Massive embezzlement revealed in RAS

Massive embezzlement revealed in RAS
Sergey Fedotov, former head of RAS (Russian Authors Society)

There are signs of fictitious nature of 75% payments for 2016 alone, but there is evidence that the former top management had been withdrawing money from the organization for many years.

Former administration of the Russian Authors Society headed by Sergey Fedotov has withdrawn hundreds of millions of rubles through illegal schemes. There are signs of fictitious nature of 75% payments for 2016 alone, but there is evidence that the former top management had been withdrawing money from the organization for many years. These are the preliminary results of an independent audit of RAS’s financial and economic activity by Grant Thornton ACF audit company. They were announced at the enlarged meeting of the Authors Council. The multifaceted independent audit began in RAS in January 16, 2017. Based on its results, it is planned to optimize the financial issues of the organization.

The final results of the independent audit will be announced in 2 months, but, as stated by new RAS General Director Maksim Dmitriev, even the preliminary data suggest numerous financial irregularities.

According to him, the money used to be allocated to the accounts of fly-by-night companies and independent businessmen, who allegedly owned the rights to the unknown songs with ‘very funny’ names, whereas famous authors received ‘a measly’. According to the audit, in 2016, the RAS received 4.7 billion rubles, 1.6 billion rubles out of which it spent on itself.

Let us recall that former General Director of RAS Sergey Fedotov is accused of 500-million-ruble fraud with the company’s property. In 2015, law enforcement agencies began an audit of the Russian Authors Society, which resulted in the initiation of a criminal case against Fedotov in June 17, 2016. As previously reported by the CrimeRussia, during the audit investigators found that the RAS purchased four nonresidential buildings in 2007-2011, which could not be used for commercial purposes by the company, therefore some buildings were not used at all. During the Authors Council meeting, it was decided to sign the buildings off to a subsidiary, namely Servisno-Ekspluatatsionnaya Kompaniya (SEK, Service and Operation Company) CSJC. In turn, SEK founded several companies, in particular, Media Management and Muzykalny Olimp, to the authorized capital of which the property was transferred. According to investigators, the premises were then sold to third parties — Rosavtotrans, Sibir-Leasing, and a certain private person. The RAS never received the proceeds from the sale of buildings with a total area of 2 sq. m. According to investigators, in 2012, Fedotov transferred the RAS’s property worth more than 500 million rubles to the subsidiary’s balance sheet. In September 2016, the police referred his case to the ICR for further investigation.

Among other things, Fedotov had been regularly accused of massive swindle in the distribution of royalties. After his arrest, authors began voicing their claims. In July 2016, producer Maksim Fadeev made a statement about the machinations in RAS. “I was enduring and keeping silence for a long time, like thousands of authors in Russia, watching the corruption among RAS managers who were blatantly showing us their superiority and pointing out our place to us! While we were bowing and begging for our money, the RAS managers were deciding how much they pay to whom. Personal relations were also important and determined the amount of remuneration,” the producer said.

In addition, the surname of President of Russian Union of Right-holders (RUR) Nikita Mikhalkov often pops up next to Fedotov’s name. At the first serious problems, he said that he “has nothing to do” with the RAS, although the current copyright protection system was created jointly by Mikhalkov and Fedotov. They used to run common business projects and even have certain family ties - Nikita Mikhalkov is the godfather of Fedotov’s son.

In January 2017, it became known that Sergey Fedotov made a pre-trial agreement with the investigation. Despite this, the Moscow City Court has remanded him in custody until 17 February.

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