produced the meager center stack. And
Sugutneftegaz: very big company. The third Russian oil company produced just
a couple of – literally a couple of pieces of paper. And they were really
reluctant to give even these documents.
I was the first shareholder for all history who succeeded to force them to
produce these couple of pieces of paper. And the content of this minutes
indicate that board meet only a couple of hours throughout the entire year.
Turning to another natural resource, I draw the commission’s attention to a
case involving the petroleum trade. Russia is the biggest oil exporter in the
world. We have five major oil companies, all publicly traded. Four of them
were forced to sell an undisclosed percentage of their oil through Gunvor.
Gunvor is a small, privately held middle-man trading company based in
Switzerland. Gunvor trades more oil than any other single entity in the world.
As a minority shareholder I sent demand letters to all four companies seeking
disclosure of how much oil they sell through Gunvor, under what conditions, at
what prices and whether Gunvor received any preferential choice.
All companies refused to give any information about their cooperation with
Gunvor. So I filed suit alleged on disclosure. Finally, the judge held all
Gunvor’s documents to be privileged and we can understand pretty well the real
reason of this decision because the only one piece of information about Gunvor
is well-known. That one of the owners of this middle-man company is Gennady
Timchenko, old friend and colleague of Vladimir Putin.
His position allows him to skim a small percentage of the top of each of
millions of barrels sold and all legally. Very good business and he’s a
billionaire as well. Actually, it’s a very interesting Russian phenomenon why
all friends of Vladimir Putin who wants to be in business they became
billionaires so soon.
My third example also comes from the world’s energy resources. In Russia, a
company called Trasneft has a monopoly on the transportation of oil. According
to the official records, Transeft not only a transportation monopoly but also
the biggest charitable donor in Russia. They give half-a-billion dollars in
charity over to U.S. Sounds good, indeed, but the problem is that no one knows
who received the gifts.
After exhausting considerable efforts we were able to locate just two
recipients of these mysterious charities. One of them is Kremlin Line
Foundation (ph). Kremlin Line was created by the former secret service
officials and we have uncovered sufficient ground to allege that this so-called
charity is just a fraud through which Transneft pays bribe to secret service –
(inaudible) – when Transeft want to squelch an investigation.
This strategy is works for them – works for them. In our case we spent two
years pressing the interior ministry to investigate this classified charity.
After several months when the ministry had a deadline to announce the result of
the investigation the representative came to the hearing and said, oops, we
lost the file. There is no case anymore.
And of course it was a huge scandal, we sued them successfully and we forced
them to start an investigation again. A couple of weeks ago when another
deadline came and they were supposed to announce the result of investigation
the representative came to the hearing and said, sorry, we lost the file again.
Of course, this will set up a huge scandal so our work at least accomplished
Transneft still operates in shadows and is still hiding the identity of the
recipient of the so called charity. But our litigation drew attention to the
cover ups so the government was pressured into reinforcing our rules of
transparency for Transneft. The company has been forced to disclose their own
incrimination – even more incrimination information about their work. So we
managed to use the system against the system to protect investors’ interests
I described just three, very typical, examples of the corruption among the
dozens we are investigating. So why does it matter for you? Corruption in
Russia effects share pricing for shareholders around the world which hurts
corporate portfolios and the retirement funds of little American guy. It also
made a hit to your tax base and your economy because U.S. funds have invested
billions of dollars in Russian companies.
Not only do we fight to reduce the damage suffered by American and other
investors but our work, also, draws attention to human-rights violations. When
we expose corruption officials try to hide their tracks. At times some of them
have resorted to violence and degradation to protect their careers.
In this connection I remind the commission of the chilling story of attorney
Sergei Magnitsky who was jailed, tortured and left to die in the prison cell
for his role in exposing corruption. He wasn’t an activist, he wasn’t a
politician, he was just a lawyer investigating the crime against the state.
We are all grateful for emergent congressional support for the Justice for
Sergei Magnitsky Act of 2010 sponsored by Sen. Cardin. Passing the bill will
garner attention and we activists will all sleep more soundly. I found myself
especially encouraged that Congress will be considering this bill in the light
of recent events back home.
This weekend journalist Oleg Kashin was assaulted. Kashin is a friend of mine
as he is a prominent Russian journalist. Here’s the clipping from the official
website of United Russia Youth League, a pro-Kremlin youth movement. The
author has – (inaudible) – the words to be punished over a photo of journalist.
Within a matter of a month, he was attacked. The attackers broke his legs, his
arms, his jaws; they smashed his hands. He lost finger as a result. He also
sustained serious injuries of the head and has fallen into a coma. And
actually, he’s still in a coma.
The assault is presumed to be tied to Kashin’s criticism to the Kremlin and
their pro-Kremlin youth movement. The attack on Kashin highlights the
connection between corruption and politically motivated violence. Kremlin
officials are afraid of political change. So power is hard to let go – so is
The careers of corrupt officials are funded by graft. We are really eager to
know who’s funding the pro-Kremlin youth movement. If corrupt officials and
private managers who are conspiring with them are forced to disclose this
information any ties to pro-Kremlin organizations will be exposed. The Russian
people and worldwide human-rights organizations will take notice.
If you’re operating on emerging markets, you will hear a million times that all
your attempts to fight corruption and to change the situation abroad are
fruitless because of deep cultural roots of foreign corruption. I’m here to
tell you that this is not true. We have very powerful tool to fight corruption
in Russia. And because Russian corruption has passed laundered money through
the United States we hope they will be prosecuted here, too.
I’m not a dissident; I’m an activist. I consider investment in Russia to have
very high potential. I hope Americans will continue to invest in Russia but we
need a little more political leverage to protect those investors.
I do not presume to ask commission to support any particular project or agenda.
But I do hope Congress will take steps that will benefit both of our
countries. I will leave the commission with a few additional thoughts about
the battle against corruption. I’ll start with a general principle, the
principle of the carrot and the stick. Trust the carrot. Russian companies
note that the greater transparency translates into the higher rating of their
agencies such as American agencies such as Standard & Poor’s, which means that
they can borrow cheap money more easily.
Unfortunately, they also know that America tends to overrate Russian
transparency. This tendency needs to be watched by Securities and Exchange
Commission and, perhaps, legislated. Our efforts are bolstered by the Foreign
Corrupt Practices Act in U.S. and the Bribery Act in the United Kingdom. Many
of us dedicated to the anticorruption agenda are pleased to see these
We also need to give the Russian corruptionists the stick. American investors
should always listen carefully to what competent and – (inaudible) – advisors
says about specific Russian investments. These are such RiskMetrics, ICC;
Glass-Lewis; Lincoln Jones (ph) and so forth.
Where the concerns arise, fund managers may need to pull out and allow the
Securities and Exchange Commission to investigate or even initiate legal action
in the United States. The SEC must remain fully empowered to tackle this
The stick needs to be applied in another area, too. Almost all Russian
state-controlled companies have ADR – American Depositary Receipts – here in
the U.S. The privilege of issuing American Depositary Receipts should be tied
to the rights of American investors, international investors and Securities
Exchange Commission to bring suit and cases of fraud and embezzlement whether
the alleged white-collar crime was committed in the United States or abroad.
Additional monitoring and enforcement of ADR rules is always a good thing.
Although the Russian legal system is not free of corruption we Russian
activists are able to make the system work. However, we need to see the U.S.
develop a strategy for prosecuting crimes committed by corruptionists on U.S.
I do not want to see U.S. act like a world police force. I’m not asking
Congress to be involved itself in policing cover up within Russia. However, in
my opinion, the United States could do a better job of investigating the trail
of stolen money and enforcing consequences. An enormous amount of money stolen
from investors have been invested in the U.S. real estate, bank accounts,
American and European stocks.
This is money laundering and this is a violation of your federal law. In order
to battle money laundering efficiently the Justice Department, the FBI, the
Securities Exchange Commission, Homeland Security, State Department and so on
may need to pool their sources in a new way and to be found to do so.
Making this a high priority would help investors, including Americans, recover
billions of dollars per year – improving the economy of both our country and
expose corruption that leads to human-rights violations and abuses. Thank you.
MR. PARKER: Thank you, Alexei, for your testimony and for all of those
examples. I’m glad you mentioned the Kashin case which is something – I don’t
know how many have seen the video. There is a video out there.
MR. NAVALNY: This is horrific. This video is horrific.
MR. PARKER: Particularly a brutal – it’s just – again, I don’t even know the
words to describe the type of brutality that’s seen in the video and, you know,
and then another journalist on Monday. And there’s another journalist who was
involved in opposing this project who is partially paralyzed now and facing a
libel suit from a regional official, I think.
So you had mentioned this little stamp that was on the page. I just would note
that it’s no longer to be found on the website. I believe it’s Muldi Aguardia
MR. NAVLNY: Yes. This is Muldi Aguardia but –
MR. PARKER: It’s been taken –
MR. NAVALNY: – fortunately Internet we can find –
MR. PARKER: Oh, no, I’m not – I’m actually highlighting that it was –
(chuckles) – that someone took it down. I’m not questioning that it was there
and is well-meant, you know, to telling us a little bit more about Gannady
Timchenko and Gunvor.
I brought here an article. I used the Congressional Resource Service to get
because Timchenko sued – and I think successfully sued The Economist when there
was a piece written on him. I think the piece had something – I think the
title was something to the effect of “Grease My Palm” or something like that in
The Economist in 2008.
MR. NAVALNY: Actually, he wants to sue them but they decided to have a
MR. PARKER: They had some agreement and, again, and what I have here it’s not
clear. But it’s – (chuckles) – it’s clear that this stuff is sensitive and
that somebody doesn’t want this, you know, want this information in the public
domain. As well, Alexei, thank you for mentioning the Magnitsky case.
Just as I was on my way over to this briefing I discovered that two of the lead
people who – this is a press release we put out in April when Sen. Cardin sent
a letter to the secretary of state asking that these people be barred from
entering the United States. Well, we’re almost a year later; no one has been
brought to any justice or held accountable despite voluminous evidence.
Additionally, a number had been promoted and not only promoted but today I see
in this announcement here – and I just had time to do a quick Google
translation – that two investigators Pavel Karpov and Oleg Silchenko –
Silchenko, I believe, is the person who the Moscow Prison Oversight Committee
in their report on the Magnitsky case, sort of, argued was the most culpable –
received today “best investigator” awards from the ministry of internal affairs
And I don’t know where to start. There’s all kinds of – I have all kinds of
questions. I hope a number of people out in the audience do. One thing I want
to ask is, just on your work in Moscow and the corruption: Does the dismissal
Luzhkov; do you expect that, that will disrupt some established, corrupt
relationships, corruption networks? Is this something that’s going to be
severely disruptive or is it just?
MR. NAVALNY: You mean in Moscow city?
MR. PARKER: Yeah, in and around Moscow. I’m just wondering if this, you know,
is there any bright side in this, at least, in the near term while people
rearrange their position or the balance of power is worked out? I would
imagine having been in office for so long that there were a number of things
that – people got pretty comfortable and relationships were established.
So how disruptive do you think that the change will be to corrupt networks and
MR. NAVALNY: I’m pretty skeptical about the possible changes with this Luzhkov
dismissal because we have a very clear signal for the new Moscow authorities.
And one of the signals is that Mr. Resin who’s actually, kind of, symbol of
Moscow corruption is still mayor deputy. This is the person who supervised all
construction building and all these relationships in Moscow.
He’s the person who has a hand watch which cost more than $1 million and all
his life he was an official. He never was involved in the kind of business and
so on. And I think as this operation to replace Mr. Luzhkov is just an
operation to connect the federal corrupt practices and Moscow corrupt practice
because Moscow is a very big and very tasty piece of money. And I think it’s
just an operation of corruption – integration of corruption.
MR. PARKER: Interesting. What about the recent raid over the weekend on
Lebedev’s bank? Is he done? How serious is this? What do you expect?
MR. NAVALNY: I think Alexander Lebedev is – sometimes he’s very aggressive in
disclosing of corruption as in talking about corruption. And he actually did a
big job to disclose information about corruption practices in Moscow. But he’s
a business man and he’s involved in business himself. And he’s a very easy
MR. PARKER: He’s a Czechist (ph), as well, if I’m not mistaken, right?
MR. NAVALNY: Pardon me?
MR. PARKER: Czechist.
MR. NAVALNY: Yes, he’s a Czechist –
(MR. NAVALNY: He has guys to support him, of course and he’s playing in this
game using rules of this game. But I think he’s – maybe this attack on his
office is the signal for him and to prevent some of his ideas to investigate
new cases because he’s – he’s a really easy target to attack.
MR. PARKER: Like I said, many stories that have been out in the past couple of
weeks is the possibility that WikiLeaks may be on the verge of a massive dump
on, sort of, corrupt Russian officials. Are you hearing much in the
blogosphere on that? And, you know, Russia is a tough audience. What’s it
going to take to shock the Russians?
MR. NAVALNY: Of course I heard about it. But this statement of the WikiLeaks
founder didn’t have any impact on Russian audience because actually, for
example, in Russia we have site compramot.ru (ph). And we have a lot of very
evident information. A lot of real information about the real crimes and a lot
of proofs. And using just information from this website, we can put to jail
half of Russian officials.
But the problem is that we have a real low barrier of tolerance to the
information about corruption. So people are just accustomed to this
information. They are taking their morning newspapers and reading, okay,
another $1 billion was stolen. Let’s go to their culture department. We are
just too accustomed to this information. So I think that WikiLeaks information
cannot bring something new, something shocking for the Russian audience.
MR. PARKER: It’d be interesting to see what –
MR. NAVALNY: Maybe they have some information about, for example, about Gunvor
because this area still is pretty closed about this mysterious third owner of
Gunvor because we know that one of the owners of Gunvor is Gennady Timchenko,
another one is a lawyer from Finland, I guess. And the third shareholder is
Hedin (ph) and no one knows him.
Some people think that this is Mr. Putin. I don’t think so. But I do believe
that maybe all owners of Gunvor they’re just nominal owners and real owner of
Gunvor and person who got real benefits from this company is Mr. Putin,
MR. PARKER: I had a quick just – I guess just sort of your take on – you want
Americans, foreigners to do business in Russia, just to explore that a bit.
I’m looking in this Washington Post piece – just late October: “Russian
corruption takes on a life of its own”. And this is a piece that came out
around the new Transparency International ranking, which I think showed Russia
slipping some at least numbers.
Although, I think the sense that I heard from, sort of, digesting a lot of the
ink that was spilled was that, probably, really not significantly worse than it
had been. Certainly, probably not, better. But Sergei Markov, political
analyst and member of the lower house is quoted in here saying, you know,
Russia’s leaders have been tentative about fighting corruption because they
don’t want to upset the stability that the country has finally achieved and
stability is the main threat to economic growth. And corruption is not
contradictory with economic growth.
Additionally he says, investors won’t pay attention to Transparency
International. They pay attention to their own experience. Some of them are
quite cynical, for some of them corruption is good.
How important is this issue? Certainly, I don’t imagine anyone would argue in
favor of instability in Russia. And I guess, sort of, taking the whole
environment as a whole and understanding, I guess, what’s possible, what’s
realistic; what would you say to Markov?
MR. NAVALNY: I think in Russia we have, very basically, two parties who are
struggling now in corruption and fighting corruption is a hot issue in their
fight. Some of the most advanced managers and officials they realize now that
it’s much more profitable to be transparent. That, actually, you can get much
more money if you’re transparent, if you have a good business.
But other part, basically, we can isolate with Mr. Putin. They really want to
be engaged – still engaged in these heathen practices. They prefer this scheme
of enrichment which I described. It’s overpricing of construction, it’s the,
kind of, very strange charity schemes and so on and so forth. They don’t want
to mind in new styles.
They still don’t realize that if, at least, they shift their corruption to the
most sophisticated case it would be much easier for them. They still prefer to
just classify all the information to just come to the company and take,
literally, bags with the cash from the companies.
But other parties, as I mentioned, they have a real political reach to fight
corruption. That’s why I’m addressing to the U.S. and ask for their help
because I believe that some force that you can apply it here in America will
help Russian party to fight corruption.
As I mentioned, this idea of prosecuting Russian officials who are laundering
money here in America will be real powerful tool and will bring real, positive
change in Russia very soon because, now, officials and managers with whom I’m
talking with they just are asking me, Alexei, please explain – give us at least
one reason to be more transparent.
We’re absolutely fine without corruption. There is prosecution here. There is
no prosecution abroad. And the, kind of, potential danger for them will be
created here in America, in Europe or in London. This will be a very powerful
tool because they are stealing money in Russia but they invest it abroad.
They are buying luxury condos in Miami, Florida, in New York, in London. Their
children are living here. They have education here and so on. So creating
this potential danger will be very positive to Russia and to Russia parties to
fight corruption. And I do believe that, actually, these efforts that you can
apply here are not opposing to the Obama strategy of reset button because reset
button doesn’t mean that we should just ignore any corruption or should we just
Reset button means that America is not going to policing in the Russian cases.
We don’t want you to invade Russian political area or something. You can use
your own legal system to protect your own citizens and your own companies and
through it help the Russia.
MR. PARKER: Thank you. Questions from the audience? Please. We have a mike
right there, we have some time. If you could just identify yourself and your
affiliation and keep it sort of brief and make it a question. Do we have
anyone? John, you have a question?
Q: Hi. Thank you for coming and speaking. My name is John from Georgetown
University and I have two quick questions. A lot of the cases that you worked
with dealt with a lot of the high-profile companies like Gunvor and Gazprom.
But I’m sort of interested on a lower level how pervasive is this corruption
on, I guess, smaller companies or even on a more local provincial level? And
are there regional differences in Russia as well?
And my second is, you spoke about, sort of, the political will of who would
find it more profitable to be more transparent. Are there people in the duma
or even in the government right now that currently have that belief? Are they
silent about it and is waiting for someone to come and sort of push this? Or
where is this kind of sentiment and where does it hold most? Thank you.
MR. NAVALNY: Okay, thank you. About lower level of companies – it’s
interesting because the fight for their minority shareholder’s rights or fight
with corruption on the lower level could be more efficient in Russia because
there’s no political agenda. For example, when I come to Russian court and I’m
trying to sue Rosneft for their dealing with Gunvor. It’s a kind of taboo for
all judges. They’re just afraid of hearing this word.
So this is a political issue. If you’re going to sue Gazprom because of their
corruption practices that everyone understand that actually you’re suing,
personally, Mr. Putin because it’s his people making all of this corruption.
And lower level you can – we can use successfully and we do use successfully a
Russian legal system to fight corruption.
Sometimes on the lower level we can – much more violence, especially, in the
regions. And if police or our special service involved in these crimes they
can act much more violent because of lack of media attention to these cases.
But anyway, we can succeed and people who are fighting corruption with this
company they can succeed their aims.
About people in duma or in government who are – now who want to fight
corruption. We have such people. And I think we can, generally, (isolate ?)
them with Mr. Medvedev. I don’t want to push this idea of bad president and
good president so I – actually it’s not true that we have a bad Mr. Putin and
good Mr. Medvedev.
But anyway, around them – around Mr. Medvedev there are some people who really
understand. They’re open-minded and they understand that it’s much more
profitable to be more transparent. You can attract cheaper money and you can
attract more investors and so on and so forth.
For example, Mr. Barkovich (ph) and actually Mr. Medvedev, himself – they are
promoting the idea of replacing all officials on the company boards – replacing
them by the independent members of the board. They are promoting the idea
privatization of companies. Of course companies is extremely reluctant.
For example, they hid an idea to privatize Transneft which I mentioned here.
But Transneft was powerful enough to cancel this idea. And a couple of weeks
ago the government declared that they are not going to privatize this company.
But anyway, the Russian people who are really making it a tough job to fight
corruption. But they have a lack of real levers because all the energy
industry is under the cover of Mr. Putin and his colleagues.
MR. PARKER: Along those lines – those questions. A quick point, you know, the
Russian legal system, really, is a mixed bag. They’re really some very good
parts of it where lots of progress has been made in terms of rule of law and
setting things up. And then there are other parts of it where you certainly
wouldn’t want to find yourself alone at night.
And also on the duma, I’d like to ask you, Alexei, what about Grishankov?
Mikhail Grishankov who, I believe – at least, I know for a long time was
associated with the Duma Security Committee. I think he has – was also in FSB
or SVR or something like that. And he’s someone we have met with and talked to
over the years.
He’s taken part in a lot of exchanges that have happened between our
parliaments. And I notice him in this Wall Street Journal article on Yana
Yakovleva’s story, being quite supportive. Is there anything you can say about
Grishankov’s efforts or other like-minded deputies?
MR. NAVALNY: I cannot say something about Grishankov personally. But for
example, duma’s comments on the property are – they attract me as an expert,
which was very surprising for me because sometimes I’m considered to be, kind
of, official enemy of the state-controlled company.
And they ask me to give them some proposals. How to make company transparent
and what kind of changes should be applied. And they are really open-minded
now. And this project of a bill that they are preparing is a real revolution
in these relationships.
The problem is that when these theoretical ideas would be applied to the
particular company, the company realized that it would be a tragedy for them.
And all officials who are connected with the companies who are sitting on the
board of the companies; they support the idea of transparency in theory. But
then they are thinking about the practice that we should disclose all this
charity. What consequences would it be?
No one knows who gave these billions of dollars – millions of dollars to
charity donors. We should disclose all the information about Rosneft, we
should disclose all documents, we should play in the rules. And this is real
money for real people. And of course, people who got this real money, they are
absolutely reluctant to these new ideas.
So people who are sitting in duma and who are not engaged in the companies who
are just making papers; they are ready to promote this idea. People in the
government who should approve this idea; they are reluctant because they’re
connected and they are living by graft. Does that answer your question?
MR. PARKER: Yes, no, very good. Other questions? Please.
MR. NAVALNY: There’s a question.
MR. PARKER: Oh, okay. Yep. Tom? Yeah, if you don’t mind. It just helps the
transcribers get it better. I’m sure we’ll all hear – and then Tom.
Q: Hi. Richard White, Hudson Institute. Two questions. One, to what extent
do these ties extend across the former Soviet republics? I’m particularly
interested in the Caucasus and Central Asia.
And second, I have heard some of the people here worry that there’s actually
another problem that we’re, perhaps, overlooking in that the Russian
authorities have, sort of, a power to provide kompromat to Western and
international institutions against people they don’t like. And so for example,
we are placing them in a position of, say, if they are having problems with a
business person having them tell us that he’s actually engaged in terrorism or
corrupt practice and so on.
And knowing how energetic our U.S. Treasury, that means that person loses all
access to international business and so on, so that in a way we’re empowering
the authorities to do something like that. And I’ve heard that just mentioned
as a theoretical possibility from people. So I was curious if this is actually
MR. NAVALNY: (Off mike.)
MR. PARKER: Could you?
MR. NAVALNY: Just briefly –
MR. PARKER: Question on the first question?
MR. NAVALNY: You rephrase the first question? I’m sorry.
Q: (Off mike.)
MR. NAVALNY: I think everyone can speak Russian here. (Laughter.)
Q: (Off mike.)
MR. NAVALNY: How corruption – (inaudible, cross talk).
MR. PARKER: I think the question about the linkages and some of these corrupt
– (inaudible, cross talk) –
MR. NAVALNY: Oh, yes.
MR. PARKER: – going over the border.
Q: (Off mike.)
MR. NAVALNY: Yes. I think, first of all, it’s Kazakhstan and because we have
very close relationships and of these – Kazakhstan and Turkmenistan because
both countries –
MR. PARKER: But not Kazakhstan.
MR. NAVALNY: Sorry?
MR. PARKER: It couldn’t be Kazakhstan.
MR. NAVALNY: Why?
MR. PARKER: They’re the chair-in-office of the OSCE this year.
MR. NAVALNY: (Chuckles.) Yes. But anyway, it’s Kazakhstan and Turkmenistan.
People with a very closed economy and a very well-connected with the Russian
companies. They are – actually, Russia gave infrastructure for these countries
to transport their oil and gas and so on and so forth through Russia.
And all this industry of transportation of their gas and oil is absolutely
hidden and closed. So I think it’s a very – a lot of cover ups in this area.
And like, in Gazprom for example. I investigated several cases of how they are
dealing with the gas – the natural gas of independent production companies.
And this area of just giving infrastructure but buying gas and oil from the
independent production company is very corrupt and very hidden and it’s all
about middle man, about overpricing and so and so forth. So did that answer
your question? Okay.
And second was about – I’m sorry.
Q: The possibility that because there’s only certain bodies – (inaudible) –
they can tell business people so you better do what we tell – (inaudible) – or
we’re going to tell the West that you’re financing terrorism and therefore that
means you won’t ever get – (inaudible).
MR. PARKER: Sort of the notion that there’s credible kompromat on everybody or
that kompromat is fabricated easily – or both?
Q: Right, theoretically being both because, I mean, as we know in the 1990s it
was hard to make any money with filing then – (inaudible) – laws. This
actually for – (inaudible) – modeling this at Brookings. And I’m curious if
this is actually – (background noise).
MR. NAVALNY: I agree. Now, the thing works like this. It’s a kind of
bargaining. Everyone has a kompromat on everyone and okay, if you oppress us
abroad with our accounts in Switzerland, we will press you here and we will
press your company because they are engaged in corruption. And we can press
American company. We can reveal some information about American companies
which means that they will be prosecuted because of the Foreign Corruption
Practices Act and will be fined over billions of dollars.
Now it works like this. It’s a kind of bargaining. That’s why I really think
that we should eliminate this system because it just leads to increasing of
corruption. We should apply real formal process and we should formalize all
the system. If some American companies involved in criminal practices in
Russia this company must be prosecuted in U.S. and without any – without any
swaying and so on.
And I think U.S. officials, they should not afraid that pressing on Russian
companies and Russian officials will bring some bad consequences for American
companies. Because if any bad information about American companies exist, it
would be revealed anyway. So it’s better to play in a fair game.
MR. PARKER: There’s a question over here. Tom?
Q: Tom Firestone. I’m with the U.S. Embassy in Moscow and I’m assigned there
by the U.S. Justice Department. I worked as a prosecutor for many years here
and I wanted to follow up on, make a comment really, on some of the – what you
had said about the importance of prosecuting corrupt Russian officials in the
I think it’s a very good idea, and the Department of Justice has been pushing
in that direction. Their organized-crime section came out with a new,
international organized-crime strategy in 2008 which recommends exactly what
you have recommended in your talk today: a new focus on international
money-laundering cases, domestic prosecutions of foreign government officials
for all the reasons that you’ve mentioned.
The problem with these cases and the reason more of them are not brought, it’s
not because any American prosecutor is necessarily afraid of the consequences
for U.S.-Russian relations. It’s just extremely difficult to make these cases
in the United States.
To prosecute somebody – if you take a corrupt Russian government official from
Krasnoyarskaya (ph) who’s stolen money from the budget through a rigged
privatization and then taken that money and moved to the United States –
prosecuting him for money laundering in the United States essentially requires
the prosecutor to prove all of the corrupt actions from Russia.
That’s very difficult because you’re going to have to get all the evidence from
Russia. If the guy still has influence there, he can prevent the delivery of
the evidence. Even if you do get the evidence, you’re going to have to get
witnesses from Russia to come here and testify, and you’re going to have to
convince an American jury that there was a crime committed. And you’re going
to have to explain to an American jury what the privatizations rules were in
Russia in the 1990s, whenever he did this; why it’s a fraud, what the money was
And it’s just extremely difficult. And that’s why – and it’s faced with the
choice of doing that kind of case or prosecuting some drug gang that’s running
around in the neighborhood terrorizing people in your backyard. Most
prosecutors are going to do the latter kind of case, and it’s an understandable
decision. It doesn’t mean these cases shouldn’t be pursued. I agree with you.
But it’s just difficult. It’s not as easy as it may sound.
What I do think is promising – but you didn’t mention it explicitly in your
talk – is private litigation at the international level. We’ve seen a lot more
of this in recent years. Yukos brought a $100-billion claim against the
Russian government in the European Court of Human Rights because the European
Convention protects companies, not just individuals. Yukos investors have
filed arbitration claims in various European arbitration fora.
Gene Burd, who’s here today, has been involved in civil litigation brought on
behalf of people who claim to be victims of corporate raiding in Russia here in
the United States. What do you think of private – and it seems to me that
those cases might be easier to make because the plaintiffs in those cases,
having been involved in these businesses, are already in possession of a lot of
the evidence which U.S. prosecutors are going to have to get through official
channels. What do you think of private civil litigation?
MR. NAVALNY: Okay, thank you for question. First of all, about difficulties
in prosecution of this white-collar crime. As I said, yes of course, is
difficult to treat them and to address them, this white-collar crime. But
anyway, you have here in America some very successful examples. When you have
a political wish, we can remind Mr. Borodin case, Mr. Adamov case. And
American regulation by this very efficiently had a deal with these guys.
Q: If I could just – I was the prosecutor on the Borodin case. First of all,
we didn’t prosecute him; Switzerland prosecuted him for money-laundering. He
was arrested here and extradited to Switzerland to face the charges, and they
let him go for a small fine right away. So we never made any domestic case
The Adamov case, we did bring charges. He was arrested in Switzerland, at
which point Russia brought its own charges against him and got him extradited
to Russia –
MR. NAVALNY: Yeah.
Q: So that he never faced the charges here in the United States. So –
(inaudible, cross talk.)
MR. NAVALNY: But then you – wait – you launched this process, and these people
had some nice experience to be in jail. (Laughter.)
Q: There was some justice, yeah. (Chuckles.) I guess you could say some
MR. NAVALNY: But anyway, it was very powerful and it was a huge impact inside
of Russia. So of course, white-collar crimes is very difficult to investigate.
But I think we should start it.
For example, Daimler case. Everyone knows about it. Daimler was fined here
and there was no investigation at all in Russia. But all money, which were
paid like a bribe from Daimler to Russian officials – actually Daimler paid on
the foreign accounts, to the offshore , in the offshore countries and so on.
And I do believe that all this money which Daimler paid like a bribe, now here
in U.S. or in United Kingdom. So I think we should just put more efforts here.
What about private litigation? Yes. I do believe that it could be most
efficient. As I mentioned, if some new regulation will give opportunity for
the American investors – or for Russian investors, for example – bring
class-action suits, that would change everything.
Now, for example, if you are American and if you invested some money in
company, and you have real grounds about the money embezzling in this company.
You will sue them next day. And you can sue them very efficiently here in
America. Why we cannot do the same for the Russian company, which have ADR
here in America?
Because Russian company, they connect it very well with American system. They
borrow money from America and so on and so forth. And if we can figure out how
to use American legal system, civil system, to sue companies here, that would
be verily huge impact. Because the way how they’re stealing money now, it’s
very simplistic. Very evident. And with this proof and with these grounds, if
we will find the way to sue them here, we can put a real pressure on all these
But it’s not very easy. For example, it’s very difficult to persuade American
huge investment funds like Black Rock and other just to be engaged in these
cases and to start this war because they consider all these like a kind of
political story. They don’t want to be involved in the kind of political
investigation because all big corruption in Russia, it’s corruption in company
and in government.
So big companies – American companies – they be afraid about it and they don’t
engage with politics. And sometimes they – for example, American mutual funds:
they don’t even vote on the shareholders’ meeting. They just ignore what’s
going on in Russia. And I think it’s our common task to encourage them to
realize that it’s the part of their corporate social responsibility to
investigate and to put pressure on Russian company where they invest some money.
Q: Thank you.
MR. NAVALNY: Thank you.
MR. PARKER: Gene?
Q: Gene Burd. Law firm, Marks & Sokolov; Philadelphia. Alexei, I just heard
discussion – your discussion and Tom’s discussion regarding private action in
connection with corruption in Russia. And our firm brought several actions
here in the United States in connection with various misdeeds of certain
individuals in Russia.
One of the issues that we’re facing in the United States with respect to the
private course of action is the doctrine which exists here in the United
States, which is called “forum non conveniens,” which essentially prevents us
of bringing private actions here in the United States where the events, where
the witnesses, where there is other factors took place outside the United
States and where United States court would find, that it is most convenient for
the justice, that this type of action is not brought here in the United States.
That is why some of the actions get dismissed. Some of the actions are going
through in U.S. courts with significant friction. There is, however, there is
also another recent impediment which was brought in the United States court
system. I don’t know if you’ve heard, but there is the Morrison case which was
decided this year by the United States Supreme Court which severely limited
application of the Securities Act outside of the United States.
My understanding is there is a current legislative proposal which is being
moved here in the United States to provide specific language to the Securities
Act to allow prosecution of crimes and violations of the Securities Act here in
the United States, prosecution by the SEC and the Department of Justice. There
is also proposal which hopefully will be, which will be supported here on the
level of the commission and perhaps of the Congress: a proposal for the
private right of action to allow the Securities Act – private right of action
for cases where events took place outside the United States.
Finally, with respect to the FCPA, for the Foreign Corrupt Practices Act, there
was a positive development in the United States. In the summer, the Foreign
Corrupt Practices Act was amended to provide for the whistleblower provision.
I don’t know if familiar with that but essentially, at this point of time, any
person with information – which relating to the corruption, the corrupt
activities by U.S. companies or companies subject to jurisdiction under Foreign
Corrupt Practices Act – can provide this information to the Securities and
Exchange Commission and the Securities and Exchange Commission will consider
this information for prosecution. And this whistleblower would be prosecutors.
So there are certain devices – there are some certain devices which are
available here in United States for a private fight with corruption in Russia.
But there are certain things that can be done and which, perhaps, should be
done to give more ammunition to private lawyers to be able to defend interests
of their clients. Thank you.
MR. NAVALNY: Thank you. I absolutely agree with you. And I think, yes, we
have some tools which we can apply right now here in U.S. But we have a lack
of jurisdiction. That’s a big problem and a big issue. And I saw the
statistic of the class-action suits against – class-action suits in America and
amount of class action against foreign issuers is increasing.
So it’s a good signal. Not just against Russian but all of foreign issuers.
But anyway, I agree with you that we have connect all interests and connect all
efforts, from the regulation budget, from Congress and from the private sector.
Because we should realize that each – this is a problem, not just a Russian
problem. The American investment funds -- they are the same victims like me.
So the managers who are embezzling money from the countries: They are stealing
money from the small American guy who have his retirement fund in the mutual
fund invest company. And we should connect interests on these enormous and big
American investment funds, and connect interests of American lawyers who can
act very efficiently, how we know, and interest of the Congress and other
And interest of Russian shareholders who are ready to give proofs, grounds,
papers and so on and so forth here in America to prove this is the corruption.
This is a fraud, this is money embezzlement.
Q: Thank you.
MR. PARKER: Anyone else? Another question? I wanted to ask just quickly,
Alexei – what prospects or promise and maybe how effectively are the mechanisms
being utilized, that are provided for by the UNCAC, the Convention against
Corruption? As well, I believe, there’s a Council of Europe group on
corruption that has mechanisms that could be used. And then also, what if any
effect could WTO membership for Russia have on corruption writ large?
MR. NAVALNY: I have never, ever seen the real consequences of these acts – of
these organization. I think they are very – not reluctant, they just don’t
care about what’s going on. They just don’t care about what’s going on.
And now, maybe we have some opportunities to use this act and this organization
are now vital. But now, it doesn’t work, and I cannot see how it could work in
the future. It’s a kind of very – they have some – in theory, they have some
tools to fight corruption, but it’s very vague and unclear, and no one – it
couldn’t be an engine or a vehicle to fight corruption, unfortunately.
MR. PARKER: What about WTO membership? Will that have any effect at all?
MR. NAVALNY: I don’t think so.
MR. PARKER: What about –
MR. NAVALNY: For example, China and India and other countries, they are
members of the WTO but they have the same problems like Russia. And WTO didn’t
give some additional opportunities to fight corruption.
MR. PARKER: What about this new hotline, I believe, that the investigative
committee has set up? I saw it was in the press some weeks ago where people
could call in and open investigations, corruption. Is that something you’re
hearing much about? Are there ways to sort of use that –
MR. NAVALNY: I didn’t hear. What kind of hotline?
MR. PARKER: It’s a new number, a hotline that I believe –
MR. NAVALNY: Oh, oh. This is ridiculous. We’re establishing these hotlines
every single year, and every single year, they are starting another campaign to
fight corruption, and they are establishing hotlines. And this is just a –
MR. PARKER: I’m wondering if you in the activist sector can find innovative
ways to make use such mechanisms. Whether it be simply symbolic protests, mass
call-ins – (inaudible, cross talk) –
MR. NAVALNY: Actually, we used this opportunity. We don’t use particular
hotlines, but we use campaign of mass complaint. For example, we mentioned
Daimler case. When I appealed my supporters in the Internet and blogs to write
complaints about this case, Russian persecution office got more than 1,000
complaints. And it’s really, actually, a press for them not because they
should have investigated more accurately, but because it just bring more
attention from the media, from the public and so on.
And so, like a method to attract media attention, it works.
MR. PARKER: Media attention does not seem to – at least in a number of the
occasions we’ve watched, blistering, withering media attention and has seemed
to been powerless to sort of disrupt what looks very much like a culture of
impunity around a lot of these cases.
That said, I think the media intends – needs to be there for the record and –
MR. NAVALNY: Yes, of course, media attention, it’s not a kind of universal
appeal, but sometimes it works. And, anyway, it works better when you have
media attention than when you don’t have it.
MR. PARKER: Yeah. What strikes me is how, even the smallest, even symbolic
efforts – and I’m thinking particularly of Sen. Cardin’s appeal regarding
simply the privilege to visit this country or whether or not U.S. banks would
be required to freeze ill-gotten gains that even these very small, limited
measures have been able to provoke as much of a howl as they have provokes
drawing reactions from Russia’s foreign ministry, drawing – so it seems to me
that we really need to think there’s a variety of sort of plains and realms of
the battlefield. There’s the legal realm, the political realm, the media
Again, they’re all important –
MR. NAVALNY: I absolutely agree with you. And my main point is that you
cannot fail a fight against corruption totally. Any efforts will bring some
positive results, any efforts. So it looks like it’s absolutely useless but,
actually, it works.
We should just reinforce our efforts and be flexible and invent new mechanisms
and new ideas how to fight corruption.
MR. PARKER: Yes? Shelly?
Q: Hi. I’m Shelly Han with the Helsinki Commission. And I just wanted to draw
your attention to something that our commission heads, Sen. Cardin and Sen.
Lugar, changed the provision in the securities law this summer as a part of the
Dodd-Frank financial reform bill. And part of the purpose of that provision is
to give investors a bit more of a voice in the oil and gas and mining industry.
Specifically, what it does is requires companies that are listed on U.S. stock
exchanges and, also, have ADRs to report in their SEC filings the amount that
they’ve paid for extractions of oil and gas and the – (inaudible) – in any
foreign government and, also, in the U.S. as well to the U.S. federal
government. So that’s one tool that we think is going to be helpful. It’s
still being – the rules are still being written by the SEC.
But we’ve also started trying to expand that jurisdiction by getting the London
stock exchanges to do the same thing because one of the companies that is not
covered by U.S. stock exchanges is Gazprom, and so we’d like to see Gazprom,
which is listed in the U.K. – we’d like to see them make this type of
reporting, and I think that would be useful for investors as well to have that
type of transparency.
Another thing that I wanted to ask you about is to see if you’re familiar with
the extractive industry’s transparency initiative. Are you familiar with that?
It’s an international initiative where countries sign up to have their own
companies and their government itself to – basically for the companies to
publish what they pay to the government. And so it’s a way of reconciling
within a certain country – for example, Azerbaijan – (inaudible). And what
they do – all the companies that are working in Azerbaijan make a report on a
regular basis as to what they’ve paid for extraction to the government, and
then the government is then reporting, and then the public – it’s a
We’re working as commission to try to get the U.S. to do the same thing because
we think that transparency is good for everybody, not just other countries.
But we’d also like to see Russia do it. And I’d like to ask, as an investor,
if you think that type of initiative would be helpful to address some of the
concerns that you mentioned in the extraction industries.
MR. NAVALNY: Thank you. I am not very familiar with this last initiative that
you said which works in Azerbaijan. But people from transparency international
actually told me that it works very good in Azerbaijan. So I think we can try
to apply it in Russia.
As for your first idea, your first bill you mentioned about more regulation for
the company which has ADR it would be great. It would it be very powerful.
And I believe that more regulation of the ADR, especially if you will be able
to transform it to London, where most of the countries have leasing, it will be
really powerful because Russian companies – we should understand it very
clearly – they cannot just escape to Hong Kong.
Q: But Hong Kong –
MR. NAVALNY: Oh, great. (Laughter.)
So anyway, they cannot just ignore it or go out from the stock exchange all
over the world. We should just frame it, and we should just make their area
for corruption more narrow from every step.
I think if you will succeed to accept this bill, it would be very, very
Q: (Off mike.)
MR. NAVALNY: I mean, if you will be able to transfer to London.
MR. PARKER: Yeah. It passed this summer.
Any last quick questions? We’re winding down here on time. Does anyone have
one last before we close up the record?
I certainly would like to thank everybody today. It’s been an interesting
discussion. This really is a massive topic, and, you know, I sort of am left
still scratching my head wondering if it’s as bad as it seems; has it always
been this bad; is there any hope for it getting better.
You know, on the one hand, you know, it seems like just, you know, picking up
the newspaper that things have gotten so bad that could we be at sort of the
proverbial darkness before the dawn or thinking of this as, you know, a frog in
the water and somebody’s just spiked the temperature and maybe, you know,
something’s going to change because sort of the universal recognition of the
On the other hand, there’s always sort of the turn towards increased cynicism
and apathy. So again, it’s hard to know. From our perspective, beginning it
back to what we do here, the human dimension, you know, it’s certainly one
thing to lose money in a country, and it’s one thing to have wealth destroyed.
It’s another thing to lose your life.
And very sadly, in too many of these cases, there’s really an incredible and a
heartbreaking human cost of corruption. Whether that be in the many people who
are wrongly accused who fill Russia’s jails, which is part of the problem of
overcrowding is the fact that there are a lot of people sitting in jail who
shouldn’t be sitting in jail, or whether it’s that, you know, this – I really –
there’s a lot of material on the table there that will be in the hearing record
here that we have not been able to even get into today. And I really urge you
to take that, like I said, Tom Firestone’s article, “Armed Injustice,” the
story of the Mackievs, Romanova and Yakova’s (ph) submission.
I mean, these are heartbreaking cases. You know, Mrs. Mackiev is a mother of
two, and her husband is up in Komi Republic in jail still. And this whole
criminal network has been exposed. We’ve known about it for a number of
months. It was in the Financial Times on Thursday. We are releasing some
additional information on the story, and yet today, as I said, on my way here,
some of the lead players are awarded best investigator.
So what does this mean? And they know this is being discussed here. I mean,
you know, our hearings, what we do here is on the record. We put out press
releases. So really, that’s something I just would like to underscore, you
know, from our perspective of the human dimension. You know, there’s
corruption around the world, and I don’t think any of us are naive enough it
think that we’re going to end corruption.
But can it be limited? Can be it moved from a sector where it does more damage
to a sector where it does less damage? Can it be less brazen and in-your-face?
And, again, there’s – I don’t mean to set our sights too low and say we’re
prepared to accept a certain amount of corruption, but it is a reality. Human
nature is a reality and, certainly, we’re not changing that any time soon.
We’ll have a video and a transcript of this event up very soon, probably today
or tomorrow. And before we go, I would like to draw your attention – we do
have a notice outside, and many of you maybe have seen the poster we have up –
next week, an event that the Helsinki Commission will convene one week from
today at 5 o’clock in the Capitol. We will do the world premiere of the film
“Justice for Sergei”. It’s just under an hour. It’s a very moving film,
particularly highlighting sort of the human costs of corruption. Everybody is
invited. Please tell your friends and neighbors. The more the merrier. We
have a big room, and we have a very interesting lineup of speakers to offer
remarks before the event.
And I also mention that Olga Romanova, who submitted testimony for today’s
event, is in the film. So you didn’t get to see her today, but come next week
and see her. Her husband happened to share a cell with Sergei Magnitsky during
his incarceration. And so she offers some very personal insights to what it
was like for Mr. Magnitsky during his year-long detention.
With that, we’ll adjourn the briefing. And, again, I thank you all for coming.