What the Aleksei Navalny Case Says About Life in Putin’s Russia

April 24, 2013
Russian opposition leader and anti-corruption blogger Aleksei Navalny looks on surrounded by journalists after arriving for a court hearing in the city of Kirov April 17, 2013. (Maxim Shemetov/Reuters)

All show trials in Russia commence with adjournments, as if to purposefully use as banal legal procedure to interrupt the anticipatory anxiety of seeing the Kremlin face off with one of its enemies. So it was with Mikhail Khodorkovsky, with Pussy Riot, and now with the trial of opposition blogger Aleksei Navalny. After all the hotels in Kirov had been booked for foreign and domestic correspondents and for Navalny’s broad team of comrades and admirers, the first day of the trial lasted about 30 minutes. The defense had asked for a month-long adjournment to study the Everest of prosecutorial documents (one can’t quite call these “evidence”) against their client. They got a week. Then everyone went home, including the defendant who had taken a 12-hour train journey from Moscow, some 550 miles away, to see first hand just how Vladimir Putin intends to destroy him by branding him with the labels he hates the most: a fraudster and a hypocrite.

Depending on your perspective, which depends on how closely you follow events in Russia, the brazenness of the modern show trial is either surreal or typical. The presiding Judge Sergei Blinov has handed down 130 guilty verdicts and zero acquittals in the last two years, which is slightly above the national average of 99 percent conviction rates (defendants during the Great Purge were 20 times more likely to be acquitted than they are now). In Navalny’s case, Blinov has so far broken the law by allowing no preliminary hearings. The head of the Leninsky District Court has publicly stated that a guilty verdict in the present case is “probable but not inevitable.” In a normal country, that alone would likely be grounds for a mistrial, or at least a change of venue.

But Russia is not a normal country and no longer pretends to be. It’s widely acknowledged that Putin has personally directed the Investigative Committee — which is like the F.B.I. under J. Edgar Hoover only it’s wholly subordinate to the president — to quash the two-year-old protest movement against the Kremlin by any and all means. Putin’s avowed war on mid-level state corruption, itself little more than a wag-the-dog distraction from going after the heavies that he has neither the desire nor means to confront, is in fact a war that Navalny began and popularized. So the imperative to break the 36-year-old lawyer and blogger may be said to transcend politics. Navalny has dubbed Putin’s ruling United Russia the “party of crooks and thieves,” a coinage that is now universal and irreversible.

Having an arch-nemesis who never utters your name in public but will determine the course of the next decade of your life is bound to make you uneasy. So is being judged and found guilty, as Navalny inevitably will be, in a city named for the most famous assassination victim in Soviet history, whose murder in 1934 — almost certainly ordered by Stalin — was the curtain-raiser on the Great Terror. Yet Navalny seems clear-eyed about his own options, which are exactly two.

In an essay he published this month in the independent weekly The New Times, he said that he’ll either go to prison for the maximum sentence of 10 years (he’s already packed for it) or he’ll be convicted but receive probation, an outcome that would bar him — given the felony-status of the charges — from public office for life. This is thanks to a newish tweaking of Russian electoral law, which he has termed the “Belorussian scenario” after Belorussian dictator Alexander Lukashenko’s practice of keeping opponents from competing in elections.

Make no mistake: Navalny has his mind on public office. He is one of the few opposition figures to openly describe himself not as an activist but as a “politician.” Others agree. A credible poll taken last month found that of all Russians, 37 percent has heard of him, up from just 6 percent in April 2011 — and this in a media environment where the state still controls the misinformation clearinghouse of television. (Of those who have heard of him, 14 percent said it would “definitely” or “probably” support Navalny in a presidential election; this translates to just 5 percent of the population at large.) Navalny’s gaining recognition is the problem, as the Putinists have themselves have admitted.

Kirill Kabanov, a member of the Kremlin’s council on civil rights, confirms that Navalny is being punished rather than brought to justice. His gravest offense was persuading protestors during a rally last winter to march on Lubyanka Square in Moscow, the headquarters of the KGB and its successor agency, the FSB, the site of Putin’s actual seat of power in Russia. “You want to work on your anti-corruption blog,” Kabanov apostrophized, “Go for it. But politics is not your business.” In an interview with the newspaper Izvestia, Vladimir Markin, the spokesperson for the Investigative Committee, similarly accounted for why Navalny was on trial: “[W]here someone who appears in a case goes out of his way to attract attention, one could even say, to tease the authorities — here I am, pure and innocent compared to everyone else, then the interest in his past grew and the process of bringing him to justice, naturally, accelerated.”

Markin went further suggested that Navalny was an American spy who was run from Yale University, where he spent six months in 2010 enrolled in a leadership training program, and then sent back to Russia, which his spymasters mistook for “Georgia or some Third World country” in its vulnerability. “I doubt that his handlers knew that a criminal prosecution was likely,” Markin added, nicely summarizing how this flak’s own handlers view any off-script democratic occurrences in a “managed democracy” as the ministrations of a foreign conspiracy.

The point isn’t just self-serving propaganda; it is instinctively felt by the siloviki whose worldview was molded by the KGB. Whenever a parliamentarian, bureaucrat or officer of the law in Russia is shown to be illegally keeping undeclared luxury condos in Miami, or homes in Eastern Europe, or millions in deposits in offshore bank accounts, it will not have a been a patriot toiling of his own accord who uncovered the corruption; it will have been provocateurs in Washington feeding him intelligence to de-stabilize all that Putin has built up over the last 13 years. This is why NGOs that receive money from overseas are now being raided and compelled to register as “foreign agents,” a Stalinist epithet, and never mind that the ones who have the most contact with foreigners are the Kremlin-blessed oligarchs and state officials who send their children to private schools and colleges in the West and keep their fortunes abroad.

Navalny has exposed plenty of those. Since 2007, he has also waged minority shareholder crusades against state energy and banking giants, first via his LiveJournal blog, then via his crowd-sourced anti-corruption website RosPil. In 2010, he exposed how executive of Transneft, a major state-owned oil pipeline company, had pilfered $4 billion in contracts for the construction of the Eastern Siberia-Pacific Ocean pipeline. Last year his newish NGO, the Foundation for Fighting Corruption, put out a report cataloguing the eyebrow-raising history of the majority state-owned bank VTB, which you may have come across in reading about the Cyprus implosion. It’s got retail, commercial and investment arms in over a dozen countries, and controls almost three-quarters of a billion dollars in French and German pension money. Yet VTB can most generously be characterized as rather lousy at performing due diligence. Eight-figure loans have a habit of defaulting and landing the bank in expensive civil court cases in non-Russian jurisdictions. Other allegations have also been leveled against its top executives.

I know something first-hand of Navalny’s sleuthing in this area, and of the hysterical attention his quarry pays to his efforts. I edited the Foundation’s report on VTB, then marveled at how a guy with a laptop could make a multinational financial institution so nervous as respond to his findings in the press by childishly accusing his organization of corruption in turn. “No, you are” was really the best they could do.

Since Navalny’s legal troubles accelerated in the last year, at least one of the Foundation’s known donors has been chivvied right out of Russia, and the home of the organization’s managing director, Navalny’s friend Vladimir Ashurkov, has been raided by the federal police.

Westerners might think that a graft-buster’s criminal prosecution in Russian backwater doesn’t really concern them, but Navalny’s core argument has always been that corruption isn’t bound by national borders; it’s Russia’s most readily exported commodity (again, see Cyprus, or re-read that sentence above about VTB’s European pension deposits). In an event in British parliament held about a year before the protest movement transformed him from a cult online celebrity into the de facto leader of the opposition, Navalny was asked by a well-meaning questioner whether or not it was possible for a foreign company to do business in Russia without paying bribes. His response was: “Yes, but it’s very expensive.” American corporations and businessmen subject to the Foreign Corruption Practices Act should remember this observation as they try to capitalize on Russia’s recent accession to the World Trade Organization.


As of Thursday morning, there were four outstanding indictments against Navalny – one accusing his brother Oleg, a postal worker, and his parents, the owners of a wicker factory, of money-laundering — although he was only on trial for the most-documented charge of “embezzlement” of $500,000 from a state-owned forestry company. How flimsy is this case? Earlier this month, a Chicago-based law firm, Loeb and Loeb, which had pored through the available evidence for months, put out a usefulwhite paper on Navalny’s supposed misdeeds. The facts pertaining to the present indictment, which can have only amused even the most veteran Chicago attorneys, are these.

In 2009, Navalny volunteered as an advisor to N. Yu. Belyx, the oppositional regional governor of Kirov. He was first put to work overseeing the Kirov Regional State Unitary Enterprise, or Kirovles, the state-owned forestry company that at that time was operating at a loss, owing to the economic recession. Shortly after assuming his role, Navalny was contacted by an old colleague from his days in the liberal Yabloko party, Petr Ofitzerov, who, in March 2009, had formed a consultancy, Vyatka Timber Company LLP (VLK), and was keen on using the firm to do business in Russia’s lucrative timber industry. Navalny put Ofitzerov in touch with V.N. Opalev, then the general manager of Kirovles, which is where Navalny’s involvement in the ensuing deal ended. In April 2009, Kirovles and VLK entered into a general contract agreeing to allow VLK to act as a broker for Kirovles. The contract was then amended over the next several months to include each specific deal relevant to the Kirovles-VLK arrangement. Some customers listed in these amendments were newly found by VLK; others were old Kirovles clients, but now the consultancy acted as an intermediary buyer of forestry products, which it would then sell to third party customers (the markup price constituted VLK’s profits). After a time, Opalev decided that the business VLK was bringing into Kirovles wasn’t worth the cost in loading and shipping overhead, so he instructed his branch directors to cut out the consultancy middle man altogether and sell directly to Kirovles clients. Opalev terminated the company’s contract with VLK on September 1, 2009. Navalny was not a party of all of these decisions, nor did he receive any money that changed hands between VLK and Kirovles throughout the tenure of their contract.

In December 2010, one month after Navalny exposed Transneft’s $4 billion graft, the Kirov division of the Investigative Committee conducted a full investigation into Navalny’s connection to Ofitzerov and the Kirovles-VLK deal and found no evidence of any wrongdoing. Nevertheless, in May 2011, the Investigative Committee’s main division in Moscow started a criminal case against Navalny and Ofitzerov, charging them with embezzlement. For the purposes of compiling the necessary evidence, the case was redirected back to the Kirov division to investigate, which that division did in earnest. Russian police in Kirov interviewed witnesses and forensic experts and pored through all relevant documents pertaining to the Kirovles-VLK contract. Opalev said Navalny was blameless. Almost a year later, on April 10, 2012, the Kirov division issued a Decision to Terminate Criminal Case, citing that the file “contain[ed] no information evidencing a deception or abuse of trust by Navalny and Ofitzerov when entering into the agreement and its appendices between VLK and Kirovles.”

It took about two weeks for Investigative Committee’s Central Staff to overturn this decision. The case was once again reopened by both the Privolzhsky Federal District and the Investigative Committee’s Main Investigative Division in Moscow. In July 2012, Navalny was handed a summons informing him that he would be indicted at the end of the month.

He was. The indictment arrived just one week after Navalny exposed another high-profile target: Alexander Bastrykin, the head of the Investigative Committee, who, as Putin’s top cop, has been pursuing the Thermidor against the Russian opposition with the combined zeal of Jean Valjean and Andrey Vyshinsky.

As it turns out, Bastrykin not only owns undeclared property in the Czech Republic, Navalny found, but he was lawfully granted the right to live in it. Navalny also publicized Russia’s top cop thuggery toward journalists who try to tell the truth. Most infamously, Bastrykin took a Novaya Gazeta reporter out into the woods near Moscow and threatened to behead him and mutilate his corpse so that it could not be identified; he later apologized for his “emotional outburst” when the newspaper’s editor-in-chief went public with the story. So it’s safe to assume that if Putin at all needed his arm twisted to finally go after Navalny, it was Bastrykin doing the twisting. At meeting in St. Petersburg, Bastrykin demanded to know why the Kirovles case had been closed in 2010: “You had a criminal case against this man, and you’ve quietly stopped. For such things, there will be no mercy.”

But there will evidently be plenty of absurdity. Now included in the resulting indictment as a co-conspirator in an elaborate embezzlement scam which Navalny orchestrated was not just Ofitzerov (a target in the original investigation) but Opalev, the director who canceled the VLK contract and formerly told the Investigative Committee that Navalny had done nothing wrong. The indictment states that all three colluded to sell forestry products for anywhere between 3 and 24 percent below market, at prices that were “deliberately understated by the accomplices in comparison to the price at which Kirovles products were sold to other counter-parties.” No counter-party prices are proffered; it is simply asserted that Navalny, Opalev and Ofitzerov stole half a million dollars worth of goods. How they made such a handsome return is left to the imagination.

The indictment even uses many of the same facts and events as those contained in the Investigative Committee’s Kirov division’s Decision to Terminate Criminal Case, only it reaches the opposite conclusion — namely, that a financial crime had been committed. No victims or damages are identified. It ignores evidence that VLK engaged in profitable business for Kirovles with some of the new customers it brought in. So is the fact, confirmed by Kirovles regional directors, that the forestry company reserved the right to choose the amendments to its contract with VLK based on the profitability of each deal. Those amendments that proved lucrative, it accepted; those that didn’t, it rejected.

In total, throughout the life of the contract, an independent accounting specialist found that price difference between what VLK paid Kirovles and what it charged customers was just $40,000, which constituted the whole of VLK’s profit margin. That sum was both reasonable for the business conducted and the state of the market at the time as well as negligible to Kirovles’ overall financial situation, which was worsening anyway. The Kirov Property Development, the state company that technically owned Kirovles, never filed a complaint for property damages against any of the indicted parties. Therefore, as Loeb and Loeb writes in its white paper, “Given these facts and the primary investigators’ well-supported conclusion of no criminal conduct, the only explanation for Moscow’s reversal of that decision, and the ensuing indictment against Mr. Navalny, is political motivation.” This is an assessment that the U.S. State Department has echoed in milder, diplomatic fashion.

Opalev, who would have been the ostensible victim of the originally suspected fraud, was the first “co-conspirator” to be prosecuted in December 2012. He pleaded guilty in exchange for a suspended sentence, which makes it legally impossible for Navalny’s defense team to contest evidence from that conviction because, in light of a plea deal, such evidence was never subjected to a court examination.


Navalny has said that the real campaign against the opposition will come just as soon as the Russian petro-economy begins to falter and Putin runs out of self-justifications for continuing in power. If history has a sense of humor, then it just made the Kirovles trial’s commencement coincide with the drop in Brent crude oil prices below $100 a barrel for the first time since last July.

As for the prospect of prison or the gulag, he seems ready but unbowed. In that New Times essay, he wrote:

Will I change my discourse? Of course not. This is exactly why people support me – I call things by their true names. I treasure what I have done, and I will not change just because prison looms on the horizon. I am a grown up man. I chose that path, I accepted some responsibilities, I have some obligations to people who believed me. I knew what to expect.

As he rode the train from Kirov back to Moscow Thursday, the Investigative Committee issued its fifth indictment against him.