http://www.sptimes.ru/index.php?action_id=2&story_id=16910 MOSCOW -- An Italian businessman killed in downtown Moscow in January was carrying a briefcase with about $400,000 in cash -- down payments for orders of designer Italian footwear.
It was far from the first time that the businessman, Pierpaolo Antinori, 52, had traveled to Russia. Antinori, a senior official in Italy's Fermo Union of Entrepreneurs, had been organizing shoe exhibitions in Moscow for 15 years, and he often had to cart around bundles of cash, friends and colleagues said.
The killing casts the spotlight once again on the prickly issue of cash-only payments, a tax-avoidance practice that Russian entrepreneurs insist is necessary to remain competitive but that many foreigners detest because it forces them to carry around a lot of cash.
"Cash payments represent a major problem for foreigners operating in Russia," Marco Gentile, a colleague of Antinori's at the Fermo Union of Entrepreneurs, said by telephone from Fermo, in Italy's central Marche region.
He was echoed by Bruno Scheggia, an Italian shoemaker who was in Moscow when Antinori was killed.
"Little by little, this practice is disappearing, but still some small-business men don't like bank transfers," Scheggia said.
"After Antinori's death, however, we decided to make this practice disappear. Nobody wants to take the risk anymore," he said.
Small-business owners interviewed for this report insisted that they had to work in cash to avoid what they called double taxation: official taxes and bribes. Most owners would speak only on condition that their last names and places of business not be disclosed.
"If I paid through a bank, the tax authorities would know that I had signed a contract to buy a certain product for a certain amount of money," said Oleg, who owns two shops that sell women's apparel in Moscow.
By paying taxes and customs fees, "my product could not compete with that of those who did not pay taxes," he said.
Oleg's method of importing clothes appears to be commonplace: He bribes customs officials to allow him to declare that he is importing another product with lower customs duties. Doing so, he said, reduces retail prices and keeps his stores competitive.
"As for the tax police, we just bribe them. It is much cheaper to work in this way," Oleg said.
Natalya, the owner of two lingerie shops, also cited the need to remain competitive. "With others bribing customs officials and not paying taxes, you cannot compete," she said.
"Another problem is that if you follow the law, customs and tax officials ask for money anyway; they are so used to taking bribes. But we cannot afford to pay twice," she said.
Andrei Nagorny, the head of Elips, a small chain of stores that sells sport shoes, estimated that 80 to 90 percent of the shoe market was in the shadows because of bribes to customs and tax officials. "We have to play by these rules, although we don't like them. But it is not we who choose the rules," he said.
Bribe-taking is deeply ingrained among police, licensing bodies and state inspectors, and it amounts to $316 billion a year -- twice Russia's annual federal revenues, according to a 2005 report by Indem, an anti-corruption watchdog.
Business owners said some customs and tax officials encouraged cash-only payments because it meant that bribe money was always on hand.
"Corruption is a problem and we admit it," Federal Customs Service spokesman Alexei Savinkov said Tuesday. "We call for businessmen to report such cases so we can fight against it."
A spokeswoman for the Federal Tax Service said the service could not comment on the issue. "People say all kinds of things," she said.
A senior spokesman, Alexander Belyayev, asked a reporter to submit questions by fax and promised a reply in five to 15 days.
Many small businesses prefer to pay bribes because they are significantly cheaper than taxes and duties, said Alexei Yazykov, a consumer goods analyst with Aton, the investment bank. "For example, if you are importing microwaves, you can declare that you are importing sugar and customs taxes are much lower," he said.
Antinori's death stunned many Italian businessmen with ties to Russia.
"Antinori was a very important figure for the Italian shoemakers operating in Moscow. He had experience and he would help them to move in the Russian market," said Leonardo Soana, the director of the National Association of Italian Shoe Factories, speaking by telephone from Milan.
On Jan. 18, a Zhiguli sedan forced Antinori's Nissan Maxima to stop on Mantulinskaya Ulitsa, near the Ulitsa 1905 Goda metro station. Two men leaped out of the Zhiguli, smashed a window and stabbed Antinori in the leg, severing a major artery. Antinori bled to death.
The assailants made off with his briefcase, which contained some $400,000 in down payments from Russian buyers at Konsumexpo, a major annual exhibition of convenience goods that was taking place at the time, said an Italian businessman and friend of Antinori's.
"He was not carrying his own money, but money that people had given as an advance at the exhibition," said the businessman, who would speak about the details of the attack only on condition of anonymity, citing the sensitivity of the issue.
Asked about possible suspects, he said, "Everybody knew that people would give him the cash to send home."
Antinori -- who usually traveled to Russia five or six times a year and was overseeing the Italian shoemakers at Konsumexpo -- was taking the money to a bank, he said.
"The atmosphere at the exhibition was really gloomy -- he was killed and a lot of people lost their money," he said.
The killing, which came amid a spate of attacks on cash couriers and currency exchange booths, prompted Moscow police chief Vladimir Pronin in February to create a special department to prevent such robberies, Kommersant reported.
Gentile and Soana said that although Italian businessmen were still coming to terms with Antinori's death, they were determined to regroup and attend the next exhibition, the Obuv Mir Kozhi expo in April.
"Russia is one of the most important markets for us. It is a market that has been steadily growing, and we are not planning to leave it," Soana said.
Natalya Krainova contributed to this report.
