Russia's Erin Brockovich: Taking On Corporate GreedMar 09, 2010
When the state-friendly Russian oil company Surgutneftegas held its annual shareholders meeting in the Siberian city of Surgut two years ago, the proceedings in the shabby auditorium started off as tightly scripted as a Politburo meeting. That is, until the moderator called for questions and Alexei Navalny took the stage. In front of some 300 stunned shareholders, Navalny, who owned about $2,000 worth of stock in the company, grilled senior management for several minutes about the company's minuscule dividends and opaque ownership. When he finished, there was a brief silence and then an unexpected burst of applause from a small group of shareholders in the back of the hall. The company directors were visibly flustered, said a Russian journalist present at the meeting. "They clearly weren't accustomed to being asked questions like that," the journalist said on condition of anonymity, citing company policy about speaking to other media. "They looked really uncomfortable."
Asking uncomfortable questions is what Navalny does best. An erstwhile activist in Russia's marginalized opposition movement, Navalny, 33, has eschewed electoral politics to focus his formidable energies on investigating companies owned by the Russian government and its minions. And in the two years since he crashed that shareholders meeting in Surgut, he has arguably become Russia's most relevant political renegade. He is demonstrating that there may be a tool more effective than the ballot box in keeping Russia's ruling class in check: stock.
A corporate lawyer with a degree in financial markets, Navalny has spent the past three years snapping up small stakes in publicly traded state-owned companies, many of which have senior government officials on their boards. Public listings provide these firms with crucial capital and international legitimacy, but in exchange, they're forced to adhere to a modicum of transparency that is absent from Russian politics. This is where Navalny comes in. Exploiting his status as a part owner, he harasses senior management with questions about how their actions may be affecting the bottom line. "All you need is one share to get into the room with these guys," Navalny says.
Navalny's transparency drives have earned him legions of admirers in the Russian blogosphere, the country's most freewheeling forum for political discussion, and among the independent-minded media. The respected Russian business daily Vedomosti named Navalny its "Private Individual of the Year" for 2009, saying he sets a "personal example proving it's possible for citizens to defend their rights." "While professional investors solve their problems quietly, this everyman, without status or power, is trying to fight the system," the paper wrote of Navalny. Sergei Guriev, dean of Moscow's New Economic School and an independent board member of Sberbank, a state-owned company in which Navalny has stock, says the lawyer's focus is a logical avenue of dissent for politically minded young people who are unable to crack into Russia's rigidly controlled political landscape. "His generation of opposition politicians has been denied a career in politics," he says. "They may have to wait 20 years. So he has taken what looks like a smart, reasonable path."
Navalny's targets have included the oil and gas giant Gazprom, which was previously chaired by Russian President Dmitri Medvedev, and the state-owned oil company Rosneft, whose chairman is Igor Sechin, a Deputy Prime Minister widely seen as Russia's most powerful official after his boss, Prime Minister Vladimir Putin. In 2008, Navalny filed a lawsuit to force Rosneft to reveal information about delivery contracts it had with an obscure Swiss oil trader called Gunvor, whose co-owner is an acquaintance of Putin's. A Moscow arbitration court rejected the suit, saying the company was not obligated by Russian law to reveal its dealings with Gunvor. Navalny says he will now file a suit against Rosneft at the European Court of Human Rights for alleged violation of property rights. Rosneft maintains that it has made available to shareholders all the information that is required under Russian law.
Navalny's most significant investigation to date was into the alleged embezzlement of $150 million by officials at a subsidiary of the state-owned bank VTB following the company's purchase of 30 Chinese oil rigs in 2007. His report electrified Russian Netizens when he published it on his blog in November. Authorities initially declined to open a criminal investigation into the deal, saying there were insufficient grounds to do so, but last month Moscow prosecutors sent the case back to the police for further review, which is ongoing. For Navalny, forcing his opponents into a dialogue is often victory enough. "Even a nonsense answer exposes the company somewhat," he says. "At the very least the person responding has to give his name ... They give us something to sink our hooks into."
In a country where discussing conspiracy theories is a national pastime, there is no shortage of speculation about Navalny's motives. Some bloggers say he collects dirt on companies to demand payouts in exchange for keeping quiet. (He denies the accusation, saying the companies he targets are too powerful to bother with hush money.) Others claim he is secretly funded by powerful businessmen who want to make their competitors nervous. Gazprom even published a two-page article in a corporate publication attacking Navalny for his pursuit of criminal charges in a deal involving a Gazprom subsidiary, accusing him of "terrorizing" state-owned companies in order to build "political capital." The article also ridiculed him as a bumbling version of "the brave housewife Erin Brockovich of the eponymous film."
Navalny dismisses the suggestions that he is a puppet of murky forces and says his income from his corporate-law practice is sufficient to finance his crusades. "Not a single one of these managers in these large companies believes I am doing this just as some sort of battle for justice," Navalny says. "These people can't believe that someone would do something for anything other than money."
Harassing Russia's financial and political élite is hardly a hobby for the fainthearted. Navalny says the most common question he's asked is, "Who's paying you to do this?" followed by, "When are you going to be killed?" He says he has never received any direct threats but that he understands the danger of physical retribution for anticorruption campaigners in Russia. He speaks reverently of other activists who do not enjoy his relative fame but nevertheless follow his lead. "For them it's 10 times more dangerous than it is for me," Navalny says. "But they carry on. To a certain degree my work inspires them, and their work inspires me." Plus, he says, there are visceral rewards in attacking the powerful: "I love watching them squirm."