24 Ottobre 2014

MK&PARTNERS Адвокат в Италии - Russian Parliament Moves Closer to Adopting Law on Compensation for Sanctions

MK&PARTNERS Адвокат в Италии 

The Russian Parliament on Wednesday took the first major step to authorize the Kremlin to seize foreign assets and use them to compensate individuals and businesses in Russia that are being hurt by Western sanctions over the Ukraine crisis.

The law stands to arm the government of President Vladimir V. Putin with a remarkable weapon of retribution, effectively allowing the government to compensate the very insider businessmen and other elite figures who Western leaders hoped would convince the Russian leader to reverse his course in Ukraine.

The sanctions imposed by the United States, the European Union and others in varying phases since March had been intended to bring Russia to heel. While the full parameters of the legislation are unclear, Western corporations hold billions of dollars worth of assets in the energy-rich country.

Under the law, courts could seize foreign-owned property in Russia to top off the budget after these outlays, according to the draft, which was approved on the first of three readings. For a bill to become law in Russia, it must pass the lower chamber of Parliament three times and the upper chamber, the Federation Council, once. Then it must be signed by the president.

Early discussions of the rule precipitated a stock sell-off late last month.

The news media in Russia have taken to calling the rule the “Rotenberg Law,” after Arkady Rotenberg, a former judo-sparring partner of President Putin who has become a wealthy industrialist. He reportedly lost access to about $40 million worth of real estate in Italy in September. Mr. Rotenberg has natural gas pipe and construction businesses.

The law passed over the objections even of acting members of government, a rarity in Russia’s usually monolithic political system. The minister of economy, Aleksei Ulyukayev, said just last week, “There is no better way to create capital outflow than passing or even discussing such legislation.”

It passed with 233 votes for and 202 against, unusual in the Russian Parliament, where near-unanimous votes are more common. Mr. Putin’s United Russia party voted in favor; others including the Communist Party, loath to be seen aiding the wealthy, voted against.

The law allows Russian citizens to who suffer from an “unlawful court act” of a foreign government to appeal for compensation in Russia, ultimately by seizing foreign assets here, even those covered by immunity, like diplomatic real estate.

The sanctions were intended to dissuade Mr. Putin from invading Ukraine. The United States Treasury Department has called some of the targets the “inner circle” of Mr. Putin, or longtime acquaintances, who would presumably have his ear.

Among the designated businessmen are Gennady Timchenko, an oil-to-banking billionaire, and Vladimir Yakunin, the head of the national railway, who both have said they have no intention of pressuring Mr. Putin to pull back militarily from Ukraine.

Critics of the compensation law say this group instead lobbied for a payout from the budget, which was not the intention of the sanctions.

“I have never heard of anything more cynical,” Boris Nemtsov, a former deputy prime minister in the opposition, said on Wednesday in a telephone interview.

“In fact, Russia will be robbed twice,” he said. “First Putin allowed them to steal this property and buy villas. Then when it turned out the property was frozen abroad, Putin allows them to receive compensation from the budget. I have never heard of a more cynical law.”

The 2015 budget, Mr. Nemtsov said, reduces outlays for health care and education as Russia’s economy skids into a probable recession in the fourth quarter of this year.

The price of the Brent oil, which is a barometer for the outlook of Russia’s economy, is dropping and was at $92 a barrel on Wednesday, above the about $90 price that economists say Russia needs to balance its current account. The ruble fell to a low of 40 rubles to a dollar, and Russia’s stock market index, the Micex, dropped 2.19 percent by the closing.

Mr. Rotenberg, in an interview on Rossiya state television, denied he lobbied for the law and said he would not seek compensation for his Italian real estate, snared now by sanctions. The law’s intention is to shield Russian businesses, he said, and dismissed the Italian seizure as the mere “loss of a house.”

MK&PARTNERS Адвокат в Италии
Юридические услуги в Италии, России и Швейцарии


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