The video images may resemble scenes from a civil war, but in fact they come from the factory floor. Armed troops in gray uniforms are seen storming the facilities of the Angarzement cement factory in Angarsk, near the Siberian city of Irkutsk. The attackers smash windows and then lock out the management.
It has become an all too familiar scene in today's Russia. In Moscow 150 strong young men entered the headquarters of the Rasvitiye construction company using baseball bats and metal bars. Although the thugs retreated when a squad of policemen arrived, the company -- which controls more than 25 percent of Moscow's housing construction market in Moscow -- miraculously ended up in the hands of a financial tycoon a short time later.
And in Chimki on the outskirts of Moscow, not far from Sheremetyevo International Airport, a real estate firm suffered a surprise attack by a company with the exact same name. Once again musclemen were used for the scare tactics. They barricaded themselves behind a barbwire fence and displayed a sign as their calling card: "Very Evil Guard Duty."
These cases show just how literally the terms "hostile takeover" and "corporate raider" are often taken in Russia. And unlike in Western Europe, the attackers are normally not even interested in the business itself but only its premises. Many of these land grabbers build luxury apartments for Russia's nouveaux riches on the premises they have seized -- one way of making a fast buck in the country's booming big cities.
Since what matters most is the speed of the take-over, when it comes to the transfer of property rights in Russia muscle takes precedence over money. The brawny mercenaries are dubbed "landsknechty" in Russian jargon. Their employers convey them by bus or train from small provincial towns to the scene of the crime.
They usually have orders to do little more than intimidate their victims. Avoiding bloodshed, they usually overpower the company's security guards, tie them up with duct tape and throw them into a store room, as one Ukrainian mercenary reports. The police only arrive 40 minutes later, probably bribed to take their time, at which point the new well-dressed company owner is already sitting at his desk, equipped with fraudulent company papers.
The Moscow journal Ogonjok has already published lists of prices for the semi-legal services of the landsknechty. Spying on a business costs between $5,000 and $20,000, tapping a mobile phone is $1,500 per day, while "neutralizing" the police and prosecutor's office costs between $30,000 and $60,000.
Raiders are becoming increasingly bolder, especially in the provinces, where bribes are lower than in Moscow. Russia's Interior Ministry, headed by Rashid Nurgaliyev, has estimated that one in seven company takeovers in Russia are carried out by illegal means.
Business Is Booming
And business is booming for these bandits. The number of investigations relating to forced company takeovers has doubled over the last three years to a total of 354, according to the Interior Ministry. Experts at the ministry estimate the financial volume involved in 2005 alone to have been somewhere between $4 billion and $7 billion -- as much as 17 percent of all Russian company takeovers that year.
Just like in the mafia thriller "The Godfather," businessmen are often made "an offer they can't refuse." If the offer is not accepted, the gangsters then bribe arbitration courts and forge share registers or sale contracts.
In the Chelyabinsk region north of the Ural Mountains, a land registry office's hard drive containing company data disappeared temporarily. When it showed up again, the steelworks in Magnitogorsk suddenly had a new list of shareholders -- and new owners. Such maneuvers are made easier by the fact that most share registers in Russia only exist as electronic files, as required by the law.
More than 170 raider teams operate using these kinds of tricks, according to official estimates. Some of them work freelance while others are even employed by companies.
"They're highly professional," says Vladimir Ovchinsky, the former director of Interpol in Russia. According to the retired major general, gangs like the Tambov Group in St. Petersburg function "like Cosa Nostra in Italy" -- complete with their own analysis center, team of lawyers and headhunters for the recruitment of young members. Underpaid intelligence officers are particularly in demand.
'A Threat to National Security'
According to the criminologist, the attackers are increasingly targeting businesses belonging to the Russian armaments industry. He says they have already taken control of Basalt, a St. Petersburg company that produces components for the "Igla" portable anti-aircraft missiles.
More than 200 armament factories have been targeted by organized raiders, according to estimates by Russian intelligence agencies. This makes the raiders a "threat to national security," says Ovchinsky.
These raiders rarely end up in court. Pavel Fedulev from Yekaterinburg, a businessman and former member of the regional parliament, is one of the few exceptions. The fit "bisnesmen" was arrested at a gym in November of last year, accused of having taken over a wholesale center with the help of an armed gang. One of the charges he now faces is that of "inciting mass unrest" -- a crime punishable by up to 20 years in prison.
Vassily Boiko -- known as the "King of the Raiders" -- was arrested in Moscow in February. The 48-year-old director of a company called "Your Financial Helper" appropriated 40,000 hectares of land around Moscow by questionable means. The conservative-looking man, who wears glasses and has the air of an accountant, had boasted he would build a kind of "Switzerland of the East" just west of Moscow, complete with five-star hotels, a golf course and a safari park -- but without the Swiss rule of law of course. The public prosecutor's office is accusing him of serious fraud and money laundering. He faces up to 15 years in prison -- if convicted.
Ovchinsky knows why even the most reckless raiders seldom end up in court. For years, the Russian police acted on the principle of "not getting involved in economic disputes," he says. The state failed to protect private property. Those engaging in organized crime could often rely on the protection of "corrupt networks within the state institutions."
The Samara-based director of the Russian Business Estate (RBE), Andrei Shokin, is described by Ovchinsky as one of the most successful company raiders outside of Moscow. Thanks to his friendship with former mayor Georgy Limansky, Shokin gained control -- "by means of raids" -- of 238 pieces of real estate, including the Volga city's port, according to Ovchinsky.
Bring Back the Oprichnina?
The Russian State Duma's security committee recently took a closer look at Shokin's activities, despite his protests that he doesnt understand what the security experts are so excited about. He insists he is "no raider" but simply someone "fighting for civilized business." Shokin says he merely cultivated a "normal partnership" with Limansky, notwithstanding the fact that RBE saw massive expansion during the former mayor's time in office.
It is not only Russian firms that are affected by these shady dealings. Indian businessman Rajesh Galani became aware of the problem thanks to a phone call he received in London this spring. A security company by the name of "Faust" had just stormed one of his warehouses north of Moscow and stolen documents from the safe.
The assault team was accompanied by the new would-be owners, who announced they intended to set up an office for a member of the Duma on the premises. Meanwhile, the politician -- who had resigned as mayor of Vladivostok under a cloud of corruption allegations -- claimed ignorance.
Hardliners in the Russian legal apparatus are now demanding tougher laws for combating white-collar crime, including laws that would allow for the confiscation of criminals' property. A Kremlin working group headed by presidential aide Viktor Ivanov is currently debating these proposals. A veteran of the Soviet military intervention in Afghanistan and confidante of Putin, Ivanov was previously deputy director of Russia's domestic intelligence service, the Federal Security Service (FSB). He is considered an advocate of a hard-line strategy. There is a growing willingness in the pro-Kremlin State Duma to employ tough measures. One member of the Duma, Vladimir Semago, was himself the victim of a hostile takeover and is calling for the "Oprichnina method."
The Oprichnina was militia loyal to Ivan the Terrible in 16th-century Russia, which was founded to curb the power of the feudal rulers. But the lawless militia, whose symbol was a dog's head, swiftly mutated into a fearsome gang of murderers and robbers -- an early precursor of Stalin's dreaded secret police.