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“LACK OF RULE OF LAW IN RUSSIA” mentioning the U.S. Dept of State was published in the House of Representatives section on pages H5912-H5918 on July 19, 2004.
The publication is reproduced in full below:
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 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.
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, 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.
____
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.
____
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.''
____
[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 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 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.
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 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.
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