Crab companies tied to Oleg Khan petition Putin for clemency

Three Russian crab-fishing companies have written letters to the country's president, Vladimir Putin, asking him for help in forestalling legal investigations that may drive them into bankruptcy.

The separate, open letters were signed by all 700 employees of Primorskaya Rybolovnaya Kompaniya (PRK), Kurilskiy Universalniy Komplex (KUK), and Moneron, which collectively hold around 9,000 metric tons of crab quota, according to business journal Vedomosti.

All three companies have been connected to Oleg Khan, one of the biggest players in Russia’s crab sector until 2018, when several media reports called into question the legality of Khan’s business dealings. Television stations Russia and NTV both aired investigative reports alleging Khan’s involvement in underreporting catches and selling the excess crab to South Korea and Japan.

The reports emerged just after Putin had proposed reallocating 50 percent of Russia’s crab quota via an auction system. The overlap and close timing between the two lightly-sourced reports – and the fact that such investigative pieces targeting high-profile individuals typically require tacit approval from the Kremlin prior to broadcast – was interpreted by the crab industry as a message that the top ranks of Russian leadership would not harbor dissent in their decision to move to auctions. 

Soon, Khan’s public relations problem became a legal one, after the Investigative Committee of Russia reopened a dormant criminal case against him, allegedly tying him to several murders. That led Khan to flee the country via private plane. After his departure, further investigations were launched into Khan’s activities and his businesses by the Russian Tax Service, the Federal Security Service (FSB), and the police. In late March 2020, a court seized assets from several of Khan’s companies, which included police raids on their offices.

Now living abroad, Khan has been arrested in absentia in Russia. He claims he is no longer an owner of the three crab companies that have written to Putin, though he was a founder of them years ago.  

But Russian investigators say Khan remains the owner of the companies, and now claim that the three firms sold crabs for export at artificially lower prices to pay fewer customs export fees. The scheme netted Khan RUB 210 million (USD 2.9 million, EUR 2.6 million) in money that would have otherwise been collected as taxes, according to the authorities.

According to the letters, the investigation has the ultimate purpose of forcing the companies into new ownership.

“We see that our company is being pushed out of the industry,” the employees of Moneron wrote.

The employees of PRK said their business had essentially been gutted by the investigations.

“Law enforcement seized our property, equipment, and plants, thus making our activities impossible. They force us to close,” they wrote.

At KUK, there is concern that future fishing activities will be made impossible by law enforcement actions.

“We fear that our fleet will be paralyzed,” the letter by KUK said..

Putin has not yet issued any formal statement in regard to the letters or the numerous investigations targeting Khan. However, Putin did approve the controversial government-run auctions for crab quotas in Russia, with the first round of auctions taking place in December 2019.

According to Far East Crab Catchers Association President Alexander Duplyakov and Primorye Fisheries Association Georgiy Martynov, the auctions spell the beginning of the end for smaller crab-fishing companies in Russia.

“The withdrawal of half the quotas, as well as the fact that they have gone to a limited number of companies, will have negative consequences,” Duplyakov told Vostok Media. “Our work will become more difficult. We had been talking about negative consequences before the law on crab auctions was enacted, now we have to face them. We don’t know how things will go.”

Martynov told Vostok Media that the auctions will force consolidation in the industry, and that small- and medium-sized companies that lost their quotas will go bankrupt or be forced to sell their businesses.

So far, two of the biggest losers have been KUK and Moneron, which lost about half of the available quotas to the government's move, and which did not participate in the December auction process, according to Vedomosti.

Photo courtesy of Alexander Piragis/Shutterstock