[Congressional Record Volume 150, Number 100 (Monday, July 19, 2004)]
[House]
[Pages H5912-H5918]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LACK OF RULE OF LAW IN RUSSIA
The SPEAKER pro tempore. Pursuant to the order of the House of
January 20, 2004, the gentleman from California (Mr. Lantos) is
recognized during morning hour debates for 5 minutes.
General Leave
Mr. LANTOS. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on the topic of my 5-minute speech, and that I may include extraneous
material on the same.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
Mr. LANTOS. Mr. Speaker, I rise today to call the attention of my
colleagues to my serious concern with the lack of the rule of law in
Russia.
Fifteen years ago, all of us watched with great excitement and great
optimism as the Communist system came to a resounding close while the
Russian people and the government went through an historic
transformation. We saw President Boris Yeltsin stand up against tanks
in the streets of Moscow, and we watched as Russia moved to embrace
Democratic change.
Mr. Speaker, unfortunately, in the last few years, we have watched as
the government of Mr. Putin has slowly but surely pulled back from
Democratic change. Freedom of the press has increasingly declined,
particularly in the realm of television. Elections have been less open
and less Democratic. The rule of law has been proscribed by government
regulation. Increasingly, government control has restricted the
freedoms that had just begun to blossom in post-Soviet Russia.
Mr. Speaker, the most recent, and in many ways the most dramatic,
example of this decline of the rule of law in Russia has been the
Russian government's political prosecution and persecution of Mikhail
Khodorkovsky, the former chairman of Yuko Oil, one of Russia's largest
companies, and the one that had gone the farthest in moving towards
transparent western market-oriented business practices. It was the
Russian company which had made the greatest progress in corporate
transparency. The company was on the verge of an unprecedented business
deal with Western oil companies.
The Russian prosecutors, clearly at the demand of the political
leadership, initiated a political prosecution of Mr. Khodorkovsky. He
was arrested last summer by a mob of armed security forces as his plane
landed at a Siberian airfield. Since that time, he has been held in a
Russian jail. He has been limited in his contact with his own
attorneys, he is not permitted to communicate with the outside world,
and he appears in court in a steel cage.
This treatment of an individual who at this point has a tax dispute
with the Putin regime violates all principles of due process and the
rule of law.
Mr. Speaker, I am calling attention today of our colleagues in the
Congress to this decline of civil and human rights in Russia. Together
with my distinguished colleague, the gentleman from California (Mr.
Cox), we have established the Russia Democracy Caucus to work for the
development of the rule of law and the consolidation of civil and human
rights in Russia.
Mr. Speaker, a number of my colleagues will be submitting their
statements joining me in deploring the rollback of freedom and civil
rights in Russia during recent years.
Mr. Speaker, last month, on a visit to Moscow, I met with Ambassador
Alexander Vershbow and other embassy officials to get an update on the
political situation in that country. I also met with legal experts and
human rights groups who provided a grim account of the recurring
threats to individual and political freedoms that regrettably harkens
back to the old Soviet days.
Respect for human rights is the cornerstone of a civilized society.
Even the Russian constitution recognizes this fact, as provided in
Article 2:
The individual and the individual's rights and freedoms
represent the highest value. It is the duty of the state to
recognize, respect, and protect the rights and freedoms of
the individual and the citizen.
Our own commitment to human rights as it relates to Russia and other
former Communist countries is manifest in the Helsinki Final Act in
1975, in which we effectively utilized the so-called ``Basket Three''
of that document to publicly hold the Soviet Union accountable for its
violations of human rights and civil liberties.
For a brief moment, during President Yeltsin's presidency, we thought
indeed there would be freedom and liberty in Russia. It was during this
time, the G-8 member nations allowed Russia to participate as an ad-hoc
member, so long as it adhered to the principles of Constitutional
democracy, rule of law and human rights. My colleague Chris Cox and
Senator Joe Biden have spoken out recently about whether Russia, under
President Vladimir Putin, deserves a place at the G-8 table and indeed
if that country should host the next session in 2006.
I would also remind my colleagues that Resolution H. Con. Res. 336,
which enumerates these shortfalls and recommends that Russia be denied
participation in G-8 sessions until it demonstrates its worthiness as a
Democratic state, recently passed the House International Relations
Committee. A similar measure is cosponsored by Senators McCain and
Lieberman.
Mr. Speaker, our own State Department has documented what we have
learned from a variety of sources concerning the deteriorating
situation as it relates to rule of law, freedom of expression, and
human rights in Russia. Over the past year, reports from human rights
groups, NGOs, the European Union, legal scholars, and wide spread media
reporting of conditions in Russia bear out what our own government has
reported. On Secretary of State's last trip to Russia, he made it a
point to voice his concerns directly to President Putin and publicly
expressed them through the limited media outlets that exist in Moscow.
There is much that concerns me about Russia today. In view of the
time limitation I cannot address all of them, but I would like to
mention a few that I believe deserve urgent attention.
First is the case against Mr. Mikhail Khodorkovsky, chairman of YUKOS
Oil Company. This week Mr. Khodorkovsky goes to trail in a court that
is hardly known for its integrity or independence. Virtually all of the
legal entities and courts outside Russia have ruled against the Russian
government, generally finding the cases lack in legal merit and being
political in nature. Little wonder Mr. Khodorkovsky is already a
condemned man. Hardly anyone inside or outside Russia seriously
believes he will receive a fair and just trial.
Since his arbitrary arrest last fall by masked gunmen and detention,
Mr. Khodorkovsky has been subjected to numerous violations of his due
process rights. The Kremlin has directed the case against him for
purposes that are widely seen as political, not criminal. Indeed the
case is being held in the notoriously corrupt Basmanny Court, which is
controlled by Kremlin and Russia security forces. His corporate and
lawyers' offices, foundations, daughter's school have been repeatedly
searched without warrant or warning.
The relentless attacks on the YUKOS Company and efforts to cripple
the once prominent and Western-oriented company raises questions about
the true motives by the authorities involved. It is one thing to bring
a case against Mr. Khodorkovsky and other officers in the company,
depending on the charges brought against them. But clearly the Kremlin
has other motives as well, not the least of which is to bring about a
stake takeover or ownership of the once thriving private company.
Mr. Speaker, I draw the attention of my colleagues to Senate Res.
258, which expresses concern about the circumstances surrounding Mr.
Khodorkovsky's case, and which has passed the full Senate.
My second concern has to do with state ownership and control of the
media in Russia. Under President Boris Yeltsin, privately owned and
independently operated media began to take root and for the first time
citizens of that country could read and view objectively reported news
and even criticism of government officials, even the president himself.
The vanguard of this new era was Mr. Vladimir Gusinky, an
entrepreneur who had the genius of a William Randolph Hearst and the
resources to build a media empire worthy of any in the West. However,
Boris Yeltsin's successor had no tolerance and certainly not the
temperament to allow any criticism of him or his politics.
The result, as we have seen in subsequent events, was predictable. An
angry Vladimir Putin, utilizing extralegal means, forced a shutdown of
Mr. Gusinsky's media outlets, save one--the prominent and popular NTV
television station, which was taken over by the
[[Page H5913]]
state-owned Gazprom and has been under Kremlin influence ever since.
Just a few weeks ago, the one newscaster on NTV who dared to lightly
criticize government officials was sacked on orders from intelligence
agencies inside the Kremlin. Mr. Leonid Parfyonov, a popular host of a
Sunday-night political news program and one of the most independent
voices in Russia, apparently crossed over the line on the Kremlin-
directed censorship.
I was personally well acquainted with Mr. Gusinsky, who today
operates a media conglomerate in Israel. Not only did he lose his media
businesses in Russia, but he suffered personal hardship and
humiliation. President Putin ordered raids by masked gunmen on his
business headquarters and the arrest and detention in Moscow's infamous
Butyrskaya prison, and eventually forced him into exile. Since then
Russian authorities have sought his extradition by way of requests to
Interpol, and the courts of Spain and Greece. In every single case, the
requests were denied for lacking in legal merit and being political in
nature.
Finally, I would like to address the issue of expropriation of
property. There is little secret that many of Russia's crown jewels,
its natural resources, were acquired by individuals during the
privatization that occurred in the early 1990s. Whatever the
circumstances and the controversial amounts that were paid for these
acquisitions, they were conducted within the laws that existed at the
time. Yet there are recurring threats, some outright as in the case of
YUKOS and others implied, that the government may renationalize these
assets.
This poses several disturbing questions. One, of course, is the
overall affect on direct foreign investment in the country. At the
moment, Russia's economy is performing well only because of the sizable
revenue that is pouring in from the exportation of energy, primarily
oil and gas. Foreign investment and Western business cooperation, which
is necessary if Russia is to truly develop its industrial and exporting
sectors, will be jeopardized if the Kremlin-directed assaults on these
enterprises is allowed to continue.
Other questions concern the Russian government's official position
with regard to these privatized businesses, most of which are in the
resource-based sectors. At the moment, the government policy is, if
anything, arbitrary and unpredictable, if not outright threatening to
the privatized companies involved. At best, President Putin has sent
conflicting messages by making reassuring statements, on the one hand,
while authorizing contrary actions on the other.
A case in point is the SPI Group, which acquired production and
distribution rights to Russia's most famous vodka trademarks (including
Stolichnaya). In 1997, a group of investors, headed by Mr. Yuri
Shefler, bought the rights to 43 Russian vodka brands from the original
investors who acquired the production and trademark rights during the
privatization of this and other resource-based sectors. They assumed a
$50 million debt and promptly invested another $20 million, and today
it is a well managed and successful business.
SPI Group has registered the trademarks for its vodka brands in more
than 150 countries. It has a 10 year distribution deal with Allied
Domecq in the United States and equally well established distributors
throughout Europe. Yet the Russian authorities, principally Rospatent
and the Ministry of Agriculture, have aggressively challenged the SPI
Groups rights inside Russia and elsewhere, and while court rulings have
been mixed in Russia they have been uniformly in favor, of the SPI
Group outside the country. Among the more prominent cases, ruling in
favor of the SPI Group, occurred in Germany, a Rotterdam decision
affecting the Benelux countries, France, and more recently in
Kazakhstan.
Mr. speaker, what I have recounted here is limited simply because
there is no time to go on further. But it underscores the disturbing
trends in Russia today.
I have always counted myself as a friend of Russia and have expressed
on many occasions my gratitude for the huge sacrifices made by the
people of the country to halt the march of Nazism in Europe. It greatly
saddens me, therefore, to witness the unraveling of democratic freedoms
in that country today. The Russia democracy Caucus, cochaired by
Christopher Cox and myself, is fully committed to helping guide Russia
through this period so that it can be counted among the truly great
democracies of the world.
Mr. Speaker, in conclusion to this discussion of concerns about the
rule of law and related problems, there is an urgent humanitarian issue
that I want to bring to your attention. That is the grave medical
condition of Mr. Platon Lebedev, a prominent businessman who, along
with his partner, Mr. Mikhail Khodorovosky, is in detention under
rather inhuman conditions in Moscow. The gravity of Mr. Lebedev's
deteriorating health and the absolute neglect of his condition by the
Russian authorities demands international outrage and it underscores
why I, along with many of our colleagues, have asked for this time on
the floor today.
Last week, a dozen of the leading human rights activists in Russia
representing major human rights groups issued a statement critical of
the treatment by Russian authorities of Platon Lebedev, the head of
Group Menatep, the parent company of YUKOS Oil.
Mr. Lebedev has been detained and jailed for nearly a year and has
not been allowed to have an independent medical examination or
treatment, despite the fact that credible Russian and foreign experts
have confirmed that he has severe and life-threatening ailments. In
fact Mr. Lebedev was originally taken into custody from a hospital bed
and in December 2003 had to have an ambulance take him from a court
hearing.
Russian human rights activists point out that the denial of
appropriate medical attention violates several articles of Russian law
that indicate that detainees may receive medical treatment at medical
establishments should this be required by the detainees condition. It
is clear that Russia is not only violating universal human rights and
the rule of law but their own laws.
Let me read a quote from the recent statement:
It is out conviction that in order to protect the sacred
human rights--the right to live and the right to a fair
trial--the court must change the custodial restraint for
Platon Lebedev to a format that does not involve prison
detention so that an independent medical examination and
full-fledged treatment can be provided immediately.
Mr. Speaker, the treatment of Platon Lebedev is clear evidence that
the Russian legal system is broken.
Mr. Speaker, I am submitting for the Record a series of articles and
extraneous material on the lack of the rule of law in Russia. These
articles are from the Washington Post, the Wall Street Journal, and the
International Herald Tribune.
[From the Washington Post, July 13, 2004]
Same Old Ruthless Russia
(By Michael R. Caputo)
American journalist Paul Klebnikov was shot to death
outside my office building on Friday. At least it used to be
my office. I worked with Klebnikov, Forbes magazine's
maverick correspondent, several times in the past 10 years,
sometimes in Moscow, sometimes in New York. Out paths crossed
often through one of Russia's wildest decades.
Eight years after we first met as he covered Boris
Yeltsin's 1996 presidential election, his murder brings
clarity: Nothing has changed. Brutal criminals still run amok
in Russia, operating with impunity and no fear of
prosecution.
Klebnikov had high hopes for Russia and was determined to
urge democracy along. He grew up in the United Sates, cradled
in the close-knot Russian American community; his Russian
skills were perfect and his devotion to the culture ran deep.
He blossomed in journalism just as the communist bloc
crumbled, and his unique understanding of ``the story'' in
the region propelled his career.
As we toured the Russian countryside eight years ago, he
talked to peasants waiting in line to vote and grilled me
with questions, too. Had I run across billionaire Boris
Berezovsky in my work with the Yeltsin administration? I
hadn't. Klebnikov had recently been scratching the surface of
Berezovsky's brazen get-rich-quick schemes. He was convinced
there was much more to the oligarch. He was in town to
investigate him as well as to cover the elections.
Berezovsky was one of several super-wealthy men who had
back doors to Yeltsin's Kremlin. His popularity waxed and
waned, but as he amassed wealth he gained unparalleled power.
Experienced expatriates in Russia shared an essential rule:
Don't cross these brutal billionaires, ever, or you're likely
to go home in a box.
Klebnikov knew this well. In Russia the mafia kills every
day. He knew Paul Tatum, the Oklahoma entrepreneur who ran
afoul of Moscow's mafia and was shot dead just a few hundred
yards from a hotel he had founded and had fought against
Mayor Yuri Luzhkov to control. After Tatum's murder. Hizzoner
promised swift justice. We're still waiting.
Tatum had led a loud life in Moscow. Klebnikov told me he
knew Tatum's battle with city ``authorities'' was never a
sound strategy for survival. The Tatum murder shook him, but
he was determined to go forward with what grew into a series
of articles exposing Russian corruption. After all, he was a
reporter, not a businessman.
As a journalist, Klebnikov was the real deal. He was based
in New York through the 1990s but had more contacts in Moscow
than most reporters on the ground full time.
During his frequent trips to the region he accomplished
more meetings before lunch than many of us could pull off in
a week.
Klebnikov listened as intently to the griping of a
pensioner as he did to the drone of politicians. He was quick
to the point, wasted no time, and drove to the center of his
story like a tank. Some thought he was bold, others thought
him brash, but everyone was reading.
``Godfather of the Kremlin,'' his December 1996 Forbes
cover story on Berezovsky, threw new light on the doings of
Russia's oligarchs. The story grew into Klebnikov's first
book,
[[Page H5914]]
with the same title, published in 2001. The exiled
industrialist took the magazine to court in London, and
eventually Forbes recanted accusations of violence. Those of
us who lived in Moscow during Berezovsky's heyday still
believe.
His follow-up stories on Russian industrialists were always
fair and thorough, but he didn't make many friends in the
country. Soon after Vladimir Putin stepped into the
presidency, Klebnikov and I met in New York. I told him he
needed to watch his back with so much change afoot. He
shrugged and said he was uniquely positioned to get to the
heart of corruption in Russia. ``Who else is going to do
it?'' he asked. I had no answer.
When Forbes announced Klebnikov would lead its new Russian
publications and relocate to Moscow, I immediately feared for
his safety. A few months later he was dead. I think about
him, sprawled bleeding on the sidewalk, coughing his final
words to a reporter colleague who found him dying.
Russia hasn't changed in the past decade and at this
trajectory it won't be truly civilized for generations. Those
who killed Klebnikov are killing today, plan to kill
tomorrow, and know they'll roam free to kill for years to
come. Hellbent on getting rich, they have no boundaries.
Raised in a communist world devoid of morals, they have no
soul.
There is no valid reason why a nation so tolerant--even
complicit--in organized crime should stand on par with world
leaders in groups such as the World Trade Organization. Putin
must stand as the guarantor of media freedom. And the Bush
administration must demand results in this murder
investigation and require the assassins and their bosses be
detected, arrested, tried and punished to the fullest extent
of the law.
Or will it let Paul Klebnikov, like Paul Tatum, be just
another footnote in Russia's disingenuous flirtation with
world-class rule of law? We're waiting.
____
[From the Wall Street Journal, July 12, 2004]
Lawless Russia
The murder of Forbes Russia Editor-in-Chief Paul Klebnikov
on a Moscow street Friday night was the most dramatic display
yet of the lawlessness that has Russia in its grip.
Prosecutor General Vladimir Ustinov says he has taken
``personal control'' of the case, a suggestion that the
Russian state is finally conscious of its bad image in the
world. But under its present leadership, the state is itself
an important part of the problem.
The 41-year-old Mr. Klebnikov was a brilliant journalist
and student of Russian history. He had written for our pages
several times, most recently last November when he argued
that the arrest of Russia's richest businessman, Mikhail
Khodokovsky, was a blow against the ``kleptocracy'' that had
enriched itself with state assets under Boris Yeltsin's
privatization program.
He knew a lot about the subject, having written a
controversial 2000 book, ``Godfather of the Kremlin,'' about
one of the leading Russian oligarchs, Boris Berezovsky, In
the May issue of Forbes Russia, Mr. Kelbnikov broke the news
that Moscow has more dollar billionaires than New York City.
The magazine, licensed by Forbes of the U.S. and published
by the German Axel Springer organization, published the names
of Russia's 100 richest business leaders, giving them the
sort of attention many don't welcome. Mr. Klebnikov was not
afraid to make powerful enemies in the interest of honest
journalism.
In a recent book, ``Darkness at Dawn,'' David Satter, a
former Journal Moscow correspondent, wrote that Russia has
been taken over by a criminal elite in which gangsters,
business and corrupt officials work together. The result is a
climate of fear and public cynicism. The collapse of
communism, with its history of state-sponsored violence, left
a moral vacuum that persists in a different form. Some of the
modern thugs got their training with the Soviet secret
police.
The Committee to Protect Journalists, which records attacks
on journalists throughout the world, cites Russia as a
special problem. Attempts to shut up the press have been made
by the Federal Security Bureau, formerly the KGB. Russian
President Vladimir Putin, who has systematically seized
control of Russian TV, retains some of the habits he
developed when he himself was a KGB functionary.
Yet Mr. Putin is welcomed to international parleys, such as
G-8 meetings, as if he were the leader of a normal country.
The murder of Paul Klebnikov demonstrates that Russia is not
a normal country. Perhaps it's time for the leaders of free
democracies to ask Mr. Putin whether the rule of law exists
in Russia.
____
[From the Washington Post, July 7, 2004]
Russian Government Begins Seizing Yukos Assets
(By Peter Baker and Susan B. Glasser)
Moscow, July 7.--The Russian government moved Wednesday to
begin seizing assets of Yukos Oil Co. in the culmination of a
politically charged tax battle that could either bankrupt or
break up the country's largest oil producer.
Court marshals accompanied by special police forces raided
the company's registry office in Moscow at the end of the
business day to search for ownership documents for various
Yukos properties. The marshals were enforcing last week's
court judgment giving Yukos a Wednesday deadline to pay a
$3.4 billion back tax bill.
Yukos said this week that it had no more than $1.4 billion
in cash and could not pay the full charge in time without an
installment plan. Yukos reportedly offered to turn over some
or all of the controlling stake owned by the company's
imprisoned chief shareholder, Mikhail Khodorkovsky, and his
partners, but all attempts at negotiations appeared to have
failed so far.
``The debtor was given a five-day deadline for voluntary
execution, after which the court bailiffs service of the city
of Moscow began to enforce the court decision,'' the Russian
Justice Ministry said in a statement carried by the Interfax
news service after the raid began.
The ministry statement immediately threatened a new
criminal investigation and obstruction charges against
officials at Yukos' registry for allegedly trying to avoid
cooperating with the marshals who arrived at their building.
Authorities can seize the company's assets and either keep
them to satisfy the tax debt or sell them off. But it is
possible they were not able to find the right documents at
the office of the registry, a firm called Reyester-M. Yukos
said registry documents of its subsidiaries in Siberia and
along the Volga River were transferred last week after the
court ruling, apparently to those regions.
The confrontation stems from a year-long power struggle
between Khodorkovsky and President Vladimir Putin.
Khodorkovsky is a brash former communist youth league leader
who bought Yukos at bargain-basement price during the
privatization auctions of state property during the 1990s. He
built the company into a major international player and
himself into Russia's richest man.
But he angered some in the Kremlin with his outspoken
political activities and soon found himself and his company
under legal threat. Khodorkovsky was arrested at gunpoint
last October and remains in prison awaiting trial on fraud
and tax evasion charges, while the federal tax service has
hit Yukos with two tax bills from 2000 and 2001 adding up to
nearly $7 billion. The country's chief prosecutor said
Tuesday that more bills from 2002 and 2003 were still to
come.
The situation endangers a company that pumps more oil than
Libya and accounts for one-fifth of foreign petroleum sales
by Russia, the world's second-largest oil exporter.
The latest figures published by brokerage houses Monday
showed that Yukos produces 1.7 million barrels a day,
surpassing its own records and every other Russian oil
company.
Bruce Misamore, the company's chief financial officer, said
Tuesday that production had not been disrupted yet and that
the company has prepaid transport and other fees to keep
shipping oil until at least the third week in July. The bank
accounts frozen so far have just $20 million in them, he
said. Misamore met Tuesday with representatives of Western
banks that declared Yukos in default on a $1 billion loan and
they have not demanded payment yet.
Misamore said the government abruptly halted secret
settlement discussions last week and has not been willing to
compromise. ``We're just trying to make our best efforts to
reach a resolution to the situation,'' Misamore told a
conference call with investors. ``But first they've got to
talk to us.''
The Financial Times reported that Yukos sent a fresh
proposal to the government Tuesday, offering some or all of
Khodorkovsky's shares in exchange for a three-year payment
plan. Prime Minister Mikhail Fradkov's office denied
receiving any written proposal, and a Yukos spokesman said it
sent no letter, however, he would not say whether the idea
was floated in some other form.
Prosecutor General Vladimir Ustinov, who imprisoned
Khodorkovsky, expressed little sympathy for what he
sarcastically called ``poor Yukos'' and doused hopes for a
deal. ``This is like a snowball,'' he said on Echo Moskvy
radio Tuesday. ``This case has a beginning, but it's very
difficult to see its end.''
He asserted that the company should have no trouble paying
the tax bills even though the government obtained a court
order freezing its assets. ``The profits that Yukos made
could easily pay the company's debts,'' he said.
The case drew international criticism this week for the
politicization of Russian business and courts. ``The so-
called `Yukos case' reflects these problems,'' the Paris-
based Organization for Economic Cooperation and Development,
said in its annual report on Russia, released Wednesday.
``Whether the charges against the company and its core
shareholders are true or not, it is clearly a case of highly
selective law enforcement.''
A senior U.S. diplomat said Tuesday that the case is
``raising fundamental questions in the minds of many
investors.'' There are ``increasing signs that destruction of
the company is the intended endpoint,'' he said. ``At a
minimum,'' he added, it's ``an extraordinary game of
brinkmanship'' akin to a game of chicken with two cars racing
toward a cliff and ``they're getting very close.''
In his analysis, the diplomat said, it appears likely that
a ``sizable percentage of the company's assets [will] move
into the hands of the state.''
[[Page H5915]]
____
[From the Herald Tribune, June 15, 2004]
Russia on Trial
The Russian government's fraud and tax evasion case against
two billionaires, Mikhail Khodorkovsky and Platon Lebedev,
opens Wednesday in a Moscow court. The trial has already
attracted enormous attention; the extraordinary fortunes of
the two defendants, and the parallel struggle for survival of
the oil company that made them rich, Yukos, has turned this
case into a microcosm of the struggles that are shaping the
new Russia. Much depends on the outcome, not least how
investors will look at Russia in the future. In effect, it is
Russia and the rule of law that go on trial.
Khodorkovsky, to be sure, is not the model, philanthropic
businessman his supporters make of him. Like all the other
so-called oligarchs, he made his billions in the dirty
plunder of Russia's riches in the chaotic aftermath of the
Soviet Union's disintegration. But neither is President
Vladimir Putin the champion of civic virtue he would have us
see. If tax evasion were the real issue, every oligarch, and
most every Russian, would be in the dock. And even if Putin
needed to pillory a couple of oligarchs to set an example,
there are far more unsavory examples to go after.
Khodorkovsky at least turned Yukos into a globally admired,
relatively transparent business.
To all appearances, Putin is leaning on the judiciary to
settle scores with tycoons who dared show an interest in
politics. In this regard, Khodorkovsky, who has contributed
generously to reform-minded parties, is only Putin's latest
target, following in the footsteps of Boris Berezovsky and
Vladimir Gusinsky, two Russian tycoons now residing in exile.
Equally ominous, in pushing Yukos to the brink in a
parallel tax-avoidance case, Moscow has raised fears that it
is trying to bring Russia's natural resources back under
direct state control. Last Friday, the government was able to
remove a judge from the case who seemed open-minded in
considering an appeal by Yukos.
We do not argue that all oligarchs should go scot-free. No
state can tolerate enterprises operating above the law. But
at play here is a different danger, of a state capriciously
and selectively applying laws to suit its political
interests.
Russia's judiciary faces an unenviable challenge in
tempering excess prosecutorial zeal, without endorsing
blanket immunity for past misdeeds. In the end, the critical
question is not whether the court finds the two men guilty or
not, but whether it succeeds in demonstrating that it has
delivered justice. Russia's courts have shown themselves
sadly subservient to the government so far. Most Russians
expect that they will continue down this familiar road,
rubber-stamping the government's charges until Khodorkovsky
and Lebedev are found guilty.
For the sake of Russian democracy, the judiciary needs to
declare its independence. Courts in such high-profile cases
can do so in the way they handle the objections and arguments
of the defense, in the way they rule on the crude methods of
the investigators and in the way they separate the political
demands of the Kremlin from the legal facts of the case.
Given Russia's past, few things could be more corrosive to
democracy than a show trial.
The Russian government's fraud and tax evasion case against
two billionaires, Mikhail Khodorkovsky and Platon Lebedev,
opens Wednesday in a Moscow court. The trail has already
attracted enormous attention; the extraordinary fortunes of
the two defendants, and the parallel struggle for survival of
the oil company that made them rich, Yukos, has turned this
case into a microcosm of the struggles that are shaping the
new Russia. Much depends on the outcome, not least how
investors will look at Russia in the future. In effect, it is
Russia and the rule of law that go on trial.
Khodorkovsky, to be sure, is not the model, philanthropic
businessman his supporters make of him. Like all the other
so-called oligarchs, he made his billions in the dirty
plunder of Russia's riches in the chaotic aftermath of the
Soviet Union's disintegration. But neither is President
Vladimir Putin the champion of civic virtue he would have us
see. If tax evasion were the real issue, every oligarch, and
most every Russian, would be in the dock. An even if Putin
needed to pillory a couple of oligarchs to set an example,
there are far more unsavory examples to go after.
Khodorkovsky at least turned Yukos into a globally admired,
relatively transparent business.
To all appearances, Putin is leaning on the judiciary to
settle scores with tycoons who dared show an interest in
politics. In this regard, Khodorkovsky, who has contributed
generously to reform-minded parties, is only Putin's latest
target, following in the footsteps of Boris Berezovsky and
Vladimir Gusinsky, two Russian tycoons now residing in exile.
Equally ominous, in pushing Yukos to the brink in a
parallel tax-avoidance case, Moscow has raised fears that it
is trying to bring Russia's natural resources back under
direct state control. Last Friday, the government was able to
remove a judge from the case who seemed open-minded in
considering an appeal by Yukos.
We do not argue that all oligarchs should go scot-free. No
state can tolerate enterprises operating above the law. But
at play here is a different danger, of a state capriciously
and selectively applying laws to suit its political
interests.
Russia's judiciary faces an unenviable challenge in
tempering excess prosecutorial zeal, without endorsing
blanket immunity for past misdeeds. In the end, the critical
question is not whether the court finds the two men guilty or
not, but whether it succeeds in demonstrating that it has
delivered justice. Russia's courts have shown themselves
sadly subservient to the government so far. Most Russians
expect that they will continue down this familiar road,
rubber-stamping the government's charges until Khodorkovsky
and Lebedev are found guilty.
For the sake of Russian democracy, the judiciary needs to
declare its independence. Courts in such high-profile cases
can do so in the way they handle the objections and arguments
of the defense, in the way they rule on the crude methods of
the investigators and in the way they separate the political
demands of the Kremlin from the legal facts of the case.
Given Russia's past, few things could be more corrosive to
democracy than a show trial. The Russian government's fraud
and tax evasion case against two billionaires, Mikhail
Khodorkovsky and Platon Lebedev, opens Wednesday in a Moscow
court. The trial has already attracted enormous attention;
the extraordinary fortunes of the two defendants, and the
parallel struggle for survival of the oil company that made
them rich, Yukos, has turned this case into a microcosm of
the struggles that are shaping the new Russia. Much depends
on the outcome, not least how investors will look at Russia
in the future. In effect, it is Russia and the rule of law
that go on trial.
Khodorkovsky, to be sure, is not the model, philanthropic
businessman his supporters make of him. Like all the other
so-called oligarchs, he made his billions in the dirty
plunder of Russia's riches in the chaotic aftermath of the
Soviet Union's disintegration. But neither is President
Vladimir Putin the champion of civic virtue he would have
us see. If tax evasion were the real issue, every
oligarch, and most every Russian, would be in the dock.
And even if Putin needed to pillory a couple of oligarchs
to set an example, there are far more unsavory examples to
go after. Khordorkovsky at least turned Yukos into a
globally admired, relatively transparent business.
To all appearances, Putin is leaning on the judiciary to
settle scores with tycoons who dared show an interest in
politics. In this regard, Khodorkovsky, who has contributed
generously to reform-minded parties, is only Putin's latest
target, following in the footsteps of Boris Berezovsky and
Vladimir Gusinsky, two Russian tycoons now residing in exile.
Equally ominous, in pushing Yukos to the brink in a
parallel tax-avoidance case, Moscow has raised fears that it
is trying to bring Russia's natural resources back under
direct state control. Last Friday, the government was able to
remove a judge from the case who seemed open-minded in
considering an appeal by Yukos.
We do not argue that all oligarchs should go scot-free. No
state can tolerate enterprises operating above the law. But
at play here is a different danger, of a state capriciously
and selectively applying laws to suit its political
interests.
Mr. CHANDLER. Mr. Speaker, last March, I had the opportunity to meet
with human rights groups, legal experts, media representatives, and
others concerning the situation on the ground in Russia. I learned
firsthand that Russia is enduring a difficult transition to what
hopefully will become a modern, fully democratic nation. While there
have been many positive developments in Russian society over the past
decade, particularly with regard to the freedoms that average Russian
citizens now enjoy, there are disturbing signs that Russia under
President Vladimir Putin may be slipping back to its old authoritarian
ways.
My primary concern is with the rule of law. Prior to coming to
Congress, I served for eight years as the Attorney General of Kentucky.
I understand that there are inherent principles in any constitutional
democracy, chief among them the rule of law. Recent events have called
into question Russia's unequivocal commitment to a transparent judicial
system, defendants' rights, and the presumption of innocence within the
Russian legal system.
As we speak, there is a major trial taking place in Moscow. It
concerns the controversial arrest and detention of prominent Russian
businessman Mikhail Khodorkovsky. The case of Mr. Khodorkovsky has
raised concerns from legal experts, human rights groups, and the media
that his trial may have more to do with his opposition to President
Putin's policies rather than the crimes for which he is accused.
The most disturbing element of Mr. Khodorkovsky's trial is that it
may signify a reassertion of state influence over Russia's private
sector economy. Such a move by the Russian government, I fear, would
raise questions about the state of property rights in Russia,
discourage foreign investment, and slow progress towards Russia's full
integration into the global economy.
Mr. Speaker, the U.S. must continue to deliver the message that
adherence to the rule of law and support for political and economic
freedom is essential to developing successful free-market economies and
prosperity. As I mentioned earlier, Russia is truly at a crossroads in
its history. I urge my colleagues to
[[Page H5916]]
work with me to convince Russia to choose the path of transparency,
adherence to the rule of law, and a commitment to the security of
private investment.
Mr. SMITH of New Jersey. Mr. Speaker, I thank the distinguished
gentleman from California for requesting this time to discuss rule of
law in Russia. Not only is this an issue of great importance to the
citizens of Russia but U.S.-Russia relations are affected by the regard
given to this critical component of democratic and civil society.
I have the privilege of serving as chairman of the Commission on
Security and Cooperation in Europe, commonly known as the ``Helsinki
Commission,'' an independent agency of the United States Government
charged with monitoring and encouraging compliance with the Helsinki
Final Act of 1975 and subsequent documents of the Organization on
Security and Cooperation in Europe. The fate of rule of law in Russia,
an OSCE member, will determine to a great degree the future of the
Russian state and its role in the world community.
With the collapse of the Soviet Union in 1991, Russia moved from an
authoritarian police state under communist rule to a sovereign nation
with democratically elected leadership and many of the civil liberties
that we in this country take for granted. We were encouraged by those
positive and historic steps. On paper at least, there have been
significant reforms designed to bring the Russian political and legal
system into conformity with the accepted norms and practices of the
United Nations, the OSCE, the Council of Europe, etc.
In recent years, though, the Putin government has undermined these
reforms. In its Nations in Transit 2004 report, Freedom House sums it
up: ``Russia is backsliding in key areas of democratic governance and
rule of law.''
Two months ago, on May 20th, the Hensinki Commission held hearings on
the issue of human rights in President Putin's Russia. One of our
distinguished witnesses, Mr. Gary Kasparov, chairman of the Free Choice
2008 Committee in Russia and world-famous chess champion, spoke with
passion about restrictions on freedom of speech in the electronic
media, a process that we see continuing today.
In the area of rule of law per se, we are also seeing some disturbing
moves against individuals who have apparently offended the powers-that-
be in the Kremlin or the intelligence apparat.
The first case is that of industrialist Mikhail Khodorkovsky, former
head of the Yukos Oil Company. Mr. Khodorkovsky's arrest on charges of
fraud and tax evasion has received a lot of publicity. I don't claim to
know whether Khodorkovsky is guilty or innocent, but this appears to be
very much a case of selective justice. His real crime seems to have
been, as David Satter wrote in the Wall Street Journal last week, that
he ``had demonstrated independence, and, by financing opposition
political parties, had contributed to political pluralism.''
Will Khodorkovsky get a fair trial? Let me jut quote from a report by
the Organisation for Economic Cooperation and Development: ``The courts
are often subservient to the executive, while the security services,
the prosecutors and the police remain highly politicized . . . the so-
called `Yukos case' reflects these problems.'' As if to confirm the
OECD assessment, officials at the Matrosskaya Tishina prison
confiscated documents from one of his lawyers after she met with her
client.
Another case is that of Dr. Igor Sutyagin, a Russian scientist who
was sentenced to 15 years of labor camp for espionage, i.e., passing
military secrets to British intelligence agents. Sutyagin never denied
that he had worked with foreign scholars or that he shared previously
published material with them. Indeed, Federal Security Service (FSB)
agents never found evidence of any classified documents in his
possession, and he had neither security clearance nor access to
classified material. However, the FSB and the court came to the
conclusion that Sutyagin's research was so accurate that he must have
used classified documents to draw his conclusions. Think of it: one may
be imprisoned for espionage for being too competent an analyst in
military-security issues.
Deputy Assistant Secretary Steven Pifer of the State Department has
testified before the Commission that ``most observers agree that
[Sutyagin] had no access to classified information and consider the
severe sentence an effort to discourage information-sharing by Russians
with professional colleagues from other countries.''
The final case I would mention in this brief presentation is that of
Mikhail Trepashkin, an attorney and former FSB officer who was arrested
on October 24, 2003, a week before he was scheduled to represent
relatives of a victim who perished in an apartment explosion at a trial
in Moscow. At the trial, Trepashkin was expected to present the
findings of his investigation which implicated the FSB in the 1999
apartment bombing in Moscow and the aborted attempted bombing of
Ryazan.
A week before the trial opened, the police just happened to pull
Trepashkin over on the highway, and just happened to find a revolver in
his car. Trepashkin claims the gun was planted, a venerable KGB tactic.
Three weeks later, he was put on trial and sentenced to four years
labor camp for allegedly divulging state secrets to a foreign
journalist.
I don't know all the details of this case, but it has the whiff of
the proverbial mackeral by moonlight. It is very possible that
Trepashkin was arrested in order to prevent him from releasing
potentially damaging information regarding the activities of the FSB.
These are just few examples of the challenges to rule of law and
human rights that Russia is now experiencing under President Putin. Let
us hope that he will soon realize that the way to a genuinely stable
and prosperous society is paved with rule off law and civil society,
not the high price of crude oil.
Mr. DOGGETT. Mr. Speaker, the Khodorkovsky/Lebedev trial resumed on
Monday last week before a three judge panel in Moscow. Since the last
hearing three weeks ago, the physical appearance of the court was much
improved: the courtroom had been air conditioned and the halls outside
had been refurbished and painted.
Appearances are important, but substance is critical.
Respect for the rule of law in Russia is essential for the same
reason it is essential in every democratic society--citizens, the
press, and the business community must have confidence that the legal
system affords them protection of their rights and that everyone is
treated equally under that law.
In Russia there is a pattern of troubling signs that the rule of law
and a free press are threatened. I know a number of my House colleagues
share these concerns. Members of the Congressional Human Rights Caucus,
the Helsinki Commission, and the Russia Democracy Caucus are just some
of those who have expressed their misgivings.
One high profile example of concern is the seizure of the assets of
Russia's largest oil company, YUKOS, and the trial of two of YUKOS's
largest stockholders, Mikhail Khodorkovsky and Platon Lebedev.
Many Russian and Western observers view the Russian Government
seizure of the assets of YUKOS as a result of political motivations.
Here are just a few recent statements on these events:
On July 7, the Washington Post quoted a senior level U.S. diplomat as
saying ``there are increasing signs that destruction of the company is
the intended endpoint,'' and that it appears likely that a ``sizeable
percentage of the company's assets will move into the hands of the
state.''
On July 7, the Organization for Economic Cooperation and Development
(OECD) called the YUKOS affair ``a case of highly selective law
enforcement'' and a case that reveals how ``the courts are often
subservient to the executive, while the security services, prosecutors
and police remain highly politicized.''
What is now occurring in Russia has significant human, political, and
economic consequences. Justice, freedom, and human rights are all
directly tied to the rule of law, open and accountable government, and
a free press, which are increasingly absent in Russia.
There are several disturbing trends that demonstrate problems with
the rule of law in Russia.
The general prosecutor and courts cannot be merely an extension of
the political will and agenda of the Kremlin. In his visit to Moscow
earlier this year, Secretary of State Colin Powell was unambiguous in
his concern over the rule of law in Russia, saying ``Russia's
democratic system seems not yet to have found the essential balance
among the executive, legislative and judicial branches of government.
Political power is not yet fully tethered to the law.''
Furthermore, the selective and arbitrary use of judiciary power by
the Kremlin undermines the rule of law.
Mikhail Khodorkovsky, as many observers have noted, shows how a
businessman has been singled out for prosecution because his political
activities are not appreciated.
Journalist German Galkin was thrown into jail and prosecuted for
revealing the corrupt behavior of local government officials. His
appeal was denied and he was only freed under the weight of
international pressure.
Aleksandr Nikitin is a former submarine officer and nuclear safety
inspector who was pursued relentlessly through the courts by the
Russian security service in retaliation for his outspokenness about
radioactive contamination by the Russian military. These rulings bear
out what prominent legal experts have been saying about the flawed
legal system in Russia.
More recent events in Russia threaten a free press, an essential
element of any strong democracy.
We do not know who murdered Paul Klebnikov, the editor in chief of
Forbes Russia, who was writing the truth about Russia's dark
[[Page H5917]]
underside, but the government must insist on a thorough, open, and full
investigation of his killers. As one observer noted in the New York
Times, ``Twenty journalists have now been assassinated in Russia for
their work; 14 since Mr. Putin became president. Not one of the murders
has been solved.''
A crackdown of media freedom has resulted in all major TV networks
under state control. The last independent TV station disappeared last
summer. TV is the number one way Russians get their news.
If Russia continues down this path, she will never fully become the
peaceful and democratic nation that the Russian people and the
international community desire. It is essential that Russia undertake a
sincere effort to reform its judicial system and establish the highest
degree of credibility for the rule of law and free press, which are
essential for a prosperous and peaceful Russia.
Mr. WOLF. Mr. Speaker, as co-chair of the Congressional Human Rights
Caucus I continue to be concerned that Russia has significant problems
in honoring the universal human rights standards that are widely
accepted in many parts of the world. Russia aspires to be a leading
force on the world economic and political scene, but it is failing to
respect some of the fundamental and universal principles of the rule of
law, human rights and freedom of speech and expression.
I am concerned about freedom of expression in Russia, given the fact
that the Russian government's commitment to independent and free media,
freedom of assembly, and religious freedom appear to be wavering. In
fact, Russia's last major non-state television station was eliminated
in 2003 as a result of government pressure. This is a disturbing trend
which is in stark contrast to the value placed on freedom of speech by
other democracies around the world.
Earlier this year the State Department released its annual Country
Reports on Human Rights Practices, which included documentation of many
abuses. Serious violations of basic human rights in Chechnya were
highlighted including unlawful killings, abuse of civilians and Chechen
fighters and politically motivated disappearances. The report also
mentioned that the December 7, 2003, Duma elections failed to meet
international standards. Factors undermining party competition included
criminal charges and threats of arrest or actual arrest against major
financial supporters of opposition parties and the seizure of party
materials from opposition parties.
I remain concerned that Russia is named in the State Department's
annual report on trafficking in persons as a tier two country and this
year was placed on the tier two ``special watch list.'' Trafficking in
persons is an evil that must be directly confronted and ended.
Countries that fall under the special watch list have high numbers of
trafficking victims and fail to provide evidence of increasing efforts
to combat severe forms of trafficking from the previous year. Russia is
named as the largest source country in Europe for trafficking and is a
significantly large transit country. It is my hope that the Russian
government will acknowledge the extent of its trafficking problem and
play a more active role in ending trafficking in the region.
I also am concerned that Russia still does not fully accept or
encourage religious freedom. The 2004 annual report on religious
freedom by the United States Commission on International Religious
Freedom states about Russia:
``A federal law on religious organizations enacted in 1997 contains
provisions that have prevented some religious groups from registering
and thus practicing freely. Regional governments have often passed
ordinances that result in discrimination against minority religious
groups, and acts of violence against members of religious minorities
are widespread.
``In the past few years, however, trends have emerged that have
raised serious questions about Russia's commitment to democratic reform
and protection of religious freedom. Russian authorities have denied
registration efforts of certain religious communities, based on the
allegedly insufficient time they have existed, despite a February 2002
Russian Constitutional Court decision that found that an active
religious organization registered before the 1997 law could not be
deprived of its legal status for failing to re-register. The government
has meddled in the internal affairs of religious communities, including
the Jewish and orthodox Old Believer communities.''
The U.S. Congress must speak out about human rights abuses around the
world. It is my hope that Russia will begin to encourage religious
freedom, crack down on trafficking in persons and comply with
international standards on human rights.
I would like to submit for the Record an article from The Wall Street
Journal, highlighting the concern for the lack of rule of law in
Russia.
[From the Wall Street Journal, July 12, 2004]
Lawless Russia
The murder of Forbes Russian Editor-in-Chief Paul Klebnikov
on a Moscow street Friday night was the most dramatic display
yet of the lawlessness that has Russia in its grip.
Prosecutor General Vladimir Ustinov says he has taken
``personal control'' of the case, a suggestion that the
Russian state is finally conscious of its bad image in the
world. But under its present leadership, the state is itself
an important part of the problem.
The 41-year-old Mr. Klebnikov was a brilliant journalist
and student of Russian history. He had written for our pages
several times, most recently last November when he argued
that the arrest of Russia's richest businessman, Mikhail
Khodorkovsky, was a blow against the ``kleptocracy'' that had
enriched itself with state assets under Boris Yeltsin's
privatization program.
He knew a lot about the subject, having written a
controversial 2000 book, ``Godfather of the Kremlin,'' about
one of the leading Russian oligarchs, Boris Berezovsky. In
the May issue of Forbes Russia, Mr. Klebnikov broke the news
that Moscow has more dollar billionaires than New York City.
The magazine, licensed by Forbes of the U.S. and published
by the German Axel Springer organization, published the names
of Russia's 100 richest business leaders, giving them the
sort of attention many don't welcome. Mr. Klebnikov was not
afraid to make powerful enemies in the interest of honest
journalism.
In a recent book, ``Darkness at Dawn,'' David Satter, a
former Journal Moscow correspondent, wrote that Russia has
been taken over by a criminal elite in which gangsters,
businesses and corrupt officials work together. The result is
a climate of fear and public cynicism. The collapse of
communism, with its history of state-sponsored violence, left
a moral vacuum that persists in a different form. Some of the
modern thugs got their training with the Soviet secret
police.
The Committee to Protect Journalists, which records attacks
on journalists throughout the world, cites Russia as a
special problem. Attempts to shut up the press have been made
by the Federal Security Bureau, formerly the KGB. Russian
President Vladimir Putin, who has systematically seized
control of Russian TV, retains some of the habits he
developed when he himself was a KGB functionary.
Yet Mr. Putin is welcomed to international parleys, such as
G-8 meetings, as if he were the leader of a normal country.
The murder of Paul Klebnikov demonstrates that Russia is not
a normal country. Perhaps it's time for the leaders of free
democracies to ask Mr. Putin whether the rule of law exists
in Russia.
Mr. INSLEE. Mr. Speaker, I would like to share with my colleagues
information that raises serious concerns about the development of a
free-market system in Russia. Many of my constituents who develop
products such as software and biological drugs rely on the enforcement
of strong intellectual property rights laws and copyright protection,
and therefore have an interest in ensuring that countries such as
Russia maintain fair and enforceable laws in this regard. For this
reason, there is cause for concern regarding the Russian government
placing significant pressure on SPI, the company that produces the
Stolichnaya beverage, in an effort to reclaim the intellectual property
rights of its brands. Stolichnaya, nicknamed Stoli to many Americans,
is one of many brands of production the Russian government is
attempting to reclaim from SPI in the wake of the privatization of
other beverage companies in the 1990's.
I am concerned about the implications of such actions on
international global property rights, Russia's potential WTO and G-8
membership, and the direction of Russian Democracy and rule of law.
This case is emblematic of a general situation and is part of a pattern
of disrespect for the rule of law that has unnerved foreign investors
who are concerned about long-term economic, legal and political
stability of Russia. If we are to hope to crack down on the copyright
infringements on software produced in the Puget Sound, I believe that
proper enforcement of this issue is an important step.
I would like to offer my colleagues some background on SPI and its
issues.
SPI is a Dutch-based company that owns the trademark rights to a
large number of beverage brands including Russia's most famous brands,
Stolichnaya and Moscovskaya as well as Russkaya and Limonnaya. It is my
understanding that the SPI Group acquired the rights for these
trademarks by means of buying out the minority shareholders of a
Russian company, which owned the above-mentioned trademarks worldwide
and was privatized between 1990-1992. It also assumed a $50 million
debt that was inherited by the previous owner from its state-owned
predecessor. SPI has since invested another $100 million to develop
into a successful international competitor.
The SPI Group has registered the trademarks for the 43 brands in more
than 150 countries. It has a 10-year distribution deal with Allied
Domecq in the U.S. as well as a distribution deal with First Drinks in
the UK
[[Page H5918]]
and Bacardi in Greece. Last year, SPI recorded sales of $680 million.
This success, however, has merely brought the company to the forefront
of the debate over who owns these trademarks.
It is also my understanding that from 2000 onwards, certain entities
within the Russian State have started various actions against SPI to
obtain its trademark registrations.
In late 2001, in a case brought by the Russian State Trademark
Organization, the Russian courts ruled that the original privatization
of the company that owned the brand before SPI was invalid (on a
technicality) and returned the rights for 17 brands controlled (now) by
the SPI Group to the Russian Ministry of Agriculture.
Since then, SPI, while producing the product in Russia, has been
forced to move its bottling plant to Riga in Latvia, after the Russian
authorities seized and blocked its exports from the Russian port of
Kaliningrad. Various heated legal battles have been fought in a number
of Russian and foreign courts as SPI continues to sell Stolichnaya
internationally. In Russia, a company resurrected by the Government
markets its own Stolichnaya brand after confiscating back the trademark
there.
On 4 March 2002, the Leninsk-Kuznetskiy City Court seemingly resolved
the dispute by ruling that the Ministry of Agriculture had illegally
registered 17 trademarks belonging to SPI, including the Stolichnaya
trademark, and ordered that SPI be reinstated as the registered
trademark owner.
However, Russian authorities ignored the Leninsk-Kuznetskiy City
Court's ruling and employed intimidation and police-state tactics to
grab the company's assets and trademark rights for its own purposes.
Some examples of these tactics include:
The Government's Federal Security Service, in a letter dated March 5,
2002, ordering Kaliningrad Customs to prohibit bulk export of
Stolichnaya produced by SPI in Kaliningrad.
The confiscation of more than 150,000 cases of SPI products seized in
Kaliningrad along with related packaging material.
The filing of criminal charges levied against Audrey Skurikhin,
president of SPI Spirits-Russia, and its Kaliningrad facility.
As a result of these events, it is my understanding that the Ministry
of Agriculture currently produces these products in Russia with
virtually identical labeling and uses libel and intimidation to force
distributors and customers to stop doing business with SPI. In
addition, the Russian Patent Agency gave the rights for the re-
nationalized trademarks to the newly incorporated company of the
Russian Ministry for Agriculture.
International courts have ruled in favor of SPI. Court rulings in
October 2002 in Hamburg, Germany and May 2003 in Rotterdam,
Netherlands, rejected the lawsuits brought against SPI, substantiating
SPI's claims.
Mr. Speaker, in conclusion, the SPI case is about something larger
and more fundamental for Russia and its relationship with the United
States and other nations of the world--adherence to the rule of law and
political, social and economic freedom. SPI is an example of the need
to uphold the rule of law and ensure a better business environment for
Russian business. A stable and democratic Russia, based on a rule of
law, is critical to U.S. interests; not only for U.S. firms interested
in doing business there, but also for the overall, long-term U.S.-
Russia relationship. Many of my constituents depend on adherence to the
rule of law and copyright protections to ensure that their products,
particularly software and biotechnology, are not stolen. We should not
let this SPI case set precedence or be a harbinger for software and
other U.S. industries.
____________________