A Fraud Of The Century

 

— They do. Mr. Putin issued at least three orders to check “Rybcomflot”. This bargain, no doubt, is a fraud of the century or a fraud of resent times — a fraud of new Russia. The Rybcomflot Company was established in 1989, as a public company, which had a number of offshore structures for ships’ mortgage to attract foreign investments. Seventy-nine vessels were built against state security, later they passed to commercial structures almost without any payments. Since 1993 till now they have been using Russia's fish resources absolutely free. Then the property was redistributed and the company no longer belonged to the state. Thirty of seventy-nine vessels simply vanished away — they are no more.

It was not until yesterday that final decision on Spanish-built vessels operated by Dalmoreproduct was reached. This company must pay US $ 16 million to the state before it wins some quotas. National resources were merely ravaged. I know that legal proceedings were instituted on this fact in 1994. But in 1995 the file disappeared from the prosecutor’s office. Now they bring the action again.

— Let’s start off with the most important thing — the shipbuilding industry. If the Russia’s fish industry shifted from the 2nd to the 7th place in the world, then its shipbuilding branch plummeted from the 6th to the 20th or even lower. The fleet renewal program accepted in 1995 provided for building 324 vessels of various capacities in Russian shipyards. They have built, but mostly of small capacity, 16 vessels only. They made a strategic mistake. We allotted quotas to all companies, which had built vessels and were far costly, for the whole period of payback, 10-12 years due to the project. Not a single enterprise interested in building its vessels in Russia got quotas for the whole period of payback — they had some per year.

As you realize, no bank will finance shipbuilding projects, if a company receives quotas for one year only, but it takes 7-8 or 10-11 years to pay everything back. I want to give you my own example when I was at the head of an enterprise in the Kaliningrad province: we took credits in a German bank from the year 1994 but paid regularly. It became possible only because we worked outside Russia's EEZ, where resources could not be developed fully. If we had worked inside Russia’s EEZ, the Bank would have never given any credits to us, as they were not sure we would have quotas for the whole period of payback.

We informed the government and met with support. They are preparing a decree stipulating 10 percent of Russia’s national fish resources from the total permitted catch would come just to finance our industry. In ten years we will renew the fleet built in Russian shipyards.

That’s what I think about the fleet you ask. From September 1999 on, I imposed a ban on extra bare-boat chartered vessels. The bare-boat charter is a conventional agreement practicing all over the world — has become a free ticket for foreigners to our colossal fish resources. In most cases even crews were made up through offshore companies, i.e. they even paid no income taxes here in Russia. I examined that contract (answer to the question of “BM”), they had a ridiculous scheme: the Germany company received US $ 6 million only for that it operated the vessels fishing in Russia’s EEZ.

— I agree with this letter almost in all items.

— What is your reaction to the statements in mass media? Will you launch an investigation on those critical remarks that fill the press now?

— The analytic department informs me about all what is published in the press. I believe we shouldn’t conceal or hide anything reiterating that we are nice people and have no faults. The press can greatly help us overcome negative processes we have in fish industry. Inter-departmental commissions have been checking some facts already. For example about Rybcomflot.

Western creditor-banks demand from us to continue to give quotas to these companies though it’s absolutely clear that the project is not profitable. No matter how much the vessels operated, they will never become Russian ones, as the project doesn’t recover money. Their interest can be easily explained. They take our resources and ship them to the country, which, as a rule, it finances. And then the finished products are exported to us at a higher rate. It causes the most sever damage to the economy of the country. It’s known that profitability of processing is much greater than that of fishing. And all taxes remain there.

“Rybnoye Khozyaistvo” (The Fish Industry) magazine:

— Visiting the Far East I come across a situation when quotas received are distributed locally mostly guiding by the human factor. What can change this system?

— The quota allocation system is absolutely inadequate to economic entities. At the same time distribution of quotas is the most powerful instrument in monitoring the industry. The quota allocation system will be improved soon. We have to develop a resolution concerning new system by April. It will provide that resources can be given to those Russian companies, which have no budget debts but have real vessels for specific fish catch. We’ll make the quota allocation system a public one, everyone will be able to visit our web site we are going to open and find out who and why receives a certain amount of quotas. That amount will depend upon volume of investments one makes into the Russian economy.