DATE=7/15/2000 TYPE=BACKGROUND REPORT TITLE=RUSSIA / BUSINESS CRACKDOWN (CQ) NUMBER=5-46676 BYLINE=EVE CONANT DATELINE=MOSCOW CONTENT= VOICED AT: /// EDS: in 5-46669 of 7/14, fixing translation of Kadannikov Act in Russian Fade Under (fourth Act) to read: 200-thousand cars were made etc., instead "two-thousand cars were made." Graph is being re-dubbed to tape and corrected tape to be available in the bubble /// INTRO: This past week in Russia has been marked by a series of crackdowns against some of Russia's leading businessmen, part of what many see as an orchestrated campaign by President Vladimir Putin to restore order to the Russian economy. V-O-A Moscow Correspondent Eve Conant reports a series of investigations into a top Russian media company, the country's largest auto maker, and Russia's electricity monopoly has left the country's business elite, known as the "oligarchs," fearing for the power they built up since the collapse of the Soviet Union. TEXT: During the election campaign, President Vladimir Putin promised to -- in his words -- "destroy the oligarchs as a class." A series of raids and investigations into top businesses this past week has many believing he is keeping his promise. And there is little concern among average Russians for the handful of powerful businessmen, who are believed to have used close ties to the Kremlin to make illegal fortunes while average Russians lost their life savings or went months without their salaries. In one of several comments he made this past week on the subject, President Putin vowed to fight against those who exploited political connections to make their millions in what he called the "muddy waters" of post-Soviet capitalism. /// PUTIN ACT IN RUSSIAN - FADE UNDER /// Mr. Putin says the government has promised that it would act more energetically as far as setting conditions for businesses. He says that means getting Russia's tax system and economy in order. And he adds, "the state is doing this, whether it is popular or not." /// OPT /// The director of the Center for Policy Studies, Vladimir Orlov, says the campaign will face little resistance from average Russians. /// OPT ACT ORLOV /// This is becoming popular. It doesn't matter whether it's good or bad. The general public believes the oligarchs are bad guys that should be killed. They are not analyzing the details of the situation. /// END ACT // END OPT /// On Tuesday, investigators for a second time searched the offices of a media company, whose owner, Vladimir Gusinsky, faces charges of embezzling state funds during a privatization deal in the mid-1990's. His television network has been critical of the Kremlin and Moscow's military campaign in Chechnya. The early part of the week also saw pressure turned up on Russia's natural gas giant "Gazprom," oil company LUKoil, and the owner of Russia's largest nickel plant, Vladimir Potanin. Mr. Potanin has been requested to return 140-million dollars he allegedly stole from the government when he acquired Norilsk Nickel in the mid-1990's. The chief economist for Russia's "Renaissance" investment bank, Roland Nash, says the investigations and raids are simply a way for President Putin to prove that he, and not a handful of powerful businessmen, is in charge of Russia's economy. /// NASH ACT /// It is just part of the ongoing process that Putin is taking to centralize control and to grab back control for the federal center. The oligarchs for too long have been able to act as they wanted to. There has been no centralized power. And what Putin is trying to do -- he is using these specific events as an excuse to say to the oligarchs `look, that time is over. Now you have to listen to what I want you to do. /// END ACT /// On Wednesday, Russia's tax police went after AvtoVaz - the country's largest automaker, which is facing charges of cheating the government out of 600-million dollars in taxes. The chairman of the auto company, Vladimir Kadannikov, told V-O-A the charges against the company are nonsense. ///KADANNIKOV ACT IN RUSSIAN - FADE UNDER/// He says, "I finally understand the essence of the charges that more than 200-thousand cars were made `in shadow -- `in secret' -- to cheat the state." He says, "but anyone who is familiar with car production knows that is ridiculous." The director of the Carnegie Moscow Center, Alan Rousso, says only if Mr. Putin takes on the truly politically entrenched oligarchs, like Boris Berezovksy, will it be clear if he is really out to fight corruption, or simply playing favorites. But Mr. Rousso says President Putin has chosen a politically dangerous path by making at least a few oligarchs accountable for past actions. /// ROUSSO ACT /// Starting with a clean slate would have been an easier approach by all means for Putin. That would have meant he had fewer political enemies, but also it would not have meant a sincere attempt to change the rules of the game in favor of the rule of law. I think he's chosen a more difficult path, one which is certainly dotted with pitfalls. /// END ACT /// The business week culminated on Friday with a challenge to the creator of Russia's privatization program of the early 1990's, Anatoly Chubais. Investigators from Russia's Audit Chamber say they are examining whether Mr. Chubais sold an illegal number of shares of Russia's electricity monopoly to foreigners in the first years after the Soviet Union collapsed. /// OPT /// Mr. Chubais, who served as deputy prime minister under President Boris Yeltsin, said the legal basis for the case was, in his words, "laughable." /// OPT CHUBAIS ACT - IN RUSSIAN - FADE UNDER /// /// OPT /// Mr. Chubais says, "This is not a conflict of laws, this is the Communists trying to carry out political revenge. /// END OPT /// A Russian liberal politician says he has persuaded President Putin to hold a meeting with business leaders later this month aimed at easing tensions between Russia's business and political elite. But in a newspaper interview published Friday, President Putin said simply that those people who try to abuse the state or win privileges because of political connections, will in his words "be forced to give up their ideas." (Signed) NEB/EC/JWH/PW 15-Jul-2000 15:23 PM EDT (15-Jul-2000 1923 UTC) NNNN Source: Voice of America .