The Oil Oligarchs

Roman Abramovich is not the only so-called "oligarch" under suspicion for the way in which he amassed his fortune. In the spate of privatizations that occurred following the collapse of the USSR in the early 1990s, a small handful of men have made enormous personal profits, largely through buying shares at well below their real value in the previously state-owned oil industry.

Unlike Abramovich however, some of the others have not escaped the scrutiny of the Russian government for their business activities since then. Mikhail Khordokovsky, former CEO of the troubled oil giant Yukos, was arrested in October 2003 and as of September, awaits trial on charges of fraud, embezzlement and tax evasion.

Yukos came under fire for tax evasion and was found guilty of evading nearly $2bn during 2000. While Yukos denies the charges, the Russian tax ministry has revealed that Yukos operated a system of transfer pricing through its special-purpose companies in known tax havens such as Gibraltor.

Khodorkovsky meanwhile, as Russia's richest man (estimated to be worth more than $15bn according to Forbes magazine), is seen by some as a scapegoat for Putin's attack on the oligarchs who are well known for their ties with Yeltsin's government. The fact that the oligarchs are widely seen as criminals by the Russian public is also a convenient vote-winning tactic on Putin's behalf. Khodorvsky is not shy in his political affiliations and funding of opposition parties, including Putin's biggest rivals, the communists.95 He also bought the rights to the Moskovskiye Novosti newspaper and hired outspoken critics of the Putin government as staff.

However, to dismiss the claims made against Yukos and Khodorkovsky as political maneuvering on the government's behalf is to dismiss the serious question of the obligations of rich citizens and companies to the country that spawned their wealth, and concern about the legality of corporate financial practices. The involvement of accounting firms such as PriceWaterhouseCoopers (PwC) in the scandal is testament to not only the influence of these global organizations but also of their far-reaching influence in terms of accounting practice. As Robert McIntyre, the director of Citizens for Tax Justice, commented in September, "[O]ur accountants have exported their tax-sheltering skills so that even former godless communists can evade taxes just like church-going, red-blooded American corporate chiefs."96

Whether the clampdown on oil oligarchs reveals a return towards a more authoritarian Russia, an endeavor from within the Duma to increase support for the presidency, or a more righteous attempt to stop the flow of money outside of the country along with its oil, what can be understood is that Putin's hunting down of the oligarchs has only just begun.