May 16, 2006

Rock 'n roll v. the mob

It seems they're still figuring out the notion of private property in Russia.
In Russia's early transition days, amid the collapse of authority and resulting lawlessness, organized crime groups wielded great influence. Teams of armed thugs used to carry out takeovers, arriving at a businessman's door with little to back them up but the threat of violence, even murder. Indeed, contract murders reached a frequency of more than one a day in the mid-1990's.


Now, the trend in business crime in Russia is decidedly white-collar — with the faking of documents, hiring of lawyers or payoff of judges — but no less insidious, Mr. Matthews and other business owners say.

In a puzzling case in Moscow in April, for example, thieves stole a shipping container with thousands of files on company registrations from the yard of a tax inspectorate office, using a crane and a flatbed truck.

"It cannot be excluded that so-called independent raiders, those who seize others' businesses, showed an interest in the tax documents," an article in Gazeta reported.

The article suggested the theft was a coup by corporate raiders who intended to use the papers much as identity thieves in the United States turn documents rifled from trash cans into profits through fraudulent credit card operations. In this type of crime, however, entire companies are at stake.

The tax authorities act as a registrar for small businesses. With the files gone, ownership is anybody's guess, the newspaper reported. Another common tactic of the new takeover artists is faking sale agreements for company shares and then voting out the legitimate management. Tracking down the true owner can be impossible if the authorities have been bribed — or the original papers are mysteriously missing.

The problem has become so pervasive among small and medium-size businesses that it has been discussed in the Parliament, where a committee on state security addressed the issue and cited more than 1,400 cases of fraudulent takeovers in 2005.

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