Corporate Raiding and Predatory State in Russia: Yukos, O1 Group, Cherkizon

• In Event: Power, Propaganda, and Predation: Contemporary Russia's International Strategies of Control and Influence

Abstract

This study considers three big cases of the state-led corporate predatory raiding in Russia, including Yukos, O1 Group, and Cherkizovsky market in Moscow. These cases represent oil & gas, finance, real estate, and wholesale and retail sectors of the Russian economy. Business competition can turn a given company into a target for mergers & acquisitions done by predatory raiders. Political reasons can also be considered as a reason for predatory raiding in Russia. However, in deeply authoritarian ruling political regimes, political competition is either very weak or even non-existent by definition. Thus, it is highly unlikely that any major corporation in Russia would fall prey to state-supported predatory raiders due to some alleged political ambitions of the company’s leader. Economic reasons dominate in corporate predatory raiding. In some instances, attacks of predatory raiders on large corporations in Russia are supported by the elements of the state apparatus. The mechanisms used in state-supported raiding attacks on large corporations in Russia vary. Allegations of major tax evasion, financial fraud, staged bankruptcy, and licensing violations are classical mechanisms in such cases of attempted hostile takeovers. Another formal reason to halt business activities is to discover minor violations in numerous codes and regulations, set by the state. Corrupt state bureaucrats can use minor violations in order to suspend the license of the targeted company or to interfere with its business activities. Big cases of corporate predatory raiding in Russia are both informative and demonstrative, signifying the battle between big businesses and the predatory state.

Author

• Ararat Osipian, The New School