#14 - JRL 7252
Subject: Re: 7250-YUKOS
From: "Ethan Burger" <ethansb@american.edu>
Date: Wed, 16 Jul 2003

The recent arrest of Platon Lebedev for allegedly stealing 20% of the state-owned shares of stock in the fertilizer company "Apetit" in 1994 illustrates the critical importance of the development of a truly independent judiciary in Russia. It also demonstrates the risk that still exists for owners of property originally acquired during a "privatization" process. Mr. Lebedev's situation may be a harbinger of future legal (and political) battles over assets that were once state property.

Article 168 of the Russian Civil Code provides that "a transaction not corresponding to a law or other legal acts is void, unless a law establishes that such deal is voidable, or envisions other consequences of a violation." There are other provisions within Chapter 9 of the Russian Civil Code (e.g. Article 169, which makes void "a transaction with a goal, knowingly contrary to legal order [ordre publique] or morality") that could also provide a basis for challenging other privatizations, and for the state to seize property away from unfavored individuals (assuming that the period of limitations has not been deemed to have expired).

Thus, the legal basis for undoing "tainted" privatizations (perhaps a majority) exists where the political will and tools of power exist. No wonder why the Russian Union of Industrialists and Entrepreneurs have written President Putin urging him to maintain political stability in the country. Selective prosecutions combined with widespread corruption highlight the need for a strong and unbiased judiciary, an independent and aggressive mass media, and active and well-financed NGOs.

Ethan S. Burger, Esq.
Legal Advisor & Research Associate Professor
Transnational Crime and Corruption Center (TraCCC)
School of International Service
American University
Washington, D.C. 20016
tel: (202) 885-2660
fax: (202) 885-1389
www.american.edu/traccc