Russian stock market nosedives on Navalny verdict

(RIA Novosti, The Moscow News – themoscownews.com – July 18, 2013) Russia’s stock market fell sharply on Thursday according to Moscow Exchange data, after investors took in the news that opposition blogger Alexei Navalny had been found guilty in a controversial fraud trial and sentenced to five years in jail.

The court in the city of Kirov, about 900 kilometers (560 miles) east of Moscow, found the vocal Kremlin critic guilty of organizing the embezzlement of about $500,000 worth of lumber from state-owned company KirovLes.

As of 1:21 p.m. Moscow time (9:21 a.m. GMT), the ruble-denominated MICEX index plunged by 1.51 percent on Wednesday’s close to 1,410.22 points while the dollar-denominated RTS index plummeted 1.50 percent to 1,372.15 points.

Billionaire Mikhail Prokhorov, who heads the Civil Platform party, called the verdict a turning point in Russian entrepreneurship. “It’s not just a verdict on the entire Russian court system,” he told journalists hours after the verdict on Thursday. “A whole page in the history of Russian entrepreneurship has been opened and closed. Now anyone who enters any sort economic agreement with someone will know that he can go to jail for that agreement at any moment.”

The conviction, unless overturned upon appeal, will prevent Navalny from running for public office, just a day after he registered his candidacy to stand in September elections for the Moscow mayor’s post.

Navalny, a whistle-blowing blogger well-known for leading mass protests against Russian President Vladimir Putin, has denounced the charges as politically motivated.

The founder of the anti-graft website Rospil and a shareholder rights campaigner, Navalny has in recent years sought to obtain documents via court rulings from a number of state-run companies, in a bid to make their activities more transparent. As a minority shareholder in state-run oil major Rosneft, Navalny attempted to get the company’s minutes of board meetings for 2009, and also copies of agreements on crude oil supplies to China.

The Navalny verdict will seriously affect the investment climate in Russia, political experts polled by RIA Novosti said on Thursday, adding the verdict was politically motivated.

“Naturally, the verdict was politically motivated – this is my personal opinion,” political analyst Vladimir Slatinov said, adding Russia’s investment climate would worsen after the verdict.

“No doubt, this will affect the investment climate. We have a whole number of similar high-profile cases and this is an extremely negative signal for investors,” he said.

That view was shared by Alexei Mukhin, head of the Center for Political Information think-tank.

“Navalny will hardly become a second [Mikhail] Khodorkovsky but this will nonetheless explode political life,” he said, also adding the investment climate in the country would be worse as a result.

Khodorkovsky, once the richest man in Russia, and his business partner Platon Lebedev were sentenced in 2005 to eight years in prison on fraud and tax evasion charges. In 2010, a Moscow district court convicted them on similar charges in a case widely seen by the Kremlin’s critics as politically motivated, a charge the government denied.

A leading member of the ruling United Russia party said the verdict had nothing to do with politics. “There is no politics in embezzlement and other analogous crimes linked to corruption,” Sergei Zheleznyak, deputy secretary of the party’s General Council told journalists on Thursday.

[featured image is file photo from political protest]