Timber trade threatens Russia protest leader

Reuters News
Posted: Aug 10, 2012 1:30 PM
Timber trade threatens Russia protest leader

By Gabriela Baczynska and Timothy Heritage

MOSCOW/KIROV, Russia (Reuters) - The timber industry in the vast forests of Russia's Kirov region, far from prying eyes in Moscow, has long been easy prey for unscrupulous businessmen.

Locals say it is so murky that the country's most charismatic opposition leader Alexei Navalny will have a hard time fending off charges levied last week of stealing wood from a state company while advising the governor there in 2009.

Navalny says politics lie behind the case, which may also tarnish the governor, Nikita Belykh, a liberal whose appointment by then-President Dmitry Medvedev may grate with the more conservative previous and current Kremlin leader Vladimir Putin.

"The charges were not only absurd but unexpected," he told Reuters, adding that one member of the gang he was said to have organised to steal the wood had given evidence against him in earlier corruption charges involving timber that were dropped.

"This suggests they don't care what the accusation is."

Alexander Shishanov, former head of the timber-producing Omutninsk district of the Kirov region, took a view widely held in the region, that there may be something in the charges, if only because so many people in the area are on the take.

"There is no smoke without fire," Shishanov said, while adding that the alleged theft from state timber firm Kirovles could easily be used to tarnish Belykh's reputation and "everybody will quickly forget about Navalny".

"When somebody says the Kirovles case is political, of course it is, just as much as it is commercial. In Russia it is more or less the same."

Navalny, 36, says his true crime in the eyes of the Kremlin is to have used his blog to reveal high-level corruption at state companies and organize protests against Putin.

Opposition leaders portray Navalny's problems - his home has also been searched by investigators - as part of a crackdown on dissent since Putin began a new six-year term on May 7.

Parliament has rushed through laws increasing fines for protesters, tightening controls on the Internet - which is used to arrange protests - and imposing stricter rules on defamation.

Putin's critics also portray the trial of three women from the punk bank Pussy Riot over an anti-Kremlin protest on a church altar as a sign that he is prepared to brook no dissent.

Navalny says the Kremlin has identified opposition leaders' or critics' business interests as a potential Achilles Heel.

Another adviser to Belykh, Andrey Votinov, has already been sentenced to three years in prison for trying to extort a 2 million rouble ($63,000) bribe from the former head of Kirovles, local media said.

Gennady Gudkov, a protest leader and opposition Just Russia member of Russia's lower house of parliament, is also under investigation over his business interests.

Alexander Lebedev, a billionaire businessman who co-owns a campaigning newspaper that has criticized the Kremlin, says he is considering pulling out of business in Russia because of pressure from the federal security services.

"It cannot be considered a crackdown," Putin's spokesman, Dmitry Peskov, said of the recent moves by the Kremlin.

Denying any deliberate targeting of Navalny or Gudkov, he said: "As far as investigations and detentions are concerned, this is a natural reaction by the state to people who could be suspected of breaking the law."

As far as Kirov resident Larisa Kolbova is concerned, almost everyone involved in Kirov timber could fall into that category.

"The forest industry here is one of the main industries and it's common knowledge that stealing is part of everyday life," Kolbova, a woman in her 40s, said as she tucked into prawns and beer in Kirov's old centre.

"I guess we'll never know the truth about Kirovles, but I'd say it's entirely possible and probable it wasn't all legal and fair."


Outside Kirov, a city of 500,000 named after a Bolshevik revolutionary whose assassination in 1934 was used by Soviet dictator Josef Stalin as a pretext to purge his opponents, the river winds into forests that stretch as far as the eye can see.

The region, which is bigger than Hungary, covers 120,000 square km and almost two thirds is state-owned forests.

"We have so much woodland that it's simply impossible to closely control it all. Somebody just starts chopping timber somewhere, takes it and that's it," said Vladimir Zhuravlyov, a member of the local parliament who works closely with Putin's ruling United Russia party.

"The forest in Kirov is like oil in the rest of Russia. It's stable and easy money, you just come in and take it. It's also quick money, you can make fortunes on it in no time at all."

Navalny was asked to help turn around the fortunes of Kirovles, which controlled nearly all the forests of the region 800 km (500 miles east of Moscow) but faced financial problems.

He was involved in the appointment of an intermediary firm called VLK to help Kirovles secure deals to sell wood. But Kirovles was declared bankrupt in 2011, and he made enemies.

"Workers at Kirovles were very unhappy about the intermediary selling some of their output," said Vladimir Krylatov, head of the Kirovles Limited Liability Company that has been established on the ashes of Kirovles and has already hired 700 of its former employees.

He would not comment on whether VLK was corrupt, but said it was new to the business. "They hadn't got a clue about the timber industry and were offering prices that were way too low," he said at the new company's two-storey office in Kirov.


Navalny does not regret going to Kirov, saying: "It was a unique situation, an interesting experiment."

But he quickly faced accusations over the commission VLK charged for selling a fraction of Kirovles' production, and has struggled ever since to shake off suspicions.

"Of course there is a political order against Navalny now. Otherwise they would not keep on digging until they can come up with something," said Yevgeny Kokoulin, a local leader of the liberal Yabloko party in Kirov.

"On the other hand, I would really like to see an independent court case on his dealings with Kirovles to clarify things to the very end."

An initial investigation was opened against Navalny in 2010 over accusations that he had put pressure on Kirovles to agree to a "disadvantageous" supply agreement with VLK.

That case was closed in April because no evidence was found against him. But Navalny was summoned by the state Investigative Committee on July 31 and charged with organizing a criminal group that stole 10,000 cubic meters of wood worth more than 16 million roubles ($500,000) from Kirovles.

Opposition leaders often cite the fate of Mikhail Khodorkovsky, once Russia's richest man, as an example of how far the Kremlin is ready to go when it turns on critics.

The former head of the Yukos oil company was arrested in 2003 after falling out with Putin by taking an interest in opposition politics and is still serving a 13-year jail sentence on fraud and tax evasion charges.

Shishanov said anyone criticizing the authorities had to keep themselves above suspicion - a tall order in a country where most business is seen as corrupt.

"If you are pretending to be Jesus Christ, you must be really careful to act like him on all fronts. Otherwise things may become problematic."

(Additional reporting by Gleb Bryanski, writing by Timothy Heritage; editing by Philippa Fletcher)