The price of protection in a lawless land

The village clubhouse at Nikolina Gora, a well-heeled dacha village just outside Moscow, is usually a delightfully sedate place. Local residents Mstislav Rostropovich and Sergei Prokofiev used to give recitals for their neighbours on the clubhouse terrace. On Sunday afternoons lesser musicians still keep up the tradition and the strains of Mozart drift through the pines.

Hardly an appropriate venue, one would think, then, for a hostile takeover bid by corporate raiders — but at last month’s annual residents’ meeting tempers were running high as the village’s elected committee decided how to face just such a raid. Nikolina Gora’s troubles offer a nasty insight into the way business is done in Russia. As a cynical Russian proverb puts it, ‘right is on the side of he who has the most rights’.

The problem began three years ago, when the village committee realised that Nikolina Gora’s communal lands — on which the clubhouse, kindergarten, shop, fire station and war memorial stand — had not been properly privatised after the fall of the Soviet Union. Instead, the land had been left in a sort of legal limbo, not quite belonging to the village co-operative, but not quite state property either. To regularise the land registration would involve paying the state about $30,000 per hectare. That is well below the soaring market value, which is approaching $3 million per hectare. Nevertheless, the privatisation bill added up to a third of a million dollars, which the village committee was unable to raise.

One well-to-do resident, a businessman named Vadim Stepanov, came up with a rescue plan. He offered to finance the privatisation of the village lands — including the heavy bribes that would be involved in pushing through the registration process. His price was that he wanted the village committee to sign over to him Nikolina Gora’s potential rights to a further chunk of 20 hectares of adjacent woodland which may (or may not) belong to the village.