Cablegate: Russian Police Raid Collecting Society

VZCZCXRO5026
RR RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #2901/01 2741450
ZNR UUUUU ZZH
R 301450Z SEP 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 0172
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 002901

SIPDIS

STATE FOR EUR/RUS,EEB/TPP/IPE
STATE PLS PASS USTR FOR SMCCOY, PBURKHEAD
USDOC 4231 FOR JBROUGHER, MEDWARDS, JTHOMPSON
USDOC PLS PASS WPAUGH

E.O. 12958: N/A
TAGS: ETRD KIPR ECON RS
SUBJECT: RUSSIAN POLICE RAID COLLECTING SOCIETY

REF: MOSCOW 155

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.
1. (SBU) SUMMARY: On September 24, Moscow police raided the
offices of the Russian Phonographic Association (RPA), a
royalty collecting society for the music industry, including
U.S. rights holders. The raid occurred just four days before
the GOR's deadline for RPA to participate in the tender to
accredit an official collecting society for all recorded
music producers and performers in Russia. In spite of the
raid, RPA representatives tell us they will still meet the
deadline to participate in the tender. Nonetheless, the raid
raises questions about the overall fairness and transparency
of the process and whether a rival collecting society was
trying to hinder RPA's participation. END SUMMARY.
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RPA Raided by Police
--------------------

2. (SBU) On September 24, police from the Investigative
Department for the Southern District of Moscow raided the
offices of RPA. RPA is the collecting society supported by
the RIAA. It has been collecting royalties on behalf of
foreign rights holders since 2004. The raid took place just
four working days before the deadline for RPA to participate
in a tender administered by the Russian Agency for the
Protection of Culture (RosOkhranKultura). The tender will
determine which collecting society will be officially
accredited to collect royalties for rights holders in the
future.

3. (SBU) Under Russia's new intellectual property law (Part
IV of the Civil Code), the federal government is required to
accredit entities to collect royalties for the main
categories of rights holders, including one society that
would be responsible for collecting royalties on behalf of
recorded music producers and performers. The GOR
accreditation process is supported by international recording
industry associations, including the International Federation
of the Phonographic Industry (IFPI) and the Recording
Industry Association of America (RIAA).

4. (SBU) According to the police warrant, the raid was based
on an informant's tip that linked RPA to an alleged purchase
of 121 counterfeit DVDs at a local market in the Spring of
2008. According to RPA representatives, police investigators
apparently applied an artificially inflated price to the
contraband disks to satisfy the minimum monetary threshold
for a criminal penalty. (Under the relevant section of the
Russian Criminal Code, monetary damages in cases of DVD
piracy must be at least 50,000 rubles, or about $2000.) A
criminal case was filed with the Ministry of Internal Affairs
on April 30, and apparently remained dormant until last week,
when police raided RPA's offices.

5. (SBU) Police did not uncover any counterfeit DVDs at RPA's
offices, but did confiscate several boxes of documents and
one computer. While RPA representatives and the company's
lawyer were present during the raid, the police did not allow
RPA to document or record what the police were taking, in
apparent violation of Russian investigative procedures.

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International Associations Suspect Foul Play
--------------------------------------------

6. (SBU) RPA, IFPI and RIAA representatives told us they
believe the raid may have been arranged by one of RPA's
rivals, likely a competing "rogue" collecting society that
purports to collect royalties on behalf of rights holders,
but never in fact pays out any royalties. In the view of
RPA, IFPI and RIAA, the raid may have been an attempt to
obstruct RPA's ability to make the September 30 filing
deadline to participate in the RosOkhranKultura tender
process. Despite the confiscation of some of RPA's documents
and the computer, RPA representatives tell us that the
company will still be able to make the deadline and
participate in the tender.

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Previous Harassment of RPA
--------------------------

7. (SBU) In the lucrative but shady world of collecting

MOSCOW 00002901 002 OF 002

royalties in Russia, this is not the first time that RPA has
faced harassment and obstruction of its business activities.
In January 2008, a few days before RPA was required to
re-register as a collecting society under new regulations,
RPA's managing director, Vadim Botnaruk, died from wounds
following a brutal assault, which was the second attempt on
his life in a three-month time frame (Reftel). Following
Botnaruk's murder, RPA scrambled but still met the
registration deadline.

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COMMENT
-------

8. (SBU) The timing of the police raid, a few days before the
filing deadline for the collecting society tender, tends to
confirm RPA, IFPI and RIAA'S suspicions that the raid may
have been orchestrated by a rival collecting society. This
is a profitable, and rough, business in Russia. While it is
good news that RPA will still be able to participate in the
tender, its representatives tell us they are concerned that
the tender process may not be transparent. We will continue
to monitor both the police case and the tender process
closely.
BEYRLE

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