The Navalny Organized Crime Group

Another criminal case against the founder of RosPil

It took Russia’s Investigative Committee less than three weeks to put together yet another criminal case against the founder of RosPil

On December 20, opposition Coordination Council member and RosPil head Alexei Navalny, along with his younger brother Oleg Navalny (the two are seven years apart), deputy director of the express delivery company EMS Russian Post, a subsidiary of Russian Post, were charged under Part 4 of Article 159 of the Russian Criminal Code (“fraud”) and Part 2 of Article 174.1 (“laundering money or other property acquired by a person as a result of committing a crime”). This is already the second case, after Kirovles, in which Alexei Navalny is a defendant. But this time the Investigative Committee has gone after not only the opposition figure, but his family as well.

Business

“Pursuant to Clause 9.3 of Contract No. 1 dated August 5, 2008, for cargo transportation and freight-forwarding services, LLC Yves Rocher Vostok hereby notifies you of the unilateral termination of the contract” — this was the message, signed by Yves Rocher Vostok CEO Bruno Leproux, that the freight company Glavnoye Podpisnoye Agentstvo received on December 3. The company is part of the Navalny family business, which also includes the Kobyakov wickerwork factory in Golitsyno, outside Moscow, where some of the space left vacant after the financial crisis was turned into a 50-square-meter shop.

Glavpodpiska was conceived in 2007. “The original idea was to create a website through which anyone could subscribe to newspapers and magazines. That’s where the company’s name came from,” says Alexei Navalny. He did not dare register the company in his own name — he believed that any business associated with him would be prevented from operating. So an offshore company, Aloptart Management Limited, was registered in Cyprus and became the 99% owner of the new enterprise*.

*One more formal Russian founder was needed, so Navalny invited an accountant he knew, Leonid Zaprudsky, who owns 1% of Glavpodpiska.

In 2008, the Navalnys — more precisely, the younger brother, Oleg — decided to set up a business that would outsource freight transportation, and they used Glavpodpiska for that purpose, since, as he put it, the company was “just lying idle.” They rented a warehouse at the Kobyakov factory and set up a freight dispatch office there.

Yves Rocher Vostok — the Russian branch of the French cosmetics giant Yves Rocher — began working with Glavpodpiska in the summer of 2008. According to Oleg Navalny, Yves Rocher is Russian Post’s third-largest client by volume: “They send every tenth parcel in the country.” The company has a base in Yaroslavl, and most of its products are shipped through the Yaroslavl postal sorting center. “That center couldn’t handle all of the products, so Yves Rocher transported some of the parcels to Moscow on its own. I got in touch with their managers and offered our services,” Oleg says. “I found a company, AutoSAGA LLC, that hauled sausage to Yaroslavl. Since their trucks were returning empty anyway, they agreed to carry Yves Rocher products back to Moscow for a small fee. So I offered Yves Rocher a market rate that also allowed us to make money.”

In 2010, Yves Rocher also began using Glavpodpiska’s carriers on another route — between the company’s base outside St. Petersburg and its Yaroslavl branch. The cooperation lasted more than three years, and during that time the client had no complaints. “We didn’t lose a single parcel, and we never raised prices,” says Oleg. Even so, the termination letter the Navalnys received on December 3 did not come as a surprise: “An acquaintance at Yves Rocher called me back in November and said the FSB had come to see them. They seized documents and started hauling managers in for questioning — everyone who had signed off on contracts with us. And every single one was asked: ‘Do you know Alexei Navalny personally? Did you take part in the protests on Bolotnaya Square?’”

Links in the Same Chain

The resolution opening the criminal case shows that the next important date was December 10: “The head of the Main Investigative Directorate of the Investigative Committee of the Russian Federation, Major General of Justice A.V. Shchukin, having reviewed the report of crimes — the statement by the general director of LLC Yves Rocher Vostok, registered in the crime report log under No. 201pr-167/12 of 10.12.2012, as well as the investigator’s report on the discovery of signs of crimes under Part 4 of Article 59 and points ‘a’ and ‘b’ of Part 2 of Article 174.1 of the Criminal Code of the Russian Federation, registered in the crime report log under No. 201pr-166/12 of 10.12.2012, and the materials of the procedural review, established…”

At the time, the opposition Coordination Council was in active talks with City Hall, trying to secure approval for the “March of Freedom,” scheduled for December 15 on Lubyanka Square. Alexei Navalny posted a video on his LiveJournal with the slogans “Enough waiting” and “We must go,” which was viewed 45,500 times on YouTube, and made it clear that the event would go ahead even if permission was denied.

> THIS PHENOMENON, WHICH HAS ALREADY REACHED THE SCALE OF A NATIONAL DISASTER, IS CALLED THE ARTIFICIAL CRIMINALIZATION OF ORDINARY BUSINESS ACTIVITY

“Leproux (the CEO of Yves Rocher Vostok. — The New Times) was apparently pressured,” says Alexei Navalny. “Yves Rocher is a huge company, with lots of stores in every city; they can be intimidated with tax inspections, for example. He agreed. After that, on December 10, an operative wrote a report — in the resolution it appears under No. 201pr-166/12 — saying that during searches conducted at the Kobyakov factory in August of this year as part of the Kirovles case, financial transactions had been discovered bearing all the hallmarks of Article 174 — ‘money laundering.’ Then Leproux, on that same day, December 10, filed his own statement, which in the document appears under the next serial number — 201pr-167/12. What exactly was in the statement, what damage Yves Rocher Vostok allegedly suffered — nobody knows: they never made any claims against Glavpodpiska, and Leproux himself is keeping out of sight and refusing contact.” On December 14, The New Times, which had repeatedly tried to obtain comment both from Yves Rocher’s Paris office (“all questions should be directed to the Moscow representative”) and from its Moscow office, received an official press statement: “We confirm that we have contacted law enforcement authorities to protect our economic interests and the interests of our shareholders. Until the investigative actions are completed, we are not in a position to comment.”

On December 13, at around 3:00 p.m., according to news agencies, President Vladimir Putin held a “working meeting” with Investigative Committee chief Alexander Bastrykin. Four and a half hours later, at 7:30 p.m., the Investigative Committee opened a criminal case against the Navalny brothers, though they only learned of it the following day, when the relevant press release appeared on the Investigative Committee’s website at 10:40 a.m. on December 14.

Searches and Interrogations

Searches began at the Navalnys’ premises on December 14: around lunchtime, officers arrived at Oleg Navalny’s office at Russian Post. “They seized four flash drives, a Björk CD, and a disc with photos from our honeymoon in Greece,” Oleg Navalny said. The search began at 1:50 p.m. and ended at 3:35 p.m. When it was over, he was handed a summons for questioning: he was to appear that same day at 4:15 p.m. at the Investigative Committee building on Tekhnichesky Lane. In response to all questions there, he invoked Article 51 of the Constitution (“No one is obliged to testify against himself…”).

That same day, a search was also carried out at the parents’ factory in Golitsyno: “They took my mother’s computers away (they can’t even file their taxes now) and her personal phone. She didn’t want to hand over her mobile, but the investigators threatened to twist her arms behind her back. She was furious. She said, ‘Medvedev was right about all of you.’ And they told her, ‘Your Medvedev is a jerk himself,’” Alexei Navalny recounted.

The Charges

On December 20, charges were formally brought against the Navalny brothers. From the order naming them as defendants:

“Between August 2008 and May 2011, in the city of Moscow, O.A. Navalny and A.A. Navalny, acting as a group by prior conspiracy and using the bank account of LLC Glavnoye Podpisnoye Agentstvo under their control, by means of deception stole funds from LLC Yves Rocher Vostok in the amount of 55,184,767 rubles. Having stolen funds from LLC Yves Rocher Vostok in the amount of 55,184,767 rubles, O.A. Navalny and A.A. Navalny, acting as a group of persons by prior conspiracy, entered into a criminal conspiracy aimed at legalizing (laundering) funds acquired as a result of their crime.”

> THEY SEIZED DOCUMENTS AND STARTED DRAGGING MANAGERS IN FOR QUESTIONING. AND EVERY SINGLE ONE WAS ASKED: DID YOU TAKE PART IN THE PROTESTS ON BOLOTNAYA SQUARE?

The amount cited in the case, the Navalnys explain, is the total sum Yves Rocher paid them under the contract over three years, and more than half of it — 31,698,750 rubles — was paid to the carrier.

“What infuriates me most,” Alexei Navalny says angrily, “is that they claim Glavpodpiska was registered from the outset in order to sign a contract with Yves Rocher and steal money from them. So they count the entire turnover over three years as the stolen amount, and what we paid to the freight carrier and so on as the laundering of stolen funds.”

“And supposedly I made them send those shipments to Moscow,” adds his brother Oleg. “I told them it would be more выгодно for them to hand them over there, and in that way deceived them, because Russian Post provides the same services to everyone everywhere.”

“They found a business transaction, and now they’ve declared that business transaction to be fraud. The idea, apparently, is that this way they can bundle Navalny, his mother, his brother, and his father into one criminal group,” says Alexei Navalny.

No fewer than 10 investigators from the Investigative Committee’s Main Investigative Directorate are working on the Navalny “organized crime group” case, five of them senior investigators for especially important cases.

A Contract Hit

Vadim Klyuvgant, Mikhail Khodorkovsky’s lawyer (who, as is well known, was also accused in his second conviction of having stolen all the oil from his own company), reviewed the case at The New Times’ request and immediately recognized familiar wording: “All these techniques were perfected long ago in one well-known model case — the Yukos case. These exact formulations were tested there and then spread far and wide across the country. This phenomenon, which has already reached the scale of a national disaster, is called the artificial criminalization of ordinary business activity.” According to Klyuvgant, if disagreements arise between counterparties over a signed contract, that is a matter of civil, not criminal, law. Theft by fraud or embezzlement is possible only when the issue is not a civil-law transaction that was actually performed — and for more than one year at that — but the mere appearance of a transaction, when in reality it is “the gratuitous seizure and appropriation of someone else’s property.” But the Navalnys worked with Yves Rocher under contract for three years, and there were no complaints.

“It is perfectly clear how such ‘victims’ appear — people to whom someone comes and explains that they have, it turns out, suffered terrible damage, something they themselves had not suspected until a certain moment,” says Klyuvgant. “We saw this very clearly in the Yukos case as well.” Only one thing needs to be added: the method the Russian authorities are using in their fight against the founder of RosPil is called “hostage-taking” — his mother, father, brother, and his brother’s family, all people far removed from politics (Oleg Navalny attended a protest on Bolotnaya Square only once, on December 10), are now paying the opposition’s bills. That is how politics came for them too.