Russia's campaigner against corruption

Country's most vocal minor shareholder is on a mission to expose cheats in state-owned companies, targeting the rich and powerful.

MOSCOW // Alexei Navalny already had a reputation as a rabble-rouser when he showed up at the annual general meeting for Rosneft, a Russian oil firm, in Moscow in June. With a small stake in the company, Mr Navalny, 33, wanted to question the Rosneft chairman, Igor Sechin, a confidant of Vladimir Putin, the prime minister, about management strategy and the lack of dividends for stockholders.

"I looked around and noticed a bunch of beefy-looking fellows sitting around me," Mr Navalny said in an interview in his sparsely furnished offices in Moscow. "I'm well known in Rosneft, and they're not always happy to see me." Mr Navalny said he approached Mr Sechin afterwards and asked why he had been surrounded by guards. "He chuckled and said it was for my own safety," Mr Navalny said. It is, perhaps, no surprise that questions of personal safety arise wherever Mr Navalny goes. Cocksure and irrepressible, he has become Russia's most vocal and obnoxious minority shareholder, hounding the country's largest companies with muckraking campaigns against corporate malfeasance and incompetence.

Readers of his popular blog regularly post questions about whether he is scared of being killed for his crusades against Russia's richest and most powerful. "I've never received any direct threats," Mr Navalny said. "Maybe it's something to think about, but for me that's not a reason to halt my work." In contemporary Russia's tightly managed political system, there is little room for renegades. Those who aspire to public office, or even to debate the issues of the day on state-controlled television, have few prospects of success without the consent of the Kremlin.

But in a country where politics and business are so intimately intertwined - and notoriously opaque - Mr Navalny is ruthlessly exploiting capitalism's most basic building block to needle Russia's political and financial overlords: the share. Seeking capital injections and international legitimacy, dozens of Russian companies, including state-owned giants, have gone public in recent years. Among these were so-called "People's IPOs" - promoted by officials as safe bets for small investors - of Rosneft and banks Sberbank and VTB.

Mr Navalny is among those small investors, with stakes - each worth around 50,000 roubles (Dh6,000) at the time of purchase - in almost every major state-owned company that is publicly listed. Leveraging his status as part-owner, he has launched broadsides against the management of these companies, filing lawsuits over lack of transparency and complaining to prosecutors about alleged embezzlement by management. "While professional investors try to solve their problems quietly, this everyman without status or power is trying to fight the system," the respected Russian business daily Vedomosti wrote of Mr Navalny last month after naming him "Private Individual of the Year" for 2009.

His attacks are ostensibly in the name of a better bottom line. Theft and mismanagement are hurting the performance of the companies in which he holds stock, he claims. But Mr Navalny said it would be "stupid" to deny the political implications of his anti-corruption drives. "My activities are directly aimed at changing the political situation in the country. I don't participate anymore in politics. I don't vote. But my battle for the oil export market to belong to our Russian companies - and not to a Swiss offshore company - is essentially politics."

The company is a publicity-shy Geneva-based firm named Gunvor, the world's fourth-largest oil trader, handling about one-third of Russia's seaborne exports. It is co-owned by a Russian businessman, Gennady Timchenko, an acquaintance of Mr Putin. Mr Navalny took an interest in Rosneft's relationship with Gunvor after Mr Timchenko's inclusion in the Forbes list of the world's billionaires, and he began pressing for Rosneft to reveal to shareholders its dealings with the Swiss firm, eventually filing a lawsuit. A Moscow arbitration court rejected the suit in 2008, supporting Rosneft's claim that its dealings with Gunvor are a commercial secret.

"We lost in all the courts in Russia. We knew that would happen," Mr Navalny said. "But to go to [the European Court of Human Rights] in Strasbourg we had to go through the entire court system. In Strasbourg we've filed a complaint over violations of our property rights." In his most recent - and successful - campaign, Mr Navalny targeted VTB last month for what he calls a naked scam by employees of one of the bank's subsidiaries, VTB-Leasing, to siphon off $150 million from the purchase of Chinese oil rigs. Mr Navalny travelled to northern Russia to track down the machinery, which he found collecting rust in a poorly guarded storage yard.

Using tip-offs from bank employees and disgruntled middlemen hired by VTB-Leasing, Mr Navalny claims to have almost completely documented the alleged swindle and has called on fellow investors to bombard authorities with requests for a criminal investigation. The VTB chairman, Alexei Kostin, addressed Mr Navalny's investigation at a meeting last month of the bank's shareholders advisory board after the issue was raised by a board member, Oleg Anisimov, the editor-in-chief of the Russian business magazine Finans.

Mr Kostin explained that the VTB-Leasing director had been fired "not only for this, but in general fired", according to a partial transcript of the meeting released by Mr Anisimov. Mr Kostin said the company was trying to sell the oil rigs and added that authorities had discovered no evidence of a crime, according to the transcript. The amount of time, energy and money Mr Navalny pours into his muckraking has fuelled suspicion about his motives. He has been accused of digging up dirt on companies and threatening to go public if they refuse to pay him to keep quiet, a claim he calls ridiculous.

"It is simply impossible to [do this to] companies like Rosneft or Gazprom," he said. "Any attempt by me to get some money out of them will end in the best case scenario with a few law enforcement agents jumping on me screaming 'bribe!' and immediately arresting me, or in the worst case scenario with someone quietly having me killed." He says he finances his anti-corruption activities himself thanks to his small corporate law practice. "I'm not saying I'm rich, but I'm relatively well off," he said.

Mr Navalny's admirers say that although some of his attacks may be misguided, the fastidiousness and force of his drives to weed out official and corporate graft can only benefit Russia. "He is raising very legitimate questions," said Sergei Guriev, an independent director on Sberbank's supervisory board and the dean of Moscow's New Economic School. "At times he may be mistaken, but it's the responsibility of the company management to respond to his questions. My concern is that some of these guys may be pretty ruthless. In that sense, Mr Navalny is very courageous."