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Boss of Russian collecting society arrested over fraud allegations

By | Published on Wednesday 29 June 2016

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The boss of the Russian music industry’s collecting society RAO – Sergei Fedotov – has been arrested on suspicion of fraud following an investigation into allegations royalties collected by the organisation were used to buy properties which were then transferred over to third parties.

As previously reported, last summer it was announced that RAO, the Russian collecting society for music publishers and songwriters, would merge with record industry society VOIS and private copy levy body RSP, to create one super music rights organisation in the country which, RAO chiefs said, would be more efficient and more transparent.

But then the boss of VOIS said he’d not been consulted about any merger. Then there was talk of changing Russian law to allow new rival collecting societies to be set up to compete with the merged RAO/VOIS/RSP super society. And alternative proposals were also floated to abolish all that entirely and just have a government department manage the collective licensing of music rights.

It was in among all of this that RAO confirmed it was under investigation over the embezzlement allegations, with the society insisting that its past property transactions, worth some 500 million roubles, were all legit. That investigation has seemingly been going on ever since and, according to local media, Fedotov’s office and home were both searched by police on Monday resulting in the RAO chief’s arrest yesterday. So far bail has been denied.

Fedotov’s legal rep is quoted by Russian news agency RBC of denying all of the allegations against his client, while RAO itself continues to insist nothing illegal has occurred. A spokesman told Billboard: “RAO’s General Director Sergei Fedotov and the organisation’s other employees are fully cooperating with the investigation, helping it to find out the truth. We are sure that a qualified investigation will lead to establishing no wrongdoing in Sergei Fedotov’s action”.

The big RAO/VOIS/RSP merger was seemingly called off last autumn, though RAO insists a reform of collective licensing in Russia is still needed. The Russian government seems to agree, though has alterative proposals to those put forward by RAO. But the country’s Communications Minister, Nikolai Nikiforov, insisted to local media that Fedotov’s arrest is unrelated to disagreements about collective licensing reform.