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Cablegate: Businesswoman Vs Corrupt Drug Agents

VZCZCXRO4736
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHMO #2477/01 2331220
ZNR UUUUU ZZH
R 201220Z AUG 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 9583
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 MOSCOW 002477

STATE FOR EUR/RUS

DOJ FOR OPDAT/LEHMANN, NEWCOMBE AND ALEXANDRE, OIA FOR BURKE, OCRS
FOR OHR AND OTT

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PHUM PREL RS KCRM KJUS SNAR
SUBJECT: BUSINESSWOMAN VS CORRUPT DRUG AGENTS

THIS CABLE IS SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET
DISTRIBUTION

1. (SBU) Summary: Post Resident Legal Advisor (RLA) recently met
with Yana Yakovleva, financial director of Sofeks Chemical Company.
Yakovleva and her business partner were the subjects of an extortion
attempt by the Federal Service for Narcotics Control (FSKN). When
they refused, they were charged with distributing diethyl ether (not
a crime under Russian law) and held in jail for seven months. They
were finally released when prosecutors were forced to concede that
they had not committed any crime. Upon release, Yakovleva formed
Business Solidarity, an alliance of approximately 100 Russian
businesses dedicated to fighting official corruption and extortion
of businesses. Her case provides fascinating insight into how
law enforcement extorts businesses and how businesses are trying to
protect themselves. It also provides an opportunity for USG to
support a civic initiative against corruption. End Summary.

------------------------
THE CASE OF THE CHEMISTS
------------------------

2. (SBU) Yakovleva explained that she started Sofeks in Moscow in
the early 1990Qs, after graduating from college. SofeksQ main
business was the importation and re-sale of chemical solvents. For
years it operated successfully, without any problems. But in 2004,
Yakovleva and her partner Aleksei Protskii were approached by FSKN
agents, who proposed partnering in a scheme where FSKN would provide
the protection in return for splitting the profits. At first,
Yakovleva thought it was a joke, but quickly realized that it was a
crude attempt to extort Sofeks and dismissed the agents.

3. (SBU) Shortly thereafter, the agents officially opened a criminal
case against Yakovleva and Protskii for illegal distribution of
diethyl ether, a chemical solvent which Sofeks purchased from a
French producer and re-sold to various Russian purchasers. In July
2006, Yakovleva and Protskii were charged under Article 234 of the
Russian Criminal Code, which criminalizes trafficking in so-called
virulent (silnodyestvuyushchiye) substances. Because Article 234
does not define the word virulent or designate the substances to be
considered Qvirulent,Q it is an open invitation to abuse. In
charging Protskii and Yakovleva, the FSKN relied on a list which was
prepared by an unofficial organization called the Standing Committee
on Narcotics Control which, it was later determined, did not even
have the legal authority to classify virulent substances. (In June
2006, the Russian Supreme Court issued a ruling holding Article 234
unconstitutional given the absence of any legal definition of the
term virulent. This ruling, however, did not stop application of
the law. In 2006, over 1,000 people were convicted under Article
234 and in the first six months of 2007, over 600 were convicted.)


4. (SBU) Upon being charged, Yakovleva and Protskii were arrested
and denied bail. During court hearings, which began in October
2006, their lawyer presented evidence that FSKN forensic analysis
had been fabricated and argued that, in the light of the wording of
Article 234 and the Supreme CourtQs June 2006 decision, distribution
of diethyl ether was not a crime. At the same time, The case, which
became popularly known as the Case of the Chemists (Dyelo Khimikov)
became a cause celebre. YakovlevaQs and ProtskiiQs supporters
mounted an aggressive public relations campaign, which included
calls for their release by several Duma deputies, Human Rights
Ombudsman Lukin, the Moscow Helsinki Group, and approximately 100
other chemical companies. In February 2007, the Perovskii District
Court returned the case to prosecutors to correct what the court
termed errors in the indictment. Prosecutors then decided to drop
the case.

5. (SBU) After her release, Yakovleva continued to fight against
abuse of Article 234. As a result of her agitation, in April 2007,
the Public Chamber reviewed the Sofeks case, called on the Moscow
City ProsecutorQs Office to pursue a criminal investigation of the
FSKN agents responsible for it, and also called for repeal of
Article 234. In August 2007, in response to a request by Sofeks
lawyer, the Ministry of Health and Social Development issued a
statement confirming that the Standing Committee on Narcotics
Control is not legally authorized to designate substances as
QvirulentQ under Article 234. In November 2007, the Duma formally
amended Article 234 to require that lists of virulent substances be
officially approved by the Russian government before they can obtain
the force of law. (Despite this amendment, the law still does not
provide a definition of virulent. Nor does it specify by what
criteria the list should be compiled. In December 2007, the
government refused to approve a draft list prepared by the FSKN and,
as far as we are aware, no legally binding list exists.)


MOSCOW 00002477 002 OF 002


6. (SBU) In September 2007, Yakovleva started Business Solidarity,
an NGO dedicated to protecting businesses against abuse by law
enforcement. It purports to represent 91 businesses committed to
protecting each member business from illegal attack. In June,
Business Solidarity presented President Medvedev with a proposed
anti-corruption program. The main provision of the proposal is a
moratorium on pre-trial detention in cases involving non-violent
crimes where other means of pre-trial restraint, such as bail, are
available. Yakovleva explained that this is a priority because the
threat of detention is the main means by which law enforcement
extorts business. Even if a criminal case is clearly fabricated and
falls apart in court, she said, the simple fact of being held for
several months pending trial can easily destroy a personQs business.
In order to ensure that a subject will be detained, Yakovleva said,
investigators often deliberately send a notice to appear for an
investigative interview to the wrong address. When the subject
fails to appear, he is declared a fugitive, which provides a strong
basis for detention when he is finally Qcaptured.

7. (SBU) Other planks of the proposed anti-corruption program
include a moratorium on supervisory inspections (proverki) of small
and medium sized businesses; a zero tax for start up businesses;
reduction in the number of government inspectors; salary increases
for government inspectors; regular public hearings at which
businesses can express their concerns about government regulation;
expert review of existing regulatory and criminal legislation and
development of a federal law on the defense of entrepreneurs. In
addition to these proposals, the organization has also created a
website, himdelo.com, with an electronic hotline where entrepreneurs
can report abuse and extortion by law enforcement.

-------
COMMENT
-------

8. (SBU) Initiatives like Business Solidarity provide an ideal
opportunity for USG to support the rule of law and combat
corruption. In order to help her formulate proposals on reform of
pre-trial detention, RLA provided Yakovleva with relevant US
legislation and judicial decisions. We will continue to explore
other ways to support this and similar campaigns.

BEYRLE

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