Raiding in Russia’s Regions: Indicators and Causes

Abstract

Anton Kazun – PhD Student, Lecturer, Faculty of Economics, Junior Researcher in the International Center for the Study of Institutions and Development, Higher School of Economics. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation. E-mail: kazun.anton@gmail.com

This paper addresses the problem of raiding attacks on property in Russia, which often involve unlawful criminal prosecution of employers and their subsequent imprisonment. This phenomenon is beyond the scope of what is called a ‘hostile takeover’ in the international literature, because it concerns the particular methods of exerting pressure on businesses which were widely spread in Russia in the 1990s. In this study, we use the internal database of the Centre for Public Procedures ‘Business against Corruption’ containing more than 600 submissions from Russian entrepreneurs reporting attempted raiding attacks which occurred between 2011 and 2013. We claim that, with certain reservations, this indicator reflects the magnitude of the problem. By considering these data in regional context we shed light on the causes of the high number of raiding attacks in certain regions and their absence in others. In particular, we define certain threshold conditions which increase the likelihood of such raids. Our analysis shows that raiding is more common in regions with developed trade, construction and industrial sectors, and less common in regions with a greater share of oil production. Favourable conditions for the spread of raiding attacks are the lack of transparency in the judicial system, the weak development of non-profit organizations in а region, and a conspicuous reluctance of local law enforcement to actively resist raiding as a practice.