Russian and foreign investors criticise Putin's wave of police actions

Jul 28, 2000 02:00 AM

President Vladimir Putin promised Russia's top business moguls that post-Soviet economic privatisation will not be reversed, but his words did little to assuage their concerns over a wave of police actions against large companies.
Putin met in the Kremlin with 21 heads of some of Russia's largest companies to discuss the recent police actions, which include arrests of business leaders and criminal proceedings against several companies. While many of the business leaders emphatically praised the talks afterward, they conceded that few specific agreements have been made.
Putin made no promise to curb police actions against large businesses. While Russian and foreign investors have criticised the actions as harming the business climate, they have proven widely popular among ordinary Russians, who have fared poorly during the economic chaos since the 1991 collapse of the Soviet Union.
Putin gave "no clear answer" about whether the crackdown will continue, said reformist lawmaker Boris Nemtsov, who helped set up the meeting. "But (Putin) said one thing: That the law-enforcement system must work, and nobody can get in the way of the law-enforcement system," he said.

A statement from Putin's office said "the president once again confirmed that the powers do not intend to revise the results of privatisation." Putin agreed to let the business leaders form an advisory council to discuss their concerns with the Kremlin every few months - a deal that won lavish praise by some businessmen.
"I got the impression from the meeting that Russia's powers-that-be, as represented by the president, regard business leaders more as allies in implementing economic programs, rather than in some other capacity," said Vladimir Potanin, owner of Norilsk Nickel company.
But the CEO of the Uralmash-Izhora industrial holding company, Kakha Bendukidze, said the meeting did little to ease the businessmen's minds about the sudden rush of police actions against private companies. In recent weeks, police and prosecutors have tried to overturn the privatisation of metallurgical giant Norilsk Nickel. They have also filed tax evasion charges against oil company LUKoil and Russia's largest car maker, Avtovaz.
Russian police attracted world attention when masked officers carrying machine guns arrested media mogul Vladimir Gusinsky on charges of defrauding the state in a privatisation deal. The charges were dropped.

Many in Russia and abroad have criticised the actions as a government campaign to intimidate business leaders, particularly those who do not support Putin. Putin has said he merely intends to make all equal before the law by treating large companies the same as regular citizens. He came to office earlier this year promising to cut the lucrative ties that some business leaders had cultivated with government during the administration of his predecessor, Boris Yeltsin.
The head of the Vimpelkom mobile communications company, Dmitry Zimin, said that even though the business community wants to be law-abiding citizens, sometimes it is forced to bend the rules. "We want to live according to the law, but our laws are still rather vague," he told.
Bendukidze said legal chaos and huge taxes, which many businesses are forced to dodge to avoid going broke, open the way for "selective" prosecution by the government. "As long as the tax burden is not reduced, the basis of fear will not go away," he said.

Source: AP
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