FSB accused of stealing pharma business after arrest of billionaire

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Hello! This week our top story is a lurid tale of corruption involving two high-profile arrests, the pharmaceutical industry and the security services. We also look at how opposition leader Alexei Navalny’s health has deteriorated in prison, and the fallout from ex-presidential candidate Ksenia Sobchak’s controversial YouTube interview with a serial rapist.

FSB accused of stealing pharma business after arrest of billionaire

A high-stakes corruption case dominated the news in Russia this week. The star of the drama was billionaire Boris Shpigel, owner of pharmaceutical company Biotech and a former senator in the upper house of parliament. For many years Shpigel was part of Russia’s powerful pharma lobby that enjoyed connections to the highest level of government; now he finds himself behind bars.

  • Shpigel, 68, was arrested last Sunday along with Ivan Belozertsev, governor of Penza Region in central Russia. Investigators allege Belozertsev accepted a Mercedes, Breguet watch and 31 million rubles ($400,000) from Shpigel in return for helping Biotech land state contracts. Shpigel is closely connected to Penza: part of Biotech’s assets are here, and he represented Penza Region as a senator in the Federation Council between 2003 and 2013.
  • Shpigel insists he is the victim of a ‘raider-style’ takeover of his business by the Federal Security Service (FSB). In an interview with newspaper Kommersant, which the billionaire gave via a human rights activist who visited him in jail, Shpigel described his case as a hit job and said last summer an FSB colonel offered him protection in exchange for a controlling stake in Biotech. Shpigel claimed that, when he refused the offer, the colonel told him that: “we will talk again in another place.” Now, Shpigel alleges the same colonel has visited him in his cell to offer him freedom if he testifies against Belozertsev. The billionaire said he also rejected this proposal. “It’s the easiest solution for them: I rot in here, and they just take my business,” he told Kommersant.
  • In modern Russia it’s not unusual for a governor to be arrested for bribe-taking — but Shpigel is not a governor and has been a larger-than-life figure in Russian business for decades. Officially, his career started in 1983 when, as a 25-year-old history graduate from a small Ukrainian college, he was suddenly — and suspiciously — appointed deputy head of Moscow’s Institute of Agricultural Biotechnology. Shpigel set up Biotech in 1991, operating out of one of the institute’s buildings and supplying medicines to hospitals and military units.
  • Biotech soon became one of the biggest pharmaceutical wholesalers in Russia and Shpigel acquired a reputation as one of the fiercest lobbyists for an industry that is built on state contracts. Shpigel unsuccessfully ran for a seat in the State Duma in 1995, before becoming an advisor to parliament speaker Gennady Seleznev. In 2003, he finally entered parliament when he became a senator for Penza Region in the Federation Council.
  • Unsurprisingly, Shpigel was regularly accused of conflicts of interest during his period as senator, even if he officially transferred his stake in Biotech to his wife. In 2005, Biotech won an enormous contract to supply the whole Volga Federal District (with a population of 30 million). And in 2009, Biotech president Oleg Kovalev was implicated in a criminal case arising from a corruption scandal involving the Health Insurance Fund. But Shpigel’s parliamentary career was largely unaffected by these events, and he resigned in 2013.
  • Proximity to power made Shpigel one of the most important figures in the pharmaceutical industry even when Biotech was only Russia’s 10th largest pharmaceutical company. But his star rose during the pandemic: Biotech doubled its sales in 2020 thanks to state contracts to supply COVID-19 tests and drugs. Suddenly, Biotech was one of the top three firms when it came to government contracts.

Why the world should care

Criminal cases in modern Russia often follow the same pattern. An entrepreneur starts out closely connected to the authorities, but then outlives his/her usefulness and is left open to extortion from the security forces or becomes a casualty in a political conflict.

Navalny reports health problems as new protest announced

Opposition leader Alexei Navalny — who has just begun a two-and-a-half year jail sentence — is already suffering from health problems. Not only is Navalny experiencing severe back pain, the cause of which is unclear, but his lawyers claim prison doctors are refusing him treatment. At the same time, Navalny’s colleagues are experimenting with new ways to organise rallies in his support.

  • Navalny’s wife and lawyers spoke publicly about his health problems Thursday. Lawyer Olga Mikhailova, who visited the politician, said Navalny is suffering serious pain in his back, and his right leg has “almost stopped functioning”. Another of his lawyers, Vadim Kobzev, said Navalny has been complaining of pain every day for a month, but the medical staff refuse to give him anything more than a couple of painkillers. “This is not merely a lack of treatment, but a deliberate strategy to undermine his health,” Kobzev said.
  • Later the same day, Navalny published two appeals to the head of Russia’s prison service. In one, he described his symptoms, said his treatment was a mockery and demanded an examination from a specialist doctor. In the second, he complained of sleep deprivation and said he is woken every hour during the night, ostensibly to ensure he has not escaped.
  • Navalny is serving his sentence at the notorious IK-2 penal colony, which is known for being one of the toughest in Russia. Conditions in the prison — located in the town of Pokrov in Vladimir Region outside Moscow — were described in detail by media outlet Mediazona. People who served sentences there said it is “as isolated from the outside world as possible”. There are reportedly no beatings or torture, but prisoners are subject to stringent and inhumane rules and face punishments for every minor infraction.
  • “Nobody laid a finger on me,” said nationalist Dmitry Demushkin, who spent two years in IK-2. “But they create an environment where it feels like you are always late. You have to hurry all the time, you need to do everything at the double, running here and there. It feels like you should have plenty of time, but in fact you have none. You have a couple of minutes to get up and make the bed properly, you have two minutes to put on your winter clothes and run outside.” According to Demushkin, he lost seven stone in weight during his sentence.
  • Navalny’s colleagues who remain at liberty are trying to come up with new ways to protest, and out-maneuver the police (who cracked down on pro-Navalny rallies in February). Navalny’s chief of staff Leonid Volkov announced Tuesday a ‘Big Spring Rally’, but the date, time and format will only be revealed when 500,000 people sign up on a special website. By Saturday, the number of potential participants stood at 329,000. Pro-Kremlin Telegram channels insist that these are mostly bots. In April or May, we will find out if they are right.

Why the world should care

It’s important to remember that Navalny’s prison conditions are not necessarily the result of orders from the Kremlin – this is just the normal functioning of Russia’s penal system. On the other hand, it would be simple for the authorities to ensure Navalny receives proper medical treatment.

Sobchak interview with serial rapist causes fury

TV presenter and ex-presidential candidate Ksenia Sobchak sparked debate this week after her video interview with kidnapper and serial rapist Viktor Mokhov. In 2000, Mokhov seized two under-age girls and imprisoned them in a specially-built cellar, where he kept them for four years, raping them repeatedly. For his crimes, Mokhov spent 17 years in prison, but was recently set free and returned to his home near the city of Ryazan. The interview was watched by over 5 million people.

  • Sobchak was met with a flood of criticism for the film that contained the interview. Her most radical critics said you should never give a public platform to such criminals. To which many people — including Sobchak — responded that a journalist’s job is to investigate both good and evil. Less radical critics said the problem was with how Sobchak chose to tell his story.
  • So, what’s the problem with the film? Firstly, the tone: Sobchak and Mokhov sit opposite one another on stools and Mokhov sips coffee from a cup. I.e. it looks exactly like almost any other YouTube interview. And Sobchak jokes repeatedly with Mokhov, for example asking him when he lost his virginity:

Sobchak: “You were aged 29 when you first had sex?”

Mokhov: “Yes”

Sobchak [with disbelief]: “You were 29 when you first had sex?”

Mokhov [laughing]: “Yes. Perhaps you had it earlier?”

Sobchak: “A little bit, yes.”

  • There are lots of such moments in the film. Sobchak later said that — as Mokhov committed sexual crimes — it was necessary to ask him questions about this side of his personality. But it’s at the very least debatable whether it’s ethical to give a rapist a platform to talk about the sexual positions he used when raping his victims. And it’s odd that Sobchak chose to use the word ‘sex’ instead of ‘rape’ when talking about what he did to the underage girls held in his cellar. Is what Sobchak did really a journalistic investigation? Or is it the legalization, even glorification, of evil? Mokhov himself said that all the attention from journalists since his release has been a “thrill”.
  • Another criticism of Sobchak was that she reportedly paid Mokhov 50,000 rubles ($660) for the interview. Sobchak denied this. To be fair, Mokhov has made several media appearances in recent weeks and said he earnt a “pile of cash” from Moscow talk-shows.
  • Many Russian journalists working in the true crime genre say that the point of ‘talking with evil’ is to illuminate systemic problems, not wallow in lurid details. But such questioning is absent from Sobchak’s film. One obvious issue is why 17 years in jail did not change the unrepentant Mokhov? Nobody in the film is asked about this: neither Mokhov himself, nor the investigators and psychotherapists that Sobchak also interviews. Another is the length of Mokhov’s sentence and whether he deserved to be released (at trial, an estimated 900 episodes of violence were not treated individually, so the sentence was capped at 17 years).
  • Perhaps one of the most chilling moments of the interview is when Mokhov explains that, as one of his victims “no longer gives birth”, he needs to “set about her again” (this woman gave birth to two of his children while in captivity). It’s important to remember there are no restraining orders in Russia, and Mokhov’s victims have no formal ways to protect themselves from him.

Why the world should care

Ethical questions are the subject of intense discussion in Russia, just like other countries. But there are some peculiarly Russian dimensions to these debates. In the wake of Sobchak’s interview, officials suggested it should be made illegal for convicted criminals to talk to the media. But it’s laughable to think that a ‘no interview no problem’ would be an adequate way to protect Mokhov’s victims.

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