What is corporate raiding?

The Bitkovs are the victims of a classic Russian-style corporate raid.

This has included artificial bankruptcy, spurious criminal charges, kidnapping, threats to their family and a vicious campaign of character assassination in the media.

A Russian-style corporate raid is not the same as a hostile takeover in a western jurisdiction. It is a sophisticated form of organized crime used to take control of other people’s businesses. The practice flourishes in countries like Russia where there is weak rule of law and high levels of corruption.

It usually combines “legal” agreements with inducements to “co-operate”, including threats of “commissioned” criminal cases, physical intimidation and “black” PR.

It often involves illegal use of state resources with the approval of political patrons. It is a very widespread practice: in Russia in 2009 there were 40,000 reported cases of corporate raiding. Only 55 were investigated.

In a seminal article “Criminal Corporate Raiding in Russia” published in 2008, Thomas Firestone, Legal Adviser for the US Department of Justice at the US Embassy in Moscow describes reiderstvo as reliant on “criminal methods such as fraud, blackmail, obstruction of justice and actual and threatened physical violence.”