Oleg DERIPASKA: Why I paid gangsters for protection (The Sunday Telegraph)

Director general of the aluminum giant Rusal and one of the richest people of the world Oleg Deripaska told about his role in the notorious “aluminum wars” of the 1990s for the first time. The time when privatization of the property of the former Soviet space led to the fight for plants and factories that gave profits running into billions to those who owned them ruined many lives. The shady past of those who managed to survive and make a profit out of the “ruin” still does not leave them. This year two judicial trials that somehow lift the curtain from the post-Soviet habits of the 1990s are being held in London. The first conflict is between Russian businessmen, owner of the football club Chelsea Roman Abramovich and Boris Berezovsky. The second one is the action of the billionaire from Uzbekistan Mikhail Chernoy against Oleg Deripaska. Chernoy claims that he signed an agreement with Deripaska that gave him a 10 percent share in Rusal which is one of the oligarch’s companies. Deripaska denies that he owes Chernoy a share in Rusal and declares that he just paid him for “protection.”

In his interview to the British newspaper The Sunday Telegraph Deripaska confessed that he had paid the gangsters that “protected” his company. “Two days later my business manager got two bullets in his head. He survived. Then I decided that it would be better to pay [gangsters. – Ed.] for a while for me and my people to stay alive. Then we took measures for security reinforcement,” Deripaska said. “I had to either pay for ‘protection’ or leave that business. I hated paying but my workers and I did not have any safe choice then.”

The Day was given commentaries by those who know the peculiarities of doing business in the 1990s and their returns from their own experience.

COMMENTARIES

Aleksandr LEBEDEV, Russian businessman and media tycoon:

“Today the situation is clearer. There is a joke: if you buy a ticket to movies in Russia you will come and take your place, but in Ukraine there will be someone sitting on it. In this meaning the situation in Ukraine is thought to be closer to the one in the 1990s than the situation in Russia. Anyway, if someone is punished in Russia now, they are punished for their political activity. There are no gangs that were closely related to the police and determined the life in the 1990s.

“I have never used any ‘protection.’ Probably, because I came back from England in 1992. However, I fought wars with criminals. I did not want to be under someone’s ‘protection’ since I had to either pay them when they demanded or… By the way, I had a story that lasted many years, from 1996 to 2000 with the prosecutor general Skuratov and the late logistics manager of the prosecutor general’s office Khapsirokov... I think you should better call Berezovsky and Abramovich, they explained it in detail at the court. They are dealing with raw materials and I did banking. However, who knows, probably, I should have gone under someone’s ‘protection.’

“I combine business with active corruption investigation in Russia. It may seem senseless to average people but I want to have some rights as a businessman. Why can’t I publish Novaya Gazeta, investigate corruption in banking and own a bank at the same time? People assure me that I can’t. In general something has changed since the 1990s and something has not; something has got even worse.”

What do you think the peculiarities of doing business in Russia are?

“All businesses in Russia are owned by what we call the state. I would not say that the state is certain mimicry bureaucracy asserting that it is the state. In fact, the people representing it are parasitic capitalists. They just confiscate the added product that is not theirs and put it into their pockets. Such people always win all the trials: everything happens as they want. They are not bandits but one should not try arguing with them! For example, I have recently taken a camera and gone to the post office to receive the object of bank and commercial secrecy. Imagine that 130 inspectors came to your bank which has never happened in the history of inspections of the Central Bank of Russia. Moreover, my bank is smaller than the Bank of Moscow. They have been ‘rummaging’ in the bank and commercial secrecy. Besides, all this time they have been leaking the information to the special difamation websites spreading the nonsense about the bank in order to frighten clients and block the limits. Then they collected 2,000 pages of documents and sent them by post having estimated their value of 7 rubles. Can you imagine it? There are two laws on bank and commercial secrecy. What instructions do allow the Central Bank sending the secret information by post and evaluating it in 7 rubles? I would not trust our post even a piece of paper. Do you think I will win the trial? I will not. With gangsters it was even clearer: either they put you in prison or something worse happens. Rules of play were clear back then. Now everything is much more complicated. Or, maybe, only I am tormented so much and have to stop publishing Novaya Gazeta? Or stop having proceedings with Ukraine because of the Ukraina hotel? However, it is not funny anymore: I paid money to the architects and builders and for nine years the Ukrainian authorities from top to bottom are trying to take away this poor hotel that looks like a barn. Ukraina is a real barn to steal the gain from there. I even do not know whether it is better or worse than it was in the 1990s. Everything is so tangled and it is unlikely to get better. Such things do not happen even in Zimbabwe! We have won 48 trials and lost the 49th one. The authorities are doing it on the top.”

What has to be done to cancel the system of “protection”?

“We have to build a political system with institutes that would control each other. We need the independent media, independent and efficient court that is not a part of a chain of command, we need the parliament that would control the executive power, public control and elections that assure the change of power. In fact, it is not difficult, it all works in Europe. Though their system also has certain drawbacks, there is no such corruption [as in the post-Soviet countries. – Author] generating ‘protection’ when everything is on the authorities’ side. We should adopt the British or American model. But it is not profitable!”

You have mentioned that you have never used “protection.” Is it a topical issue for you now?

“Probably, now I should get under dirty cops from FSB or police. I am currently investigating their adventures with the Central Bank when they made bankrupt 200 Russian banks over the last seven years. Do you think they would believe it? To be honest, I am not interested in ‘protection.’ I do not value the money that much to trade my principles. We will see, maybe corruption will fight me. Maybe not. For example, I am the author of the law on limitation of the casinos that led to their prohibition in Russia. Who could believe it when I started that campaign back in 2004?”

Oleksandra KUZHEL, former head of the State Committee for Entrepreneurship:

“In the1990s nobody knew how it all would develop since we all lived within the state-planned economy and thought that we had to go through that difficult period of time. People tried to survive. There were gangsters, showdowns but there was the light at the end of the tunnel. Now it is an organized and tried-and-true system. There has never been such a close relation before. Previously, it did not all converge. Previously people could complain to the prosecutor about the police but now all the bodies are governed from one place.

“In the 1990s the ‘protection’ of a stall cost 100 dollars, now one should pay 9,000 dollars. This is the reason why there are no current assets. Many enterprises are selling their businesses to save money. It also happens that one’s profitable business is bought for a song. The other day I had a conversation with a woman-restaurateur. She told me that she had sold her restaurant just on time after a young man had come to see her and repeatedly hinted that he liked the restaurant and it was time for her to stop working there.

“The difference between the 1990s and nowadays is that back then those were separate gangs who protected their territory. Now it is governed by the Presidential Administration. They have the police and prosecutors. If someone is attacked by them there is nobody to ask for protection. That is why everyone says that we should pack and escape.

“They say that after the Orange Revolution they got scared and stopped accepting bribes. No, they did not. Bribes have always existed: someone wanted to speed something up, someone wanted to avoid law, however, it was possible to make everything according to the law if someone did not want to give a bribe. Three months after the Orange Revolution it was impossible to give anything but later the prices multiplied at least by 10. They took money because they were afraid of taking them. They thought that the bandits would really be imprisoned. However, later everything settled down.

“You should better ask oligarchs about what is going on now. I know one of them who has recently told the president who, by the way, ‘is never told unpleasant things’ (though, I think he does not want to hear them himself) that he has finished three constructions over the past two years and had to pay bribes of 17 million hryvnias and does not want to build anything in Ukraine anymore.”