Now you see them, now you don’t

A new Russian tax policy is about to make it much harder to investigate corruption

Russian officials have stopped reporting tax records for many companies where data were previously available to the public.

In accordance with the law, information about Russian legal entities (companies, firms, and organizations of any type) should be accessible to anyone who wants it. Russia’s tax service has special online systems that allow people to download extracts from the Unified Public Register of Legal Entities (EGRYuL), where you can find an organization’s name, “unique identifiers” (Taxpayer Identification Number and Main State Register Number, which indicates the year an entity was assigned and the district that assigned it), who manages, owns, or founded the organization, and more.

Investigative journalists recently started noticing that some EGRYuL queries no longer return any information in this last category, offering no data about a legal entity’s founders and participants. Even with Alexey Navalny’s Anti-Corruption Foundation — an organization that often leans on tools like the Unified Public Register of Legal Entities — the available records do not indicate that Navalny founded the group.

Work by journalists in Russia has demonstrated repeatedly that some of the biggest investigative reports rely on the smallest links found in the EGRYuL.

For example, Alexey Navalny’s bombshell investigation in 2017 alleging that then Prime Minister Dmitry Medvedev embezzled $1.2 billion would have been impossible today because the new restrictions would have withheld information about who founded a charity at the heart of Medvedev’s actions, says Ilya Shumanov, the deputy general director of Transparency International Russia. “Nonprofits are often used to launder money, and [the Federal Tax Service’s] initiatives create a new information vacuum that will allow this to happen with greater intensity,” Shumanov told Meduza.

It was there, and it’s easy to prove. Remember Navalny’s Anti-Corruption Foundation? Meduza compared its EGRYuL records downloaded from the Federal Tax Service (FNS) to the foundation’s records obtained from the “SPARK-Interfax” service. Information about its founder (Alexey Navalny) is missing from the FNS’s records, but the data exists in the records received from SPARK-Interfax.

Yes, but SPARK-Interfax gets its information directly from the Federal Tax Service. The FNS offers a paid public service: access to an FTP server with public data about legal entities in a machine-readable format. SPARK-Interfax collects these data and independently generates records that are almost identical to the records available at the FNS. In both cases, the data are taken from the publicly available section of Russia’s Unified Public Register of Legal Entities.

We don’t know for certain. Most likely, the FNS website has already switched to the EGRYuL’s new format, and other services are still returning older data while transitioning to the updated, more restricted public register.

In November 2020, the tax service issued orders stating that the transition period would end as soon as federal and local government agencies adopt the new format, or by July 1, 2021, at the latest.

That’s right. Legal entities’ founders used to be listed whenever they were registered, though the section containing this information wasn’t mandatory in tax records. For example, records for only two of the six political parties now represented in the State Duma included the names of founders. (The two parties were Rodina and Civic Platform.) This information is now gone.

The Federal Tax Service upended Russia’s recordkeeping procedures by explicitly limiting the types of legal entities where founders are reported publicly. The new, narrowed list includes the following groups:

• Joint-stock companies with a sole shareholder
• Limited liability companies
• State and municipal institutions
• Unitary enterprises
• Commercial partnerships (both general and limited partnerships)
• Farming enterprises
• Production cooperatives
• Savings and loan associations

All the organizations that don’t fit into the categories listed above. For example, because of the changes implemented by the Federal Tax Service, Russia’s public records no longer indicate that the founders of the infamous “Ozero” dacha housing cooperative include several of Vladimir Putin’s close personal friends: Nikolai Shamalov, Yuri Kovalchuk, and Vladimir Yakunin. Putin himself was one of the cooperative’s founders, but you’d never know it, looking at the records available now.

Here are just a few of the legal entities in Russia where information about their founding members is no longer listed:

• Joint-stock companies with multiple shareholders
• Autonomous non-profit organizations
• Foundations, including charities
• Political parties
• Labor unions
• Social movements
• Other public organizations
• Consumer cooperatives, such as housing, housing-construction, garage, and garage-construction cooperatives, mutual insurance societies, credit cooperatives, rental funds, and agricultural consumer cooperatives
• Associations and unions
• Real-estate associations
• Cossack societies
• Religious organizations
• Indigenous community groups

The FNS changed the registration rules for new companies and thereby justified the concealment of information about a large number of already-registered legal entities.

Spokespeople for the Federal Tax Service told Meduza that the agency changed its filing requirements for new legal entities, asking for information about founders only from select categories of organizations. “Therefore, the Unified Public Register of Legal Entities reflects data about the founders (participants) only for the specified legal entities,” the FNS explained.

We don’t know. Russia’s tax officials, at any rate, certainly believe that they have the right to hide an enormous amount of information about who founded various kinds of organizations across the country.

Federal law, however, states that information about founders can only be hidden in special cases and only at a legal entity’s own request. These exceptions apply to international companies, banks authorized to work in Russia’s defense sector, Crimea-based organizations, and legal entities designated under foreign sanctions. In all other circumstances, according to Russia’s federal laws, data about founders must be open and publicly available.

Text by Denis Dmitriev with additional reporting by Anastasia Yakoreva

Translation by Kevin Rothrock