A BRIBE TOO FAR? THE SACKING OF CVO NEPOKLONOV

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001238

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SECSTATE PASS AGRICULTURE ELECTRONICALLY
USDA FOR FFAS/TERPSTRA, FAS FOR OCRA/FLEMINGS, KUYPERS;
- OSTA/MACKE, HAMILTON; OTP/FOSTER, OGA/CHAUDHRY
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FAS PASS FSIS FOR RICK HARRIES, RALPH DUTROW
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STATE PASS USTR FOR ROHDE, KLEIN, PORTER
POSTS FOR AGRICULTURE
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VIENNA PASS APHIS/TANAKA

E.O. 12958: DECL: 05/02/2028
TAGS: EAGR PGOV PREL SOCI RS
SUBJECT: A BRIBE TOO FAR? THE SACKING OF CVO NEPOKLONOV

REF: A. MOSCOW 36

B. MOSCOW 558

Classified By: Allan Mustard, AgMinCouns, for reasons 1.4(b) and (d)


1. (C) SUMMARY: Moscow's agricultural rumor mill buzzed this
winter and spring with word that MinAg's notoriously corrupt
Chief Veterinary Officer, Yevgeniy Nepoklonov, was variously
in hiding, suffering from gunshot wounds, or under
indictment. Nepoklonov eventually resurfaced in Moscow, but
only after having been quietly fired as CVO. The informal
word on the street is that Nepoklonov was scapegoated for
having gone too far in his corrupt activities -- but even so,
he not only won't do jail time, he won't even be indicted,
and may end up with a cushy sinecure. END SUMMARY.


2. (C) In late January 2008, Russian Chief Veterinary Office
(CVO) Yevgeniy Nepoklonov abruptly disappeared "on vacation
for health reasons". Embassy learned of this when AgMinCouns
called the Veterinary and Phytosanitary Surveillance Service
to follow up on Nepoklonov's request, made in mid-January,
that AgMinCouns come see him as soon as possible (AgMinCouns
at that time was departing Moscow imminently, so the meeting
had to be postponed.) Nepoklonov remained "on vacation in
Europe" throughout February, then in March reappeared in
Moscow though still "on vacation," with other veterinary
officials signing letters in his stead. As weeks went by, it
became clear that Nepoklonov would not return as CVO, and
that appointment of Nikolay Vlasov as Russia's new CVO was in
the works. The tale of Nepoklonov's firing, as best we can
piece it together, is one of corruption having gone just a
bit too far.


3. (C) Embassy has reported on the November 2007 arrest of
the chief veterinary officer of Moscow Oblast, Aleksey
Volkov, and the linkage of his corrupt activities to Russia's
then-CVO Nepoklonov (REF A). While certainly a blow to
Nepoklonov and his overseers (Veterinary and Phytosanitary
Surveillance Service Head Sergey Dankvert and Agriculture
Minister Aleksey Gordeyev, among others),sources tell us the
Volkov case was not quite enough to have led to Nepoklonov's
ouster -- but it provided Gordeyev with the excuse he needed
to can Nepoklonov for some of his other transgressions.

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CONFLICT OF INTEREST
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4. (C//NF) The straw that broke the steer's back was
apparently Nepoklonov's refusal to issue permits for imported
veterinary pharmaceuticals that compete with products of his
multiple personal pharmaceutical companies. Nepoklonov's
firms' inferior medications were a major factor in the
shockingly high mortality rate of very expensive foreign
livestock imported under the National Priority Project for
Agriculture (REF B). Lorin Grams (strictly protect),a U.S.
citizen managing a dairy farm in Rozhdestvo village, Vladimir
Oblast, told us the head of the All-Russian Institute for
Livestock in Vladimir confessed that in the aggregate,
imported cattle had suffered a 48 PCT death rate over two
years, due to a combination of incompetent herd management,
inadequate nutrition and bad veterinary care. In particular,
Grams said, use of Nepoklonov's firms' pharmaceuticals
increased animal mortality -- herds receiving Nepoklonov's
firms' vaccines had higher death rates than herds that were
not vaccinated at all. Andrey Zhuravlev, head of the Russian
Interregional Beef Foundation (and himself an importer of
live cattle for breeding) confirmed Grams's information and
added that AgMin Gordeyev had personally reacted angrily to
reports that Nepoklonov was single-handedly undermining one
of his pet projects.


5. (C//NF) Aleksandr Rasskazov (strictly protect),MinAg's
deputy director for rural development, explained to us that
this combination of factors led to Nepoklonov's dismissal.
In effect, his corrupt conflict of interest in reserving the
veterinary pharmaceutical market solely for himself was not
enough to force Gordeyev to act, Rasskazov said, even though
it was undermining the national project, but when the Volkov
case broke, it gave Gordeyev an excuse to act. In late
January Nepoklonov was shown a dossier the procuracy had

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collected on his corrupt activities and given the choice of
resigning or being indicted. He chose to resign, and before
the resignation took effect, took his family to an
unspecified location in western Europe for roughly a
one-month getaway.

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THERE AND BACK AGAIN
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6. (C) Nepoklonov's disappearance sparked rumors, some
verging on the bizarre: that he had hired bodybuards to
protect himself from angry competitors, that he had been shot
and was in hospital in Europe, that his bodyguards had been
assassinated, that he had moved to western Europe and would
never return for fear of being indicted. Nepoklonov
resurfaced in March, when German Agricultural Counselor
Judith Kons bumped into a healthy-looking Nepoklonov on the
steps of the Duma. In March, Stavropol Agrarian University
Rector Vladimir Trukhachev (protect),himself a veterinarian,
told us Nepoklonov had resigned to avoid being indicted but
had now weathered the worst of the storm and was bucking for
appointment as rector of the Moscow Veterinary Academy (the
position opens in May 2008). Trukhachev expressed doubts
that Nepoklonov would get such a plum job after being fired
as CVO, saying, "he doesn't have a lot of friends," but
others have told us Nepoklonov may well land a job as
director of one of Russia's numerous veterinary institutes.


7. (C) Most MinAg contacts have been silent on Nepoklonov's
abrupt departure. For example, when we asked Ivan
Rozhdestvenskiy, Director of the Department of Veterinary
Medicine in MinAg, why Nepoklonov left, he shrugged that he
does not know and didn't want to speculate (COMMENT:
Rozhdestvenskiy is extremely well plugged in, is close to
Gordeyev and Dankvert, and certainly is in the loop. END
COMMENT). Veterinary officials have as a rule been very
circumspect with us as well, though they were willing to
confirm that Nepoklonov had been "removed" (as opposed to the
official line that he resigned voluntarily "for personal
reasons") and to keep us posted about progress in getting
Vlasov appointed as Nepoklonov's successor.

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COMMENT
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8. (C) In Russia, once you are a member of the club -- what
in communist times was the nomenklatura -- you rarely have to
worry about being sent to jail for serious violations of law.
Rather, the punishment is to be privately disgraced and, in
extreme cases, stripped of assets you acquired through your
corrupt activities. The heavy betting is that Nepoklonov, as
a scapegoat for Dankvert, Gordeyev, and their Kremlin masters
in the Volkov case, will not be stripped of his ill-gotten
wealth. Volkov, however, almost certainly will be relieved
of his assets in a process known by the Russian verb "obut'"
(literally, to shoe). After that, Volkov will likely receive
a suspended sentence for his crimes and be released back to
society, presumably to prosper in the private sector.
Nepoklonov, on the other hand, will most likely not even get
that much of a slap on the wrist. Rumor has it Nepoklonov
paid USD 250,000 in bribes for the CVO position five years
ago. From a financial angle, we suspect it was a sound
investment.
BURNS