Nastiness Is a Warm Gun: The Kremlin’s Cowboys

bd1bf37b99A Miratorg worker tending calves. Courtesy of Readovka

Business Russian Style, or, What is Miratorg, and What Do You Eat with It?
Dmitry Zhuravsky
Readovka
April 30, 2019

How Did a Company Importing Meat from Brazil End Up Getting Most of Russia’s Agricultural Subsidies? 
Miratorg’s own website identifies it as the largest agribusiness investor in Russia. The company is owned the Linnik twins, Viktor and Alexander. Viktor serves as the company’s president. It was Viktor Linnik who, last week, proposed tightening controls on the luggage of people entering Russia and increasing penalties for the illegal import of meat-based products. Today, he encouraged Russians to stop thinking about Parmesan cheese and start thinking more about the country’s growth. To rub it in, he dubbed everyone disgruntled with such proposals “blowhards.”

We should point out right off the bat that the fact Prime Minister Dmitry Medvedev’s wife’s maiden name is Linnik is only a funny coincidence, one which the Linnik twins have never tired of mentioning when they are interviewed by journalists.

The facts back this up. Blood relatives of the Russian state’s second most important person could not have established a giant agribusiness company that keeps all its accounts and founding capital outside Russia.

One hundred percent of Miratorg’s shares are owned by Cypriot offshore companies: 99.99% by Agromir, Ltd. (despite its Russian acronym, the company is registered in Nicosia), and 0.01% by Saudeid Enterprises, Ltd. (also registered in Nicosia).

Nevertheless, Miratorg is on the Russian federal list of so-called backbone companies and, since 2015, due to Russia’s self-imposed ban on meat and produce imports, it has been dubbed a strategic company. These regalia allow the Cypriot-based company to obtain loans from Vnesheconombank at discounted rates, which means it borrows part of its operating capital by drawing on the future pensions of Russians. (We published a detailed analysis of this scheme in a previous article.) It also means Miratorg can apply to the government for subsidies to pay back these selfsame loans.

A Success Story
Considering Viktor Linnik’s current circumstances, Miratorg’s origins appear laughable. The company was initially established to import meat from Holland and Brazil to Russia. To make the job easier, two years after the company was founded, in 1997, Miratorg opened a subsidiary in the Kaliningrad Sea Fishing Port, through which it imported meat to mainland Russia. Miratorg did business this way for nearly ten years. In 2005, it purchased a stake in two BelgoFrance-owned pig farms in Belgorod Region. The import company was transformed into a full-fledged agribusiness.

Kaliningrad Sea Fishing Port. Courtesy of Readovka

Miratorg went on to co-found a farm in Kaliningrad Region. A little later, it moved into Bryansk Region, which has become the company’s second home.

It was also in 2005 Miratorg was chosen to be involved in the National Priority Projects, a program for growing “human capital,” announced by Vladimir Putin on September 5, 2005. Until Dmitry Medvedev was elected president, the program, which included promoting the agricultural sector as one of its priorities, was overseen by the current Russian prime minister. Since 2008, when Medvedev was inaugurated president, the agricultural growth program has had its own line item in the federal budget.

Current Realities
Miratorg is currently Russia’s largest meat producer. According to Kontr.Focus.ru, an online service for assisting in doing due diligence on potential clients and business partners, Miratorg, Ltd., has founded thirty-six subsidiaries in eight regions of Russia. In 2017, the company produced 415,000 tons of pork, 114,000 tons of poultry, and 82,000 tons of beef.

Russia’s regions regard Miratorg as a valuable investor whom nearly any governor would be glad to welcome into his neighborhood. According to Miratorg’s website, the company has made a total of 200 billion rubles in investments. The advent of an agricultural market player of this caliber in a region means a guaranteed inflow of money from the federal budget in the form of subsidies from the government’s agricultural sector growth program and  Miratorg’s own investments.

On paper, Miratorg is a real find for regions heavily dependent on federal government subsidies. Aside from the federal agricultural subsidies it brings with it, Miratorg contributes to regional budgets through the land it leases. Its farms provide jobs while they are being builty and after they are brought on line. In addition, it pays taxes in the regions. The company is not a burden but a blessing, or so it would seem.

Russian Prime Minister Dmitry Medvedev and Miratorg President Viktor Linnik. Courtesy of Readovka

Taking advantage of its status, Miratorg moves confidently around Russia. In the regions, it has become accustomed to acting suddenly and brazenly. The company often receives land under indefinite gratuitous bailments by order of the federal government, whose decrees are personally signed by Prime Minister Medvedev.

Miratorg usually acts in full compliance with the law, although the effects of how it does business trip up regional governments. After three years, the land it leases free of charge is transferred from regional ownership to Miratorg’s ownership.

Last summer, the Bryansk Commercial Court adjudicated a conflict between the Bryansk Meat Company (Miratorg’s local subsidiary) and the Bryansk Regional Government. Miratorg tried to prove that members of a district council had violated the law by refusing to sell them land they had been leasing. According to law, a company that has leased agricultural land for three years has the right to purchase it and continuing farming it. Only two conditions must be met for the deal to go through: the relevant regulatory authorities must have no objections, and the land must be used for its original purpose.

The Bryansk Meat Company had complied with these terms, but local councilors had not signed off on the deal. Originally, they had agree to lease the land to the investor. Later, Miratorg’s subsidiary decided to trick the council and buy the land. Consequently, the local council was not paid the rent promised to it and did not profit from Miratorg’s presence in the district.

Instead of a lease, the local council was offered a one-time payment, which is transferred to the council’s accounts when the investor buys the land. Bryansk Meat Company’s farm occupies thirteen parcels of land totaling 7,398,700 square meters. Under the terms of the sale of the parcels to Miratorg, the average assessed value of one square meter of land is a mere 1.6 rubles. It is a great deal for Miratorg, but not for Bryansk Region.

We found reports of similar law suits ongoing between Miratorg and local governments in other regions of Russia.

Nastiness Is a Warm Gun
Since 2009, Miratorg has also confidently been colonizing Kursk Region. Its investments there began with the Pristen District, but currently the company operates in thirteen districts in the region. Its facilities in Kursk Region include the Pristen Pig Farm, Blagodatnoye Agricultural Enterprise, Renaissance Farm, Fatezh Lamb, and Miratorg Kursk, Ltd. According to Miratorg’s figures, it invested 17 billion rubles on its agribusiness facilities in Kursk Region between 2009 and 2017. In the Pristen District, it built two pig-breeding facilities with three sites each, while in the Oboyan District it built two pedigree breeding units.

Currently, Miratorg is building what will be Europe’s largest refrigerated slaughterhouse with a capacity to process 4.5 million head of hogs or 400,000 tons of meat in slaughter weight. Miratorg has also been building seven pig farms in two other districts in the region.

3fe1ac38af.jpgA billboard showing Miratorg’s assets in Kursk Region. Courtesy of Readovka

Why has Miratorg invested so much in Kursk Region? For the same reason it has invested heavily in Smolensk, Bryansk, Kaluga, Kaliningrad, and other regions in Russia. The Russian federal budget supports domestic industrial agricultural enterprises with subsidies. Some of the federal government’s assistance is earmarked for the largest players in agribusiness, the strategic, “backbone” companies we mentioned earlier. Some of the assistance is filtered through regional government budgets, where it is meant to boost small companies and support local producers. When Miratorg sets up a subsidiary in a region, it automatically grabs the lion’s share of federal subsidies for itself.

In Russia, there are no limits on the subsidies a particular agricultural holding company can receive. By using the subsidiaries it has established in the regions, a national agribusiness company can qualify for regional subsidies. For example, in 2016, the Bryansk Meat Company was awarded 98% of all subsidies earmarked in the federal budget for promoting agriculture in Bryansk Region.

At the same time, Miratorg has been officially designated as a strategic, “backbone” enterprise. Accordingly, the company and its subsidiaries also receive subsidies for pursuing particular projects. Since 2014, Vnesheconombank has lent Miratorg $871.5 million to expand meat production. Thanks to sleights of hand such as this on, in 2016, Bryansk Meat Company left not only farms in Bryansk high and dry in terms of financing but also farmers nationwide by hogging 90% of all subsidies earmarked for agriculture. The total amount of subsidized loans was 33.6 billion rubles, and this financing was obtained by a single Miratorg subsidiary for a single year.

The company has been feeding off this program since it was founded in 2005. Miratorg has received hundred of billions of rubles in subsidies over this period.

The more subsidiaries it gets, the more lines of credit Miratorg can receive. The story  of its rise to the top bears a strong resemblance to the way Yevgeny Prigozhin built his school cafeteria catering monopoly in Moscow. There is one signal difference, however: whereas Concord Catering’s contract implies that Prigozhin’s food production facility does the work for which it was contracted and pays back its debts out of the profit generated by the facility, some of Miratorg’s loan agreements contain an interesting loophole. It can fulfill its obligations to Vnesheconombank one of two ways, either the way Concord Catering does it, by paying back its debts out of its profits, or by selling off its founding shares in its subsidiaries to pay off its loans. Meaning, hypothetically, Miratorg can rid itself of some of its subsidiaries.

Where Do Miratorg’s Profits Go?
Considering the billions in government subsidies it receives annually, Miratorg and its owners do not even have to run a good business to live high on the hog. According to open sources, Miratorg’s profits shrunk fivefold in 2016, amounting to a mere five billion rubles, despite the fact the company received several tens of billions of rubles in subsidies from the Russian federal government.

Nevertheless, Miratorg is the main supplier of meat for huge fast food chains such as McDonalds and Burger King. It has also launched its own cafes and supermarket chain. Miratorg’s profits, which are incomparable to the subsidies paid to the company, end up not in Russian bank accounts, but in offshore accounts in Cyprus.

d79d3fe745.jpgA  Miratorg supermarket, newly opened somewhere in Russia. Courtesy of Readovka

Miratorg’s operations do not resemble an attempt to promote Russian agriculture, but rather a scheme for spiriting federal money out of the country. Given Miratorg is the industry leader in terms of land assets and government support, it should also have come to monopolize supermarket shelves. Its status as a strategic enterprise and the subsidies it receives simply oblige it to aspire to this end. The government’s plan was to have Miratorg replace all the imported meat banned from supermarkets with domestically produced meat.

Instead, Miratorg annually receives several hundreds of billions in subsidies allocated by the government to support the country’s agriculture. Miratorg spends the money to purchase land, which it uses, along with shares from its regional subsidiaries, as collateral to obtain more loans.

Ultimately, instead of building a successful business and resurrecting Russian domestic agriculture according to the government’s plan, Miratorg merely filches money from the federal budget. As long as it keeps feeding the “Cypriot butchers,” real hardworking Russian farmers will have to get by without substantial assistance. Eventually, the whirligig of subsidies could lead to the complete collapse of Russian agriculture as such.

Thanks to Anna Klimenko for the heads-up. Translated by the Russian Reader

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Halo’s in Your Head

390px-unsc_insignia_(post-war)

The nonstop international hasbara hoedown Quora gets all the best “specialists” to answer its readers’ pressing questions.

When my personal favorite Quora hasbarista, “Dima Vorobiev, I worked in Soviet propaganda,” is unable to make the shaky, miserable, mean, destructive Putin regime look indestructible and infallible, “Ha Dang, Military Specialist at United Nations Space Command (2016-present” picks up the slack.

Who would win in a war between Russia and Germany?
Ha Dang, Military Specialist at United Nations Space Command (2016-present)
Answered Mar 11, 2018
Russia vs Germany ( Great Patriotic War Vol.2)

No Allies involved (NATO would not support Germany)
No Nukes

[…]

Though a lot of experts said that it is most likely Russian land invasion would be stampede, since their T-72 and T-80s are too fragile when facing tanks like Leopard 2 or Abrams. However, with the advent of T-72B3, T-80BVM, T-90s and T-14 Armata, it is the Russian, who are enjoying both numerical and technological edge. With a force of 3600 modern tanks, Russia can quickly capture Berlin within 4 weeks, instead 4 years like it did 73 years ago.

Final Verdict:

Russian Victory

Why does garbage like this matter?

Because people read it. This particular post garnered 60,400 views for “Ha Dang, Military Specialist.” That’s only 22,000 or so fewer views than the Russian Reader got all last year, even though I never publish hasbara and fake news, much less the “expert” opinions of self-avowed propagandists and video game enthusiasts.

This is the brave new world Alex Jones, Donald Trump, Yevgeny Prigozhin, Mark Zuckerberg, and other world-historical creeps have bestowed on us.

The essence of this topsy-turvy world is well expressed by Quora superstar “Dima Vorobiev, I worked in Soviet propaganda.”

Does Dima Vorobiev add his own propaganda and biases into his answers?

[…]

Obviously, I do. As a propaganda veteran, I believe that hardly anything people tell each other, is ever unbiased. Everything is propaganda—you just have to accept that, like death and taxes.

What is my bias? I’m the wrong person to ask: I don’t know. I live inside my own bias. Don’t ask fish what water feels like. It’s got no idea, it just swims in there.

It’s also a world where 60,400 people were impressed by Ha Dang’s arguments, even though he “works” at a fictitious agency that only exists in the “military science fiction first-person shooter video game franchise” Halo.

The United Nations Space Command (UNSC) is the military, exploratory, and scientific agency of the Unified Earth Government which acted as the emergency governing body of the human race at large for a time. The UNSC was formed in the 22nd century, a time when remnants of old cultural ideologies clashed for supremacy in the Sol System. The UNSC served mainly as overseer of United Nations military operations in space. After initiating massive militarization propaganda throughout its off-world colonies, through the UNSC, the UN defeated Frieden and Koslovic insurgent forces in a conflict known as the Interplanetary War, which consisted of several side-battles that took place on Mars, the Jovian Moons and the South American rainforests. Although the Interplanetary War brought a great deal of suffering to both the colonial population and the residents of Earth, it also united most of humanity’s military forces by the end of the 22nd century.

This is one of the reasons I have nearly given up on the idea that this website has much to contribute to a conversation that is anything but intelligible. The masses (or, at least, a worryingly large number of people) want racist, fascist, apocalyptic, pro-Putinist fairy tales for breakfast, dinner, and supper, not the complicated but ultimately discoverable truth. {TRR}

UNSC logo courtesy of Halopedia

One Good Turn Deserves Another

Media Identify Prigozhin Firms as Developers of Judicial Quarter in Petersburg
According to Kommersant, Firms Affiliated with Businessman Yevgeny Prigozhin and Concord Management and Consulting Are Project Subcontractors
Grigory Dubov
RBC
December 26, 2018

755458040463897Judicial district construction site in Petersburg. Photo courtesy of Stanislav Zaburdayev/TASS and RBC

Firms affiliated with businessman and restaurateur Yevgeny Prigozhin will build the judicial quarter in Petersburg, a project costing 35.7 billion rubles [approx. 455 million euros] that will include residential buildings for the Russian Supreme Court and Boris Eifman’s Dance Palace, report sources quoted by Kommersant newspaper familiar with the project, which has been designed by the Russian Presidential Property Management Department and construction industry insiders.

The sources say the subcontractor was selected in the summer of 2018 without tendering. The newspaper’s sources claim firms affiliated with Prigozhin have launched the process of awarding commercial tenders and have been requesting bids from major construction companies for the construction of individual buildings without advance payment. One of the Prigozhin-affiliated companies engaged in sending out bid and tender requests is Lizena, a firm founded in 2014.

In 2016, the Russian Presidential Property Management Department pledged it would build two office buildings for the Supreme Court and Judicial Department, the Dance Palance, and four residential buildings containing a total of 600 apartments within four years in Petersburg. Construction was supposed to have begun in 2017, and the opening of the facility was scheduled for 2020. In May 2017, the Presidential Property Management Department declared the project top secret and obliged future contractors to maintain secrecy.

judicial quarterThe future judicial quarter in Petersburg is currently a giant sandbox. Photo courtesy of Alexander Koryakov/Kommersant

Construction was not begun, however. In September 2018, the Presidential Property Management Department acknowledged the deadlines it had set would be missed. As Kommersant wrote, the department failed to spend the 22.3 billion rubles allocated on the project. The funds were reallocated for 2021, when completion of construction has been planned. As transpired in December, an advance payment in the amount of more then 9.2 billion rubles was postponed from 2018 to 2021; no advances are envisaged in 2019 and 2020. As of December 1, according to the Federal Targeted Investment Program, builders in Petersburg had started to dig foundation pits for the residential complex. There was no information about the Supreme Court’s residence and the Dance Palace.

In March, the US Department of Justice imposed sanctions against Prigozhin and his companies Concord Management and Consulting, and Concord Catering. In February, Prigozhin and twelve other Russian nationals, as well as a number of legal entities, were indicted for interfering in the 2016 US elections. Included in the indictment was Prigozhin’s Internet Research Agency, which was abolished [sic] in 2016. RBC’s sources identified the IRA as the “troll factory” that, according to the US Department of Justice, had tried to influence US voters since 2014. President Putin called the charges made against Prigozhin by US officials “laughable.”

prigozhinYevgeny Prigozhin. Photo courtesy of Mikhail Metzel/TASS and RBC

A number of media outlets have also identified Prigozhin as “Putin’s chef.”

At his press conference on December 20, Putin said, “All my chefs are officers of the Federal Protection Service (FSO). All of them are military men. I have no other chefs.”

Translated by the Russian Reader

Lilia Shevtsova: Gutting Russia

1535459018_stena-1The Wall, one of the Russian National Guard’s new toys for crushing popular unrest. Photo courtesy of Voennoe obozrenie

Lilia Shevtsova
Facebook
September 27, 2018

Gutting the State
“They are crazy!” we wail as we gaze at the regime’s latest stunts.

“What stupidity!” the commentators exclaim in horror as they compile the Kremlin’s list of shame: raising the retirement age; a high-ranking silovik threatening to kill Navalny in a duel; the fiasco of the so-called Salisbury tourists; vote rigging in the Maritime Territory; the Russian fighter plane shot down by the Syrians with our own rocket; the hole in our spaceship, patched up with epoxy; threats to ban use of the US dollar in Russia; more lies about Malaysian Airlines Flight 17; and Navalny’s latest arrest.

The regime’s attempts to rectify its blunders only exacerbate the circumstances, turning them into farces. Did annulling the election in Vladivostok restore people’s faith in elections? Were the elections in Vladimir Region and Khabarovsk Territory not turned into farces when the winners did their level best not to win? And what about the televised interview with the Salisbury tourists? What should we make of attempts to blame Israel for downing the Russian warplane, and the Americans for punching a hole in the Soyuz capsule? The latest act of shooting ourselves in the foot was supplying the Syrians with a S-300 surface-to-air missile system, which is a threat to Israel and, of course, the US. (The Israelis will most certainly respond.)

If we regard all these topsy-turvy achievements as the outcomes of stupidity, the hope emerges that we can fix the stupidity by purging the ranks of officialdom, which is exactly what the Kremlin, in fact, sunk its teeth into today. Actually, what we regard as failure and stupidity have long become the new normal. What we see are the outcomes of a monopoly on political power, which has turned its own replication into an end in itself, and of a negative selection of members of the political elite based on the loyalty principle. In short, a duelist in charge of the Russian National Guard, and poisoners disguised as tourists are the new Russian normal. They are logical and inevitable consequences.

The wailing about a crisis at the top is, therefore, groundless. Russia skipped over the crisis stage. A crisis is a natural turn of events that compels society to look for new solutions and new people to implement them. When this does not happen, society and its superstructures rot. This stinky viscous goo is our current location. Decay prevents collapse: what is rotting cannot collapse. But decay also prevents our country from finding the strength to change.

The ruling class can seemingly take it easy, for the system somehow hobbles along. There are no large-scale protests, and the protests that do occur can either be ignored or quashed, especially since the National Guard has special new crowd-control armored vehicles at its disposal like the Shield, the Storm, the Wall, and so on.

In reality, things have taken a serious turn for Russia. By seeking to ensure its endlessness, the regime has been destroying the Russian state. That is a whole other ballgame. We have reached the point at which the ruling class has been rocking the pillars of statehood, destroying its own guarantee of survival in the bargain.

By outsourcing violence to volunteer oprichniki, the regime has deprived the state of one of its vital attributes: a monopoly on violence. By making Russia a global scarecrow, the regime has undermined the country’s international status and the external habitat in which it dwells. By rejecting strategic planning in favor of tactical maneuvers, the regime has stripped the country of the capacity for progress. By making the Russian state a tool of clan domination, the regime has destabilized the country, since society has been forced to defend its own interests by protesting on the streets.

Finally, by destroying institutions and making the rules of the game relative (there is more than one way to “get things done: in Russia), the regime has plunged the country into a state of lawlessness. When lawlessness ensues, no one is safe from it.

Do the guys in the Kremlin not realize how things will end? Apparently, they do understand, but they are incapable of stopping.

The autocracy survived in 1991 by scrapping the Soviet state. The autocracy has now been trying to survive by turning the post-Soviet Russian state into a lip-synched song about superpowerdom.

Lilia Shevtsova is a well-known Russian political scientist. Translated by the Russian Reader

Leonid Volkov: Spooks

parasites

Leonid Volkov
Facebook
September 23, 2018

Two completely different stories in two different Petersburg media outlets, Fontanka.ru and Rosbalt, fused into one after I read them.

Rosbalt looked at the early years of Yevgeny Prigozhin, the same guy who not only is in charge of feeding the president and siphons off many billions of rubles from food supply contracts to the Defense Ministry but also privately, as it were, runs unofficial military operations outside Russia. He has the blood of many hundreds of our boys on his hands, boys who died in Syria and other places where they had no business being. Prigozhin was a wild young man. He was several times convicted of theft, robbery, and assault, topping it off with thirteen years in a maximum-security prison.

Fontanka.ru continued its investigation of the series of foreign travel passport numbers that included the passports held by “Petrov” and “Boshirov,” the two Russian men recently implicated in the poisoning of the Skripals. It has transpired that a good number of people whose passport numbers differ from those of the Salisbury duo by only a couple of digits list the headquarters of the GRU (Main Intelligence Directorate) as their home address. Like “Petrov” and “Boshirov,” they are also people without pasts. Meaning that by covering for “Petrov” and “Boshirov,” our would-be intelligence wizards actually blew the cover of several dozen agents and completely torched their own network.

How are these stories linked, except by the persistence of the bold Petersburg reporters who researched and wrote them? They are stories about the so-called professionalism of the so-called secret services. We are told how tough and almighty the FSO (Federal Protective Service) and FSB (Federal Security Service) are. But we saw what professionalism was worth in their case during the World Cup finals: Petya Verzilov showed the whole world what it was worth. These people, who gave a repeatedly convicted felon access to the president, are professionals? Really? What about the people who came up with the bright idea of issuing all their agents passports whose numbers were ordered sequentially.

I don’t like secret services. Whatever country in the world you pick, their secret services are unprofessional parasites who only know how to puff up their cheeks and pretend to be combating nonexistent threats.

At this point, someone will definitely come along and say, “But what about Israel?” I’m sorry, but with rare exceptions, perhaps, Israel has the same problem. It is simply the logical consequence of the specific nature of their work. They enjoy secrecy, meaning we cannot verify whether a threat really exists, and they are not subject to public oversight. They are heavily funded and have an incredibly broad remit, but there are no corresponding checks and balances.

When the terms of their employment are such, you could hire angels to do their jobs, and after a while the angels would also be bloating their budgets and hiring more and more staff while getting nothing done whatsoever. It is the inevitable consequence of their initial portfolia and human nature. J. Edgar, a terrific serious film, and Burn After Reading, a terrific comic film, illustrate the process of degradation as it plays out in the US.

I would argue that not a single country in the world has figured out what to do about it. You cannot get by without having intelligence services, but it is nearly impossible to change the conditions in which they operate. Everyone basically puts up with the inefficiency and highway robbery for the sake of a minimal albeit necessary outcome.

When compared with the rest of the world, of course, our secret agents and security forces are particularly stupid loafers and especially worthless pests who achieve no positive outcomes.

Leonid Volkov is project manager at Navalny’s Team.

Translation and photo by the Russian Reader. The Russian Reader is a website that covers grassroots politics, social movements, the economy, and independent culture in Russia and the Russian-speaking world. It is not financed by anyone nor has it ever solicited donations. All work on the website is done for free, and no fees are paid for the Russian-language articles translated into English and posted on the site. Everything published on the Russian Reader can be reposted as long as the Russian Reader is indicated clearly as the source and a link back to the original post is included in the republication.