Saturday, October 19, 2013

Russia: In Wake Of Nationalist Rioting In Moscow, A Hostile Business Takeover?

RFE/RL Copyright (c) 2013. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

In Wake Of Nationalist Rioting In Moscow, A Hostile Business Takeover?

By Natalya Dzhanpoladova and Tom Balmforth

After nationalists searching for illegal migrants stormed and ransacked a vegetable market and warehouse complex in southern Moscow last weekend, one might have expected the authorities to crack down on the rioters.

Instead, Russian law-enforcement officials seem far more interested in the business activities related to the warehouse.

First, police arrested 1,200 migrants at the Pokrovsky vegetable storage depot in Moscow's Biryulyovo district, where the unrest took place. Next, health inspector Gennady Onishchenko suggested -- and a court ordered -- that the warehouse be closed for sanitary reasons. Then, Moscow Mayor Sergei Sobyanin said on October 16 that it would probably be closed for good -- and might be better replaced by a health club. Other media reported on plans to build a shopping mall on the site.

By the time police arrested Magomed Churilov, who runs the holding company that controls the warehouse, for facilitating the employment of illegal immigrants, the business was all but dead. Police are searching for Aliskhab Gadzhiyev, the company's general director.

Churilov’s lawyer, Asma Shamilova, says this is no coincidence. She alleges that the authorities are capitalizing on antimigrant sentiment to get control of the warehouse and the large patch of land on which it sits.

“In my opinion, this is an economic reallocation of the market," Shamilova says. "The authorities are trying to use administrative and financial levers to clear out the market and bring in new owners. It is a hostile takeover at a political level, I believe."

This version of events has gained a lot of traction in the Russian press in recent days due to the Pokrovsky warehouse's rapid demise in a country where it can often be dangerous to do business.

The practice of state-backed hostile takeovers -- or "reiderstvo" -- in which a politically connected company or group effectively seizes assets by force and with the help of law-enforcement bodies, is common in Russia.

The Pokrovsky warehouse, which was opened during the 1980 Summer Olympics in Moscow and once served as a market for Soviet bureaucrats, is one of the largest in Moscow. It supplies 70 percent of the capital’s tomatoes, pickles, and dill, has a turnover of more than $30 million a year, and is also spread over a huge swath of land.

According to the news agency Rosbalt, it has long been fought over by gangsters. The agency also cited an unidentified law-enforcement official as saying, "There is no doubt that the unrest" that led to the warehouse's troubles "was orchestrated."

The current owners -- Gadzhiyev and his brother Igor Isaev -- acquired the warehouse in 2007, when Moscow's mayor was Yuri Luzhkov. In 2010, Luzhkov was sacked and replaced by Sobyanin, meaning the warehouse's current owners lost their political patron.