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TT Business Intelligence Report Vol. 1, No. 24, 20 June 2002 Business Intelligence, Crime, Corruption and Debt in Europe and the former Soviet Union  CZECH REPUBLIC ELECTION RESULTS - SOCIAL DEMOCRATS (CSSD) GAIN MOST VOTES The ruling Social Democrats (CSSD) gained the most votes in the general election held on 14-Jun-02 to 15-Jun-02 with 30.2% of the vote, giving it 70 seats in the 200-seat Chamber of Deputies, a loss of four seats from the previous election. The opposition Civic Democrats (ODS) gained 24.5% of the vote, gaining 58 seats, 5 fewer than previously. The surprise of this year's election was the performance of the Communists (KSCM) who were supported by 18.5% of voters and will have 41 seats in the lower house, a gain of 17. The biggest loss was suffered by the Christian Democrats (KDU-CSL) and the Freedom Union-DEU, who formed the Coalition. They received 14.3% of the vote and will have 31 seats, a loss of 8. None of the other parties contesting the election passed the necessary 5% threshold to gain seats. Analysts attribute the losses to the right-orientated parties to a markedly lower turnout, just 58%, against 74% four years ago. (NewsBase 18.vi.02) PRESIDENT HAVEL'S REACTION TO ELECTION RESULT President Vaclav Havel held separate meetings, on 16-Jun-02, with CSSD leader Vladimir Spidla and ODS chairman Vaclav Klaus, and then jointly with KDU-CSL leader Cyril Svoboda and Freedom Union-DEU chairwoman Hana Marvanova, to discuss the results of the election, presidentialspokesman Ladislav Spacek told journalists. The spokesman added that Havel would not be consulting with KCSM chairman Miroslav Grebenicek. Itis expected that Havel will wait until the Election Office confirm the result, before asking one of the leaders to try and form a government. On a discussion programme on Czech TV on Sunday night, Spidla said that Havel had unofficially told him he would be asked to form a new government. Analysts consider the most likely scenario would be for a formal coalition between the CSSD and the Coalition parties, which would have 101 seats in the 200-seat chamber. Analysts consider that the 'grand agreement' between the CSSD and ODS following the 1998 election, which allowed the minority CSSD government to rule, is unlikely to renewed, while a formal coalition between the two parties is also considered a non-starter. Havel annoyed some politicians by revealing in a recent interview that he did not necessarily have to appoint the leader of the party with most seats, but it is likely that it will be Spidla that is invited to try and form a government later this week. (NewsBase 18.vi.02) POLAND POLAND TO PAY FOR GAZPROM'S STAKE IN EUROPOLGAS Poland has come to the conclusion how to write off a portion of its debt to GAZPROM - it will pay for maintaining the Russian company's share in the EUROPOLGAS. The fact is that EUROPOLGAS shareholders are expected to approve the issue of shares worth $200 million on June 21. Poland will pay for GAZPROM's stake thereby reducing its debt to the Russian gas monopoly company by $96m. GAZPROM now holds 48% of EUROPOLGAS shares, while another 48% belong to the Polish state-run PGNIG company and 4% are in the hands of GAS TRADING, an intermediary in gas sales. EUROPOLGAS has to repay the $1.3-billion debt to GAZPROM, including $700m in loans from GAZPROMBANK and the remainder for pipe supplies. A portion of the debt has been extended to 2019. EUROPOLGAS will use $200m raised from the issue of shares to build three compressor stations, which will help attain a projected annual capacity of 33 billion cubic meters at the first line of the Yamal Europe gas pipeline. Now the line can handle 20 bcm of gas. (NewsBase 18.vi.02) RUSSIA PUTIN POURS COLD WATER ON LUKASHENKA'S MERGER PLANS Following his meeting with Alyaksandr Lukashenka in St. Petersburg two days earlier, Russian President Vladimir Putin on 13 June voiced some of the harshest criticism ever of plans for the creation of a Russia-Belarus union, an idea promoted by the Belarusian leader throughout his eight years in power. Speaking at the Bakulev Cardiological Surgery Center in Moscow, Putin accused the Belarusian leadership of wanting to make the union a form of the defunct Soviet Union, and flatly refused to follow such a path. "You cannot try to resurrect the USSR at the expense of the Russia's economic interests, since this will strengthen centrifugal forces within the country and weaken Russia economically," Russian media quoted Putin as saying. According to both Russian and Belarusian media reports, the Lukashenka-Putin meeting on 11 June went rather smoothly in terms of economic issues. In particular, both sides signed a plan for joint actions to introduce a union currency, a move that enabled the Russian Central Bank to disburse a $50 million portion of its $150 million stabilization loan to Belarus. But not all economic controversies were worked out. Lukashenka reportedly handed Putin a letter outlining a number of problems that require the Russian leader's personal intervention. These problems, according to "Nezavisimaya gazeta," chiefly concern the collection of value-added tax on Russian exports to Belarus, supplies of Russian rough diamonds to Belarus, Belarusian exports of sugar to Russia, and the creation of a common market for transport services that would allow the lifting of restrictions on Belarusian shippers. (RFE/RL 18.vi.02) RUSSIAN BUSINESS CONSULTING (RBC) TO CREATE BUSINESS TV CHANNEL Russian Business Consulting (RBC) shareholders have approved a business plan on creating a new business TV channel. According to their concept, it will be a Russian product, modelled after CNBC and Bloomberg. The channel under the tentative name of RBC TV is to start operating to full capacity for Moscow and the Moscow region before the end of June 2003. The investments will amount to $5m. The money will go to buy studio equipment. This year a test broadcasting will be held. Programmes will contain news and business information, short comments and specialised reviews. Purely financial information will be rather limited. The channel content will be based on Russian business news of Russian make, and not on Western licensed materials. In the near future, RBC TV programmes will be broadcast not on generally accessible channels, but only via satellite and cable networks. Preliminary agreement on broadcasting has already been reached with the Russian NTV PLUS and COSMOS TV companies. Besides, talks are under way about including the channel into Western broadcasters' packages. (NewsBase 18.vi.02) DEFENCE ENTERPRISES PLAN COMMERCIAL LAUNCHES OF SATELLITES A host of defence enterprises in Russia and other CIS states are implementing programmes for the commercial launches of satellites through the use of intercontinental ballistic missiles converted to civilian needs. Six such projects are now underway, named Start, Rokot, Shtil, Volna, Dnepr and Strela. Each of these projects involves the use of light carrier rockets, capable of delivering satellites into low orbits with altitudes of under 2,000 kilometres. Specifically, the Yuzhnoye design bureau, based in Dnipropetrivsk in Ukraine, is fulfilling the Dnepr project, which involves the use of an RS-20 ballistic missile. Converting this missile into a Dnepr carrier rocket costs around $100,000. The Dnepr rocket can deliver up to 3.5 tonnes of payload into orbit. The project was put on hold for lack of funding and will require an additional $15 million to complete. The Makeyev design bureau in Miass in Russia's Chelyabinsk region is developing the Shtil and Volna rockets designed for launches from submarines. The Kompleks MIT R&D Center has developed a Start-1 carrier rocket, based on an MBR RS-12M Topol missile. One launch by this rocket will cost $8.5m. The KHRUNICHEV R&D centre in Moscow and the machine- building group in Reutov in the Moscow region are developing the Rokot and Strela launching complexes, involving the MBR RS-18 missile. This past spring, a Rokot rocket was used to deliver two German-made satellites into orbit from the Plesetsk cosmodrome in the Arkhangelsk region. A Strela rocket is due to be tested in the third quarter of 2002. One launch by a Rokot rocket will cost $15 million to a satellite owner and that involving a Strela rocket is priced at $10 million. (NewsBase 18.vi.02) NORDEX IS FOCUS OF INTERNATIONAL INVESTIGATION Operation Web, an international law enforcement investigation into Russian organized-crime groups involved in money laundering, is focusing its efforts on the activities of magnate Grigorii Luchanskii and his company, Nordex, "Izvestiya" reported on 16 June. Luchanskii, who resides in Austria, attracted the attention of international law enforcement agencies in the 1990s because of his massive and controversial deals involving the export from Russia of oil, copper, strategic metals, and weapons. Although Luchanskii has been dubbed by the media as "the biggest uncaught criminal," Operation Web has been studying a potential Achilles heel -- his close contacts with the controversial U.S. businessman Mark Rich, who lives in Switzerland. Rich was wanted by U.S. authorities for 17 years on suspicion of illegal oil trading and massive tax evasion until he was pardoned in 2000 by then-U.S. President Bill Clinton. (RFE/RL 17.vi.02) DUMA REFUSES TO RESTRICT STATE MEDIA OWNERSHIP The State Duma on 13 June failed to pass in its first reading a bill that would have limited state ownership of mass media outlets to 25 percent, RIA-Novosti and other Russian news agencies reported. The bill, which was sponsored by independent deputies Petr Shelishch and Viktor Pokhmelkin, would have required the state to reduce its ownership of any mass media organs to 25 percent within six months. During debate on the measure, deputies argued over the exact size of the state's present share in the country's mass media market. Duma Information Committee Chairman Pavel Kovalenko (Unity), who opposed the bill, asserted that the state owns just 10 percent of the country's mass media, while Deputy Boris Reznik (People's Deputy) stated that his information shows "the state is the largest monopolist in the media sector," controlling 90 percent of it. Just 41 deputies voted in favor of the bill, nns.ru reported. President Vladimir Putin's representative to the Duma, Aleksandr Kotenkov, declined to comment on the bill. (RFE/RL 14.vi.02) CHUBAIS ASSOCIATE TARGET OF CORRUPTION PROBE The MVD has initiated an investigation of Mosenergo Director Arkadii Yevstafiev, a close associate of United Energy Systems (EES) head Anatolii Chubais, Interfax and NTV reported on 8 June. Mosenergo is a EES subdivision. According to investigators, the case against Yevstafiev is linked to his business activity before becoming head of Mosenergo. Yevstafiev became known during the 1996 re-election campaign of then-President Boris Yeltsin when he was caught leaving a government building with $538,000 in cash in a cardboard box; Yevstafiev declined to explain anything about the money. Commenting on the MVD investigation, gazeta.ru wrote that it is linked to another 1996 episode, in which Yevstafiev and Chubais took a loan of several million dollars for an NGO called the Center for the Protection of Private Property, which they headed. The loan was allegedly never paid back. In his 1998 book "Obscurantism," MVD Colonel Valerii Streletskii wrote that significant evidence of fraud had been uncovered in both cases but that the investigations were stopped for political reasons. (RFE/RL 12.vi.02) ITALY ITALIAN POLICE CRACK RUSSIAN ORGANIZED-CRIME RING Italian law-enforcement authorities announced that they have exposed a vast international network that was involved in laundering illegal funds from Russia, nns.ru and Western news agencies reported on 11 June. About 50 people in several European countries have been arrested during Operation Web, which was conducted jointly with law-enforcement agencies from Germany, France, Switzerland, and the United States. Italian officials added that the money-laundering pipeline, which was allegedly directed by Igor Berezovskii (no relation to the tycoon Boris Berezovskii), operated via falsified import-export deals and that many of those arrested are Russian citizens. Authorities estimate that the network laundered about $3 billion between 1996 and 1998. (RFE/RL 18.vi.02) YUGOSLAVIA WORLD BANK GRANT TO HELP YUGOSLAV BORDER CONTROLS The World Bank has granted Yugoslavia $6.7m to tighten up border control of excise goods, the Belgrade daily Danas reported. The funds fall within a project on easing trade and transport in south eastern Europe, and will also be channelled into reducing non-customs expenses in trade and transport of goods and bringing smuggling and corruption under control at border points, including technical support to modernise crossings. Yugoslav Deputy PM Miroljub Labus signed the agreement with WB representative Johanes Linn, which now goes to the Federal Parliament for ratification. Linn said that considerable progress in customs enforcement has been made in Yugoslavia , and that the project, encompassing Albania, Bosnia, Croatia, Macedonia, Romania and Moldova, should help bring all of the countries' customs regimes into accord with EU standards. (NewsBase 18.vi.02) NEW MONEY LAUNDERING LAW Beginning on 1 July, all banks and financial institutions in Yugoslavia will be required to report all transactions in excess of 600,000 dinars (or about $21,000) under new money laundering legislation, Tanjug news agency reported on 3 June. The legislation does specify to whom such information must be reported. According to the new law as published on the National Bank of Yugoslavia's website (www.nbj.yu) money landering is defined as: "The term money laundering shall be understood to mean depositing the money acquired through illegal activities (gray economy, illicit traffic in arms, narcotic drugs and psychotropic substances, and the like) in the accounts kept with banks and other financial organizations and institutions, or introducing such money in any other manner into legal financial flows -- which domestic and foreign physical and legal persons perform with the aim of carrying out permissible economic and financial activities." "Pursuant to Paragraph 1 hereof, the term money shall be understood to mean cash, including foreign currencies in cash and other financial assets. The following shall be considered as acts enabling money laundering: * Concealment or disguise of the origin of money or the location where the money has been deposited, concealment of the purpose of using the property and all the rights resulting from the performance of forbidden activities; * Exchange or transfer of the property resulting from the performance of forbidden activities; * Acquisition, possession or utilization of the property resulting from the performance of forbidden activities; and * Concealment of illegally acquired social property and social capital, in the process of ownership transformation of enterprises." (RFE/RL 14.vi.02) INFORMATION PROVIDERS NEWSBASE NewsBase is a leading provider of business and economic news and intelligence from Russia, Central Europe and the FSU. Daily bulletins and industry specific weekly reports backed by an archive containing over 10 million words combine to provide a comprehensive service to a global blue chip client base. Contact: Duncan Cunningham T: +44 (0)131 478 8535 F: +44 (0)131 478 7001 E: [email protected] W: www.newsbase.com RADIO FREE EUROPE / RADIO LIBERTY Radio Free Europe/Radio Liberty is a private, international communications service to Central, Eastern and Southeastern Europe; the Caucasus; and Central and Southwestern Asia funded by the U.S. Congress through the Broadcasting Board of Governors. Contact: Peter Baumgartner T: +420 (0)2 2112 2039 F: +420 (0)2 2112 2012 E: [email protected] W: www.rferl.org TEMPLETON THORP T +44 (0)20 7520 9380 F +44 (0)20 7504 8180 E [email protected] W www.templetonthorp.com |
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