Elena Milashina: In Chechnya, Only the Dead Have Nothing to Fear

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Elena Milashina

It Was an Execution: Dozens of People Were Shot in Grozny on the Night of Janunary 25
Elena Milashina
Novaya Gazeta
July 9, 2017

Over the years, Novaya Gazeta has regularly published information about massacres and reprisals in Chechnya. The motives for persecuting the people who live in the repubic have been quite varied. In early April, Novaya Gazeta published evidence testifying to the widespread persecution, torture, and killings of gay Chechens. Due to enormous international pressure, Russia’s law enforcement agencies for first time conducted, much against their will, a pre-investigation of evidence of extrajudiciary killings in Chechnya. This was in itself an incredible achievement.

On April 20, we handed over to police investigators information about two men who, we had concluded, had been killed during the anti-gay campaign in Chechnya. Our journalistic investigation, in fact, began with attempting to clarify what had happened to these two men.

We sent all information about the murdered men to investigators for their review as soon as we received it. We also gave the Russian Investigative Committee the anonymous testimony of the surviving victims, who had been kept in secret prisons and gone through terrible torture. This testimony aided investigators in independently and successfully establishing the identities of the victims, according to our information.

Igor Sobol, deputy head of the major case squad in the Central Investigations Department at the Russian Investigative Committee’s North Caucasus Federal District office, who conducted the pre-investigation, had planned to meet with the victims to try and convince them to make statements. However, Sobol had worked on the pre-investigation for a mere two weeks when he was suddenly appointed to a new post. The pre-investigation was assigned to another investigator. After this reshuffle, the official investigation ceased to be robust and adopted a predictable stance.  Since the victims had not filed complaints themselves, no crime had taken place.

Moskalkova’s Stance
We guessed this would be the outcome. It is the silence of living victims, scared to death by the unlimited capacities of Chechnya’s security forces, that is the main argument used by police investigators in response to all complaints about human right violations in Chechnya.

Therefore, in addition to the names of the slain gays, we gave investigators a list of twenty some Chechens, arrested starting late December 2016 and, according to our information, murdered in January of this year. These people were arrested during several special raids conducted in Chechnya after December 17, 2016. These people were not formally charged with any crimes. As in the case of the gays, a decision was most likely made to exterminate these people, and the order was carried out.


FYI

On December 17, 2016, a group of young men assaulted and murdered a policeman’s acquaintance. The assailants stole the policeman’s car. During the chase, they ran over a traffic police officer in this car. All the assailants were destroyed [sic], including three detainees.

According to the Memorial Rights Center, they were shot in a hospital in Grozny.

The incident triggered massive arrests throughout Chechnya, and two preventive, proactive counter-terrorist operations were conducted.


All the information about what we have assumed were murdered Chechens was passed on not only to police investigators but also to high-ranking officials, including Tatyana Moskalkova, Russia’s federal human rights ombudsman.

In our letters to these officials, we made a special point of distinguishing between the people we assumed had been killed on suspicion of homosexuality, and the people killed for another reason. (Most likely, they were killed on suspicion of extremism, although we cannot corroborate this: no formal charges were filed, and the Chechen police did not have sufficient information to file charges.)

“No one can be subjected to violence, humiliation and, especially, the loss of life under any circumstances,”  Moskalkova announced publicly before sending our petition to the Russian Investigative Committee for review.

On June 6, the preliminary outcome of the review, which the Russian Investigative Committee had been conducting for over two months, was made public. Ombudsman Moskalkova reported on the Investigative Committee’s reaction to her request.

“The reply I received says they have not ascertained evidence confirming violent actions, because they had no specific information on these citizens.”

Moskalkova had every reason to put the matter to rest, as many high-ranking officials had done before her. But she adopted a principled stance under the circumstances.

“Since my request and the letter from Novaya Gazeta I sent contain the names of the people who have, allegedly, perished, the review cannot be deemed completed at this point, and I ask you to clarify what happened to the people whose names are listed in the letter,” wrote Moskalkova.

In an interview with TASS News Agency, Moskalkova likewise remarked that the list given to her by Novaya Gazeta “contains only surnames and names, and nothing else.” She expressed her hope that the “investigative authorities would be able to talk with the article’s author and obtain additional information about years of birth, places of burial, relatives, and former places of residence.”

The fact is that, during our communications with the investigator conducting the review, we passed on more complete information that would make it possible to identify people from the list and establish what had happened to them. At the time, we had information about the places where these people had resided and their dates of birth.

One January Night
After sending the list to the official investigators, we did not halt our own investigation. We kept on trying to explain what had happened to these people.

Since we no longer have any confidence that the new investigator conducting the review will want to talk with our reporters, we have decided to publish everything we know about the circumstances of how these people disappeared.

Large-scale arrests of people kicked off in Chechnya after December 17 of last year. In early January, special raids were carried out the Grozny, Kurchaloy, and Shali districts of Chechnya, during which many people were arrested. The arrestees, however, were not formally registered or charged with crimes. Instead, they were put in the cellars and outbuilding of police departments.  The arrests continued until late January.  According to what we have learned, around two hundred people were arrested.

Novaya Gazeta carefully monitored these events and has written on several occasions about the plight of the arrestees. Thus, on January 12, we published the names of those arrested after a special raid in the Kurchaloy District. Some of the people on this list were “legalized” only on February 20. This means they were formally arrested only a month and a half after they had in fact been detained. These people were formally charged with illegal arms trafficking (Article 222 of the Russian Federal Criminal Code), and a handful were also charged with violating Article 208 (involvement in an illegal armed formation).

We believe that, during a month and a half of illegal detention, these people were coerced into confessing their guilt, which is often the only evidence of guilt in Chechnya. This can be easily seen if we examine the criminal cases currently under investigation by the Chechen Investigative Committee. The names of twenty-two men, detained on January 9 and 10, 2017, and published on Novaya Gazeta‘s website on January 12, is evidence of the illegal one-and-a-half-month detentions, which, in fact, from the legal point of view, render null and void all thhe so-called confessions of guilt.

When comparing this information, we discovered that six people, detained on January 9 and 10, are on the list of those presumably murdered, which we passed on to the Russian Investigative Committee.

The Marked List
During our journalistic investigation, we were able to obtain a list of the people detained in January from a source in the Chechen Interior Ministry. We were also able to match the detainees with the following towns and villages in Chechnya.

Shali: 28 people
Kurchaloy: 9 people
Tsotsi-Yurt: 11 people
Mayrtup: 6 people
Germenchuk: 3 people
Komsomolskoye:  1 person
Avtury: 2 people
Old Sunzha: 4 people
Serzhen-Yurt: 2 people
Belgatoy: 1 person

Comparing this document with the list of allegedly murdered people that Novaya Gazeta sent to the Russian Investigative Committee, we found out what had happend to another 21 people who had been arrested and subsequently killed, according to our information. The great number of arrests took place in Shali, and we have ascertained the addresses of the people on our list from Shali. But all our attempts to find out anything about the plight of these people have been met with incredible fear on the part of our sources. One of them, an employee in Shali city hall, panickedly refused to look over the names of the Shali residents we had ascertained.

“Everyone who was detained in Shali in Janury is gone. Don’t look for them,” he said.

Currently, we know about 27 people who were presumably killed (see the list at the end of this article), although we have reason to believe that 56 Chechens may have been killed. These people were detained at different times. (We have managed to ascertain the dates when thirty of the detainees were arrested: January 9, January 10, January 21, and January 24.) However, the date and time of death, according to our information, is the same for all these people: the night of January 25.

That night, all the detainees were held at the base of the Police Patrol Service’s Hero of Russia Akhmat-Hadji Kadyrov Regiment, headed by police colonel Aslan Iraskhanov. The relative of one victim, an influential Chechen official who has managed to uncover the circumstances of the detainees’ disappearance, has testified that, on the night in question, the following people were located at the Kadyrov Regiment’s base: Apti Alaudinov, First Deputy Interior Minister of the Chechen Republic; Abuzeyd Vismuradov aka The Patriot, commander of the Terek Rapid Deployment Task Force and head of Ramzan Kadyrov’s personal security detail; Colonel Iraskhanov of the Kadyrov Regiment; and the police chiefs of the districts where the detainees were registered.

According to the information we have, the detainees were shot that night. Their bodies were transported to various cemeteries, including Christian cemeteries, and buried in hastily dug graves. (Novaya Gazeta knows the locations of some burial sites).

Careful study of the lists of detainees has led us to conclude that the decision to carry out the extrajudicial executions was taken centrally [sic] and, oddly enough, spontaneously. However, this is how key decisions are made in today’s Chechnya.

This follows, at least, from an analysis of a document given to us by our source in the Chechen Republic Interior Ministry. It consists of the typical photo charts that are used by all police officers and are compiled, apparently, according to a single template. (We can assume that Chechen police officers keep records of their “unofficial” actions according to the generally accepted practices of the Russian Interior Ministry.) The photographs were obviously taken immediately after the arrests; moroever, they were not taken in official police departments. Many of the detainees are handcuffed to gym wall bars or radiators, which are more typically found in basements. Marks have been made next to certain photographs, apparently, at different times. If there are no marks, it means the detainee was released. Marks containing the numbers of criminal code articles mean the detainee was later charged with a criminal offense. These marks were made in the same column of the photo chart, right after each detainee’s personal information.

That is, up until a certain point, the police had two options as to what to do with the detainees: release them or bring them up on criminal charges. Later, however, marks that have nothing to do with police expediency emerged on the margins of the list: plus and minus signs. The plus signs most often match detainees charged with criminal offenses. The minus signs can mean only one thing: extermination.

The Dead Speak
We would like to underscore the fact that despite its having been confirmed by two sources (the first source works in the Investigative Department of the Chechen Investigative Committee, and the second in the administration of the head of Chechnya), we cannot affirm that, on the night of January 25, an extrajudicial execution took place in Chechnya, unprecedented in its scale even for that republic.

But we can insist on instituting a criminal case, during which it would not be particularly hard to check this evidence. First, we have given the Russian Investigative Committee more than enough evidence about the victims. Second, the exhumation and postmortem forensic examination of corpses is quite capable of revealing traces of bullet wounds: they stay on bone remains forever. Ascertaining the identities of the presumed murder victims is also easy: DNA samples would need to be taken from the relatives of the victims for comparative analysis. Unlike the persecution of the gays, in which the victims’ families, albeit under duress, were involved in the crackdown, the relatives of people arrested on suspicion of extremism will assist investigators in this case. In addition, far from all of them know what really happened to their loved ones. Many still hope the detainees will come home alive. People are still looking for their loved ones who disappeared in January. They visit police stations and ask questions.

In response, they have heard the same excuses for months on end. “Maybe they are already somewhere in Syria.” “You should have kept track of your relatives yourselves. What do you want from us?” At best, the police tell these people, “You’ll find out when the time comes.”

Our recurrent and now public appeals to the Russian Investigative Committee are our attempt to bring to the country’s leadership and the country’s head investigators evidence that leaves little doubt that extrajudiciary executions have been actively pursued in Chechnya. We are sure it was long-term connivance of this practice that made possible the widespread persecution of gays in Chechnya. If this practice is not harshly eliminated, next time we will face an even more brazen crime than killing people only because somebody considered their sexual orientation unacceptable.

We have published this evidence because the state, as represented by the authorized law enforcement agencies, has left us no choice. For two months, we had hoped for cooperation, which was effective at the very outset. Today,it is obvious that the Russian Investigative Committee is giving ground on this case just as it gave ground in the Boris Nemtsov murder case. That is why we are publishing a list of those people who, according to our information, were victims of possibly the most terrible extrajudicial execution in Grozny. And now police investigators, who refer to the lack of living complainants, will have to deal with special witnesses.

Because in Chechnya only the dead have nothing to fear.

Novaya Gazeta‘s List
1. Abdulmezhidov, Adam Isayevich, born May 27, 1987
2. Abumuslimov, Apti Hasanovich, born June 2, 1989, resided at Shkolnaya Street, 16, Shali
3. Abdulkerimov, Said-Ramzan Ramzanovich, born March 25, 1990, registered at Dokhtukayev Street, 18, Kurchaloy
4. Alimkhanov, Islam Aliyevich, born July 6, 1998
5. Abubakarov, Adam Dzhabrailovich, born May 5, 1995
6. Bergayev, Ismail Shadidovich, born August 19, 1998
7. Dasayev, Adam Ilyasovich, born June 16, 1988, Shali
8. Jabayev, Zelimkhan Khizirovich, born December 18, 1993
9. Ilyasov, Adam Khuseinovich, born September 22, 1997
10. Lugayev, Rizvan Said-Khamzatovich, born September 13, 1987, Shali
11. Malikov, Rizvan Agdanovich, born June 1, 1990
12. Muskiyev, Mohma Turpalovich, born July 17, 1988, registered at Novaya Street, 10,  Tsotsi-Yurt
13. Mussanov, Temirlan Ahmadovich, born April 28, 1986, Chicherin Street, 2, Shali
14. Ozdiyev, Usman Vakhayevich, born December 24, 1989, registered at Grozny Street, 39, Shali
15.  Rashidov, Doku Ibrahimovich, born May 30, 1995
16. Syriyev, Magomed Musayevich, born February 23, 1993
17. Soltamanov, Ismail Ezer-Aliyevich, born March 30, 1994, registered at Nuradilov Street, Mayrtup
18. Suleimanov, Magomed Arbeyevich, born January 3, 1987, Caucasus Village, 8/4, Shali
19. Tuchayev, Ahmed Ramzanovich, born February 23, 1987, Shkolnaya Street, 30, Shali
20. Khabuyev, Khamzat Slaudinovich, born February 14, 1993
21. Hakimov, Alvi Aslambekovich, born November 16, 1992
22. Khamidov, Shamil Ahmedovich, born November 14, 1986
23. Tsikmayev, Ayub Sultanovich, born April 2, 1984, Molodezhnaya Street, Germenchuk
24. Shapiyev, Muslim Isayevich, born November 28, 1989, registered at Kutuzov Street, 12, Shali
25. Eskarbiyev, Saikhan Vahamsoltovich, born May 23, 1992
26. Yusupov, Sakhab Isayevich, born January 19, 1990
27. Yusupov, Shamkhan Shaykhovich, born June 17, 1988, registered at Soviet Street, 11, Kurchaloy

Translated by the Russian Reader. Photo courtesy of Wikipedia

Russian Trade Union Blues

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“Peace, Labor, Putin.” The Federation of Independent Trade Unions of Russia (FNPR) has 22.7 million members, who annually pay out almost 68 billion rubles to fund their trade union associations. (The FNPR has 122 such affiliated organizations nationwide). At best, only 140 million rubles make it to Moscow. The rest stays at the local level. Photo courtesy of vestnikburi.com

An RBC Investigative Report: How Russian Trade Unions Make Money 
Vyacheslav Kozlov
RBC
April 29, 2016

The Federation of Independent Trade Unions of Russia (FNPR) will celebrate May Day with a march in support of workers. As RBC has found out, the budget of the country’s largest trade union organization runs in the billions of rubles, much of it earned from real estate it freely inherited from the Soviet Union. 

In February 2016, Crimea’s most famous resort got a new owner. The Foros Spa, right down the road from the residence where Soviet President Mikhail Gorbachev was held captive during the 1991 coup attempt, was purchased for 1.4 billion rubles by the Federation of Trade Unions of Tatarstan.

Even their bosses in Moscow could not understand where a little-known noncommercial organization from Kazan had got its hands on that kind of money.

“When we saw the news, we didn’t even reprint it at first. We called and checked whether it was true,” an employee at the FNPR’s central office told RBC. (The Federation of Trade Unions of Tatarstan is an affiliated member of FNPR.)

The folks in Kazan reassured the trade union bosses in Moscow. The organization, which is mainly funded by membership dues paid by workers, really did not have that kind of money. It had acted as a middleman in the purchase of Foros, getting the money from major regional companies.

“There are such companies there: KamAZ, Tatneft, petrochemical plants [part of the TAIF GroupRBC],” said FNPR leader Mikhail Shmakov, bending his fingers back as he listed off the companies.

Shmakov spoke with RBC in his office on Leninsky Prospekt, 42, in Moscow. In keeping with Soviet tradition, the building is even nowadays called the Trade Unions Palace of Labor.

foros
Ukrainian billionaire Igor Kolomoisky, who owned the property before the peninsula was annexed by Russia, could have insisted on imposing sanctions on the buyers of the famous Crimean spa Foros. The scheme for buying Foros, involving the Tatarstan trade unions, made the deal less risky, sources told RBC. The view, above, is of the government dacha Zarya (Dawn), where the coup plotters held Mikhail Gorbachev in 1991. Courtesy of Mikhail Pavlishak/TASS

Shmakov could not conceal his satisfaction with the deal, calling it “brilliant.” RBC’s source in the FNPR executive committee and another source, close to the Tatarstan government, said the scheme for buying Foros, involving trade union bosses, was employed so the real buyer would not end up on the sanctions lists of the European Union and the US.

“To act as a middleman in such deals you have to have good connections with the authorities and big business. They have to consider you one of their own. You have to be a loyal organization,” a source close to the FNPR leadership explained to RBC.

The FNPR has long been cooperating with the authorities and business. Heir to the All-Union Central Council of Trade Unions (VTsSPS), the federation is proud of the fact it is the largest labor union in Russia, with 122 affiliates and over 20 million members.

How does the country’s largest trade union organization make its money?

Budget
Despite its federal scale, the FNPR is an extremely closed organization. It does not publish financial statements.

“This information is available only to members of the executive committee, and even then documents containing specific figures are not distributed to everyone. Some are given documents without any figures,” said an employee in the central office.

RBC has obtained a document describing the FNPR’s budget in terms of percentages. From this document it follows that the federation has only two sources of income, membership dues and “other income,” a phrase that mainly conceals revenue from commercial operations.

shmakov
FNPR chair Mikhail Shmakov (pictured above) has remained at the helm of the country’s largest trade union organization for all 25 years of its existence. Photo courtesy of Oleg Yakovlev/RBC

The document reveals that membership dues make up 70% of the FNPR’s revenues, while “other income” amounts to 30%.

Expenses are more complicated. 40.5% is spent on organizational and business operations, and 46.6%, on subsidizing FNPR institutions. Six percent goes to the so-called solidarity fund (for holding protests, paying wages of workers during downtime on the job, and making one-time payments to members involved in work-related accidents), while another 6.3% pays for dues in the international organizations of which the FNPR is a member, and 0.4% is spent on maintaing the auditing commission. In other words, nearly 90% of expenses go towards maintaining the organization itself.

Shmakov confirmed the income percentages in conversation with RBC. (He said nothing about expenses.) In 2016, the FNPR’s budget was 200 million rubles, according to Shmakov. An RBC source close to the Kremlin, who was well acquainted with the operations of the trade unions, confirmed that the FNPR’s annual budget was comparatively small.

“A few years ago, it did not exceed one million dollars,” he said.

The amount looks strange when you consider the number of people paying membership dues nationwide. The income of FNPR’s various affiliated trade unions, from factory locals to central committees, is incomparably greater than the parent organization’s budget.

Membership dues in most Russian trade unions are one percent of wages. If we take the official membership figures (according to Shmakov, the FNPR has around 20.7 million dues-paying members, plus another three to four million students and pensioners who do not pay dues) and the national average monthly wage (according to Rosstat, it was 33,900 rubles in February 2016), the dues paid by all FNPR-affilated trade unions should come to approximately 5.7 billion rubles monthly or 67.9 billion rubles a year.

But not all that money makes it to Moscow.

“The money is spread around the entire organization,” said an employee in the central office.

Locals keep from fifty to ninety-five percent of collected dues, explained our source. The rest is split among central and regional organizations.

How are these billions of rubles spent?

Expenditures
“Exempt trade unionists” is the Soviet-era legal term for trade union employees, from executives to secretaries, who are exempt from working directly at a particular enterprise. Their salaries are usually paid by the trade union itself. Trade union association executives surveyed by RBC confirmed that up to half of an organization’s budget can go to paying exempted workers. For example, the Pskov Federation of Trade Unions spent nearly 30 million rubles of its 2015 budget of 66 million rubles on the salaries and bonuses of over sixty exempt employees, says the federation’s head, Ulyana Mikhailova.

RBC asked the FNPR to provide it with the number of exempt employees nationwide but our request was turned down. Open sources mention the number of elected trade union officials. According to a 2011 FNPR executive committee decision, there were 13,500 such officials.

union membership
How Union Membership Has Declined. [According to the graph, union membership in Russia has declined from 65 million in 1992 (the first full year of independence) to 20.7 million in 2016. – TRR.] Sources: RBC interview with Mikhail Shmakov; decisions of the FNPR executive committee; white paper edited by Sergei Khramov and Mikhail Delyagin. Inserted text reads: “On average, 24% of the able-bodied population, i.e., approximately 17.2 million people, admit they are trade union members, according to an October 2008 poll conducted by the Russian Public Opinion Research Center (VTsIOM).” Courtesy RBC

But this is only a small part of the trade union army. According to figures for 2011, there were 191,000 trade union locals in Russia.

“At least one exempt worker emerges in a local with no less than three hundred members,” said Yuri Milovidov, director of Proftsentr, which assists trade union activists. “By my calculations, at least a quarter of these locals have at least one trade union worker. Some have several. There are fifty to seventy thousand such workers countrywide.”

A source in the FNPR executive committee said there were fewer trade union employees, around forty thousand. But even if we take this figure at face value, it turns out that the FNPR is one of the country’s major employers. (By way of comparison, AvtoVAZ, Russia’s largest auto manufacturer, employed around fifty thousand people as of late 2015.)

According to the FNPR employees surveyed by RBC, the average monthly salary among trade union employees is around 25,000 rubles, a little lower than the national average. The payroll bill for professional trade unionists across the country thus might be as much as one billion rubles a month.

Known as the Labor Palace of Trade Unions since Soviet times, FNPR's headquarters on Leninsky Prospekt in Moscow is of the most well-known pieces of real estate managed by the federation. Photo courtesy of Oleg Yakovlev/RBC
Known as the Trade Unions Palace of Labor since Soviet times, the FNPR’s headquarters on Leninsky Prospekt in Moscow is of the most well-known pieces of real estate managed by the federation. Photo courtesy of Oleg Yakovlev/RBC

The exact number of employees in the FNPR central office is unknown. The federation declined to answer this question when asked by RBC. A source in the central office said there were no more than 120 employees. Another source said their salary was small but higher than the national average: around 60,000 to 70,000 rubles a month.

Shmakov declined to disclose his salary.

28 Kilometers from Moscow
In the village of Chigasovo, in an elite neighborhood on the Rublyovskoye Highway in the Moscow suburbs, there is a house and plot of land (516.2 square meters and 1,798 square meters large, respectively) owned by a Viktor Shmakov, which is the exact same name as that of Mikhail Shmakov’s son. The FNPR chair’s son does business. According to SPARK, he is the director of Art Mix LLC, which organizes celebrations and events. As ads on the real estate and property rentals website CIAN.ru indicate, several five-hundred-square-meter cottages sited on fifteen-acre plots in Chigasovo are valued at around 36 million rubles. Mikhail Shmakov forwarded our questions about the house and land’s ownership to the proprietor, as listed in the Unified State Register of Real Estates Rights and Transactions (EGPR).

The Russian Federation of Spas
The FNPR acquired property amid the turmoil of the early 1990s, when familiar institutions of Soviet power crumbled. It was then that the young trade union leader Mikhail Shmakov, previously employed as a rocket engineer, managed to gain standing among Russian leaders and head the new organization, which immediately declared itself the VTsSPS’s legal successor. In legal terms, its property was transferred to the FNPR in 1992 through a special agreement. This property is now the source of the “other income,” mentioned above, the revenues the trade unions generate from commercial operations.

The exact number of real estate properties and land plots that were donated to the FNPR is contained in the appendices to the 1992 agreement, which the federation keeps secret. During the twenty-five years of its existence, the agreement has never been published. (The FNPR also refused to provide a copy to RBC.)

Milovidov, who worked for the FNPR for many years, claimed that 2,582 properties were transferred to the federation: 678 health spas, 131 hotels, 568 stadiums, and over 500 Young Pioneer camps.  It is unclear how many of these properties are still managed by the federation, but informally, sources there said the trade unions had lost around sixty percent of the property belonging to the VTsSPS when the Soviet Union collapsed.

According to Profkurort, the main trade union tourist agency, the trade unions now run exactly 374 resorts (health spas, boarding houses, vacation retreats, and children’s summer camps) in sixty-five regions from the Russian Far East to Kaliningrad.

The FNPR’s most profitable properties are in the southern Russia and Moscow. The trade unions particularly cherish their properties in the Caucasian Mineral Waters area. Their health spas account for over a quarter of so-called bed capacity among all the resorts in the area. Annually, they can take in 160,000 guests.

“Shmakov personally handles the Caucasian Mineral Waters. It’s his project,” RBC’s source in the federation’s central office explained.

To manage all its properties in the Caucasian Mineral Waters area, the federation founded Spa Management (Holding) LLC in 2005, which runs twenty-two health spas, including balneo baths and mud baths, mineral water drinking rooms, three boiler plant companies, a kindergarten, a library, a repair and construction company, and a car and truck pool. The federation’s share in the holding is nearly 85%, while over 15% belongs to the Stavropol Territory Association of Trade Unions, also affiliated with the FNPR. In 2015, the holding’s total revenue was 5.4 billion rubles, and its net profit was 294 millions rubles, Yulia Korogodova, Spa Management’s director, told RBC.

The FNPR’s other claim to fame are its hotels and health spas in Sochi. (According to RBC’s calculations, the FNPR and its subsidiaries own twenty-six buildings and seven lots there.) Sochi was the site of the FNPR’s biggest project in recent years, the reconstruction of three hotels for the Winter Olympics.

“Everyone was surprised that Shmakov had decided to get involved in the reconstruction of Sochi along with billionaires Vladimir Potanin and Oleg Deripaska, and other big businessmen. The authorities set them the harsh task of finishing in time for the Olympics at all costs, and this led to the fact that the poor FNPR was almost among the first to deliver its sites,” a source close to the federation’s central office told RBC.

metallurg
Steelworker Spa in Sochi is one of three properties reconstructed by the FNPR for the 2014 Sochi Winter Olympics. The federation borrowed two billion rubles from Vnesheconombank to finance the work. The trade unions are now attempting to restructure their debt. Photo courtesy of PhotoXPress

The trade unions had no money of their own, said our source, so they took out a loan from state-owned Vnesheconombank, which was the main source of funding for the Olympic projects, another source close to the FNPR told RBC. Shmakov confirmed that there was a loan. RBC found out from Vnesheconombank that the funds had been allocated to three joint-stock companies: Adler Spa, Steelworker Clinical Spa, and Trade Union Spas (Svetlana Spa). These companies all manage trade union properties in Sochi.

According to Shmakov, the loan amounted to 1.5 billion rubles. Spa Management, however, clarified that 2 billion rubles had been borrowed. The total investment in the Olympic hotels was 2.7 billion rubles, according to Spa Management, although they did not explain the source of the additional 700 million rubles. Shmakov said the FNPR was forced to put up Adler Spa as collateral for the loan. He confirmed that all revenues from the reconstructed hotels now have to go towards paying off the loan. In the current circumstances, however, the FNPR would rather not have to pay. According to sources at Vnesheconombank, the FNPR has sent them a request to restructure the loan.

Vnesheconombank’s money was used to rebuild the Svetlana Health Resort as the Sea Galaxy Hotel Congress & Spa and renovate the Steelworker Spa and one wing of the Adler Spa. There are 690 beds in the 18-story Sea Galaxy. In high season, a standard single room, according to the hotel’s price list, costs 5,300 rubles a night. In 2014, Profkurorty (Svetlana Spa) JSC, which manages the reconstructed hotel, recorded revenues of nearly 197.3 million rubles and a net profit of over 178.6 million rubles.

The ownership of trade union real estate is extremely confusing and opaque. Without engaging in commercial operations itself, the FNPR has founded dozens of companies to manage its properties nationwide.  (The Krasnodar Territory Trade Unions Council alone has registered 74 subsidiaries at various times.) However, as analysis shows, many of the spa companies in the Caucasian Mineral Waters areas and Kuban are closed organizations: over thirty of them are closed joint-stock companies, while the rest are private legal entities. From 2010 to 2014, these companies earned nearly 45 billion rubles.

From One Funeral to the Next
In late June 2015, the latest memorial service took place in the House of the Unions on Bolshaya Dmitrovka in Moscow, a building that belongs to the trade unions. People came to pay their last respects to former Russian Prime Minister Yevgeny Primakov. Even President Putin attended the ceremony. Almost three weeks later, Alexander Bulgakov, perennial director of the House of Unions, was arrested by police investigators right in his office, next door to the State Duma.

The Investigative Committee reported that Bulgakov had been detained as he was receiving 308,000 rubles from the director of another commercial entity, House of the Unions Refreshments LLC. Allegedly, Bulgakov had extorted the money, which was ten percent of the cost of the banquets and receptions catered by House of the Unions Refreshments. A year later, Bulgakov was sentenced to four years in prison.

house of unions
The House of the Unions, adjacent to the State Duma building in Moscow, has long been considered the country’s primary venue for paying last respects to famous politicians and public figures. Along with the Trade Unions Palace of Labor, it is the most popular architectural landmark belonging to the trade unions. Photo courtesy of Wikipedia

An RBC source, close to the FNPR, did not rule out a link between the two events, the memorial service for Primakov and Bulgakov’s arrest.

The service’s organizer, the Presidential Property Management Directorate, was, allegedly, displeased with the original fee Bulgakov had asked for holding the ceremony, said the source. (According to the state procurements site, the event’s final cost was 1.222 million rubles.) Complaints against Bulgakov were made to law enforcement authorities. RBC’s source in the FNPR’s central office confirmed he had heard this hypothesis.

Shmakov also acknowledged he had heard the story about dissatisfaction with the price of the memorial service, but he said it was not confirmed in the end. According to him, when negotiating the arrangements for Primakov’s service, Bulgakov had quoted the usual rate for such an event.

“It all started with the memorial service for Shvetsova [former State Duma deputy and former Moscow deputy mayor Ludmila Shvetsova — RBC]. It cost four million rubles. Moscow city hall paid this money, because that is how much such events cost. It was this price that he [Bulgakov] offered,” Shmakov said now.

Like most of the trade union properties in the capital, the House of the Unions belongs to the Moscow Federation of Trade Unions (MFP), which is part of the FNPR. The MFP also owns the Izmailovo Hotel Complex, Krylatskoye Velodrome, Znamensky Brothers Olympic Center, Trud Swimming Pool, Sokolniki and Peredelkino Spas, and Planernaya Olympic Center in Khimki.

Izmailovo-Hotel
The Izmailovo Commercial and Hotel Complex in Moscow is trade union property like, for example, the Sputnik Hotel on Leninsky Prospekt. In contrast to the Sputnik, however, which is owned directly by the FNPR, the Moscow Federation of Trade Unions holds the controlling stake in the Izmailovo complex. Photo courtesy of top10hm.net

The most profitable asset in Moscow is the Izmailovo Hotel Complex. The Moscow Trade Unions Property Fund owns 75% of the shares in Izmailovo Commercial and Hotel Complex JSC, which manages the Gamma, Beta, Delta, and Vega buildings, while the FNPR holds a seven-percent share. (The remaining shares are owned by members of the board of directors.)

In 2014, the total revenue generated by the hotels in the Izmailovo holding was over 3.25 billion rubles, with a net profit of over 240 million rubles. The MFP wholly owns the Alpha Commercial and Hotel Complex, which manages one more of the Izmailovo hotels, which is not part of eponymous joint-stock company. In 2014, Alpha’s gross profits were over 770 million rubles; its net profits, over 33 million rubles.

The FNPR does not own so much property directly in Moscow. It owns the Trade Unions Palace of Labor on Leninsky Prospekt, where the organization has its central office; the nearby Sputnik Hotel; a motorpool near Kaluzhskaya subway station; the building of the Academy of Labor and Social Relations, in western Moscow; and its own tailor’s shop and primary care clinic.

At Public Expense
People who began their careers in Soviet times know the terrifying sounding word sotsstrakh (“social insurance”). These were payments made by the Social Insurance Fund (FSS), which was managed by the trade unions until the early 2000s. Sotsstrakh paid for children’s trips to Young Pioneer summer camps, and for workers and pensioners to go to health spas. Then the FSS was taken over by the state, but the health spas were left to the trade unions, providing them with yet another way of making money.

“When the state lacks enough of its own health spas to provide treatment for everyone who has a legal right to it, it refers people to trade union spas,” explained Nikolai Murashko, director of the FNPR’s Spa Directorate.

Judging by public procurement records, government contracts are a serious source of revenue for the trade unions. Over a period of six years, from 2010 to 2016, FNPR’s Resort Holding implemented government contracts worth more than 4.8 billion rubles. During the same period, the spas owned by the Krasnodar Territory Trade Unions Council sold holiday packages worth a total of approximately four billion rubles.

The FNPR’s affiliated trade unions also make money on government contracts. The MFP and its member organizations, for example, were awarded government contracts worth more than 617 million rubles during the same six-year period. The Federation of Trade Unions of Saint Petersburg and Leningrad Region earned 242 million rubles, while the FNPR earned 32 million rubles itself.

What does the FNPR give the state in return?

A Necessary Organization
Shmakov had no doubt the federation fulfilled its main functions: protecting labor rights and controlling the propertied classes. For sixteen years, the government has convened a special tripartite commission for regulating social and labor relations. Government ministers, employers (e.g., the Russian Union of Industrialists and Entrepreneurs and Opora Russia), and trade unions officials sit at the same table. A Kremlin official, however, warned against exaggerating the commission’s role.

“The minutes from some of the meetings are long, but that is where it ends: in the minutes. The state conducts its own policy,” he said.

He was echoed by someone who had been involved in the meetings.

“A trade union that, for example, is capable of getting people onto the streets can have a real impact on social and economic policy. Because of this, when it comes to the FNPR’s bread-and-butter issues, pensions, for example, the federation finds it quite hard to pound its fist on the table and say things will be the way it says.”

Rosstat’s data suggests that while in the 1990s there were several hundred or even thousands of labor strikes recorded annually, the numbers slumped to several strikes a year in the 2000s. One of the causes was the tightening of procedures for striking, as described in the new Labor Code, which took effect in 2002.  One of the authors of the new Labor Code was current State Duma deputy speaker Andrei Isayev, formerly a secretary of the FNPR.

“The law on strikes is prohibitive,” said Boris Kravchenko, chair of the Confederation of Labor of Russia (KTR).

The KTR, like a number of other independent trade unions, such as the locals at AvtoVAZ and the Ford plant outside Petersburg, emerged in the late 2000s as a counterweight to the the FNPR, which cooperates with the authorities.

The Kremlin appreciates the fact that the FNPR does not go on strike and cooperates with the United Russia Party. [Isayev is a member of the party’s general council — RBC.]

“The FNPR are constructive critics. The goal of certain other organizations is to get people protesting on the streets. The FNPR has a different stance: solving a problem before people take to the streets,” says an official in the presidential administration.

* * *

In May 2011, the FNPR was one of several organizations that joined together to establish the Russian People’s Front (ONF), headed by Vladimir Putin. The ONF is now the only public organization in Russia comparable to the FNPR in terms of numbers of regional offices. And, like the FNPR, the ONF does not disclose its budget.

With additional reporting by Mikhail Rybin, Anastasia Napalkova, Maria Zholobova, and Yevgenia Glazova.

Translated by the Russian Reader. Thanks to Sean Guillory for the heads-up. NB. Because of the sheer quantity of figures given in rubles in this article, I have foregone my usual practice of converting them into euros for ease of comprehension. Current and historical currency rate conversion tables, however, are eminently accessible on the web, so knock yourselves out. TRR