What Does Abramovich Fear More –
A Swiss Court or a Russian Street?
(RIA Novosti, by Vladimir Simonov) — One of Russia’s richest
people, Roman Abramovich, might have to appear in a Swiss court
to defend against claims filed by the European Bank of Reconstruction
and Development (EBRD). The bank is demanding that Mr. Abramovich
return a loan worth 9 million pounds (approximately $17 million).
The EBRD is reported to have acquired documents indicating that
Mr. Abramovich used part of the loan "inappropriately."
In particular, the Russian billionaire is accused of using some
of the money to buy two luxury yachts. The court documents prepared
by the EBRD include a fax instructing Runicom S.A. to transfer
28,000 Swiss francs to pay for beauty treatment provided for Mr.
Abramovich’s wife, Irina. Russian legal experts are rather skeptical
about the EBRD’s chances of suing Mr. Abramovich successfully.
courts have already heard the case twice, with the last ruling
in the EBRD’s favor. Unfortunately for the bank, though, Swill
company Runicom S.A., the major trader and shareholder of Sibneft,
declared itself bankrupt shortly afterward. All its assets and
functions were transferred to a new Gibraltar-registered company
– Runicom Ltd. During the new trial, EBRD’s lawyers intend to
prove that Mr. Abramovich and his associates were the legitimate
owners of both companies in question, and, therefore, Mr. Abramovich
is responsible for the obligations on the loan.
the danger for Mr. Abramovich and other oligarchs does not come
from the Swiss court, but rather from the Russian streets. In
Russia, the term "oligarch" is associated with a person
who squanders money stolen from people. In this case, it means
money from a loan issued to help the Russian economy develop.
It is hard to imagine a more inconvenient time for Mr. Abramovich
to deal with the suit if it is ever filed at a Swiss court. Pensioners
have organized a wave of protests that has swept the country against
benefit reform. With growing social tension, Russians will see
a scandal involving the oligarch as direct proof of where the
money that could have been spent on improving their living standards
actually goes. Indeed, everybody has acknowledged a sharp deterioration
in living standards that has affected millions of Russians since
the early 1990s. Market economy reforms are now entering their
second decade, and still every fifth Russian has to survive below
the official poverty level – about $2 per day. The decile coefficient,
which shows the gap between the incomes of 10% of the richest
people and 10% of the poorest people, is even more explicit. It
is shamefully high, as the incomes of the former exceed the incomes
of the latter by 14.6-15 times. And that is just an official data.
Some experts claim that if the "shadow" profits of the
oligarchs were considered, this coefficient would jump over the
30-times mark. In comparison, the decile coefficient in the United
States, Europe and Japan is four to five times lower.
is obvious that such a gap in the prosperity levels causes a serious
split in the entire social fabric, which, as history shows, is
extremely dangerous for a country’s stability. It is especially
painful for older generations of Russians who were educated according
to appealing communist rhetoric about social justice.
stark contrast in the quality of life of the rich and poor creates
a suffocating atmosphere in Russia for business in general and
big business in particular. The market economy is becoming discredited
in the eyes of the Russian public.
somebody mentions the names of prominent Russian businessmen,
70% of Russians are ready to grab a gun," says Igor Yurgens,
the vice-president of the Russian Union of Entrepreneurs and Industrialists.
a closer look at the current market economy model in Europe shows
that it is formed under the conspicuous influence of such values
as equality and social justice. Europeans believe that successful
business today must ensure a new quality of life and real benefits
not only for businessmen but also for all participants in the
idea is garnering growing support among Russian business circles,
as well. The fashionable term "the social responsibility
of business" is being heard increasingly frequently. The
Kremlin is also demanding social responsibility from a new Russian
social stratum. "We established the lowest income tax in
Europe at 13%; we abolished the sales tax and VAT in 2004,"
officials repeatedly state at various business forums. "And
we expect from you closer cooperation with the state to solve
acute social problems, primarily, the elimination of mass poverty."
does not necessarily mean the state is proposing that Russian
business strike a deal or come up with some donations. The authorities
are trying to explain to young Russian entrepreneurs that it is
a question of their own survival. The market economy will develop
normally in Russia only when all of society, including a large
army of poor people, starts to believe in its unquestionable advantages
compared with planned economy, and especially compared with nationalization.
social responsibility of business recently became the main topic
of a discussion at a conference organized by the Russian Chamber
of Commerce and Industry. President Vladimir Putin and leading
Russian businessmen attended the conference. The majority of the
participants expressed rather passive and cautious views. Many
interpreted the appeal in rather narrow terms: we develop businesses,
create jobs, ensure adequate remuneration, pay taxes – what else
do you expect from us? That is our social responsibility. The
state must take care of the remaining social problems because
it is its direct responsibility.
business representatives emphasized that the authorities had far
from exhausted their potential in that respect. For instance,
only about 15% of the 2004 federal budget was spent on education,
health, support for scientific progress, culture, arts, sports
and social policy. At the same time, the maintenance of the state
apparatus cost much more. Therefore, social responsibility has
not become a fundamental principle for state bureaucrats, either.
So, what is the point of blaming businessmen for their passive
the Russian business community is starting to realize the historical
inevitability of closer cooperation with the government in Russia’s
social revival. Often, without advertising their actions, Russian
businessmen anonymously start supporting the country’s poor. They
set up targeted social foundations, whereas some large companies
finance housing projects in neighboring residential areas, and
help to maintain transportation infrastructure, schools and local
the public is coming to see oligarchs less as unscrupulous squanderers
of illegally acquired wealth, and more as influential citizens
capable of feeling sympathy for their less successful compatriots.