[lbo-talk] Russia: Privatizations to be audited

Chris Doss itschris13 at hotmail.com
Fri Jan 9 03:09:52 PST 2004


-From Anne Williamson via the A-List (to which I subscribed largely because of her).

[A-List] Russia: Privatizations to be audited Anyutka annewilliamson at msn.com Wed Jan 7 21:37:55 MST 2004

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A-Listers, how I have dreamed of this day! It was inevitable, such injustice/theft/looting can not stand, but I thought it would never arrive. Slava Bogy! -A.

Russia to audit all state sell-offs Carolynne Wheeler in Moscow Tuesday December 30, 2003 The Guardian

The Kremlin yesterday fired another warning shot at the tycoons who control most of Russia's wealth when the audit chamber announced it would review all privatisations from the past decade.

A thorough inquiry into the shady state auctions of the country's early capitalist days - when some of Russia's most valuable assets were sold on the cheap - is exactly what big business wants to avoid.

But the audit chamber has put itself on collision course with the so-called "oligarchs" by announcing plans to examine the sell-off in the loans-for-shares schemes of the early 1990s.

The announcement comes a few days after President Vladimir Putin warned businessmen that the government would crack down on those who broke laws in the privatisation deals, and after Mikhail Khodorkovsky, chief executive of the largest Russian oil company, Yukos, was refused bail for three months while awaiting trial for tax evasion and fraud.

"Those who were involved in deliberate fraud must not enjoy more favourable conditions than those who did the right thing and abided by the law," Mr Putin told the Russian chamber of commerce and industry last week. "If five or seven or 10 people broke the law, that doesn't mean others did the same."

A chamber source said the investigation was added to its 2004 plan at the last minute, after a meeting last week between Mr Putin and the audit head, Sergei Stepashin, a former prime minister and one-time head of the FSB, Russia's security service. The source said that the decision came right from the top of the audit chamber.

The chamber is a constitutional body established by and responsible to the Duma, or lower parliament, and holds no executive power, although it makes recommendations to legislators.

The inquiry, combined with Mr Putin's statement, should unnerve all of the oligarchs this year, some analysts say.

"Nobody knows who Mr Putin has in mind," said Lilia Shevtsova, a senior analyst with the Carnegie Centre in Moscow. "Mr Putin said that he is opening all the closets and it's up to him to decide what he sees in those closets. So everybody should be worried."

Two key Yukos shareholders - Mr Khodorkovsky and Platon Lebedev - are awaiting trial on charges linked in part to a 1994 privatisation deal. They are thought to have been singled out due to Mr Khodorkovsky's political activities, contrary to a tacit deal with Mr Putin that required the oligarchs to stay out of politics to keep their wealth and power.

Their arrests, though criticised in the international business community, were received well by average Russians in the run-up to parliamentary elections earlier this month and to a presidential election in March.

Since then speculation has run rife about which wealthy businessmen or companies will be targeted next. Among potential targets is Sibneft, the oil company owned by the Chelsea FC owner Roman Abramovich, which pulled out of a planned merger with Yukos last month.

Sibneft spokesman John Mann said yesterday: "Whenever the president says something like that, obviously it raises some concern. But I'm secure in the knowledge that the company operates and was privatised above the law."

The audit chamber inquiry is expected to cut down on further such speculation.

The economics minister, German Gref, said the "inevitable" conflict between large Russian firms and the Kremlin was coming to an end.

Guardian Unlimited © Guardian Newspapers Limited 2003

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