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16 Jul, 2008 04:29

Raiders in Russia are not businessmen but criminals

For newly privatised businesses in 1990's Russia, raider attacks were an occupational hazard. However, such incidents remain topical nowadays – almost 900 charges linked to illegal takeovers were brought in Russia last year.

The term 'raider' came to Russia from the U.S. Corporate raiding in the U.S. is considered not as a crime but a business activity, and is quite legal. It refers to a situation where an entity buys significant stakes in listed companies, often against the wishes of management, to change its management or even liquidate it.

Viktor Posner, one of the most notable raiders of the last century, was an American businessman of Russian descent. He used his companies to take the others over.

In Russia, corporate raiding can mean something completely different, where on occasion groups of criminals literally take possession of the office or plant of a company, and can physically threaten management to force them out. In other instances bureaucrats can seize property claiming that management has gained it illegally. Instances like these can mean that legitimate businesspeople lose their companies, making corporate raiding, as Russia knows it, to be akin to theft.

An expert at Russia's Interior Ministry has told RT that in Russia the concept of corporate raiding falls under several clauses of the Russian criminal code. But he added that the term itself is not yet fixed in the legislation and that changes are necessary for it to be clearly defined.

At the end of May, the Russian government had reportedly worked out new legislation to protect domestic companies from hostile takeovers.

Experts say, corruption is to blame for raiding.

“It’s a myth that you can fight raiders with the law,” Aleksandr Orfenov, PhD and a corporate raiding expert, has said. “It's not true, because all property in Russia is illegally owned. Sometimes a case can go through many courts and no one really knows whats going on, which judge is being bribed and by whom.”

However, some think a takeover could improve business. Igor Puzanov, raider, lawyer and former civil servant has told RT he once acquired a factory, declared it bankrupt and sold it – and it promoted the growth of the business by attracting investors.

Owners of businesses, however, are not inspired by the idea their enterprise could be taken over.