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Russian collecting society accused of £5 million embezzlement

By | Published on Friday 4 September 2015

Russian Authors Society

Amid confusing developments in the collective licensing domain in Russia – which have seen proposals floated that would merge the three existing collecting societies, or allow new societies to be created, or just hand all collective licensing to a government agency – the biggest music licensing society in the country, RAO, is now facing allegations of embezzlement.

As previously reported, back in July it was announced that RAO, the Russian collecting society for publishers and songwriters, would merge with record industry society VOIS and private copy levy body RSP, to create one super music rights organisation which, RAO leaders said, would be more transparent. But the boss of VOIS said he hadn’t been consulted about the merger.

Proposals were then floated that laws regulating collective licensing should be relaxed, so that creators or rights owners unhappy with the merged RAO/VOIS/RSP could set up their own societies, and then new proposals were announced that would basically abolish the existing societies and put collective licensing into the control of a government agency. All these plans are, officially at least, setting out to improve “transparency” in collective music licensing. Though, perhaps ironically, no one seems especially certain what’s going on.

And according to Russian business paper RBK, RAO is now accused of embezzling 500 million rubles (nearly £5 million), by using royalties it collected to buy four buildings in Moscow, and then transferring ownership of those properties to other companies and individuals.

According to Billboard, RAO has confirmed that an investigation is underway into its financial affairs, but it denies the allegations against it, stating that the property purchases were legitimate, as was the subsequent sale of those buildings, motivated by the “economic downturn” and the need to free up cash reserves.

It remains to be seen where all this goes next.