Signs of a Russian Thaw (Toward Business)

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James Hill for The New York Times

Ruslan Telkov outside a warehouse near Moscow that he rented for his fabrics business. He was charged with copyright infringement in 2011, but with the help of Boris Titov, a new Russian government ombudsman, he has been freed from pretrial detention.

It was just after 9 on a mid-May morning in 2011 when Ruslan Telkov got into his car and headed toward one of his upholstery company's warehouses near Moscow. His parents had warned him not to start his own business, that only frustration and heartache awaited, if not worse. But it was not the 1990s anymore, he told them; the days of bandit capitalism in Russia were over. "I decided it's what I wanted, and that was that," he said.

And business was good. A year earlier, Mr. Telkov, who has tightly cropped brown hair and the shoulders of a hockey player, traveled to Guangzhou, on China's southern coast — he speaks Mandarin, along with Arabic and English — to attend a trade show and meet with local fabric manufacturers. He negotiated a production contract on the spot. By cutting out the middlemen, Mr. Telkov was able to sell fabric for less than half the price charged by his more-established Russian competitors: around $5 per linear meter, as opposed to $12. In less than a year, Mr. Telkov had recouped his start-up capital of around $1 million and had a fleet of trucks, three warehouses and 18 employees. "I saw no limits to how big it could get," said Mr. Telkov, now 33.

That May morning, not long after Mr. Telkov got to his warehouse, a convoy of speeding cars pulled up. Out came 10 police officers, some carrying automatic weapons. The officers told Mr. Telkov that he was under suspicion of copyright violations and that they would have to confiscate some of his goods as evidence.

Other men in plain clothes walked around and pointed to rolls of fabric: Take this, take that. The search lasted the whole day and continued into the next. In the end, the police carried away 527 rolls of fabric. Mr. Telkov was confused, not to mention panicked: a big furniture exhibition in Moscow was two days away, and he had just lost 80 percent of his inventory. He went from one government office to another, as he put it, "knocking on doors and saying, 'Guys, you stole my goods, where are they?' " He got no answers.

Two months later, in July, investigators officially charged Mr. Telkov with copyright infringement. The indictment cites designs for five styles of fabric that Mr. Telkov had supposedly stolen; among them was a leopard-print pattern, as well as one that resembled a slab of marble. It was funny, absurd even, but it was also uncomfortably serious. If found guilty, Mr. Telkov could spend up to six years in prison.

Some 100,000 Russian businesspeople are either in prison or have been subject to criminal prosecution. Among the most famous is Mikhail B. Khodorkovsky, the former head of the Yukos oil company, who had been in prison for more than a decade until he was unexpectedly released this month by President Vladimir V. Putin. The pardon, coming as it did on the cusp of the Winter Olympics to be held in Sochi, Russia, was viewed more as a political expedient than as a harbinger of reform.

Mr. Telkov says that in his situation, investigators seemed more interested in pressuring him to plead guilty than in building a case; he says he was promised a suspended sentence, in which he would avoid prison but lose his confiscated goods. That's how Russian businesspeople who find themselves in the middle of such cases often choose to plead. But Mr. Telkov was, simply put, a nuisance, filing requests and demanding to see the fabric that had been taken from him. If someone wanted to intimidate him or wear him down, it wasn't working.

Finally, in January, at the request of investigators, a judge ordered Mr. Telkov arrested and held in pretrial detention. He was put into a cell with 10 other men, most of whom were facing drug charges. As Mr. Telkov remembers, investigators suggested that it was his own fault — if he would only make a deal, he could go home.

Weeks passed, then months. Mr. Telkov's wife, Adilya, said she was sure that the court would see the absurdity of the case and release her husband. "At first I was absolutely certain that if not at this hearing, then the next one. If not there, then one more," she said. After a few months, though, she said she "stopped being naïve."

A Well-Placed Advocate

When Boris Titov heard about Mr. Telkov's case, it struck him as a clear reminder of why his job is necessary. Mr. Titov, who holds the official title of presidential commissioner for entrepreneurs' rights, was appointed to his position — which reports directly to Mr. Putin — in June 2012. Fighting corruption and easing the way for business are among the main priorities, at least in rhetoric, of Mr. Putin's current economic agenda. After years of oil-fueled growth and rising consumption, the economy is slowing, with growth in gross domestic product falling to just over 1 percent. Kremlin officials hope that an improved climate for small business will help save the country from a prolonged period of stagnation, thus preserving social and political stability.

By DAVID KOCIENIEWSKI 29 Dec, 2013


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Source: http://www.nytimes.com/2013/12/29/business/international/signs-of-a-russian-thaw-toward-business.html?partner=rss&emc=rss
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