When Mikhail Khodakovsky was arrested almost ten years ago there was not a lot of sympathy for him. He had after all been put in prison as a result of Tax Evasion. What’s more, the tax he failed to pay was on the profits his company had gained from the exploitation of Russia’ natural resources.
He had however, simply taken advantage of an opportunity provided to him by the State and ended up as the owner of an oil empire. Technically this oil empire was taken from the people of Russia, who it belonged to before it was decided that is should be ‘privatised’ and sold off. It was also agreed that special tax incentives would be available to those that had volunteered to take on the responsibility of profiting from the exploitation of these resources.
Mr Khodakovsky was not the only one to benefit from this kind of sale however. Many more were to end up as owners of the property of the people, some of whom decided to reinvest their money overseas, in ventures such as football clubs. Others, like Khodakovsky decided to stay in Russia.
Unfortunately for him however, he decided to start making
statements of a political nature, criticising the State and how it was led. At this point it was decided to revise the arrangements made with Mr Khodakovsky and he was hit with a huge tax bill, and imprisoned. To an extent it was a risk he took, and he had to suffer the consequences of his actions.
On the other side of the coin however, other than making political statements he had behaved in no way different from the others who had also benefitted from the sale of State assets. Yet they were not imprisoned for their actions. So, what does this mean?
The problem with Mr Khodakovsky is that he will not stop getting involved with politics. I suppose when you have become one of the world’s richest men, you look to your next challenge. For regular members of society this might be to strive towards a bigger house or a nicer car. But when you are a man who quite literally has anything money can buy, there should be another aim. His it seems was to break into politics. Which here in the UK would probably be a good idea. In Russia however, it is not!
Mr Khodakovsky finds himself as a political prisoner and it doesn’t look like he will be released any time soon. This is not good for him. It is worse however, for the Russian economy.
In order for a political system to be regarded as legitimate, it is essential that there is an established Rule Of Law. Put simply, the same rules should apply to every member of society. If those rules are broken then sanctions should be imposed, across the board. It is not possible to simply impose these sanctions on one person and not on others who have committed the same offence. If it is true that Mr Khodakovsky was put in prison for Tax Evasion then so should all the others who entered into the same agreement with State as he did. This however, has not happened.
What this means is that there’s is a breakdown of the Rule Of Law in Russia. Until this is rectified there will be reservations on the part of overseas companies to do business there.
