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The Battle for Baikal: Before its too Late! No to the gas and oil pipelines in the Tunkinsky valley! Battle in Irkutsk: An Overview a Month After |
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The Timber Mafia Pays no Tax, but Gets its Cut
Specialists estimate illegal export of timber from Irkutsk Oblast at a million cubic metres
Illegal timber extraction has reached catastrophic proportions in Priangarye. Hundreds of small firms and a host of entrepreneurs, taking advantage of virtually unlimited freedom in the absence of any real control by uncoordinated state agencies, are making themselves at home in the forest. Millions of roubles are bulging the pockets of black-market operators, but the timber Mafia pays no taxes. Instead of keeping order in their territories, local administrations in areas of abundant forest are in the habit of looking towards the regional centre for handouts. And this when Priangarye marks up 21 hectares of forest per capita, almost five times the average for Russia as a whole. Nevertheless, even amidst such wealth, most companies in the timber industry eke out a miserable existence. Meanwhile, native and foreign machinators are in for the pickings. In the words of the head of the inter-regional economic crime squad, lieutenant-colonel Aleksei Barkhatov, only the idle are not taking advantage of the timber harvest. The small squad has more than enough on its hands.
Cash on the nail
Citizens from beyond the Great Wall are especially energetic and adept at getting the famous Angarsk pine out. Having arrived in Irkutsk on the strength of a tourist visa, they quickly disperse throughout the region. If it is impossible to come to terms with the timber company itself, arrangements are made with truck drivers plying the forest roads. The Chinese are ready to pay, and pay most often in cash without any paper documentation. Then, by fair means or foul, the timber is taken by rail to its destination. If they are lucky, the entire load goes straight through to China, if not - it is shipped to Zabaikalye (the land beyond Baikal) via some fraudulent firm and from there on to the homeland. The spoils from such risky deals are enormous.
"We were literally flabbergasted at the volume of illegal deals, when we visited sidings on the railway last autumn," Aleksei Barkhatov admitted. "Over an incredibly short period of time we discovered a few thousand cubic metres of timber ready for shipment to China. No sooner did we start examining the documents, when the Chinese fled, leaving even their passports.
It seems that the more frequent checks and raids have had their effect: there are fewer small groups, but the black market firms have become more wary. One was brought to light quite unexpectedly, the extent of its traffic shocking the economic crime squad. ..........................
Having got hold of the passport of a resident of Ulan-Ude, they "registered" a private company in the same town and set to illegal timber purchasing. Within a few months they were able to ship off 130 carriages of good round timber. They were caught during a routine passport check. $4 000 (450 000 roubles) and a complete set of registration and trade documents were found on the man in charge. On inspection, the documents turned out to be false. Only one real middle-man who had helped in dispatching the contraband was found. Everyone involved have now been charged and investigations are under way. Just one interesting detail: the 'tourists' offered staff of the economic crime squad $20 000 in the hope of buying their freedom.
Fathers and sons
Another no less colourful band of players popped onto the squad's horizon. Some years ago, as the regional economic crime squad relate, a Mr. Krasnov, former chairman of trades union committee of the Regional Administration, started up a very cunning operation the essence of which was to make money. To all appearances everything was quite respectable. In 1995, a closed joint-stock company, "Sibles", was formed whose founding members included Krasnov, and his son, the president of the firm "Irkutskmebel", V. Makarov, also with his son, and the son of the director of the Baikalsk Pulp and Paper Mill, Glazyrin junior. Shares were also held by the son of Glazyrin senior's deputy - R.Steinberg: can you feel the vigorous family choir? A little later "Sibles" buys 40% of the shares of Igirminsky experimental Timber Company, where the now unemployed Krasnov becomes the chairman of the board of directors - free and legal access to forest reserves of the company was now secured. A contract is made straight away between "Sibles" and Igirminsky Timber Company for the delivery of the best timber and wood chip. The raw material, naturally, is delivered to the Baikalsk Pulp Mill via an intermediary which, in the opinion of experts, was quite unnecessary. According to Barkhatov, sales were made at prices lower than the cost of the timber. A few years of such operations and the Igirminsky Timber Company was brought to the point of breakdown, threatened with the real possibility of bankruptcy. The timber company was literally being drained dry by Krasnov's other enterprises, making losses, according to preliminary estimates, in the region of 4 billion old roubles.
Law enforcement agencies are at present investigating the activities of the "fathers and sons". It is curious that the squad came up against rigid opposition on the part of the Mill's management and all other interested parties. The economic crime squad was able to obtain all the necessary financial documents only with the help of the special internal force (OMON). However, Lieutenant-colonel Barkhatov was stunned not so much by the "family" as by the way the workers of the timber company sent the timber off to the Pulp Mill without a murmur, not having seen real money for months. The money actually did come in, but not to the company's account. The timber loggers were paid in kind - with foodstuffs and various goods, but at high prices.
Too many cooks
The Regional Administration, as can be imagined, is seriously worried about the free for all in the forestry sector, on which the condition of many a district in the Region depends. Hundreds of thousands of logs are being shipped out of the Region without leaving a kopeck in taxes but filling the pockets or a handful of thieves and machinators in various guises. The Forestry Department of the Regional Administration admitted that it was difficult to follow them all up. The problem is confounded by the fact that the federal authorities are working at cross-purposes. There are enough loopholes in the law as it is giving plenty of opportunity to slip through. Suppliers are usually paid in cash which makes the deals hard to check up on. It would help if there were compulsory registration and auditing of railway sidings where timber is loaded with information on the number of carriages or destinations and on senders. Order could be brought to the forestry sector even quicker, if the State Duma would pass a law on compulsory licensing of enterprises dealing in the export of timber. In that way it would be possible to finance the budget and increase the returns from the forest. For the time being it is being harvested by all sorts of wheelers and dealers. As they say, many cooks spoil the broth.
Sergei Kez
From the Russian National Newspaper "Novie Izvestia" February 1999
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