1998-1999-2000-2001-2002-2003
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Maxim Sladky`s News Agency
2004 A.D.
CUSTOMS OFFICERS ON UKRAINIAN BORDER ARRESTED
15 December 2004
UKRAINIAN CRISIS COMPLICATES LIFE FOR KURSK RESIDENTS, FACTORIES
9 December 2004
KURSK OFFICIALS SEEK ASSETS TO BLOCK FEDERAL MONOPOLY
2 December 2004
BREWER'S REGIONAL TAX BENEFITS PROVOKE ANGER
(21 October 2004)
UNITED RUSSIAN DEEPLY DIVIDED IN KURSK
(8 October 2004)
IN HIS LAST LEGAL TERM, BELGOROD GOVERNOR BACKS PUTIN
(21 September 2004)
BELGOROD COURT FAILS TO PROSECUTE VIDEO PIRATES
(6 August 2004)
KURSK GOVERNOR PREFERS UKRAINIAN OVER RUSSIAN COMPANIES
(12 May 2004)
FORMER KURSK PRIME MINISTER ASSASSINATED
(11 March 2004)
CRIME ON RUSSIAN-UKRAINIAN BORDER GREW DRAMATICALLY IN 2003
(12 February 2004)
CUSTOMS OFFICERS ON UKRAINIAN BORDER ARRESTED
Cracking one of the biggest smuggling cases of the year, authorities arrested the head of the Rylsk Customs Office Aleksandr Polyakov and his deputy Vasilii Smorodskii on 27 November (Drug dlya druga, 7 December). The post is in Kursk Oblast on the border with Ukraine. The Kursk Oblast procurator has sought to interview the head of the Kursk Oblast customs agency, Konstantin Odinokov, but he is currently in the hospital (prokuror.kursknet.ru).
At the beginning of 2004, employees of the Ministry of Internal Affairs Central Federal District office began to receive information that several large Moscow companies were discussing a new way to import unlimited quantities of consumer electronics and clothing into Russia without paying customs fees (www.vremya.ru). Following up on this information, the police began to look for the hole in Russia's border and quickly concentrated on Rylsk.
The post is located in the village of Krupets, five kilometers from the Ukrainian border. A group of investigators visited the site on 6 March. However, it turned out to be impossible to approach the post's temporary warehouses without being noticed by the employees. There is only one road to the post and all the men of the village work at there. When the team arrived, trucks stopped coming to the post. The investigators then pretended that they were leaving and hid on an abandoned farm nearby. One of the team then began filming the post.
Having decided that the danger had passed, the employees of the customs storage area returned to work. A truck approached and they removed the goods to two cars. The police then burst onto the scene, working in alliance with fighters from the Special Rapid Response Force (COBR). They found clothes worth $350,000 in the cars. However the customs documents claimed that they were screws, bolts, and screwdrivers. The documents already had all the necessary stamps. As soon as the police moved toward the warehouse, 10 armed fighters from the Kursk customs agency appeared. They were soon joined by 30 security officers with rifles. Luckily, neither side began shooting and after a four hour standoff, the police were able to inspect the warehouses. The police found dozens of counterfeit stamps from the border service and non-existent firms. They also found numerous false manifests.
After nine months of investigations, the oblast procurator was able to figure out how the system worked. After showing the Ukrainian border guards the actual documents for exporting consumer electronics and clothing, truck drivers crossed the border and headed straight for the Rylsk post. There they received a packet of falsified customs documents and went on to deliver the goods to their ultimate buyer. The buyer filled out forms that claimed that they had not imported the goods, but had bought them from non-existent firms on the domestic market. Thus, the final buyer did not bear any responsibility for customs fees.
According to the results of the investigation, the customs officials allegedly not only closed their eyes to the contraband, but actively participated in the process for significant kickbacks. Between December 2003 and March 2004, about 300 trucks went through the post with electronics and clothing worth $100 million. The state lost between $3 million and $6 million in customs duties during that time. One can only guess how much money the corrupt officials received.
Participants in the process claimed that someone named Albert Elishakov suggested to them that they import their goods through the Rylsk post. One source said that in the Kursk customs agency he represented the interests of the Broker-Kursk firm, others say he was among the employees of the Van-trans transportation company. Both of these positions apparently were just covers. Among circles close to the customs agency Elishakov and his partner Asad Mekhdiev were known as people who could solve any problem connected with the illegal transportation of goods across the border. At the beginning of November, the police issued an international search warrant for Elishakov. Now the courts will have to sort out the matter.
15 December 2004
UKRAINIAN CRISIS COMPLICATES LIFE FOR KURSK RESIDENTS, FACTORIES
The Ukrainian electoral crisis is topic number one for all conversations and newscasts in Kursk. Such interest is not surprising since Kursk borders on Ukraine's Sumy Oblast and many oblast residents have relatives who moved there during the twentieth century seeking work in Ukraine's factories and mines. Thousands of ethnic Ukrainians live in the border regions and in some villages only Ukrainian is spoken.
Overall opinions about events in Ukraine are divided, but most support Prime Minister Viktor Yanukovich. According to a poll conducted by the region's most popular newspaper, 51 percent of the residents think that Yanukovich won. Only 8 percent thought Viktor Yushenko was victorious and that the opposition should fight until his ultimate victory.
Residents are worried about the steps that Ukraine is taking to strengthen its border. People in Glushkov and Sudzhan raions of Kursk Oblast claim that they saw armored troop carriers moving close to the border. Because of the increased security on the border, it has become harder for shuttle traders to cross the international boundary. Typically these traders purchase goods in Kharkiv or Sumy and sell them in Kursk.
The situation is even worse for industrial enterprises working with Ukrainian enterprises. For example, the Kursk factory Agromash, which makes fuel systems for the Kharkiv tractor factory is having trouble delivering its output and receiving payment for it. There is a similar situation at the Kursk confectionery factory, which was recently acquired by the Ukrainian firm Kiev-Konti. For more than a week, the plant has not been able to receive goods from Ukraine. Overall, the private sector is suffering the most from the Ukrainian crisis, especially the enterprises with joint capital and trade.
9 December 2004
KURSK OFFICIALS SEEK ASSETS TO BLOCK FEDERAL MONOPOLY
In September, Kursk governor Aleksandr Mikhailov created a company that will eventually control most of the region's electricity and heat supply companies. Kursk officials will have a controlling stake in company, to be called Kurskkommunenergo, and eight municipalities, including the city of Kursk, will own the other shares. The new company will have charter capital of 100,000 rubles, but will initially rent assets from the oblast worth 12 billion rubles. According to federal plans, these assets must be privatized by 2006, so Kursk Oblast is planning to transfer them to the new firm, of which it will own a majority stake. The oblast plans to add in the local water supply system as well.
The oblast authorities are speeding to gain control of these assets in order to block the efforts of the newly established firm Russian Communal Systems (RKS), a subsidiary of the Russian electricity monopoly, for introducing its own plan to reform Kursk's municipal services system. RKS wants to lease all of the oblast's municipal service providers, claiming that as part of the national firm the assets would be more attractive to investors. However, the oblast authorities convinced the responsible city authorities that it would be better to join the oblast plan.
The oblast authorities justify their efforts to block RKS by arguing that the firm does not provide any real investment and only tries to grab the municipal property for itself. The oblast authorities claim that they can reform the communal sector without the help of a Moscow investor. They claim that the municipal services sector can be profitable and that it does not make sense to transfer it to private hands. The officials claim that combining all electricity and heat generating firms into one company will make it easier to keep their prices more flexible and more effectively monitor state investments into the sector. Last year such investments amounted to 9 million rubles and should rise to 20 million this year.
The formation of the new company should also reduce the debts owed to the energy companies. These debts grew in recent years because municipalities could not pay for the electricity and heat they needed. Currently, these debts are 300 million rubles. The oblast government has signed an agreement according to which the cities will pay off 40 percent of the debts this year and the rest in the next 2-3 years.
Finally, the creation of the new company will allow the oblast to stop buying electricity from Kurskenergo, a subsidiary of the Russian electricity monopoly, and start purchasing it on the federal wholesale market (FOREM). Currently Kurskenergo and municipal enterprises each provide about one half of the region's needs. Under the new system, the oblast will buy half its electricity from the municipal enterprises at 1.6 rubles a kilowatt hour and half from the Krasnoyarsk hydroelectric station at 1 ruble a kilowatt hour. These prices are lower than what Kurskenergo charges. By transferring to the wholesale market, the Kursk electricity sector will no longer be loss-making. Implementing these plans will be a direct blow to Russia's electricity monopoly.
2 December 2004
BREWER'S REGIONAL TAX BENEFITS PROVOKE ANGER
Brewer Sun Interbrew is at the center of a growing scandal about its ability to secure tax breaks in four of the nine regions where it operates. Russian State Duma members are asking why the profitable company does not pay taxes to help solve local problems. The regions involved are poor and do not have enough resources to meet their needs.
Currently regional legislation in Kursk, Ivanovo, and Mordovia frees the brewer from paying property tax. Deputies in the Klinskii raion municipality of Moscow Oblast have freed the company from pay taxes on advertisements. The aggressive advertising of the Klinskii brewery aggravated Duma members so much that they recently passed a law against beer ads.
The tax authorities charge that these regions have provided benefits to Sun Interbrew inappropriately. According to kompromat.ru, Sun Interbrew controlled 16 percent of Russia's beer market at the beginning of the year and made a pre-tax profit of 17 million euros. These figures are up 130 percent from previous years. The income of the main shareholder in the holding company, the Belgian firm Interbrew, topped 7 billion euros in 2003 and profits for the year went up 8 percent to 505 million euros.
Interest in the Belgian firm grew after it completed two major deals in recent months. First, it bought out its Indian partner, the Sun group, for 530 million euros. Sun's profitability in Russia since 1997 was 47 percent, a rate of profit seen only in the oil and telecomm industries.
Immediately after purchasing Sun, Interbrew announced that it would purchase the Brazilian AmBev. The new firm, called InterbrewAmbev, is the largest company in the world in terms of beer sales. Overall, Interbrew spent 12 billion dollars on both deals.
Currently State Duma members and the head of the Ministry of the Interior's Department for Combating Economic Crime are looking for ways to get Sun Interbrew to increase its tax payments. The Duma deputies have already asked the governors concerned to remove the tax breaks for Sun Interbrew, according to Kurskii vestnik (15 October).
In light of these actions, the press has already begun to speculate about the reasons for the deputies' activity. Beyond the deputies' desire to see more tax revenue, one theory is that they are afraid of Sun Interbrew's rapid growth. A second possibility suggests that the regions in question are led by governors who are not popular with the Kremlin and the tax break issue could serve as a basis for removing these inconvenient officials in the near future.
21 October 2004
UNITED RUSSIAN DEEPLY DIVIDED IN KURSK
Many observers have suggested that President Putin will seek to use the United Russia party to determine who will become a member of the State Duma under the new political system that he outlined on 13 September. His plan includes a proposal to eliminate the election of State Duma members from single-member districts, instead determining the members of that body solely on the basis of party-list voting.
If that is the plan, Putin will have trouble implementing it in regions like Kursk, where the United Russia party has been deeply divided since its founding three years ago. The main cause of the split is disagreement over who should head the regional branch of the party, regional politicians or figures appointed by the United Russia central party leadership in Moscow.
In 2001 when Unity and Fatherland merged into the new United Russia party, Kursk city Unity leader Vladimir Losev sought to head the new oblast party. However, Moscow preferred to support the former head of Fatherland, State Duma member Aleksandr Chukhraev. Losev's supporters tried to block Chukhraev's election, but ultimately had to submit to the party's general line after a member of the party's general council threatened to disband the oblast organization.
In June of 2003, Losev's opposition group, which included then Kursk mayor Sergei Maltsev and several local businessmen, conducted an extraordinary party conference. They declared the work of the regional party council unsatisfactory and voted almost unanimously for the removal of Chukhraev. However, on the same day, a party general council meeting in Moscow voted to exclude all of the "conspirators" from United Russia. The "Losin revolt," as the Kursk party dubbed the event, was crushed.
The general calm that followed was disturbed only in April 2004 when Viktor Mamai, a member of the party's regional political council who had played an active role in putting down the Losin revolt, accused the regional party leadership of doing nothing and resigned from the political council. At that time, Mamai did not follow up his words with further action.
However, on 21 September, Mamai held a press conference at which he accused the party leaders of placing their personal interests over the development of the party. He charged that the party leaders were not engaged in party building work, were not preparing for the regional legislative elections set for 2005, and had not done enough preparatory work for the city council by-elections which took place on 19 September. He claimed that the party did not have any popular support and that its lack of a real political platform made it impossible to realize its plans.
Mamai declared that he was leaving United Russia and taking with him 30 others, including the leaders of 14 local units of the party. He also announced that he intended to set up in Kursk a branch of a new party entitled Citizen's Network of Russia (Grazhdanskaya set' Rossii).
For his part, Chukhraev accused Mamai and his colleagues of doing nothing themselves and noted that the party planned to revoke their membership, a pointless move since they had already quit. He also argued that Mamai had exaggerated his attack against the regional party, noting that in the recent city council by-elections, United Russia won 3 of the 4 available seats. Chukhraev said that Mamai could join a new party or "go to hell." His emotional tone and crude expression suggested that the situation in the party had deteriorated considerably. Since Chukhraev spends most of his time in Moscow and lately in Beslan, he has lost authority in Kursk. Most recently, the campaign to collect membership dues from party members has collapsed.
8 October 2004
IN HIS LAST LEGAL TERM, BELGOROD GOVERNOR BACKS PUTIN
At Putin's meeting with his government and Russia's 89 governors on 13 September in which he announced that he would appoint governors, none of the currently elected governors opposed him. However, it was obvious from the dour and strained faces of leaders like Moscow Mayor Yurii Luzhkov and Tatarstan President Mintimer Shaimiev broadcast on television that they were not happy.
In contrast, Belgorod Governor Yevgenii Savchenko strongly supported Putin's initiative, surprising no one. According to current legislation, Savchenko cannot be elected for another term as governor. However, the new system Putin proposed may make it possible for him to remain in office and he has nothing to lose by supporting it. Either he will remain as governor or he will seek a federal cabinet post. Both alternatives require loyalty to the president, and Savchenko is sparing no effort to demonstrate his fealty to the president.
In public remarks, Savchenko noted that the new system will make the governors more accountable to the president who appointed them and the regional legislature, which confirmed them. After a planned meeting with Putin on 14 September, Savenchenko said that he had always been opposed to electing regional leaders and favored appointing them because such a "system makes it possible to establish political and social stability in the country." Savchenko said that in his meeting with the president he proposed going one step farther, giving the appointed governors the power of presidential representatives in the regions. Such increased status would apparently do away with the president's current seven envoys.
Savchenko and Putin discussed some of the key issues facing Belgorod Oblast at their meeting. Savchenko claimed that if current trends continued in the oblast and if similar methods were used in the rest of the country, by 2006 Russia could stop importing chicken. In the sphere of transborder cooperation, Savchenko noted that the new law requiring automobile insurance for all was limiting cross border trade. Currently cars coming in from Ukraine have to pay a minimum insurance premium of 513 rubles, while trucks have to pay as much as 8,000 rubles. The high fees are limiting the number of visitors. Savchenko said that Putin immediately ordered his staff to look into the problem. Additionally, Savchenko all discussed with the president the situation in which people who helped deal with the Chernobyl accident have been conducting a hunger strike in the city of Staryi Oskol for the last month in order to obtain housing.
21 September 2004
BELGOROD COURT FAILS TO PROSECUTE VIDEO PIRATES
Pirated software, films, and music is widely available in the Russian regions and Belgorod is no exception. On the local Lenin Prospect, one can pick up Adobe's Photoshop or Illustrator for $2 to $2.50. The latest Harry Potter movie sells for approximately $4. The police usually only press charges if there is a victim. Thus it is much easier to buy homemade copies of products when the copyright owner is a western firm. The works of Russian singers and Russian films are much harder to find.
Belgorod's trade in pirated CDs and DVDs flourishes because of its proximity to Ukraine, which produces the lion's share of the disks and sends them across the border to Russia. Pirated audio and video cassettes are prepared locally.
A recent court case against one of the region's most prominent piraters ended to the complete satisfaction of the purveyors of others' property. For the last several years, the firm Dinamik supposedly illegally sold copies of western and Russian films, according to the regional procurator. He charged that the company employed more than 60 video machines for making copies, packaged the final product in plastic wrap, and made a handsome profit selling the tapes in local stores under the brand name Konica.
Officially licensed versions of the same videos simply could not compete because they were much more expensive.
In March 2003, the police raided the firm, confiscating its equipment for copying films, more than 3,000 videocassettes, 47,000 cassette casings, and lots of other material. For the first time in Belgorod, a firm faced charges for copyright violations and illegal use of a brand name. The procurator charged that Dinamika Director Vladimir Ageev had made nearly 13 million rubles in his illegal business operations.
Ultimately, the Sverdlovsk Raion Court in the city of Belgorod ruled that Dinamika had violated trademark rules and had consciously made pirated videos.
However, the court found that these actions had not caused any financial or reputational harm to Konica, since the procurator did not prove that the goods had actually been sold.
The judge found Ageev innocent of violating intellectual property rights and dismissed the charges about illegally using a trademark, ruling that there was no evidence that a crime had been committed. Moreover, the judge returned to Ageev all the property that had been confiscated.
Although the case is now being appealed, Belgorod's stores are once again selling videos of suspicious origin. These videos had disappeared in recent months.
6 August 2004
KURSK GOVERNOR PREFERS UKRAINIAN OVER RUSSIAN COMPANIES
Kursk Governor Aleksandr Mikhailov has found it easier to work with Ukrainian companies than Russian companies in the food processing sector. On 29 April Mikhailov signed a cooperation agreement with Kiev-Konti General Director Roman Likhode, whose company recently purchased a 90 percent stake in Kursk's Konditer factory, which produces cookies and candies. The governor said that the Ukrainians had proven to be reliable partners, while the St. Petersburg firm Evroservis had not. In addition to Kiev-Konti, the Ukrainian firm Razgulyai Ukrros owns more than half of Kursk's sugar production.
Kiev-Konti is one of the top three large confectionery firms in Ukraine. It was established in 1997 and included three Ukrainian factories. Its 2004 purchase of the Kursk plant is its first foray into the Russian market and it hopes to expand its share in order to compete with Russian industry leaders like Babaevskii and Bolshevik.
Kiev-Konti is not the only Ukrainian confectioner entering the Russian market. Roshen bought a plant in Lipetsk in 2001 and then purchased a second one in March.
The Ukrainian interest in the Russian market is easily understood. In 2003, Ukraine exported 50,000 tons of product to Russia, making up 20 percent of the Russian market. Trade continues even though Russia has imposed a special 21 percent tariff. This duty will end in the summer of 2004, but Russian manufacturers are already lobbying to extend it. The new duty could prove to be even higher than the existing one. By purchasing Russian factories, the Ukrainian manufacturers are trying to avoid the tariff and maintain their share of the Russian market.
The governor is happy with the Ukrainian investors because they plan to invest in the modernization of the factory and to double the number of employees. The region will benefit from the increased tax revenue.
12 May 2004
FORMER KURSK PRIME MINISTER ASSASSINATED
Assassins killed former Kursk prime minister Boris Khokhlov on 14 February. Since serving as former Governor Aleksandr Rutskoi's last prime minister, Khokhlov has engaged in a variety of business activities. The evidence suggests that this attack was a contract killing and the police have not been able to find the killers.
Most likely, Khokhlov's death was a result of his business interests. He owned several local businesses, including a nightclub and the Kursk vodka distillery. Possibly, by winning control of this factory, Khokhlov crossed the path of a Moscow-based business group that had sought to acquire it. Khokhlov had clashed with such groups when he
served in the oblast government.
Khokhlov had to leave office at the end of Rutskoi's term when Communist governor Aleksandr Mikhailov came to office. He tried to find a new position on the staff of the Central Federal Okrug, but was unsuccessful. On 16 April 2001 he was arrested and charged with embezzling 8.6 million rubles from the Kursk nuclear power plant in 1997 when he served as the deputy general director of that enterprise. He also was charged with overstepping his powers in selling the state shares of the Kursk distillery in 1999, when he was first deputy prime minister. In 2002, he received a four-year sentence. Initially, he served his time in Orel Oblast and later was moved to a minimum security facility as the result of his good behavior in the first part of his term. This facility periodically gave Khokhlov short-term furloughs. It was during one of these that he was murdered.
Khokhlov's killing has frightened Kursk's business community because it is the first contract killing in the otherwise quiet region.
11 March 2004
CRIME ON RUSSIAN-UKRAINIAN BORDER GREW DRAMATICALLY IN 2003
"The world went crazy" was the way that Valerii Vaganov, head of the Kursk border guard division, described the criminal situation on his section of the Russian-Ukrainian border last year. During the course of 2003, the border guard detained 312 illegal immigrants here. In 2002, the number was just 20, one fifteenth of the total in 2003. "Russia is becoming a staging area for immigrants heading for western Europe," Vaganov said.
Most of the illegal immigrants are from China, India, and Afghanistan. The Kursk border guard detained the largest group in November 2003, stopping 53 immigrants from India and China. In July a group of 30 Indians was captured, heading for Europe, while avoiding all roads and checkpoints. They were all deported from Russia.
Vaganov described the transport of illegal immigrants across the border as a fully-formed illegal business. Residents of Ukrainian villages in the border region earn $8,000 to $10,000 for transporting such groups of illegal aliens across the Russian-Ukrainian border.
The other major problem on the border is contraband. The border guards confiscated 36 illegal shipments worth nearly 11 million rubles in 2003. This indicator grew by a factor of 5 from 2002. Usually Ukrainians try to ship into Russia spare parts, gasoline, diesel fuel, heating oil, food, cigarettes, and domestic appliances. They make large profits because of the vast difference in prices in the two countries.
Drugs also make up one of the main imports. In one part of the region, officers found an opium field, hidden among corn stalks, a few hundred meters from the Ukrainian border.
The border guards had to resort to their weapons three times in 2003, up from just one incident in 2002. During the entire year, the border guard worked at a higher level of alert because of the increased criminal activities.
Another complicating issue for the border guard is that the border has yet to be demarcated, often making it difficult to show that someone has violated the international boundary. Some settlements straddle the border, with some streets in one country and others in a different country. Vaganov said that only a special agreement between the Russian and Ukrainian sides could resolve this issue. Another possible approach is the adoption of a regional law in Kursk defining the border zone. In the near future, Kursk Governor Aleksandr Mikhailov will introduce a bill to the regional legislature increasing the border zone from 5 kilometers to include entire raions. If this legislation is approved, the number of border violations in 2004 will likely increase greatly.
12 February 2004