«The ‘Renova’ Case: Security Forces’ ‘Roller’ As New Principle of Political Reality» Slon in Russian 06 Sep 16

The criminal case which directly or indirectly affects Russia’s biggest businessmen — Viktor Vekselberg and Mikhail Fridman — and also the most in-demand top managers including «VympelKom» head Mikhail Slobodin is rapidly gathering momentum. First there was the check by the Procurator General’s Office into the Vorkuta heat and electric power station [TETs] (which belongs to the «T-Plyus» company) in the Republic of Komi and then the search at the Moscow offices of «T-Plyus» (the legal successor to the «KES» company with respect to whose leaders the investigation is being conducted) and of «Renova,» and the arrest of the two companies’ managers, Boris Vaynzikher and Yevgeniy Olkhovik respectively. There is contradictory information coming in about Mikhail Slobodin: The investigators are so far not revealing what specifically he is suspected of, while he himself as of yesterday was saying that he is on a business trip in France. But late on Monday evening [5 September] the operator’s head company, Vimpelcom.ltd, reported that Slobodin had resigned «following today’s news.»

What is happening is a typical example of how a purely economic dispute is turning into big-league politics. «Renova» controls the Vorkuta heat and electric power stations (TETs-1 and TETs-2) which over the course of 2009-2016 have seen consumers’ debts accumulate, reaching, according to the energy company’s figures, 6.2 billion rubles. Of this figure 5.2 billion rubles is accounted for by the «Vorkuta Heating Networks» limited company, whose director was convicted in March of hiving off money into offshore companies. Renova’s relations with the republic’s former leadership were by no means as serene as the Russian Investigations Committee portrays them: The problem of nonpayments has remained unresolved for years. A number of articles focusing on the owners of the Vorkuta heat and electric power stations have pointed out that the company hoped that following the Republic of Komi change of leadership the new authorities would be able to bring more vigorous pressure to bear on consumers. The logic of business here is simple: If we are not paid for our services, we will not modernize. And in May it was decided to sell the asset.

The Russian Investigations Committee tells a different story. It believes that the region’s former authorities headed by Vyacheslav Gayzer were an organized crime gang while the «T-Plyus» leadership was handing out bribes for setting higher energy tariffs. But the TETs owners completely refused to invest in the modernization of the enterprises, which affected the deterioration of the equipment and a rise in the number of accidents. The last major accident occurred in June of this year, but the problem had reached government level back in the winter: Conferences and discussions were held, but no solution was found. Indeed, in the current situation, when «the money isn’t there» [reference to Premier Medvedev’s recent response to complaint from pensioner about non-indexing of pensions], it would be hard to find a solution: Who would take on the burden of being an investor in an enterprise which chronically fails to receive payment for its services?

What we have is a classic dispute between representatives of the authorities and an investor who is behaving like a conventional business — looking where there is an advantage and getting rid of what is running at a loss.

But politics has entered an economic dispute together with the elections: The issue of providing heating is socially acute and the aggravation of the problem could lead to adverse sociopolitical consequences. In Vorkuta a critical situation with regard to heating is evidently indeed taking shape and if nothing is done then a winter crisis is guaranteed. In the end it is simpler for the local authorities to put pressure on the TETs owner than to prevent the onset of the cold weather.

The regional authorities here have a whole complex of interests, one of which could be preventing the sale of the asset. In fact it could be a case of an attempt to use administrative and security-forces means to impose a veto on the deal. It is likely that the decision to sell was the event which sharply turned the investigation agencies’ interest away from the former leadership of the Republic of Komi (although that interest remains) to the owners of the Vorkuta heat and electric power stations. The number two task could be forcing the owner to ensure the enterprise’s performance capability. Whether at a loss or not is a problem for the drowning man himself. From the viewpoint of the regional authorities, the sale of the asset (and, moreover, to some person unknown) jeopardizes heat supplies to enterprises and to the population and also hypothetically deprives «Vorkutaugol» of its biggest consumer of coal. That is what the new governor, Sergey Gaplikov, called a «threat to energy security» in his letter to Putin.

They may have painted a picture for the president showing a self-indulgent «oligarch» (Vekselberg is seventh on the Forbes list) thinking of buying himself another mega-asset and casting an entire region to the fates, a region which runs the risk of freezing when the first frosts set in. And then there are the federal elections, the Motherland’s fate, stability, security, and sovereignty. The FSB [Federal Security Service] was called in to help.

The security services are gradually becoming not only spin doctors controlling the non-parliamentary opposition and foreign agents, but also arbitration managers.

A new crime «roller» has appeared in Russia — a power vehicle steamrollering across all accessible paths. You only have to look at all the events that have been happening in the past three years for it to become clear that as soon as the «roller» has been given the OK, all boundaries vanish. The FSB roller, starting with the customs case, has driven over Yevgeniy Murov and Andrey Belyaninov. There are also the cases against the governors. Even a Putin appointee can now very swiftly become a defendant. Limits are also being expanded in the business environment: Vladimir Yevtushenkov, Dmitriy Kamenshchik, Yevgeniy Dod. And now Vekselberg and Slobodin. The caliber of the notional suspect is no longer of any importance. Each of the people being prosecuted is an individual, but they are all united by a marked lowering of the barriers in the path of the advance of the security forces’ «roller.»

The roller principle is based on the fact that differentiating between those who can be crushed, those who have to be treated with caution, and those who cannot be touched is becoming difficult, to put it mildly. Once it has been set in motion, the roller will not make any complicated maneuvers. The road to the Vorkuta TETs has also tangentially affected «VympelKom.»

The very fact that in the present system the roller principle is allowed deserves to be examined separately: After all, in a situation where Putin no longer needs «friends» and replaces his entourage with young secretaries and adjutants, the value of the political environment depreciates. There is a depoliticization of the systemic space where the allocation of power and influence contracts to a very limited circle of people who are «the masters of the Motherland’s destiny.» The rest are left with temporary right of access to management, distribution, and the feeding trough.

But there is no longer any stability for these people: Today you are a «courtier,» tomorrow you are a criminal. Human capital is losing its value for the regime, which is why we are observing the arrival of Putin’s former bodyguards in the most difficult areas of work. «In what way are they worse?» the president asks, airily dismissing any difference between the management of a territorial state formation and the management of protection activity. You have a think about that, governor.

It seems that the time of big criminal cases is now coming, whose roller will crush ministers, governors, the owners of major assets, and top managers. Some people will be lucky, others will go to prison. But they will crush their own people and the others, the efficient and the not very efficient, the honest and the criminal. Human capital is being liquidated. Unless a separate «reversal» decision is made (for instance, on the advent of a reformist government, which seems increasingly unlikely but is nonetheless not out of the question) then the system is being restructured to devour itself. And when the human material runs out they will turn on those who are doing the repressing.

 

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