Izvestia, July 13, 2000, p. 3

The second sitting of the reconciliatory commission which discussed the draft law “On principles of formation of the Federation Council” took place on July 12.

Duma deputies “survived” day one. Nothing specific was decided on but senators promised to have their last principal amendments and proposals sent to the Duma by noon the following day. When the first sitting was finally over, Commission Co-chairman Valery Grebennikov (the faction Fatherland – All Russia) admitted that “senators wanted to see to what extent the Duma was prepared to meet them halfway. Getting down to specifics was all we asked of them.”

There are three principal proposals in all. The Federation Council wants a different timeframe for implementation of the law. According to the presidential variant, the new composition of the upper house of the parliament should begin its work in January 2001. At first the Federation Council suggested 2004 as the starting point. Now it is apparently prepared to accept a compromise solution and set the date for 2002.

The second proposal concerns the right of heads of regional executive powers to appoint their representatives at the Federation Council without approval of the legislature as the draft law specifies. The Duma has already agreed to grant them this privilege on the condition that the representatives will be endorsed by regional administrations or governments. We should not forget the fact that either are mostly dependant on and controlled by governors.

The final amendment concerns the procedure of dismissal of representatives at the Federation Council. Governors accept the president’s right to dismiss their representatives but want the same prerogative for themselves. It seems that the president and the Duma are ready to accept the proposal. At his meeting with Oleg Morozov of the Duma, Vladimir Putin agreed that the Duma should not have stricken the appropriate provision off the initial variation of the draft law.


Izvestia, July 13, 2000, p. 5

… of the plans of the tax police on the matter of combating capitals drain and money laundering. Powers of the taxation structures are to be broadened.

Sensations were expected from the joint conference of the Ministry of Taxation and Duties and the Federal Service of Tax Police which was preceded by a scandal around the company LUKOIL. Still, the major sensations took place not at the conference as such but at the briefing of Minister Gennadi Bukayev and Director of the Tax Police Vyacheslav Soltaganov. Asked whether or not documents might be confiscated from the offices of the company YUKOS, Bukayev said that it was possible.

Bukayev: Our work is planned and chartered, you know. If the planned inspection requires it, we will confiscate them.

The minister added that “it is up to investigators to decide.”

Journalists wanted to know who was the next in line and were stunned to discover that charges of tax-evasion had already been pressed against administration of the company AvtoVAZ. It was a confirmation that the scandal around the LUKOIL was just a curtain-riser and that a series of similar actions was in the wind. These actions will apparently be performed by the ministry and the federal service working together.

Soltaganov explained the future cooperation by the fact that taxpayers became “fiendishly cunning”. Asked to list the most crime-ridden spheres, Soltaganov mentioned manufacture of alcohol and tobacco, fuel and energy complex, and the financial sphere.


Izvestia, July 13, 2000, p. 5

US Department of Finances officially warned national financial institutions of the possibility of sanctions in case of neglect of the order to closely watch all operations with fifteen countries, said list including Russia, Israel, Liechtenstein, Panama, Philippines, and some offshore zones in the Caribbean.

The Americans do not think that these countries work hard enough to fight money laundering and cooperate in this sphere with the international community. The Department says that the order does not mean to impede normal business. Apparently, it was issued to prompt these countries to improve their legislation pertaining money laundering.

This tension in the financial relations between Russia and the West may affect Russian economy and its financial sector first and foremost. Almost 90 per cent of all operations with securities in Russia go via bank accounts in offshore zones, and many insurance operations our economy needs so much are executed via the same accounts. This operation against money laundering will promptly turn into a campaign of harassment of Russian businesses in the West at the first opportunity of getting political dividends.

Using its international influence, Washington may torpedo operations of Russian businesses abroad.