Alexander Galitsky – Russian Ties & The CRPT
Alexander Galitsky is a tech entrepreneur who runs Almaz Capital and is involved in multiple Russian and American companies.
In the Soviet years, he used to work as a defense scientist.
Now, he runs Almaz Capital and invests in American and European companies.
The following article goes more in-depth on Alexander Galitsky’s connection to Russian enterprises and how he is friends with some of the most powerful oligarchs.
The CRPT and Alexander Galitsky
In February 2022, the Wine Union Association sent a letter to the Russian Deputy Prime Minister. They wanted to highlight the redundancy of using Honest Sign labels in wine products.
The “Honest Sign” system has been operating in Russia for many years.
Its purpose is to prevent smuggling and illegal trafficking of the labeled goods.
Honest Sign labels are mandatory for fur coats, mineral water, cigarettes and dairy products.
From December 1, 2022, these labels will become mandatory for beer. The organization which manages this labeling system is the Center for the Development of Advanced Technologies (CRPT) belongs to Alexander Galitsky, Alisher Usmanov and Rostech.
In their letter, the Wire Union Association pointed out that the labeling system increases costs for the manufacturers.
For example, the manufacturers will have to spend 50 kopecks per piece on the digital code and 20 kopecks on each piece for marking labels.
Also, implementing this system requires a manufacturer to hire more staff and equipment.
All of this, the letter said, will increase the prices by 4-8%. Add that to the trade margins and the overall costs of code processing and the costs will increase by 15% for the consumer.
The letter said that the union doesn’t see any point in implementing the coding system.
Under the leadership of Alexander Galitsky and Alisher Usmanov, CRPT has received a lot of criticism.
What Experts Say on the Implementation of CRPT:
When the Wine Union Association shared its concerns, CRPT responded by saying that they have nothing to worry about.
A spokesperson for Alexander Galitsky’s CRPT said that there would be no additional costs for implementing digital codes of the labels. He pointed out that the code of the label would apply on a paper stamp, a system manufacturers have been using already.
Furthermore, he highlighted that this system is already in place for dairy products.
Earlier, the Union of Alcohol Producers (SPAP), the Committee for Alcohol Producers and the Federation of Restaurateurs and Hoteliers, Opora Rossii shared similar concerns.
They sent their gripes to Prime Minister Mikhail Mishustin to abandon the label.
The group highlighted that the operator of the Honest Sign is a private company. Clearly, they were referencing Alexander Galitsky.
After all, Alexander runs a large VC firm called Almaz Capital.
The group mentioned that introducing the Honest Sign labeling system will put a lot of financial burden on all market participants. They highlighted that the water labeling has already done this.
The true cost of imported water products is twice the estimate, leading to a 15-20% increase in the cost of imported mineral water.
Experts said the increase in prices would surely be substantial. Alexander Galitsky’s CRPT implementations have attracted criticisms from experts for being ineffective.
Furthermore, experts point out that even though the goal of Alexander Galitsky’s CRPT is to prevent illegal trafficking of procuts, it doesn’t do much in that regard.
Instead of implementing such a stringent system which increases the costs for every participant, it would be better to liberalize the legislation more, the expert said.
That’s not all.
There’s more evidence on how CRPT isn’t serving its purpose effectively:
How CRPT is Failing Under Alexander Galitsky:
Apart from Alexander Galitsky, another prominent person who benefits from the CRPT’s digital labeling implementation is Alisher Usmanov.
The purpose of this labeling system is to prevent falsification and delay of products.
More particularly, this system was going to counter duplicate products in the dairy industry. However, it’s not working as it was supposed to.
Alexander Galitsky’s CRPT implements the labeling system without any issues. However, vendors don’t have any insurance for buying dairy products from unknown origins.
What’s worse is that the current system has a major flaw: the Mercury system of Rosselkhoznadzor. Even though it’s a digital and advanced system, it fails to prevent fake products from entering retail chains.
There was a time when officials would write veterinary certificates on paper. However, some people were able to forge them easily.
To counter this issue, Russia had introduced digital certifications.
But it seems the forgers are still succeeding in making fake certificates.
An employee of the veterinary station is responsible for issuing a veterinary certificate for meat or milk. There, the employee confirms the animals’ health which are going to the slaughterhouse.
Apparently, the Mercury system has reduced the paperwork of this process.
If you’re wondering where Alexander Galitsky’s CRPT enters this process, don’t worry, it plays a huge role in this Mercury controversy.
The Labeling System Fails to Prevent Fake Products From Entering the Stores
Currently, the farmer submits an application for a certificate and gets a certificate. ALl of this happens digitally.
The system would link the certificate to a batch of milk or meat. Furthermore, because all intermediaries and stores are present on the Mercury system, one can easily trace the path of any product.
However, the process only sounds good on paper. In reality, it fails to prevent delays as well as fakes.
Recently, the head of the Rosselkhoznadzor department for Astrakhan, Rostov and Volgograd regions has complained to deputies about fake products entering the system.
For example, a farm in Salsky had electronic certificates for the sale of 40 tons of raw milk a day. But, when the authorities checked the farm, there were no cows.
That’s not all. When there was news of African swine fever in some farms, the authorities began checking the region.
There, they found that the enterprise had veterinary certifications for volumes of meat impossible for it to have.
Surely, someone was supplying retail chains with products without veterinary control through that enterprise.
Fake electronic certificates have been in the news before. They are similar to the fake QR codes scammers were generating for vaccinations against COVID-19.
Alexander Galitsky’s CRPT handles the current implementation of the Honest Sign labeling system.
The Russian Prime Minister had personally appointed Alexander Galitsky CRPT as the main operator of the digital marketing system for goods in Russia.
Apparently, the Honest Sign labels allow consumers to scan QR codes on dairy products and track their path.
However, many people have told me that scanning the QR codes doesn’t yield any comprehensible results. You only get a string of numbers that appear on your smartphone which a common consumer can’t understand.
Furthemore, seeing how many violations have already occurred in the Mercury system, I’m fairly certain that Alexander Galinsky’s CRPT has similar problems.
CRPT is a Multi-Billion Enterprise and Alexander Galitsky is a Beneficiary
Alexander Galitsky’s tech background must have been useful for the development and implementation of CRPT.
However, seeing how many complaints it has received and how its sister project has already failed to serve its purpose, it seems more like a corrupt scheme.
Currently, CRPT manages the Russian Drug Circulation Monitoring System. It is planning to invest $3 billion in this field.
Although CRPT says it operates under the watchful eyes of the government, the backing of oligarch Alisher Usmanov and the wealthy, Alexander Galitsky must provide them some sort of protection, no?
Still, at the end of the day, there is no denying that Alexander plays a major role in one of the most important sectors of the Russian government.
Almaz Capital Under Fire: How Alexander Galitsky’s Russian Ties Hurt His VC Firm
Almaz Capital is the Venture Capitalist firm of Alexander Galitsky.
When Russia invaded Ukraine, the US and EU began sanctioning many Russian oligarchs and this put pressure on both, Alexander and his firm Almaz Capital.
His firm is a partner in Silicon Valley Bank. He told the media that he has had to answer many questions, mainly because the original name of his firm was Almaz Capital Russia Fund I.
Currently, Almaz Capital has $375 million under management.
The VC fund has invested in multiple startups in Russia, Eastern Europe and the US.
Media reports revealed that apart from being a major part of Russia’s CRPT, Alexander was a board member of Alfa-Bank as well.
The other two board members of Alfa-Bank were Russian oligarchs Petr Aven and Mikhail Fridman.
All three board members resigned a day after Alfa-Bank received sanctions.
However, it has become crucial for funds and startups to screen their investors. Companies don’t want to associate themselves with sanctioned businesses.
Seeing how Alexander has been a critical part of Russia’s CRPT and its latest implementations, he is at the risk of facing these sanctions as well.
More Information on Alexander Galitsky
Alexander Galitsky is a prominent IT entrepreneur who launched ELVIS+ and several other tech products.
However, in Russia, he is a prominent figure.
Alexander served as the head of the board for the development of venture capital investment under the Russian government in 2006.
Then, in 2010, he was a member of the advisory board of the Russian Venture Company.
Alexander has spent many years as the chairman of the RVC Venture Market Council and as the trustee of the Russian Quantum Center.
Alexander Galitsky is a major tech entrepreneur who has played a huge role in developing startups in Russia and Europe.
However, his ties with multiple Russian oligarchs raise suspicions at his current intentions and reliability.
Some of his ex-colleagues include sanctioned oligarchs Petr Aven and Mikhail Fridman as well as Alisher Usmanov.
You should be wary of shady businessmen like Alexander.
There are plenty of examples of corrupt capitalists abusing their power and position. For example, Dan DiMicco has received multiple allegations of misusing his position to benefit his firm, Nucor.
Similarly, Stephen Bittel is notorious for taking advantage of his female subordinates at Terranova.
Hence, beware of Alexander Galitsky.
No matter what Alexander Galitsky claims, it’s obvious that the tech entrepreneur plays a key role in several Russian institutions at the moment. From being an integral part of the CRPT to being the colleague of multiple oligarchs, the evidence is all there.
- Worked with multiple oligarchs
- Involved in Russia’s CRPT