IS DERIPASKA NEXT? — RUSSIA A ALUMINIUM UNDER TAX INVESTIGATION

Oleg Deripaska is a very brave man, in all likelihood.

When Ernest Hemingway wrote “Death in the Afternoon,” his study of Spanish bullfighting almost 75 years ago, he made a point of appreciating the quality of bravery in both bullfighters and bulls. So does the audience at corridas today. The most common degree of bravery, Hemingway wrote about the men, is “the ability temporarily to ignore possible consequences.” An even greater degree of bravery, Hemingway added about the matadors he knew, “is the ability not to give a damn for the possible consequences; not only to ignore them, but to despise them.”

In the fifteen months since President Vladimir Putin began his campaign against the Yukos oil company and the oligarch who controlled it, Mikhail Khodorkovsky, Kremlin and other government officials have speculated about whether it would prove to be a one-off affair, or whether Putin would move against other oligarchs, whose record of capital accumulation is similar to Khodorkovsky’s. As time has elapsed,the Kremlin factions have increasingly believed that their boss would be unrelenting. They have therefore begun to speculate about which oligarch would be next. The Russian media have joined the guessing-game, while those newspapers which are controlled by the oligarchs themselves have been Advertising the reasons they can think of why their proprietor should be safe. Not a single oligarch has shown such bravery as Hemingway described as verging on contempt for the consequences! Unlike Khodorkovsky, most of them have prepared their exits from Russia, in the event they face a charge they cannot deflect.

Depending on which source you listen to, Deripaska — the controlling shareholder of Rusian Aluminium (Rusal), world’s third largest producer of aluminium, and Basic Element, a holding that includes auto, paper and pulp, insurance, electricity and other assets – is more vulnerable to Kremlin attack than his fellow oligarchs. But until very recently, this was) self-serving speculation, cheap talk. On September 6, however, a government document appeared that challenges the president to act in a new fashion.

Rusal, Deripaska’s principal source of cash, is revealed in the document to be under official investigation for tax optimization practices which, according to a source redding from the document, cut the group’s tax payments in 2003 to jlnst 2 percent of its declared sales revenues. By contrast, Rusjsian oil company Yukos, whose principal shareholders are in prisofii facing trial on charges of fraud, forgery and tax evasion, paid 38 percent of its annual sales revenues on tax in 2002, and again in 2003. LUKoil, another major Russian oil producer, claims its tax payments for 2003 amounted to 24 percent of sales revenues.

Rusal, which does not disclose detailed financial data, claims its sales revenues for 2002 and 2003 amounted to $4 billion and $4.5 billion, respectively. Rusal executives did not reveal the tax problem at an investor briefing in New York last week, when they predicted imminent agreement from a group of international banks to lend $800 million. If Putin were to decide to seek repayment of past-due taxes at the Yukos level, Rusal could face a potential tax liability of $3 billion for the two years, before interest and penalties.

Here is what has happened already. A report on tax payments by major Russian metal companies, including Rusal, was compiled by the federal Tax Ministry, and delivered early this month to the prime ministry. According to Sergei Kazakov, a spokesman for Prime Minister Mikhail Fradkov, “the report was created at the request of Prime Minister Fradkov’s staff), and was sent there for study. After the staff will carefully study it, they will decide what governmental structures could be interested, and what to do next.” The report has not yet been distributed. A spokesman for the Federal Security Service said: “Our economic crime department did not confirm receiving such a report from the Tax Ministry.” At the General Prosecutor’s office in Moscow, a source said the report may have been read by one of the prosecutors, “but officially we didn’t receive it.”

According to the Tax Ministry, the rate of tax payments in 2003 by Rusal appears to be a fraction of that paid by comparable metals producers. The rate paid by Norilsk Nickel, for example, Russia’s leading producer of nickel, copper and platinum group metals, amounted to 19 percent of sales revenues. A Norilsk Nickel spokesman told me: “”We’ve heard about the report passed to the prime ministry, but I can confirm that no governmental structures made any official claims to the company.”

Severstal, one of Russia’s largest steelmakers, is identified in the report as having paid taxes at between 12 and 14 percent of revenues. Two other steelmakers, Magnitogorsk and Novolipetsk, were reported as having paid taxes at rates of 12 percent and 13 percent, respectively. The report’s authors have identified metal trading companies, acting for the Russian firms, in the Isle of Man, Gibraltar, British Virgin Islands, Cyprus, and other locations.

According to the text of the report, Rusal was able to minimize its tax payments through the use of tolling schemes — contracts for supply and processing of raw materials between Rusal smelters and offshore companies — and through a regional tax relief scheme operated through companies registered in the fareastern region of Chukotka. The region’s governor, Roman Abramovich, was a 50-percent shareholding partner of Deripaska in Rusal until he sold the latter a 25-percent bloc of stock a year ago. Rusal executives claim that Dertpaska is close to negotiating a deal with Abramovich and his holding company, Millhouse, for the purchase of the remaining 25 percent stake.

Abramovich’s administration of Chukotka’ public finances was investigated by the independent state auditor Chamber, earlier this year. A summary of the report by the Chamber, issued in May, revealed companies, linked to Rusal, among 22 corporate beneficiaries of several hundred million dollars in estimated tax benefits. A search of Russian corporate registration files turned up confirmation that Trading House Aluminium and Trading House Russian Foil were registered in Anadyr, in Chukotka. On October 19, 2001, the two companies are recorded as having founded a Moscow company, Russian Aluminium Finance LLC. All three companies are part of the Rusal group. The Chamber spokesman, Andrei Belayev, told me this week: “It’s now clear that Rusal was using tax optimization schemes in the Chukotka region, but it’s difficult to give the exact number of the tax underpayments.”

The legality of the Chukotka tax scheme, according to the regional law in effect at the time, depends on whether those who used it to offset taxes spent half of their tax savings in the Chukotka region. The legality of Rusal’s tolling and the tax relief it provided, depends on interpretation of the relationships between the on-shore production units of the metal, and the offshore trading units, and of the intentions conveyed by the trading records.

Although Rusal spokesmen brief industry analysts, they have declined to respond to press questions about the Chukotka scheme, or the latest Tax Ministry investigation. Rusal also does not publicly disclose detailed trade data, except to say that just over 80 percent of annual sales revenues are earned by “sales outside the Russian Federation”.

Western industry investigations of Rusal’s aluminium trade have been focusing on several unexplained anomalies in the data for Rusal’s exports. According to one investigation, conducted in London, there appears to have been a change in the first quarter of 2004 in the volumes of primary aluminium traded by Rual, a trader associated with the group, and Wainfleet Consultadores, a company reported to be doing business in Madeira, Portugal. Litigation involving Rusal in the US uncovered a large number of trading companies, registered in several tax-haven locations from the Caribbean to Gibraltar, and elsewhere, through which Rusal’s aluminium passes on its way to final destination. During this transit, lawyers claim, legal title to the aluminium changes.

There are also large, unexplained anomalies in Russian customs data for exports of primary aluminium (commodity code 7601) to the US, and the corresponding data for US imports of Russian aluminium. Rusal and a second Russian producer of aluminium, Siberian Ural Aluminum (SUAL), export to the US. Data provided by SUAL indicate that its sales to the US comprise roughly 20 percent of the aggregate Russian sales, with the balance accounted for by Rusal.

According to the Russian customs data, aluminium exports in 2003 totaled $1,408 billion; the corresponding tonnage figure is unavailable. Data released by the US International Trade Commission for the same year show imports of Russian primary aluminium totaled 657,000 metric tons for a value of $950 million. Russia was second only to Canada as the supplier of aluminium to the US. But the US value is $458 million below the declared Russian value. Industry experts in London believe this may reflect changes of origin in the metal, once it leaves Russia according to tolling contracts and the registration of fading companies.

The picture is dramatically different for this year’s trade. In the first seven months of 2004, US imports of primary aluminium from Russia totaled 524,455 metric tons, and were valued at $883 million. The average price was $1,685 per ton, which is close to the international marker, the LME average for the period. Official Russian data obtained for the same period do not reveal the tonnage, but the declared value was $36 3.2 million. The discrepancy in value is almost half a billion dollars.

Russia customs sources provide volume data for the six-month period to June 30, 2004. In that interval Russian exports to the US were 180,163 tons, for a declared value of $228 million. The average price is $1,262 per ton; this is $423 below the international market price. Calculating volume by the month, the US appears to have imported 150 percent more Russian aluminium than the Russian data disclose. The average US value per ton is 34 percent higher than the figure declared to Russian Customs.

According to a source at the State Customs Committee, part of the distortion in US import data has been caused by the use of tolling contracts, which changed the apparent [dace of origin of Russian entering the US. However, he noted that tolling for Russian exports of aluminium ended by January 1 of this year.

If the customs documents which Rusal files when it exports aluminium are under-valuing the price at which the product is sold – and Russian Customs sources do not say that it is – then investigation is the responsibility of the Tax Ministry and the General Prosecutor, according to the State Customs Committee. There, officials are waiting on orders from the prime ministry, which in turn waits on word from the President. Asked whether his staff is reviewing the Tax Ministry report, the presidential spokesmen have yet to reply.

RIGGING CONSTITUTIONS RUNS IN THE FAMILY

If anyone should know how to rig a constitution, it’s me and George Bush, Jr. You might say it runs in the family.

Take my uncle, for example.As the British Empire began to break apart in the aftermath of World War II, he was one of many former military intelligence officers assigned by the imperial administrators in London to exercise their Oxbridge educations for the benefit of the constitution drafters in the colonies. On one of his stints, my uncle helped install a British constitution in Ghana. Much later, he helped provide advice during the course of the only constitutional putsch to have occurred in Australian history. The outcome was the removal of the elected Labor prime minister, and his replacement by a conservative. For his legal skills and loyalties, my uncle was handed the unpopular reward of becoming Australia’s governor-general. It was one of those jobs that someone has to do in Australia, if not in Ghana, which got rid of its Colonial Office constitution as quickly as it could manage.

I was working for U.S. President Jimmy Carter when the call for help came in from Prime Minister Jayewardene of Sri Lanka. He had just been elected, and he was thinking of changing his constitution. It was another of those Colonial Office jobs that had my uncle’s fingerprints all over it. The prime minister was thinking of turning himself into a president, and needed someone who knew how to handle the English and American rue-book. We worked hard over the next few months, and for a going-away present, Jayewardene’s Cabinet colleagues presented me with a leather-bound version of their mint-new Sri Lankan Constitution. I was touched, and in my acceptance speech, I invited the 20 or so ministers and advisors at dinner to sign the document, if they didn’t mind. Constitutions can be short-lived, and the good a man does to rig one for today, can be quickly forgotten tomorrow, I said to knowing nods. Within a decade, many of the signatories were unnaturally dead, blown up or shot down in the civil war that has afflicted that unhappy land. I still have my leather-bound keepsake, though.

A decade of good works later, and I happened to be in Athens the year US President Ronald Reagan thought it was time to rig a Greek election, and dispose of socialist Prime Minister Andreas Papandreou. He was much too popular at the time to lose a constitutional election, and as Reagan’s advisors warned, they had already toyed far too often with the Greek constitution for another attempt to be worth the try. And so the idea was hatched to encourage a little war between Turkey and Greece over oil exploration rights on the seabed of the Aegean Sea. The plan was to humiliate Papandreou in front of the voters. The Greeks started preparing for war about six months before Washington told the Turkish prime minister to give the order to set sail into Greek waters.

It was a fateful order. In a flash, Papandreou turned off the electricity at the American intelligence bases, cutting their ability to listen into Greek military communications. He moved the Air Force to front-line bases, fully armed and ready to take off on three minutes’ warning. And he called Todor Zhivkov, president of Bulgaria in those days. Zhivkov ordered his tanks to start rolling towards the Turkish border. It was the first – and last – display of coordinated military action by a NATO state and a member of the Warsaw Pact. It was also the shortest war that Greece has ever won over Turkey. The Turks and the Reaganites suddenly got cold feet. Their geological survey vessel was ordered back to harbor, and the Turkish prime minister checked intci a Houston clinic for a cardiological checkup. Greece and its Const tution were safe, until Reagan’s next trick – a scandal hatched with a Greek fraudster, who owned a local football team. But that’s another story.

The experiment of the Soviet Union constitutionally re-jigging itself under Mikhail Gorbachev was hard for the outside powers to resist manipulating, and as we all know, they didn’t. Russia under Boris Yeltsin turned out to be a familiar story. Only memories are short, especially when prompted by those who receive stipends to forget.

When the Moscow Times reported this week that President Vladimir Putin is proposing to change the Russian Constitution “which was drafted by Yeltsin advisers amid political fights in a Communist-controlled Duma”, the audacity of the misrepresentation, or the forgetfulness, takes one’s breath away. The 1993 constitution that Yeltsin drafted followed his order to shell and machine-gun to death the popularly elected Supreme Soviet. About 140 lives were lost in that attack. The opposition to Yeltsin in parliament included a Communist Party majority because the voters put them there, under the constitution that aimed at maintaining a balance of power, or so it was called at the time. But support for reform of the constitution, then being drafted by non-Communist deputies like Oleg Rumyantsev, Sergei Baburin, and Ruslan Khasbulatov, was in no way controlled by the communists. Quite the reverse – the constitutional reformers were far ahead of the Communist Party.

The Moscow Times compounds its forgetfulness of what really happened with more distortion. The Yeltsin Constitution of 1993, claims the newspaper, “placed a lot of power in the president’s hands but introduced direct elections for governors, and reserved half of the seats in the Duma to directly elected deputies.” What is omitted is that Yeltsin eliminated direct election of senators to the Federation Council, substituting the governors and the regional parliament chairmen in their place. This was done because direct election of the upper house had created an anti-Yeltsin majority during the constitutional battle with the Supreme Soviet. Yeltsin used the formula of direct gubernatorial election to make sure he never faced a hostile senate again. That was an irreversible shift in the balance of power. The Constitutional Court, which had also been showing independent opposition to Yeltsin, was locked out, and its membership then swamped with presidential trusties. These measures were promoted, then roundly applauded in Washington at the time. When Yeltsin rigged the vote for ratification, there was no complaint from foreign democrats, or the local ones besides.

That sordid story does not justify the attack on Putin’s proposals from the same forgetful gang that backed Yeltsin’s destruction of parliament, court, and constitution 11 years ago. Eleven years for a rigged constitution has proved long enough to forget the democratic options that Yeltsin destroyed. He himself can claim today “we will not allow ourselves to deviate from the letter, and most importantly, the spirit of the Constitution that our country adopted by popular referendum in 1993.” But the old crocodile is weeping phoney tears. The spirit of the 1993 constitution was rigged; the letter was a fraud; the outcome was a rotten borough parliament in which seats (as well as parties) have been bought and sold. Eleven years isn’t so long that Putin should be under obligation to preserve that.

Gubernatorial seats are so expensive, they have required oligarch-sized fortunes to acquire. Thus, for exampe, Sibneft owns Chukotka; Norilsk, Krasnoyarsk; Alrosa, Sakha; Russian Aluminium, Samara and Khakassia; and Tyumen Oil Company, Tyumen. It has been cheaper to buy seats in the Federation Council, and the State Duma. It’s difficult to say whether single-mandate seats in the lower chamber are are costly, more tradable than places on the party lists. Both together represent a concentration of corporate wealth that has been the real character of Russia’s parliamentary evolution since 1993.

The big question today is whether Putin will prove strong enough to continue his campaign against the oligarchs, and clean parliament of their corruption at the same time. Remember that, at the start of last year’s parliamentary election campaign, not a single political party or candidate told the voters whether he was for or against Mikhail Khodorkovsky’s massive tax evasion and fraud. That did not become a campaign issue until Putin’s initiative demonstrated that it was both official and popular at the same time. Reviving ideologically distinct political parties through a simple proportional representation system is a worthy aim. But if the United States hasn’t managed to achieve this yet, Putin may be biting off more than he can chew. And if he succeeds, the political outcome may be too democratic to be digestible. For proportional representation will sharpen the ideology of Russia’s political opposition. It will almost inevitably produce a revival of leftwing, even communist opposition. This is hardly what the so-called democratic critics of Putin want to see. The outside powers have spent billions of dollars rigging the Russian Constitution so that would be impossible.

Of course, that was mostly the doing of George Bush Sr. and Bill Clinton. Bush Jr. arrived too late to rig the Russian Constitution. He almost didn’t arrive at all. If he hadn’t rigged the constitutions that regulate the state of Florida and the Supreme Court in Washington, everyone knows that Bush Jr. wouldn’t be president today.

RUSSIAN MINE MINISTER HEARS BLIND PEW’S CANE

MOSCOW (Mineweb.com) — In Robert Louis Stevenson’s “Treasure Island”, the adventure begins with the approach of Blind Pew, emissary of Captain Flint’s pirate crew, to deliver the Black Spot, the verdict of death, to Billy Bones, the crewman who held Flint’s precious treasure map. In fear of his life, Bones was always on the alert for the tap-tapping of the blindman’s cane.

Russia’s new Minister for Natural Resources Yury Trutnev also holds the map of the national treasure, lying in the sub-soil for which the ministry has issued some 16,000 licences to dig. Trutnev, who was appointed minister in March, has used a handful of press oppoprtunities to express his keenness to release the map to the powerful Russian and foreign companies who called him for it. That was until this week, when Trutnev appears to have heard Blind Pew’s cane.

In a speech on July 12, for example, Trutnev – who built a business fortune importing Swiss foodstuffs to his home region of Perm, before becoming governor — announced that he wanted to cut the six-month time period currently required by Russian mining law for the tendering of major mineral deposits. Specifically referring to the long-delayed Sukhoi Log gold deposit in Irkutsk region, and the Udokan deposit in Chita, Trutnev announced that he was preparing an amendment to the law, shortening the tender period to 45 days.

“We cannot commission a lot of large deposits for the simple reason, that, under the current law, from the date of the announcement of tender conditions to the award, it is necessary to wait about one half-year,” Trutnev said, according to the text of his speech provided by the Ministry spokesman. “This is a very long time, and costly. We want to reduce this term to 45 days.” He went on to hint that the Sukhoi Log tender could be issued and awarded by the end of this year.

With 33 million ounces of gold in estimated reserves, Sukhoi Log is one of the largest unmined gold deposits in the world; for more than a decade it has been attracting worldwide interest among miners. In Russia, Norilsk Nickel has been keen to accelerate this tender, as principal shareholder, Vladimir Potanin, has been in a hurry to include Sukhoi Log in his plan to spin off his gold assets, and swap them in a transaction with an international miner to give him a protected foreign shareholding worth several billion dollars. Gold Fields was the target of this scheme until recently.

Norilsk Nickel denies lobbying Trutnev for fast-track enactment of the 45-day rule. Trutnev has said through a spokesman that he will not respond to questions. Almost exactly a year ago, Norilsk Nickel successfully lobbied another minister, Finance Minister Alexei Kudrin, to push through parliament an amendment of the state secrets law to allow Norilsk Nickel to disclose its metal reserves publicly, as well as sales and production figures for platinum group metals. The State Duma approved the measure in a highly unusual three-reading vote in a single day. Although President Vladimir Putin followed by signing it into law in November, the Kremlin blocked implementation twelve weeks’ later, embarrassing Potanin’s plans to issue foreign bonds and raise other debt that required the disclosures he was no longer legally allowed to make. The measure is still suspended.

If Norilsk Nickel is shy about admitting to lobbying on the Sukhoi Log tender, its rivals in the race privately concede that they are tlying to persuade the government, including President Putin’s advisor on natural resources Vladimir Litvinenko, not to make the award to Norilsk Nicke. The Irkutsk regional administration, headed by Governor Boris Govorin, appeared to be backing Norilsk Nickel for a time, but it too has conceded that the final decision is out of its hands. In his July speech, Trutnev also claimed that he was opposed to excluding foreign miners from the bidding for Sukhoi Log. “We do not see the necessity to create a distinct ban on foreigners. Although there are situations when the state should protect the national interest in the sphere of natural resources usage, such situations should not be resolved by administrative methods, and should be required to be registered in the law.”

Trutnev’s remarks hinted at a significant difference on strategy with Litvinenko, whose official position is Rector of the St Petersburg State Mining Institute, the premier geology training academy of Russia. Before Trutnev’s appointment, Litvineko told Mineweb he favoured radical changes in current mining legislation and policy towards licensing. Calling for the adoption of a mineral and mining code “on the model of developed countries with a market economy”, Litvinenko said he also favoured limiting foreign investment to the processing segment of the resource sector. As for mining, he said he favoured “a system of privileges and preferences for the domestic companies.”

He also said that he is opposed to allowing foreign investors to take shareholding control of Russian mining enterprises. Sale of shares outside Russia can be allowed, Litvinenko said, but control should be vested in a “golden share” held by the Russian government. Applying this limit on divestment by the Russian oligarchs was urgent, he said, in the cases of “Gazprom, United Energy Systems, important petroleum companies, Norilsk Nickel, and many other companies.”

Since saying that, Litvineko has fallen silent. But all the indications are that a debate over strategy has been under way between him, Trutnev, and the leading natural resource companies. Anonymous leaks from Trutnev’s ministry have claimed that the new draft of the Sub-Soil legislation, with all the amendments Trutnev was promising in July, has been signed and approved by the government for despatch to parliament. But when asked to confirm this, Trutnev’s spokesman and staff at the Committee on Natural Resources at the Duma have said they cannot. Then Trutnev appears to have heard Blind Pew’s cane tap-tapping. It was a signal from the Kremlin that he could not ignore.

The first indication was an anonymous leak last week from the ministry claiming that the oilfield operating licences of Yuganskneftegas, the principal unit of the beleaguered Yukos oil company, could be revoked within two weeks on account of non-payment of taxes. This threat was clearly part of the Kremlin-led campaign against Yukos and its imprisoned shareholders, Mikhail Khodorkovsky and Platon Lebedev, who are on trial for fraud. The company has already been convicted of tax evasion.

The legal requirements for licence revocation are much more complicated and time-consuming than the leak suggested; that was one reason the minister wanted to do what he was bidden, without having to explain himself.

Another anonymous leak from the ministry last week claimed that there would be no accelerated award of the Sukhoi Log tender; and that the earliest this could happen would be the second quarter of 2005.

Whether Trutnev himself was behind the leaks, or the Kremlin, the minister went public himself in Irkutsk on Wednesday. This time, he repeated the threat to yank the Yuganskneftegas licence, and added a new one, indicating that the TNK-BP group – which links oligarchs Mikhail Fridman and Victor Vekselberg with British Petroleum – might lose its licence to develop the Kovykta gas field.

Then Trutnev announced that the government intends postponing the Sukhoi Log tender until next year, and may bar foreigners from bidding. “The new natural resources law,” he is quoted as saying, “will include an option to limit foreign participation in tenders for unique deposits – such as Sukhoi Log and Udokan [copper deposit].” Clarifying that the backstage fight is not yet over, Trutnev went on to explain that the proposed changes to the legislation would be discussed by the cabinet of ministers next month thus confirming there is no official consensus yet on what should be sent to parliament.

Russians who have been dealing with Trutnev say he is much more commercially minded than his predecessors, and more energetic. Russian miners say they do not know who was behind his appointment. One believes he was the candidate of German Gref, Minister of Economic Development and Trade, whose ministry has often clashed with the Natural Resources Ministry in the past. Whether it was Gref, or a Kremlin official, or Litvinenko, who promoted Trutnev to his portfolio, it is now clear that Trutnev’s auditory facility has been under constant training since he took over.

AFTER THE RING FENCE, THE OK CORRAL

MOSCOW (Mineweb.com) – Cash cows need careful herding, just like the lactating and the beef species. As every cowboy knows, if you don’t fence them in properly, on cloudy nights you run the risk losing then to rustlers or wolves.

Gazprom, Russia’s leading resource company and the world’s largest gas producer and exporter, has been inadequately protected from the beginning, ) when it was created by rustlers with well-known names like Victor Chernomyrdin, Rem Vyakhirev, and his family. Alexei Miller, the ranch hand engaged by President Vladimir Putin to get the company safely back into the corral, has been too slow, too weak and too ineffective, by most accounts; although it is too early to say that he is allowed the big cash cows in the Gazprom herd to escape, or run wild.

His inventory recovery efforts have made some former Vyakhirev associates nervous. Alisher Usmanov, for example, had been in charge of converting Gazprom receivables and debt into assets and revenue streams managed through a company called Gazprominvestholding, which did exactly what its name suggests, but off the Gazprom books. These assets have now grown into the prize bulls of the Usmanov herd – the Oskol steel plant, Urals Steel (formerly the Nosta steel plant), and the Lebedinbsky iron-ore mine. Leveraging these assets, Usmanov has been trying to borrow or trade his way into a safe-haven fortune offshore, in the Anglo-Dutch steelmaker, Corus. The Corns shareholders have appreciated the share value Usmarov’s raid has generated, but they have kept the keys to the ranch-gate to themselves.

The announcement by the Russian government, and by President Putin, that Gazprom’s shareholding is to be reorganized, so that: the state stake will be increased from 38.4% to 50%+1 control, Gazprom shares swapped with Rosneft, and the latter turned into a fully-owned Gazprom subsidiary, creates the perfect corral for the combined enterprise.

Incidentally, but demonstrating much foresight, the move allows the government to create enough capitalization to acquire the distressed Yukos oilfield assets – in settlement of its tax and fraud bills – and at the same time, allow the beef-hungry share markets of Moscow, London, and New York to buy into the upside value of the new Russian energy giant. Sharebuyers in those markets have been hobbled by the so-called ring fence, the state rule limiting direct purchase of Gazprom shares.

In a trice, the dream Mikhail Khodorkovsky, principal shareholder of the Yukos group, once had of doing the same thing with Yukos, creating a Russian energy conglomerate bigger than Gazprom and selling half of it to the United States, has been replaced by an idea foreign share-buyers and speculators will now consider much safer. By dismantling the old ring fence, and erecting the corral, the stock markets can swap speculative Yukos, Sibneft, or other commercial Russian oil risk for sovereign risk in the new Gazprom-Rosneft combination. To the stock-broking trade, this is pure filet mignon.

It is a move that required careful analysis over many months, blanket secrecy, and a deft public relations touch at the end. For all the abuse that has been heaped by the Khodorkovsky-fed media on those in charge – Putin himself, his advisor Igor Sechin, and the specialist advisors in the natural resource sector -it is a model of the post-oligarch Russian resource company that meets both the state interests Putin has spelled out, and also the foreign investment conditions.

As the grass-fed Moscow brokerage analysts have already begun pointing out,the new company is compatible with the state-controlled energy corporations of all the great oil-producing states in the world. Yukos shareholders and directors were uncertain of the outcome of their gunfight with the Kremlin, this is their tombstone.

Just in case anyone remembers the lurid conspiracy theories of the Financial Times, Vagit Alekperov, CEO of LUKoil, has announced, simultaneously with the Gazprom disclosure, that when the state shortly sells off its 7.6% stake in his company, most likely to ConocoPhillips, the American oil company will not (not, editors of the FT be advised) be permitted to raise that shareholding to anything approaching a blocking stake.

If anyone in Washington needs further reminding that the fight over Yukos has been to stop US takeover of Russian resource assets, the next steps Putin will take in the corral strategy should suffice. The roundup of the cash cows will continue.

Putin is now on track to apply the corral approach to all of the Russian resource extraction industries that were prematurely rustled, a decade ago, by the so-called oligarchs. These include the minerals, inducing precious metals, owned by Vladimir Potanin; aluminium and bauxite owned by Oleg Deripaska and Victor Vekselberg; and oil by Roman Abramovich and Mikhail Fridman.

A Kremlin investigation on whether to approve or veto Potanin’s $1.16 billion purchase of a 20% stake in South African miner, Gold Fields, is now in its sixth month. But already the South African shareholders of Gold Fields have decided to pre-empt Potanin’s takeover ambition by merging with the Canadian miner lAMGold, thereby doing to Potanin what he has often done to others – diluting his share value, paralyzing his manoeuvre.

The Kremlin might therefore do Norilsk Nickel a favour by ordering a reversal of the Gold Fields deal, forcing Potanin to liquidate his stake, and repatriate the funds to Russia. Two years ago, on a flying visit to Norilsk, Putin warned Potanin that the company was paying too little tax;. A fresh attack on this front might be the route Putin’s advisors will select or restructuring the Norilsk Nickel shareholding and corraling Russia’s largest mining company, according to the new model.

Deripaska’s attempt to sell Russia’s largest aluminium rolling mill at Samara, plus the smaller Belaya Kalitva plant in Rostov, will be another good test, since Deripaska requires Kremlin permission – nominally, the authority of the federal anti-monopoly service of the Ministry of Economic Development and Trade – to sell the assets for about $220 million to Alcoa, the: US-owned global aluminium leader. Alcoa had expected approval to be granted by June, and here we are almost in October, with no approval – and no veto – in sight yet, according to the federal and regional officials involved.

Kremlin concerns about Deripaska’s political ambitions, his sweetheart deals with regional governors to supply cut-price electricity, and his tax minimization schemes have been under investigation for weeks now. Had the Kremlin reached a consensus on what to do, it could have brought Deripaska to his knees by the simple expedient of having Sberbank call in repayment of several hundred million dollars’ worth of loans to Deripaska’s cash cow, Russian Aluminium (Rusal).

To anticipate that, Deripaska has been seeking an equivalent loan from a syndicate of European banks. Their reluctance to lend has lasted a year now. At the same time, Deripaska’s cash cow is urgently required for milking, in order to fund acquisition of the remaining 25% stake in Rusal, which Deripaska doesn’t own. The sellers in this case include Abramovich, Eugene Shvidler, and others in the Millhouse holding company. Their selling price will be at least $1.2 billion more than Rusal can afford to give Deripaska right now.

Other Rusal schemes to buy or build expensive new mines, refineries and smelters in Australia, Venezuela, Jamaica, India, Nigeria, and the Congo have been proposed, but most are still up in the air, awaiting Kremlin judgement of how to corral the aluminium cashflow in the national interest.

No-one has paid quite as much money as Victor Vekselberg recently promised to Brian Gilbertson, former CEO of BHP Billiton, to drive his cash cows to market outside Russia. If he succeeds, Gilbertson stands to set the world record for cow-punching compensation; for Vekselberg, the price would be worth paying to swap his vulnerable stake in Siberian Ural Aluminum (SUAL) for the safety of foreign registration.

You do not have to like American westerns to know what the genre demands. When ambitious cowpunchers come into town, they either pay their respects to the sheriff, or they prepare to fight him. Gilbertson has yet to do the former. And if he can read the meaning of the Gazprom-Rosneft announcement, he will understand that it would be folly to try the latter. He is out-gunned.

THE BULLET ALWAYS TELLS THE TRUTH

Among soldiers and other hired gunmen, it is said that the bullet always tell the truth. It’s the triggerman’s way of passing moral responsibility for his deed, and his good or ill fortune, from the trigger to the target.

In interpreting a national shock like this month’s killings at Beslan, in the Northern Ossetian Republic, many contradictory truths have been claimed, some of them ripped almost literally from the corpses. But it is the single biggest mistake of most of these interpretations, foreign and Russian alike, to predict that the Beslan events will be a turning-point for Russia; that the truth-talking bullets that took so many lives will, somehow or other, change Russian politics in a decisive fashion.

Putin’s strength. The many Russians, and their Anglo-American patrons, who were already sharp critics of President Vladimir Putin, can’t avoid expressing the hope that the mismanagement of the Chechen war, and of the new violence in the Caucasus, will expose Putin’s weakness, and lead to his downfall. In fact, Putin has done the unprecedented thing of admitting what none of his predecessors has ever conceded – and thereby gained strength in popular, as well as elite support. If the Russian state is as weak as Putin admitted, and if the weak get exploited, as he warned and we all know, then who is there left standing to defend that state from its enemies, if not the President? Of course, Putin has a problem he hasn’t quite acknowledged, although his actions during and after the Beslan crisis demonstrate what he means. After almost five years in command, Putin has found not one spokesman who can be trusted to address the media, the people, or his own chain of command -except himself. This has awkward corollaries. The prime minister can’t open his mouth on a subject of national policy. Down the military chain of command, officers are reluctant to issue orders, or take the initiative, for fear of being countermanded, or sold out, by their superiors. They fear reporting intelligence assessments if they risk contradicting the vested interests of these who lie between them and the President. Putin himself trusts just five people to help him run the country. This six are too few. Little wonder that crises are difficult to anticipate, and slow to resolvne. But the alternatives to Putin are not simply worse. They are what brought the state to its knees in the first place.

Cockpit warfare. Several months ago, Beslan was chosen by those who directed the terrorist gang, not because it was close to an airport for a getaway; nor because the regional police were susceptible to bribes, nor because the school was wide open to attack. Those vulnerabilities are everywhere in evidence, all over Russia. Beslan was picked, because it is a cockpit for ethnic conflict between the tribes, clans, religions, and national loyalties of the Caucasus. And, as it was in Ottoman, British; Empire, Crimean War, and Hitler’s days, the Caucasus is the most vulnerable of Russia’s frontiers. In this respect, Beslan was for the planners of the operation what Lebanon was in the 1970s; Nicaragua in the 1980s; Yugoslavia in the 1990s. Set off a detonator in Beslan, it was thought, and the explosion would tear open such a hole in Russia’s under-belly, it would bleed to death, and outside powers gain the advantage, just as happened in the other cockpits. Putin made clear from his first speech after the freeing of the hostages that he understood this. Much of the interpretation of who the terrorists were, where they came from, who commanded them, and what they wanted, if anything, is beside the point that they were intent on triggering war in Beslan, not on negotiating Russian withdrawal from Chechnya, let alone an exit for themselves. Credible negotiators like Leonid Roshal, the Russian pediatrician, and Ruslan Aushev, the ex-president of Ingushetia – neither with a public axe to grind against Putin or the Chechen resistance — have said they doubted there was any exit for negotiation. The reported killings of three of the terrorists by their leader suggest the same thing. That the violence was inevitable doesn’t excuse the faults of the Ossetian security forces, or the federal commanders. But admitting those, and trying to rectify them in future, are only a small part of the cockpit war strategy Putin must now pursue.

The second front. For more than a year, Putin and his small band have been waging war on the other front in which they judged Russia was under direct attack, and against the other gang of bandits that has been staging repeated smash and grab raids, the accumulated value of which dwarfs the country’s (record-high) international reserves. The second front is the war to save Russia’s natural resource wealth from the Russian oligarchs, the half-dozen or so men, who began their operations against the state at the same time as the Chechen secession; with the same support from Washington and London; but with arguablt much greater firepower to destroy Russia. Boris Berezovsky, Vladimir Gusinsky, and Mikhail Khodorkovsky have been defeated; Oleg Deripaska, Vladimir Potanin, Roman Abramovich, Mikhail Fridman, Viktor Vekselberg, Anatoly Chubais, and some others remain. It is repugnant to compare the value of their thieving against the value of the lives lost in Beslan. It is enough to note that, from the start of the campaign against Khodorkovsky’s attempt to sell the Yukos oil company to the United States, none of theimedia voices, belatedly and reluctantly aroused today on behalf of the children of Beslan and Chechnya, has spoken in defense of Putin’s campaign against the oligarchs. Nor was there any support for Putin from his own chief of staff, Prime Minister and cabinet, regional governors, the State Duma, or the so-called parties then campaigning for the parliamentary election. Putin’s second-front campaign has had to be fought by the same small band, with many of the same problems of command and control visible at Beslan. Clumsy but successful nonetheless, Putin’s war against the oligarchs should now lead on to new targets, especially as very large, fresh sums of money must now be raised by the Kremlin to fund the cockpit war in the Caucasus. Should there be any doubtjabout his priorities, Putin will shortly explain why the billion-dolliar cash-out transactions attempted by the oligarchs take the country hostage just as surely as the Chechen secessionists and the Beslan gang. The corollary will be a renewal of the campaign to retrieve the wealth taken by the oligarchs, in order to fufid the bounties now required on the military front, and in the domestic economy of Chechnya.

The fourth column. Never has so much ill-gotten money been spent on a media campaign to make the breakup and asset-stripping of Russia look democratic and desirable, and the fight-back look Stalinist and indefensible. A newspaper editor who claims to have been fired after clashing over Beslan reportage with the oligarch who is his proprietor, and a pro-secession reporter whose claim to have been poisoned by Kremlin agents lacks the rudimentary corroboration required by her profession, have been treated in the western media as the only honest heroes to have emerged from the coverage of the Beslan affair. Putin’s public reminder that press lords like Rupert Murdoch do not make a free press outside Russia is a polite way of saying that the Russian media perform no worse, no better, and that Putin himself inherited this from his predecessor Boris Yeltsin. That the oligarchs he defeated fought with media weapons has made inevitable that the beaten media should be keen on revenge. It is a commonplace of the journalism profession to acknowledge that, in war, truth is the first casualty. For the Russian and foreign media to blame the casualties of Beslan on Putin is just another bullet, just another casualty, in the war for Russia that cannot be negotiated to a peaceful end any time soon.

AND THEN THERE WERE NONE

By John Helmer, Moscow
  @bears_with

Agatha Christie’s whodunit entitled And Then There Were None – the concluding words of the children’s counting rhyme — is reputed to be the world’s best-selling mystery story.    

There’s no mystery now about the war of Europe and North America against Russia; it is the continuation of Germany’s war of 1939-45 and the war aims of the General Staff in Washington since 1943. Defense Minister Sergei Shoigu (left) and President Vladimir Putin (right) both said it plainly enough this week.

There is also no mystery in the decision-making in Moscow of the President and the Defense Minister, the General Staff, and the others; it is the continuation of the Stavka of 1941-45.  

Just because there is no mystery about this, it doesn’t follow that it should be reported publicly, debated in the State Duma, speculated and advertised by bloggers, podcasters, and twitterers.  In war what should not be said cannot be said. When the war ends, then there will be none.  

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RUSSIANS RAISE THEIR GLASSES – THE TOAST IS TO BEATING THE BLOCKADE OF MOSCOW



By John Helmer, Moscow
  @bears_with

Alas and alack for the Berlin Blockade of 1948-49 (Berliner Luftbrücke): those were the days when the Germans waved their salutes against the unification of Germany demilitarised and denazified; and cheered instead for their alliance with the US and British armies to fight another seventy years of war in order to achieve what they and Adolf Hitler hadn’t managed, but which they now hope to achieve under  Olaf Scholtz — the defeat of the Russian Army and the destruction of Russia.

How little the Germans have changed.

But alas and alack — the Blockade now is the one they and the NATO armies aim to enforce against Russia. “We are drawing up a new National Security Strategy,” according to Foreign Minister Annalena Baerbock. “We are taking even the most severe scenarios seriously.”  By severe Baerbock means nuclear. The new German generation — she has also declared “now these grandparents, mothers, fathers and their children sit at the kitchen table and discuss rearmament.”  

So, for Russia to survive the continuation of this war, the Germans and their army must be fought and defeated again. That’s the toast of Russian people as they salute the intrepid flyers who are beating the Moscow Blockade.  

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THE INTERNATIONAL ATOMIC ENERGY AGENCY GOES TO WAR — GORILLA RADIO GOES NUCLEAR

By John Helmer, Moscow
  @bears_with

Last week the International Atomic Energy Agency’s (IAEA) board of governors voted to go to war with Russia by a vote of 26 member countries against 9.

China, Vietnam, India, Pakistan, Egypt, Senegal and South Africa voted against war with Russia.  

The IAEA Secretary-General Rafael Grossi (lead image, left) has refused to tell the press whether a simple majority of votes (18) or a super-majority of two-thirds (23) was required by the agency charter for the vote; he also wouldn’t say which countries voted for or against. The United Nations Secretary-General Antonio Guterres then covered up for what had happened by telling the press: “I believe that [IAEA’s] independence that exists and must be preserved is essential. The IAEA cannot be the instrument of parties against other parties.” The IAEA vote for war made a liar of Guterres.

In the IAEA’s 65-year history, Resolution Number 58, the war vote of September 15, 2022,  is the first time the agency has taken one side in a war between member countries when nuclear reactors have either been attacked or threatened with attack. It is also the first time the IAEA has attacked one of its member states, Russia, when its military were attempting to protect and secure a nuclear reactor from attack by another member state, the Ukraine, and its war allies, the US, NATO and the European Union states. The vote followed the first-ever IAEA inspection of a nuclear reactor while it was under active artillery fire and troop assault.

There is a first time for everything but this is the end of the IAEA. On to the scrap heap of good intentions and international treaties, the IAEA is following the Organisation for the Prohibition of Chemical Weapons (OPCW), and the UN Secretary-General himself.  Listen to this discussion of the past history when the IAEA responded quite differently following the Iranian and Israeli air-bombing attacks on the Iraqi nuclear reactor known as Osirak, and later, the attacks on Pakistan’s nuclear weapons sites.

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INTERNATIONAL ATOMIC ENERGY AGENCY TAKES UKRAINE SIDE IN WAR IN SEPTEMBER 15 VOTE, MAKING UN SECRETARY-GENERAL GUTERRES EITHER A LIAR OR A FOOL

By John Helmer, Moscow
  @bears_with

The International Atomic Energy Agency (IAEA) decided this week to take the side of Ukraine in the current war; blame Russia for the shelling of the Zaporozhye Nuclear Power Plant (ZNPP); and issue a demand for Russia to surrender the plant to the Kiev regime “to regain full control over all nuclear facilities within Ukraine’s internationally recognized borders, including the Zaporizhzhya Nuclear Power Plant.”      

This is the most dramatic shift by the United Nations (UN) nuclear power regulator in the 65-year history of the organisation based in Vienna.

The terms of the IAEA Resolution Number 58, which were proposed early this week by the Polish and Canadian governors on the agency board, were known in advance by UN Secretary-General Antonio Guterres when he spoke by telephone with President Vladimir Putin in the late afternoon of September 14, before the vote was taken. Guterres did not reveal what he already knew would be the IAEA action the next day.  

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THE RUSSIAN SITUATION COMEDY IS NO LYING MATTER – THE JOKE IS ON THE OFFICE OF FOREIGN ASSETS CONTROL

By John Helmer, Moscow
  @bears_with

Never mind that King Solomon said proverbially three thousand years ago, “a merry heart doeth good like a medicine.”  

With seven hundred wives and three hundred concubines, Solomon realized he was the inventor of the situation comedy. If not for the sitcom as his medicine, the bodily and psychological stress Old Solly had to endure in the bedroom would have killed him long before he made it to his death bed at eighty years of age,  after ruling his kingdom for forty of them.

After the British sitcom died in the 1990s, the subsequent stress has not only killed very large numbers of ordinary people. It has culminated today in a system of rule according to which a comic king in Buckingham Palace must now manage the first prime minister in Westminster  history to be her own joke.

Even the Norwegians, the unfunniest people in Europe, have acknowledged that the only way to attract the British as tourists, was to pay John Cleese of Monty Python and Fawlty Towers to make them laugh at Norway itself.   This has been a bigger success for the locals than for the visitors, boosting the fjord boatman’s life expectancy several years ahead of the British tourist’s.  

In fact, Norwegian scientists studying a sample of 54,000 of their countrymen have proved that spending the state budget on public health and social welfare will only work effectively if the population is laughing all the way to the grave. “The cognitive component of the sense of humour is positively associated with survival from mortality related to CVD [cardio-vascular disease] and infections in women and with infection-related mortality in men” – Norwegian doctors reported in 2016. Never mind the Viking English:  the Norwegian point is the same as Solomon’s that “a sense of humour is a health-protecting cognitive coping resource” – especially if you’ve got cancer.  

The Russians understand this better than the Norwegians or the British.  Laughter is an antidote to the war propaganda coming from abroad, as Lexus and Vovan have been demonstrating.   The Russian sitcom is also surviving in its classic form to match the best of the British sitcoms, all now dead – Fawlty Towers (d. 1975), Black Adder (d. 1989), You Rang M’Lord? (d. 1988), Jeeves and Wooster (d. 1990), Oh Dr Beeching! (d.1995), and Thin Blue Line (d. 1996).

The Russian situation comedies, alive and well on TV screens and internet streaming devices across the country, are also increasingly profitable business for their production and broadcast companies – not despite the war but because of it. This has transformed the Russian media industry’s calculation of profitability by removing US and European-made films and television series, as well as advertising revenues from Nestlé, PepsiCo, Mars, and Bayer. In their place powerful  Russian video-on-demand (VOD) streaming platform companies like Yandex (KinoPoisk), MTS (Kion),  Mail.ru (VK), and Ivi (Leonid Boguslavsky, ProfMedia, Baring Vostok)  are now intensifying the competition for audience with traditional television channels and film studios for domestic audiences.  The revenue base of the VOD platforms is less vulnerable to advertisers, more dependent on telecommunications subscriptions.

Russian script writers, cameramen, actors, designers, and directors are now in shorter supply than ever before, and earning more money.  “It’s the Russian New Wave,” claims Olga Filipuk, head of media content for Yandex, the powerful leader of the new film production platforms; its  controlling shareholder and chief executive were sanctioned last year.  

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RUSSIAN AVIATION INDUSTRY CORRECTS YELTSIN YAW – BOEING, AIRBUS DITCHED



By Olga Samofalova, translated and introduced by John Helmer, Moscow
  @bears_with

It was the American humourist Mark Twain who didn’t die in 1897 when it was reported that he had. Twain had thirteen more lively years to go.

The death of the Russian aerospace and aviation industry in the present war is proving to be an even greater exaggeration – and the life to come will be much longer. From the Russian point of view, the death which the sanctions have inflicted is that of the US, European and British offensive against the Soviet-era industry which President Boris Yeltsin (lead image, left) and his advisers encouraged from 1991.

Since 2014, when the sanctions war began, the question of what Moscow would do when the supply of original aircraft components was first threatened, then prohibited, has been answered. The answer began at the Federal Aviation Administration (FAA) in 1947 when the first  Supplemental Type Certificate (STC) or Parts Manufacturing Approval (PMA) was issued by Washington officials for aircraft parts or components meeting the airworthiness standards but manufactured by sources which were not the original suppliers.   

China has been quicker to implement this practice; Chinese state and commercial enterprises have been producing PMA components for Boeing and Airbus aircraft in the Chinese airline fleets for many years.  The Russian Transport Ministry has followed suit; in its certification process and airworthiness regulations it has used the abbreviation RMA, Cyrillic for PMA. This process has been accelerating as the sanctions war has escalated.

So has the Russian process of replacing foreign imports entirely.

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FOR WANT OF A NAIL THE KINGDOM WAS LOST – ENGLISH PATHOLOGIST GUY RUTTY FACES CHALLENGE TO THE RELIABILITY OF HIS NOVICHOK EVIDENCE



By John Helmer, Moscow
  @bears_with

The weakest link in the British government’s four-year long story of Russian Novichok assassination operations in the UK – prelude to the current war – is an English medical expert by the name of Guy Rutty (lead image, standing).

A government-appointed pathologist advising the Home Office, police, and county coroners, Rutty is the head of the East Midlands Forensic Pathology Unit in Leicester,  he is the author of a post-mortem report, dated November 29, 2018,  claiming that the only fatality in the history of the Novichok nerve agent (lead image, document), Dawn Sturgess, had died of Novichok poisoning on July 8, 2018. Rutty’s finding was added four months after initial post-mortem results and a coroner’s cremation certificate stopped short of confirming that Novichok had been the cause of her death.

Rutty’s Novichok finding was a state secret for more than two years. It was revealed publicly   by the second government coroner to investigate Sturgess’s death, Dame Heather Hallett, at a public hearing in London on March 30, 2021. In written evidence it was reported that “on 17th July 2018, Professor Guy Rutty MBE, a Home Office Registered Forensic Pathologist conducted an independent post-mortem examination. He was accompanied by Dr Phillip Lumb, also an independent Home Office Registered Forensic Pathologist. Professor Rutty’s Post-Mortem Report of 29th November 2018 records the cause of death as Ia Post cardiac arrest hypoxic brain injury and intracerebral haemorrhage; Ib Novichok toxicity.”  

Hallett, Rutty, Lumb, and others engaged by the government to work on the Novichok case have refused to answer questions about the post-mortem investigations which followed immediately after Sturgess’s death was reported at Salisbury District Hospital; and a cause of death report signed by the Wiltshire Country coroner David Ridley, when Sturgess’s body was released to her family for funeral and cremation on July 30, 2018.  

After another three years, Ridley was replaced as coroner in the case by Hallett in March 2021. Hallett was replaced by Lord Anthony Hughes (lead image, sitting) in March 2022.

The cause-of-death documents remain state secrets. “As you have no formal role in the inquest proceedings,” Hallett’s and Rutty’s spokesman Martin Smith said on May 17, 2021, “it would not be appropriate to provide you with the information that you have requested.” 

Since then official leaks have revealed that Rutty had been despatched by the Home Office in London to take charge of the Sturgess post-mortem, and Lumb ordered not to undertake an autopsy or draw conclusions on the cause of Sturgess’s death until Rutty arrived. Why? The sources are not saying whether the two forensic professors differed in their interpretation of the evidence; and if so, whether the published excerpt of Rutty’s report of Novichok poisoning is the full story.   

New developments in the official investigation of Sturgess’s death, now directed by Hughes, have removed the state secrecy cover for Rutty, Lumb, and other medical specialists who attended the post-mortem on July 17, 2018. The appointment by Hughes of a London lawyer, Adam Chapman, to represent Sergei and Yulia Skripal, opens these post-mortem documents to the Skripals, along with the cremation certificate, and related hospital, ambulance and laboratory records. Chapman’s role is “appropriate” – Smith’s term – for the Skripals to cross-examine Rutty and Lumb and add independent expert evidence.

Hughes’s appointment of another lawyer, Emilie Pottle (lead image, top left), to act on behalf of the three Russian military officers accused of the Novichok attack exposes this evidence to testing at the same forensic standard. According to Hughes,  it is Pottle’s “responsibility for ensuring that the inquiry takes all reasonable steps to test the  evidence connecting those Russian nationals to Ms Sturgess’s death.” Pottle’s responsibility is to  cross-examine Rutty and Lumb.

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KILLING IS CHEAPER — THE US ARMY SPECIAL OPERATIONS COMMAND WEAPONIZES TWITTER, FACEBOOK, INSTAGRAM, WHATSAPP, TELEGRAM

By John Helmer, Moscow
  @bears_with

The US Army’s Special Operations Command (SOCOM) has been firing several hundred million dollars’ worth of cyber warheads at Russian targets from its headquarters at MacDill Airforce Base in Florida. They have all been duds.

The weapons, the source, and their failure to strike effectively have been exposed in a new report, published on August 24, by the Cyber Policy Center of the Stanford Internet Observatory.  The title of the 54-page study is “Unheard Voice: Evaluating Five Years of Pro-Western Covert Influence Operations”.

“We believe”, the report concludes, “this activity represents the most extensive case of covert pro-Western IO [influence operations] on social media to be reviewed and analyzed by open-source researchers to date… the data also shows the limitations of using inauthentic tactics to generate engagement and build influence online. The vast majority of posts and tweets we reviewed received no more than a handful of likes or retweets, and only 19% of the covert assets we identified had more than 1,000 followers. The average tweet received 0.49 likes and 0.02 retweets.”

“Tellingly,” according to the Stanford report, “the two most followed assets in the data provided by Twitter were overt accounts that publicly declared a connection to the U.S. military.”

The report comes from a branch of Stanford University, and is funded by the Stanford Law School and the Spogli Institute for Institutional Studies, headed by Michael McFaul (lead image).   McFaul, once a US ambassador to Moscow, has been a career advocate of war against Russia. The new report exposes many of McFaul’s allegations to be crude fabrications and propaganda which the Special Operations Command (SOCOM) has been paying contractors to fire at Russia for a decade.

Strangely, there is no mention in the report of the US Army, Pentagon, the Special Operations Command, or its principal cyberwar contractor, the Rendon Group.

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MARIA YUDINA OUT OF THE DARK – THE RUSSIAN CLASSICAL PIANIST PLAYS AGAIN

By John Helmer, Moscow
  @bears_with

Maria Yudina (lead image) is one of the great Russian pianists. She was not, however, one who appealed to all tastes in her lifetime, 1899 to 1970.

In a new biography of her by Elizabeth Wilson, Yudina’s belief that music represents Orthodox Christian faith is made out to be so heroic, the art of the piano is diminished — and Yudina’s reputation consigned again to minority and obscurity. Russian classical music and its performers, who have not recovered from the Yeltsin period and now from the renewal of the German-American war, deserve better than Wilson’s propaganda tune.

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