JUDGING DIMA - MEDVEDEV STEPS OUT AGAINST LEGAL

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001496

SIPDIS

E.O. 12958: DECL: 05/28/2017
TAGS: PGOV PHUM SOCI RS KDEM
SUBJECT: JUDGING DIMA - MEDVEDEV STEPS OUT AGAINST LEGAL
NIHILISM

REF: MOSCOW 01349

Classified By: CDA Daniel A. Russell. Reason: 1.4 (d).


1. (C) Summary. Two seemingly unrelated events -- Medvedev's
launch of two commissions to tackle corruption and judicial
reform and the unprecedented public exposure of Kremlin
pressure on the courts -- have re-kindled optimism about
tackling "legal nihilism" under the new president's
leadership. The collapse of the defamation case against
popular TV personality Vladimir Solovyev, who had claimed
undue Kremlin influence over the Arbitrazh Court and then
backed it with unprecedented testimony from one of the
court's top judges, reinforced Medvedev's message and
provided a signal for change. The dismissal of a Arbitrazh
appellate judge on corruption allegations and a less
celebrated procedural change last month to limit the tax
police's ability to confiscate property suggest (at least to
some) a renewed determination to rein in the courts as a tool
for "raiding" other enterprises. In conversations with
Embassy, Solovyev and other "progressive" Kremlin watchers
have tempered their optimism with a healthy respect for the
forces arrayed against Medvedev's reform agenda, with
Anti-corruption Committee member Mikhail Barshchevskiy
underscoring that efforts would be focused on preventing
future corruption, not investigating past offenders. In
contrast, Moscow's experienced skeptics like Sergey Zverev
persist in seeing the entire proceedings as farce -- a
political campaign and nothing more. End Summary.

Once More, With Feeling
--------------


2. (SBU) Assessments of Medvedev's judicial and
anti-corruption programs generally start with the reminder
that Putin too began his tenure as President with a similar
agenda. On May 20, Medvedev indirectly paid homage to Putin
when he announced the creation of a "blue ribbon" commission
to make recommendations for judicial reform by noting that
the legal system had come a long way under his predecessor.
He reiterated his goal of creating an "independent" judiciary
as a means to re-build public trust in the courts. He
appointed the Head of the Government-Legal Department in the
Presidential Administration (PA),Larisa Brycheva to head the
commission, but the expectation is that Anton Ivanov, Chief
Judge of the Supreme Arbitrazh Court and a close friend to
Medvedev, will be the driving force behind the reforms.


3. (SBU) The roll-out of the judicial reform campaign
followed only a day after Medvedev established a new
anti-corruption commission, with himself as the chairman. PA
Head Sergey Naryshkin, a classmate of Putin's from the KGB
intelligence school, heads the commission's presidium and
will supervise commission's work, which will be divided into
four working groups: legislative support, improving
government administration, increasing the effectiveness of
law enforcement, and "educational" work. The commission's
presidium is packed with government heavyweights, balancing
siloviki chieftains (FSB Head Bortnikov, Prosecutor Chayka,
and MVD Chief Nurgaliev) and Medvedev's crew of "liberal"
reformers (Vice Premier Sobyanin, Justice Minister Konovalov,
Economic Development Minister Nabiullina, and PA Assistants
Brycheva and Dvorkovich). Notably, Premier Putin is not
directly involved in the work of either commission, although
he has spoken out in support of Medvedev's project.

Winds of Change at the Arbitrazh Court
--------------


4. (SBU) Events on the ground connected with the Arbitrazh
Court, which hears disputes betwixt corporations and between
corporations and state entities, such as tax and customs
authorities, reinforced Medvedev's message about the need for
legal reform. The Arbitrazh Court system has long been the
instrument for "raiding" -- the use of illegal means to
expropriate property -- since almost all important business
disputes are fought out in their courtrooms. Although most
contacts consider Chief Judge Ivanov to be an intelligent and
sophisticated reformer (a characterization born out by our
first hand observations),the Arbitrazh courts as a whole are
widely perceived as corrupt and politically influenced
(reftel). Our contacts within the legal community tell us
that cleaning up the Arbitrazh courts is essential to
establishing the rule of law and creating a stable business
climate.


5. (SBU) Perhaps most significant event related to the
Arbitrazh Court was the collapse last week of the defamation
case against popular TV and radio personality Vladimir
Solovyev after unprecedented court testimony by the court's
Deputy Chief Judge Yelena Valyavina that she had been

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pressured by the Presidential Administration to make certain
rulings. The case had been brought by the head of the PA's
cadre bureau Valeriy Boyev, an ally of former Presidential
Assistant Viktor Ivanov. Boyev took offense at Solovyev's
public allegations, which said that Boyev controlled the
Arbitrazh Court system, and he sued for defamation. At the
trial, Valyavina said that Boyev threatened to prevent her
re-appointment as Deputy Chief Judge if she did not accede to
his demands to reverse certain rulings in a major corporate
litigation in late 2005. Valyavina also testified that she
had been told that Boyev had tried to pressure one of her
colleagues on the Supreme Arbitrazh Court in a similar
manner. According to published reports, Boyev withdrew his
claim after Solovyev threatened to call more judges as
witnesses.


6. (SBU) In a second unrelated incident, Anton Ivanov
publicized his official complaint accusing Lyudmila Maikova,
the Chief Judge of the Moscow Region Arbitrazh Court, which
hears appeals from Arbitrazh courts of first instance, of
improprieties in connection with acquisition and sale of
apartments in Moscow. According to published reports, the
complaint alleges that she had the active assistance of the
Moscow mayor's office in these transactions and that she
presided over cases involving companies involved in these
same transactions. The complaint will now be sent to the
Supreme Judicial Qualifying Collegium for a hearing. The
hearing must be attended by at least half of the Collegium's
25 members and removal of a judge at Maikova's level requires
a two-thirds vote of those present. As far as we are aware,
this is the first time that such a complaint has been filed
against such a high ranking member of the Arbitrazh court
system.


7. (SBU) Third, in early April, the Supreme Arbitrazh Court
issued a ruling restricting the Russian Federal Tax Service
(RFTS) authority to confiscate property under Article 169 of
the Civil Code. Prior to the ruling, the FTS had authority
to confiscate all property involved in a transaction that it
deemed "illegal and amoral." However, the ruling clarified
that in order to seize property under Article 169, the FTS
must prove in court that at least one of the parties to the
transaction knowingly intended to conclude an illegal or
immoral transaction, a much higher burden of proof, which
will significantly limit the FTS' power to confiscate
property arbitrarily.


8. (C) Changes at the Arbitrazh court have raised cautious
expectations in legal circles for real change under Medvedev.
As far as we know, this is the first time that a judge at
Valyavina's level has explicitly and publicly acknowledged
corruption in the judicial system. (Although the relative
lack of public outrage over Valyavina's testimony, which is
the rough equivalent of a U.S. Supreme Court Justice offering
sworn testimony that the White House had tried to corruptly
influence a Court ruling, is indicative of the Russian
public's apathy and cynicism about the court system.) One
lawyer who specializes in arbitrazh litigation was stunned
that Valyavina had testified in court about judicial
corruption and expressed optimism that this would signal a
broader cleanup of the court system. Leonid Nikitinskiy, a
legal journalist, said that he believes that Medvedev is
attempting to develop the legal community as a power base to
counter the siloviki and said that his recent statements were
sending a signal to other government officials which would at
least force them to feign respect for the rule of law.
However, he cautioned that it is still too early to say what,
if anything, will be the ultimate outcome.


Solovyev Exuberant
--------------


9. (C) In a May 23 meeting, a crowing and still-combative
Solovyev told us that Boyev's withdrawal of the lawsuit was a
significant victory, which he read as a "message" from the
Kremlin that the rules were changing. However, in between
fielding congratulatory telephone calls, Solovyev put his
legal victory in the context of a "totally corrupted" system,
in which all parties would work to undermine reform efforts:
corrupt judges would seek to protect their income flows,
lawyers would prefer to buy their victories than have to
secure them in the courtroom, businesses (in particular,
governmental parastatals) would continue to prefer the
predictability that came with having judges in their back
pocket, and government bureaucrats and crooked security
services personnel would fight hard to keep their place at
the trough. Solovyev repeated accusations published on his
website of harassment by the "services," including
surveillance and the tapping of his telephones. "As long as
I am still alive," he joked, "this is a good news story."

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10. (C) Solovyev argued that corruption was Putin's greatest
lacunae - the agenda item that he never had time to address
during his eight years. A defender of Putin (and author of a
recent, flattering book profiling the former Russian
President),Solovyev explained that he asked Putin on the
margins of an August 2007 press gathering in Sochi whether he
should desist in his campaign against corruption of the
Arbitrazh Courts. Putin's reply, according to Solovyev, was
encouragement to push on. Solovyev maintained that on more
than one occasion Putin rebuffed efforts by then FSB Chief
Patrushev to exact revenge for Solovyev's charges of
corruption in the security services. Solovyev assessed that
Medvedev was "doing all the right things" during his first
days in office to back up his campaign pledge to end legal
nihilism. In focusing on corruption and the judiciary,
Solovyev noted that he would inevitably cross the interests
of important figures in Putin's inner circle; the timing and
pace of Medvedev's initiatives and how he managed these
conflicts of elite interest would provide public benchmarks
on what he predicted would become an increasingly
self-confident Medvedev administration.

A Dose of Skepticism
--------------


11. (C) Recent appointee to Medvedev's corruption commission,
Mikhail Barshchevksiy - the Presidential representative to
the Constitutional, Supreme, and Arbitrazh Courts and leader
of the Kremlin-linked liberal political party Civil Force -
expressed quiet optimism that Medvedev was serious about
judicial reform, but was cagey about making any predictions
about his prospects for success. He saw a transition
underway as the siloviki who Putin had used to build a
structure for ruling Russia lost their relevance. He
dismissed former Kremlin gray cardinal Igor Sechin's new
position Deputy Premier overseeing industrial policy as
essentially superfluous, the bureaucratic equivalent of
retirement. They weren't going to go quietly, however, and
Barshchevskiy told us that he expects rigorous opposition to
reform, even with Putin's support for Medvedev. He also
expressed concern that the September 1 deadline for
recommendations would lead to a rushed assessment.


12. (C)) Barshchevskiy made clear that Medvedev's effort was
not designed at prosecuting corrupt officials for past
misdeeds, but at establishing the legislative framework for
preventing future abuse. He noted that an independent media
was indispensable to the effort, a point in had underscored
in private meetings with Medvedev. Less effusive about the
new President than in previous meetings, Barshchevskiy said
the jury was still out, even if Medvedev's first forays
struck him as credible.


13. (C) On a more cautious note, Carnegie Center's Masha
Lipman argued that since the same (if reshuffled) elite
remained in power, there were clear limits on what Medvedev
could so, since he was not interested in unraveling the
current network of power -- whose "cobweb" of backroom deals
and payoffs could not withstand a truly independent
judiciary. Former Yeltsin PR guru Sergey Zverev was even
more dismissive, citing the pervasive corrosion of corruption
in Russian society as beyond the state's capacity. He deemed
Medvedev's anti-corruption and judicial reform programs as
window-dressing, a populist political campaign that the
ruling elite could bandwagon without any real chance of
success.

Comment
--------------


14. (C) What we see in Medvedev's reforms and, perhaps even
more unexpected, in the changes at the Arbitrazh Court are
only the shadows of a more inscrutable process underway
within the elite. Taken in conjunction with the apparent
demotions of powerful silovik players in the government and
PA reshuffle, the collapse of the case against Solovyev has
encouraged Medvedev's supporters and reinvigorated the debate
about his strategic vision. Putin's official position on the
sidelines suggests that this is Medvedev's baby - an
opportunity for him to leverage his skills and legal
knowledge to burnish his presidential image. It remains to
be seen how far Medvedev will go. Our first indicators are
likely to come in the fall, when the administration reacts to
the commissions' recommendations, but the real test will come
with implementation. Medvedev says he wants to end the
phenomenon of "telephone" justice in Russia. Making that
happen would require some substantial changes in the Putin
system and the expenditure of enormous political capital that
Medvedev has yet to accumulate.
RUSSELL