This article is part of ECFR's Wider Europe Forum
How the Russian authorities are weaponising ‘financial sloppiness’ to crack down on dissidents
Motives matter. They matter in the investigation of a crime, and they matter as we try to understand why Russian authorities are persecuting a member of the opposition or the intelligentsia. In Russia they matter especially, given that most tactics by branches of the country’s government result in the pursuit of multiple, often unconnected, objectives all at once.
Last month, the raid on Kirill Serebrennikov’s Gogol Theatre in Moscow over alleged embezzlement of state funds drew a crowd of supporters determined to protect the director from what appeared to be politically motivated persecution. Serebrennikov’s theatre has become Moscow’s top avant-garde venue, and his films - including the controversial Student - cut to the heart of the Kremlin’s flirtation with nationalism and religious fundamentalism. In short, there were any number of reasons for those on the Kremlin’s ideological frontlines to view the artist as a thorn in the side of government and social unity.
But Serebrennikov himself was not charged or held in custody. He was released after being detained and questioned as a witness by the FSB, and he is not under criminal investigation. Nevertheless, in modern Russia the very fact that you come into contact with men in masks who wield guns, even under the most innocuous of pretexts, is a very clear signal by those who hold a monopoly on the use of force that you brought it upon yourself. That’s a nice witness status you’ve got yourself there. We wouldn’t want anything to happen to it...
The effect of these actions normally involves the silencing – or forced emigration – of the person being persecuted. More importantly, it silences other members of the creative class who inevitably begin weighing the value of each critical word against the immeasurable threat of men in masks asking about your tax declarations.
But just as important is whether that silencing effect was the main intent of the persecution – and here the evidence is unclear.
Money in Russia is dirty. State money is filthy.
The person who is in jail as a result of the investigation is Nina Maslyaeva, the former chief accountant of Seventh Studio, a staging company founded by Serebrennikov which received up to 200 million rubles from Russia’s Culture Ministry from 2011-14. Maslyaeva is accused, together with Seventh Studio former chief executive Yuri Itin (who was merely placed under house arrest) of embezzling 1.2 million rubles, which in those pre-crisis days amounted to about $35,000. At first Maslyaeva admitted her guilt, but then she recanted, and, given her testimony it is easy to see why: her bookkeeping might not have been crystal-clear, but it does not look likely that Maslyaeva pocketed money handed out by the Culture Ministry.
According to Maslyaeva’s testimony, she was involved in trying to cash up to 100 million rubles, and for those purposes she found a number of small firms that charged 10-12 percent for the service. The reason? “We needed cash to pay for theatre projects,” she told investigators. In other words, some sectors of Russia’s economy, particularly in the creative sphere, still work predominantly with cash. This causes inevitable glitches in bookkeeping, but the problem, accountants say, is not corruption, but tax and financial regulations that are impossible to keep up with.
“It’s the system,” said a Russian accountant (name withheld) who told me that the practice of cashing money was ubiquitous just because so much of the economy operated with cash. “And of course, when it’s done, it draws attention from law enforcement because it’s hard to account for large cash-based expenditures. It’s not that it’s stolen. It’s just done to maintain the workflow.”
But this is not just a problem for accountants. Almost anyone working in a management capacity at a government-funded company in Russia has been inadvertently involved in this kind of necessary sloppiness. That sloppiness is not unique to the public sector - it is just more dangerous there.
“There are situations when people who aren’t prone to take part in grey schemes are forced into them just to get work done,” said an employee at a state-funded enterprise. “Everything is done in hindsight – money, work. A project is commissioned, but the contractors are often paid in promises – and the funding obtained only once the project is done.” The account echoes my own experiences working in a government news agency, and I have seen how necessity forces people to cut corners just to get work done.
Documenting decisions after the fact and cutting corners is equally common on the other side of the law, the one supposedly administering it. Thus, Russia’s Culture Ministry sent a letter to the Investigative Committee asking to bring the embezzlers to justice after the probe had already been launched – in what a ministry spokesperson described as common practice.
The result: everyone is guilty of something, especially if they have come into contact with state cash. “When you are dealing with the government, they can always find something against you,” the state employee said.
Tangling the political, the personal, and the financial
In the case of Seventh Studio and the Culture Ministry, neither side is really stealing anything. But those on the receiving end of government grants are vulnerable to becoming victims of an unintentionally sloppy bookkeeping system that authorities then turn against them if and when they need to. Given how pervasive financial sloppiness is, the true motive is not always evident – either investigators want to show they are cleaning house, or a probe is launched for more nefarious, political purposes.
A more clear-cut example of the latter is the case of Alexandrina Morkvo. The allegations against her were similar to those in Serebrennikov’s case: her production company Bureau 17 received funding from the government to hold public park readings to the tune of 65 million rubles (about $2 million) between 2010 and 2014. In late December 2014 the Investigative Committee launched a criminal probe accusing her of embezzling state funds.
But that is where the similarities end. Morkvo was directly accused of using the embezzled state funds to finance the mayoral campaign of opposition leader Alexei Navalny. Earlier she had moved to London with her partner, Vladimir Ashkurov, a banker and an ally of Navalny who received political asylum in the United Kingdom. In other words here was an investigation where authorities had no qualms in all but admitting their political intent.
Overt repression on ideological lines has become more common in Russia over the last few years. Before 2014, common etiquette for authorities was to weaponise financial sloppiness to go after dissidents, without really bringing politics or ideology into it. Now, however, political intent is often stated first – and the financial checks are initiated later.
Such was the case with filmmaker Alexei Uchitel, whose recent work, Matilda, roiled conservatives over its portrayal of Tsar Nicholas II’s affair. Earlier this year, Duma member Natalia Poklonskaya had repeatedly appealed to prosecutors to investigate the film, claiming it insulted religious faith, which became a crime in Russia in 2014. But no violations were uncovered. Late last month, however, police began checking Uchitel’s film studio for tax irregularities – and Poklonskaya admitted she had commissioned the probe.
If Russian authorities are increasingly open about cracking down on dissidents over politics and ideology – and have an increasing number of laws to do so – then why is financial sloppiness, as in the case of Serebrennikov, still the go-to method for putting pressure on critics?
Because it is so ubiquitous and resilient, financial sloppiness makes virtually any legal case in Russia the result of tangled and counter-contaminated motivations. This facilitates obscurity in all spheres – whether the aim is political repression, corruption, or simply settling personal scores, all of which can co-exist as motivating factors in any given case. It is the same obscurity that corrodes the lines between money, power and truth – generating a moral flexibility that makes doing business in Russia so appealing for Western moguls turned world leaders. And, in the end, possibly worst of all, something so simple as financial sloppiness lends Russia that alchemic magic that inspires artists and novelists in the first place: because here, a cigar can be just a cigar, but more likely it is many different things all at once, and everything, as Lenin said, is connected to everything else.
The European Council on Foreign Relations does not take collective positions. This commentary, like all publications of the European Council on Foreign Relations, represents only the views of its authors.