Der größte Wirtschaftsprozess, der jemals geführt wurde

Biggest economic court case ever.

Earlier this month, an arbitration court at The Hague decided that when the Russian government said the oil company Yukos owed $27 billion in unpaid taxes and then broke the company up and auctioned it off, they did this to eliminate oligarch Michail Chodorowskij’s political challenge to Vladimir Putin and to benefit state-controlled companies, such as Rosneft.

The arbitration court awarded Yukos shareholders $51.6 billion (plus $64 million in attorneys’ and court fees).

Prior to this, the biggest award to investors in arbitration was $2.5 billion.

(Dare   GRISS ta   VEE OUGHT shofts prote sess   dare   YAY molls   geff IRRED   VOOR da.)

SORM, Roskomnadzor, &c.

SORM, which apparently stands for “System for Operative Investigative Activities,” is a mass surveillance system in Vladimir Putin’s Russia. Roskomnadzor is Russia’s “Federal Service for Supervision of Communications, Information Technology and Mass Media” according to English wikipedia.

The following is from an October 2013 article describing Russia’s domestic surveillance system prior to the winter Olympics in Sochi.

“In Russia, the FSB [Federal Security Service of the Russian Federation, successor to the Soviet KGB] must also obtain a court order to eavesdrop, but once they have it, they are not obliged to show it to anybody except FSB superiors. Telecoms providers have no right to demand to see the warrant; they must pay for Sorm equipment and installation, but are denied access to the boxes. The FSB does not even need to contact ISP staff; instead it calls the FSB controller, who is linked by a protected cable to the Sorm device installed on the ISP network.”

Vorteil nehmen von rechtsstaatlicher Abwesenheit daheim und rechtsstaatlicher Anwesenheit in London

Benefitting from the absence of rule-of-law in Russia and from the presence of rule-of-law in London.

An argument that Russia’s economic elites’ use of the relative safety of western countries’ financial and legal systems should depend on whether in Russia those people have participated in what would be considered lawbreaking in the western systems.

An interesting pundit said on Australian radio, for example, that money from selling exported Russian oil and gas is often moved through western financial leveraging instruments before being imported into Russia, to make it harder for that cash to be arbitrarily seized there. Even well-connected Russians are just as hostage to Vladimir Putin as the Crimean Tatars.

He said a counterargument holds that oligarchs will learn from living and working in rule-of-law countries and import some of that back to their homeland. Yet with the west’s inadequate oversight members of these groups might likewise grow corruption in their partner countries and firms. It does look as if German power utility companies who worked with post-Soviet Russian partners who demanded bribes in Russia might have started using extralegal shortcuts to achieve their goals at home; at the very least, their German competitor utilities would have had to compete with them while they were using such methods. Corruption really does seem to breed more corruption: apparently after the multinational Siemens developed streamlined procedures for paying bribes in corrupt countries it began offering them in relatively clean countries.

In a worst-case outcome, it would be interesting to see how western jurists would determine culpability in a country without an independent judiciary.

(FORE tile   nay men   fun   rect SHTOTT lichh ah   OB vaze en height   da HIME   oont   rect SHTOTT lichh ah   ON vaze en height   inn   LAWN dawn.)


“‘Paving the way’ payments” in Russia. Rapprochement geld, smoothing-the-path-between-us money, also translated as “bribes” according to a Sü article about Germany’s third-largest power company, Energie Baden-Württemberg, saying some German prosecutors have thought for some years now the nuclear power provider used unworkable, improbable “fake contracts” [Scheinverträge] to move money into “shadow accounts” [schwarze Kassen] in Switzerland to form a pool of bribe money doled out to powerful Russian decision-makers, such as politicians or high-ranking military officers, for more access to the Russian nuclear energy and natural gas sectors. At the time, about half of EnBW was government-owned: by an association of county governments from the German state of Baden-Württemberg and by the French “energy giant” EdF, which itself was also “government-dominated.”

EnBW is said to have been aided in these endeavors by Moscow lobbyist Andrej Bykow, transferring ~280 million euros to Mr. Bykow’s Swiss companies over the course of several years.

Sü’s anthropological explanation of krysha said auditors from the accounting firm KPMG found that “questionable contracts with Mr. Bykow and his companies were being used to pay ‘initiation costs'” and that the auditing company’s confidential research had found that depending on the sector such expenses could run to 2% to 5% of the total cost of a project in Russia. That would make Russia one of the least corrupt countries in the world according to the experience of Siemens executives prosecuted for paying international bribes at about the same time: Siemens accountant Reinhard Siekaczek testified for example that, when he managed transfers of approx. $65 million dollars in illegal bribe money through offshore accounts from 2002 to 2006, his unit found that in the most corrupt countries bribes could be ~40% of a project’s budget, while 5% to 6% was about normal. A retired Greek official who was Greece’s defense department’s procurement director from 1992 to 2002 and recently spoke to Athens prosecutors about ~14 million euros found in his secret accounts around the world said from Russian arms deals his kickback was a “very generous” 3%, because 0.5% to 1% was his usual fee.

Germany has some rules against companies’ paying bribes in other countries, even where corruption is supposedly endemic, as can be seen from the billion-euro fines imposed on Siemens for bribery in 2008. Reporting on possible investigations into the corruption is confused by the use of tax investigations to obtain convictions or evidence in non-tax crimes and EnBW is apparently under investigation for a completely different type of tax fraud (the “carousel” sales tax scheme for avoiding value-added tax and/or collecting refunds of advance V.A.T. payments that were never made) now suspected to have become widespread in European electricity trading. Shortly after the utility’s “opaque business deals” with Mr. Bykow became known in 2011, several tax offices told S.Z., they quickly began looking for improprieties.

The passage of years since the start of these investigations, which state, federal and European offices of which types of investigators, and what pieces of this apparently large and sprawling puzzle they were examining, remains unclear to me.

Mannheim prosecutors are said to have been investigating six former EnBW managers and one current EnBW manager since 2012 for tax evasion and “breach of trust” [Untreue] though not for corruption. That could change now that the Karlsruhe tax office has started looking into the questionably documented filling and emptying of the company’s clandestine accounts in Switzerland.

Tax-wise, the power company has already offered to file adjusted German returns for the years 2000 to 2007 and has already transferred an additional 60 million euros to German tax authorities (about what the company saved in taxes by incorrectly labeling some payments to Mr. Bykow as “business expenses,” Mannheim prosecutors said). But new threads to pull keep getting teased out of EnBW’s data.

Sü described a strange nonprofit charity Mr. Bykow founded called “St. Nikolaus the Miracleworker”—whose board members included EnBW managers at times—which made donations to Russian churches, young Russian musicians and Russia’s Air Force, Navy, Border Patrol and “landing troops” [Landungstruppen; amphibious assault?].

“Thus, the Russian Pacific fleet’s submarine squadron Wilutschinsk Kamtschatskij Kraj named a boat after the Nikolaus charity. The charity, in its turn, gave the submarine personnel a minibus and donated a car to their commander, a vice-admiral. For the ‘maintenance of the fighter bomber SU 34, “Holy Nikolaus the Miracleworker,”‘ the foundation donated the construction of a heated airplane hanger. And every year the regiment’s top member received an automobile.”

Though it’s unclear how these arrangements were reached, with Mr. Bykow’s help EnBW ended up receiving military uranium taken e.g. from decommissioned Russian submarines. The utility was said to have used similar methods to increase its access to Siberian gas fields.

(Krysha   TSOLL oong en.)

Sowohl… als auch…

“Both… and…”

The Ukrainian government’s decision at the E.U.’s recent Eastern Partnership conference in Vilnius, Lithuania, to decline to strengthen economic ties with the European Union in order to strengthen economic ties with Russia made very little sense because given an either-or choice the country would have become more prosperous by partnering with Europe. That made it appear that Russia had to have been threatening the country, in addition to carroting it, while possibly also bribing individual politicians. reporting about ship-like natural gas processing and delivery harbors that can replace pipelines has indicated post-Soviet Russian “gas wars” against Ukraine. On 21 Nov 2013 ZDF heute journal reported that Moscow had been waging a bitter trade war with Ukraine for weeks before the decision, with threats to stop investments and throttle back natural gas deliveries just as winter was starting.

Update on 29 Nov 2013: Angela Merkel told reporters at the summit it wasn’t even an either-or decision. Ukraine could have strengthened economic ties with the E.U. and with Russia. And the decision remains open; Ukraine can decide to join the E.U.’s Eastern European trade partnership program at any time. And the E.U. has few enemies in the world that might sanction Ukraine for being friendly with it: North Korea? Syria?

Meanwhile, Georgia and Moldavia did sign the E.U. trade partnership agreements, as a result of which they will enjoy fewer visa limits and lower customs charges.

Update on 02 Dec 2013: Amid fierce protesting, half a million people in the streets, terrible violence in Maidan Square, followed by the resignation of the chief of police in apology for official brutality, President Janukovytsch announced his government might be willing to talk talk about E.U. trade partnership association agreements again. He flew to China to be seen talking talk about non-E.U. trade there.

Update on 03 Dec 2013: Three opposition parties formed an alliance in Ukraine on 02 Dec 2013. The next day, “all” the parliamentary opposition parties brought a no-confidence vote that failed to oust Prime Minister Mykola Asarow’s government, getting only 186 of the 226 votes needed. Apparently Mr. Janukovytsch represents while Mr. Azarov governs.

ZDF heute journal reported that the no-confidence vote’s arguments had been: “the disastrous economic situation,” burgeoning governmental corruption and, last but not least, the decision to turn down an E.U. association agreement. Followed by the new arguments of the terrible police brutality against protesters. It’s too bad press cameras love following ex-boxer Vitali Klitschko, because there are other opposition leaders in Ukraine. ZDF’s correspondent said they mangled, mauled and lacerated each other last year, resulting in Mr. Janukovytsch’s majority.

(Zoh VOLE   …   alss   OW! chh.)


Arrest request.

Edward Snowden cannot apply for German asylum before entering German territory. Members of the government could then issue him an Aufenthaltserlaubnis but it might not prevent his deportation to the U.S.A., because that country prudently filed a Festnahmeersuchen [“(intergovernmental) arrest request”] with Germany last summer. There are deportation agreements [Auslieferungsabkommen] between the E.U., Germany and the U.S.; to prevent deportation under those agreements an “obstacle reason” or estoppel [Hinderungsgrund] must be cited, “for example, that Germany considers the deed he is accused of to be a political crime,” said Frank Bräutigam, ARD law reporter, who added that the decision or “last word” lies with the Justice Ministry, of course in coordination with the entire cabinet. The Justice Ministry would have to make a clear statement that “Germany will not deport him.” Heribert Prantl wrote in Sü that the Interior Ministry is responsible for issuing Mr. Snowden’s Aufenthaltserlaubnis, but the courts and Justice Ministry are responsible for the more important question of deportation.

Bundestag member Petra Pau (Leftists; she appeared to do a great job in the parliamentary committee investigating the investigations of the neonazi serial killers) said on Nov. 1 that she could not recommend that Mr. Snowden travel to Germany under current circumstances, “because at the moment I see no one who can guarantee his safety.” Sü’s Heribert Prantl reminded his readers of the story of reformer Jan Hus in 1414 C.E., who received a letter of safe conduct, “sicheres Geleit,” from the Holy Roman Emperor yet was burned at the stake as a heretic.

ARD showed residency-relevant paragraphs from what appeared to be a 2008 version of a residency law [Aufenthaltsgesetz, AufenthG]:

“565. Gesetz über den Aufenthalt, die Erwerbstätigkeit und die Integration von Ausländern im Bundesgebiet (Aufenthaltsgesetz, AufenthG). In der Fassung der Bekanntmachung vom 25 Feb 2008 (BGBl. I S. 162). […]” 565. Law on residency, employment and integration of foreigners in Federal German territory (Aufenthaltsgesetz, AufenthG). In the version promulgated 25 Feb 2008 (Federal Gazette I p. 162). […]
“Abschnitt 5. Auftenthalt aus völkerrechtlichen, humanitären oder politischen Gründen. Section 5. Residence due to reasons of international law [Völkerrecht, “peoples law”], humanitarian reasons or political reasons.
“§22 Aufnahme aus dem Ausland. (1) Einem Ausländer kann für die Aufnahme aus dem Ausland aus völkerrechtlichen oder dringenden humanitären Gründen eine Aufenthaltserlaubnis erteilt werden. (2) Eine Aufenthaltserlaubnis ist zu erteilen, wenn das Bundesministerium des Innern oder die von ihm bestimmte Stelle zur Wahrung politischer Interessen der Bundesrepublik Deutschland die Aufnahme erklärt hat. (3) Im Falle des Satzes 2 berechtigt die Aufenthaltserlaubnis zur Ausübung einer Erwerbstätigkeit.” §22 Admittance or acceptance from outside Germany. (1) An Aufenthaltserlaubnis can be issued to a foreigner for acceptance into Germany from abroad for international law reasons or urgent humanitarian reasons. (2) An Aufenthaltserlaubnis is to be issued when the Interior Ministry or the office they nominate has declared acceptance to protect political interests of the Federal Republic of Germany [emphasis of ARD and ZDF heute journal]. (3) In the case of (2), the Aufenthaltserlaubnis shall include a work permit.

Another possibly fruitful area or “construction site” ARD mentioned is the possibility that the federal prosecutor [Bundesanwalt] in Karlsruhe might use the Criminal Code [Strafgesetzbuch] to investigate certain individuals for spying on Germany.

“§99. Geheimdienstliche Agententätigkeit. §99. Secret service agent activity.
“(1) Wer (1) Whosoever
“1. für den Geheimdienst einer fremden Macht eine geheimdienstliche Tätigkeit gegen die Bundesrepublik Deutschland ausübt, die auf die Mitteilung oder Lieferung von Tatsachen, Gegenständen oder Erkenntnissen gerichtet ist, oder 1. performs a secret service activity against the Federal Republic of Germany for the intelligence service of a foreign power, said activity being directed toward the communication or delivery of facts, objects or knowledge, or
“2. gegenüber dem Geheimdienst einer fremden Macht oder einem seiner Mittelsmänner sich zu einer solchen Tätigkeit bereit erklärt, 2. declares himself or herself willing to perform such an activity to the intelligence service of a foreign power or one of their middlemen
“wird mit Freiheitsstrafe bis zu fünf Jahren oder mit Geldstrafe bestraft, wenn die Tat nicht in § 94 oder § 96 Abs. 1, in § 97a oder in § 97b in Verbindung mit § 94 oder § 96 Abs. 1 mit Strafe bedroht ist. will be punished with imprisonment [Freiheitsstrafe, “freedom punishment”] of up to five years or with a fine if the action is not punishable in accordance with §94 or §96 section 1, in accordance with §97a or in accordance with §97b in conjunction with §94 or §96 section 1.
“(2) In besonders schweren Fällen ist die Strafe Freiheitsstrafe von einem Jahr bis zu zehn Jahren. Ein besonders schwerer Fall liegt in der Regel vor, wenn der Täter Tatsachen, Gegenstände oder Erkenntnisse, die von einer amtlichen Stelle oder auf deren Veranlassung geheimgehalten werden, mitteilt oder liefert und wenn er […]” (2) In especially severe cases, the punishment shall be imprisonment from one year to up to ten years. An especially severe case is usually a case where the offender communicated or delivered facts, objects or knowledge kept secret by an official office or upon their order, or when the offender […]

und so weiter und so fort. reported, “The federal prosecutor in Karlsruhe recently reconfirmed to ARD that relevant German authorities had been requested to send in their knowledge/ideas/facts [Erkenntnisse] regarding the bugging of the chancellor. No official preliminary investigative proceedings have been opened yet. Only after that happened would it be possible for Mr. Snowden to testify as a witness in criminal proceedings.”

(FEST nom eh eah ZOO chh en.)


“Onion tower,” the round domes on old towers in Russia, Bavaria and parts of the Austro-Hungarian empire.

(TSVEE bellll TOOR m.)

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