An interview with Viktor Pleskachevsky, Duma property committee chairman

Viktor Semyonovich Pleskachevsky (United Russia party), chairman of the Duma property committee, promises that Russia’s billionaires will be able to leave their fortunes to their legal heirs.

Question: The number of billionaires in Russia is rising, and many of them are also increasing their fortunes drastically. Why is this happening?

Viktor Pleskachevsky: I don’t think it’s a matter of fortunes being increased – rather, they’re being legalized. People can’t double their fortunes overnight – well, some might do so, but those are isolated cases, lucky breaks. People have a need for substantial legal spending, and that means they need substantial legal revenues.

Easing taxation gave legalization a strong boost – introducing a flat-rate income tax, and the 6% tax on dividends. That tax has now risen to 9%, but it’s still facilitating income distribution in the form of dividends.

The legalization process is very beneficial for Russia.

Question: Has the YUKOS affair ceased to be a strong destabilizing factor for business owners?

Viktor Pleskachevsky: The YUKOS affair was never a factor for business owners! Problems of YUKOS are not business problems and are quire different. It seemed to me that the process started due to absolutely different motives and this began in the Duma. Mikhail Khodorkovsky wanted to buy the power in the open. This person was convinced that he was like Henry Ford: “what’s good for YUKOS is good for Russia.” That is why he was not ashamed to say that he intended to buy a controlling interest in the Duma. He intended to get 60 of his people elected to the Duma within various factions in the elections of 2003.

Question: However, many businessmen often finance or at least have financed before election campaigns of not only United Russia.

Viktor Pleskachevsky: In the past, for example, every oligarch brought five or six people to the Duma and they were gathered in such sub-multitude of people connected with the Russian Union of Industrialists and Entrepreneurs in general. Sometimes they did manage to achieve their goals. For instance, the 6% tax on dividends appeared as a result of their activity. In any case, YUKOS was the first to come out and say, “I can afford bringing 60 people, cannot I?”

Question: The state is strengthening its positions of an owner in economy. The state is an inefficient owner, is it not?

Viktor Pleskachevsky: The state is regaining some assets but from the standpoint of economy in general YUKOS and Gazprom are less important factors than land. This is the main volume of property. About 1.5% of Russian territory is privatized. I asked people in Germany, “How much land do you have in mortgage?” They said 100%. This means that I live in this building but it is mortgaged and I develop there: I build or promote my business. Property there is in secondary turnover. In Russia land is not a factor of capital.

Now the emphasis will be made on land relations. We are preparing a bill that changes the situation in this field seriously. The Economic Development and Trade Ministry prepared the second bill on pricing on the land market. These bills will change the situation radically.

Question: It is clear that mostly the people who are already mentioned in our rating of billionaires will become land owners. This means that a stratum of small owners useful for the economy will not be created and stratification of the society will grow further?

Viktor Pleskachevsky: Let they get enriched 150 times. What is important for me as defender of public interest? There is an industrial enterprise. Land under it is the property of a region. What will the region receive from it? Rent. In our country taxes are regulated by the state. The Tax Code exists just for this. As to the land relations and rent, they are not regulated and hence a state official can take as much as he wants. Something prompts me that at this point development of business on authorities is very big and relations there are very corporate.

That is why I do not care who will be enriched, or how. I care about Russia being competitive. That is, enterprises located in Russia being competitive. It’s very doubtful, to put it mildly, whether an enterprise can be competitive if the land beneath it belongs to someone else.

Question: What for do state officials need to deprive themselves of the right to pressurize business yielding land to private ownership?

Viktor Pleskachevsky: This is necessary only for subjects of the Federation now. It is difficult to say how much they suck from business. What did the President say about this? The authorities should retain only the property necessary for exercising of powers. Give up the rest.

Question: Does not it seem paradoxical to you that foreign investors in Russia are better protected from arbitrary actions of state officials than the Russian ones?

Viktor Pleskachevsky: Now there is absolute equality of foreign and Russian investors in the law. However, state officials prefer not to attack foreigners and that is all. Behind them there is the parent company and big political repercussions.

Question: very few families in Russia managed to retain property at least for a few generations. Do you agree that culture of private property cannot appear in the country from anywhere?

Viktor Pleskachevsky: Really, in Russia gentry was given villages sometimes and these villages were taken away afterwards. After that 80 years of history added very much. The institution of property was liquidated. We retained only state property and such surrogate as “personal property.”

Moreover, the law was all distorted. We are currently at the stage of formation of civil law. I have opponents who say that the law has been formed for a long time. They are mostly theoreticians.

The legal system should be prepared for clear outlining of this property and for its clear protection.

Question: Will the 720 people named in our magazine’s ranking of billionaires be able to leave their property to their chosen heirs?

Viktor Pleskachevsky: Yes, definitely. We lack a system of guarantees for property, due to traditions and due to insufficiently detailed law, but the main mechanisms are already there.

Question: Russian billionaires spend money on charity but they spend very small sums compared to the scale of their business. Why?

Viktor Pleskachevsky: What encourages a rich person to give to charity? These are three things: internal need to support someone, state stimulation of this area and public gratitude.

The state by itself serves as a tool of charity. It collects taxes and distributes money among the needy. In any case, there is always a hazard that the state is mistaken. That is why a system for encouraging of charity in the form of tax allowances, for instance, is being created. There is no such system in Russia. Russia also has a long way to go to public gratitude too.

Question: Should not the fact that many people acquired large fortunes in the process of privatization, so to speak, without any special efforts and costs, encourage them to return the debt to the society?

Viktor Pleskachevsky: Of course not. It does not matter how I have acquired something. If I find a nugget, why should I share it?

Question: What if you do not find it but give a bribe to a state official who has sold the enterprise for less than its real value?

Viktor Pleskachevsky: It is the same. Why am I to blame? It’s the state official who has given the enterprise to me. He’s the one you ought to shoot. The same official will give it to someone else tomorrow. Why go after me?

YUKOS sponsored Norwegian traveler Thor Heyerdahl. YUKOS gave the money for free, but pursued certain economic interests and wanted to enter the market of Norway. In 90% of cases, charity donations are given for in pursuit of specific economic interests.