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. 
-------------------- 
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. 
 
-------------------------------------------- 
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. 
 
-------------------------- 
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. 
 
------- 
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