26 May 2004
Audit Chamber chief Sergei Stepashin has finally settled his score with an old enemy, Chukotka Governor Roman Abramovich. The chamber's audit of Chukotka, released last Friday, uncovered "mass" financial abuse and declared the remote Arctic region bankrupt. Chukotka's debt is largely the result of an outstanding "gold loan" received and embezzled during the tenure of its former governor, Alexander Nazarov, who now just happens to be an auditor with the chamber.
The chamber turned up another alarming fact: Abramovich has turned Chukotka into an internal offshore zone. Firms linked to Abramovich's oil company, Sibneft, were awarded 12 billion rubles ($470 million) in profit and property tax breaks in the past three years. The Audit Chamber contends that the tax breaks deprived Chukotka of a revenue windfall. Common sense suggests, however, that if the firms had been forced to pay their taxes in full they would have simply relocated to a more welcoming region, leaving Chukotka with nothing.
On Abramovich's watch the regional budget of Chukotka swelled from 3 billion to 7 billion rubles. In addition, the charitable foundation Pole of Hope spends nearly $200 million annually on Chukotka. Of all the governors smacking their lips as they throng around the government budget trough, Stepashin managed to single out the only governor who is giving something back.
When Abramovich was a State Duma deputy from Chukotka, he was so struck by the region's grinding poverty that he chartered a plane at his own expense to take a group of local children on vacation in the south. Few children turned up, however, because the regional administration charged them for transportation to the airport.
Chukotka was literally dying from alcoholism. Selling moonshine to destitute reindeer breeders in exchange for animals' skins was a favored source of income for cops and functionaries. To encourage the skin trade, the breeders' wages were not paid. This sort of trading with the natives, reminiscent of the 16th century, bordered on genocide.
Chukotka has cost Abramovich something in the region of $1 billion, quite a bit more than his other pet project, Chelsea Football Club. But buying Chelsea made him a hero in England, while "buying" Chukotka made him the target of an Audit Chamber probe.
I'm not here to defend Abramovich. He faces no threat from the Kremlin, and what's more, he desperately needs his "persecution" by the authorities to be brought out into the open. Otherwise he could wind up losing billions of dollars in Western courts for his role in the state's shakedown of Yukos.
Chukotka, on the other hand, does need defending. Stepashin's revenge will have no impact on Abramovich, but it could destroy Chukotka -- tens of thousands of human lives.
Imagine an elderly schoolteacher in a Chukotka village. Under Governor Nazarov, she lived without heat or electricity. Under Abramovich, she was finally paid eight years' worth of back wages. A new school and hospital were built. Pole of Hope moved her parents to the Moscow region. Her pupils were taken on a summer trip to the south, and her best student was even flown to London to see a Chelsea match. The old chief of police, who turned the entire village into alcoholics, was given the boot. Villagers can now watch three television stations instead of one. And when she watches those three stations, she now learns that Abramovich is a thief and that Chukotka is bankrupt. She understands perfectly well that after this, Abramovich will leave Chukotka. And everything will return to the way it was: darkness, poverty, theft. Vodka for skins, skins for vodka.
It's not hard to imagine what she thinks of Stepashin. Stepashin has given Abramovich an airtight alibi for use in Western courts and an excuse for getting out of Chukotka, which he's grown tired of anyway. Let's salute the wisdom, conscience and decisiveness of Stepashin the Avenger.