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TT Business Intelligence Report Vol. 1, No. 27, 7 August 2002 Business Intelligence, Crime, Corruption and Debt in Europe and the former Soviet Union  UPCOMING CONFERENCES LVA's "3rd INTERNATIONAL BUSINESS SUMMIT OF THE CIS" This event will take place on 1-3 October 2002 at the Evian Congress Centre, Evian, France. For further information, tel: +44 (0)20 8795 2970, fax: +44 (0)20 8795 2977, email: [email protected], W: www.lva.co.uk THE ADAM SMITH INSTITUTE'S "RUSSIA'S ACCESSION TO THE WTO" To take place on 16-17 October 2002 at the Moscow Marriot Grand Hotel, Moscow, Russia. For further information, tel: +44 (0)20 7490 3774, fax: +44 (0)20 7505 0079, email: [email protected], W: www.asi-conferences.com CROATIA $35 MILLION NEEDED TO COMPUTERISE LAND REGISTRY About $35 million will be needed for a five-year project to computerise the land registry and for the introduction of electronic record-keeping in land registries in Croatia. The project is one of the government's strategic tasks and a $24-million loan from the World Bank and $4.5 million from the EU's CARDS programme along with $6 million from the state budget, will cover the costs. This year, the government has allocated about 1 million kuna, approximately $135,000, of budgetary funding for the project. The objective of compiling a credible land register is a step in the country's economic development. The current muddled situation over real estate ownership is an obstacle in the economic development and is seen as hurdle for foreign business people willing to invest in Croatia. Since 1997, pilot projects to introduce electronic record-keeping have been conducted in land registries in six towns: Varazdin, Rijeka, Zadar, Osijek, Zupanja and Pula. (NewsBase 07.viii.02) CZECH REPUBLIC UNICREDITO SAID TO BE CLOSE TO BUYING ZIVNOSTENSKA BANKA The sale of Zivnostenska Banka (ZB) to Italian bank UniCredito (UC) should be concluded by the end of this week, the Italian press writes. UC should pay EUR 200 mln (CZK 6 bln) for an 85% stake in 6th largest Czech bank to its current owner, German Bankgessellschaft Berlin. It is believed that UC will strengthen ZB's focus on small clients. (PBJ 07.viii.02) FORMER FOREIGN MINISTER JAN KAVAN RESIGNS Former Foreign Minister Jan Kavan has resigned from his post as one of the Czech Republic's three representatives at the European Convention, citing lack of time as he continues to sit as a parliamentary deputy for the governing Social Democrats and was recently elected President of the UN General Assembly for the annual session that starts in September. Speaking at a press conference following a cabinet meeting on Monday, Prime Minister Vladimir Spidla said he had accepted Kavan's written request to stand down from the post and said it was likely that foreign ministry political director Jan Kohout, would replace him on the Convention. According to Spidla, Foreign Minister Cyril Svoboda does not object to the choice of Kohout. The Czech Republic has three representatives in the European Convention. Besides Kavan, the other twoare Civic Democratic Party (ODS) deputy chairman Jan Zahradil, who represents the Chamber of Deputies, and former foreign minister and now Senator Josef Zieleniec, who represents the Senate. Speaking on Czech Television on Sunday, Kavan repeatedly denied that his resignation had anything to do with the charges laid against former foreign ministry general secretary Karel Srba of conspiracy to murder an investigative journalist and a further investigation into Srba's financial dealings while at the ministry. (NewsBase 07.viii.02) FOREIGN INVESTORS CALL ON NEW GOVERNMENT TO CRACK DOWN ON CORRUPTION The European-Czech Forum, representing commercial and industrial chambers of the United Kingdom, France, Germany, the Netherlands, and Sweden, called on the new Czech government to initiate a radical reform of the business environment's legal framework and to contain economic crime, including corruption, the daily "Mlada fronta Dnes" reported on 16 July. Members of the forum said this can only be achieved through a radical improvement of the Czech judiciary's work and an improvement of the public administration and independent regulators. (RFE/RL 25.vii.02) HUNGARY GOVERNMENT PICKS UP FARMERS' DEBT To alleviate losses caused by extreme weather, the government will take over up to Ft 72.5 billion in farmers' bank debts, Minister of Agriculture and Rural Development Imre Németh said yesterday. Ft 45 billion will be paid to banks, with another Ft 15 billion going to farmers who are not in debt but lost at least 25% of their expected revenue. The money was originally targeted for making the agricultural sector more competitive, but farmers need urgent help, the minister said. (BBJ 07.viii.02) PM TALKS OF COUNTER-INTELLIGENCE PAST Prime Minister Peter Medgyessy told the parliamentary commission probing his counter-intelligence past that during his time as an agent his only duties were to protect state secrets from foreign intelligence services. Medgyessy said he was a secret service officer at the finance ministry between 1978-82 during Hungary's negotiations to join the International Monetary Fund, the local media reported. He denied ever working for the KGB, and said he never wrote reports on his associates, as it was not his task. Medgyessy told commission Chairman Laszlo Balogh that he did not receive any regular payment for his activity. During the hearing on Thursday, which lasted more than three hours, Medgyessy said his main assignment was analysing and assessing information on the state of Hungary's economy with a focus on the country's foreign-currency position. He wrote annual summaries and regularly provided reports to a superior officer. Medgyessy told the hearing that he took a job in the secret services for the sake of his country and will not be blackmailed. (NewsBase 06.viii.02) KAZAKHSTAN CASE CLOSED ON DEATH OF KAZAKH OPPOSITIONIST'S DAUGHTER Police in Almaty have closed the investigation into the death of Leyla Baysetova, daughter of opposition weekly "Respublika" Editor Lira Baysetova, concluding that she was a drug addict who hanged herself with her jeans in a moment of temporary insanity, Kazakh Commercial TV reported on 31 July. Leyla Baysetova was arrested, hospitalized, and died last month under mysterious circumstances shortly after her mother published material relating to Swiss bank accounts rumored to belong to President Nursultan Nazarbaev and members of his family. Police denied on 31 July that law enforcement officials were involved in Leyla Baysetova's death or that she had been beaten in custody, as alleged last month by the international watchdog organization Reporters Without Borders. But Kazakh television questioned the police's findings, saying no attempts had been made to analyze Leyla Baysetova's blood to determine if she had taken drugs and no jeans were presented as evidence. (RFE/RL 01.viii.02) LATVIA CORRUPTION PREVENTION BUREAU FAILS TO FIND NEW DIRECTOR The second competition to find a director for the new Corruption Prevention Bureau ended unsuccessfully on Tuesday when the cabinet rejected the three top candidates proposed by a special selection jury, the local media reported. The candidates were Security Police Deputy Chief Didzis Smitins, deputy head of the Service for Preventing Legalisation of Illegally Acquired Funds Aldis Lieljuksis, and Presidential Security Service official Raimonds Avdejevs. Prime Minister Andris Berzins announced that applications for a third competition will be accepted until August 12. He said the same selection jury will continue to examine candidates, as he has found it to be "trustworthy." Berzins noted that in the event that no suitable candidate is found in the third competition he will likely ask parliament to amend the law founding the bureau by abolishing the requirement that the candidate have a university degree. (NewsBase 02.viii.02) POLAND SOFTBANK STRATEGY SEEMS SET TO FOCUS ON CONSOLIDATION A major supplier of software for banks, Softbank, yesterday announced it wants to spend the revenue from its planned PLN 80 million bond issue on developing the company's domestic potential and to restructure its debts. The General Shareholders Meeting, which starts today, will vote on proposals. The issue is to begin in the fall, when hopefully the financial markets will have picked up. This strategy will mean that ideas of acquiring foreign companies are being shelved. Softbank President, Aleksander Lesz, announced these plans after his company's shares plummeted following rumors that it might might be a Polish Enron. Softbank plans to acquire innovative products and resources. Moreover, the enterprise is seeking to partially transform its short-term debts of PLN 80 million into a long-term one. "The details about amounts for different purposes will be known when we start the bond issue," said Lukasz Grochowski, Softbank's director in charge of contacts with investors. He also added that the issue should help the company to fight the competition more effectively. (WBJ 07.viii.02) GROUP TO DEFEND PLANTS THREATENED BY BANKRUPTCY Some 130 representatives of the Solidarity trade union set up a team in Gdansk on August 1 with the aim of co-ordinating efforts in defending plants threatened by bankruptcy, according to local media reports. Solidarity leader Marian Krzaklewski said the union may resort to a national protest action if talks with the government and within the Tri-partite Commission, of the government, employers and trade unions, do not bring any positive solutions for the plants that have found themselves in a difficult situation. (NewsBase 06.viii.02) RUSSIA PUTIN VETOES BANKRUPTCY LAW President Vladimir Putin has vetoed the law on bankruptcy, one of the key economic bills passed by parliament during the spring session, news agencies reported Tuesday. Putin, following the recommendations of the Kremlin's legal department, sent the bill back to the State Duma because it contradicts the Civil Code, Prime-Tass reported. Specifically, parliament's version only defines three categories of priority creditors, whereas the Civil Code stipulates that there must be five. Putin is also asking deputies to toughen standards used to appoint external managers and amend sections on the bankruptcy procedures for state-owned and strategic enterprises. Viktor Pleskachevsky, head of the Duma's property committee and a member of the Unity party, which lobbied the bill, was quoted by Interfax as saying that a new version would be ready for deputies to debate by September. "The Duma will most likely agree with the president and the amended law could come into effect in October at the earliest," he said. Pleskachevsky last month said amending the existing law was necessary to set new mechanisms to protect the rights of private owners. The law has been used by creditors and competitors to initiate bankruptcy procedures and seize control of companies, he said. "With the new law, the rights of owners, creditors and the government will be much better protected," he said. Analysts predicted the veto and expect the debate to continue when the Duma reconvenes next month. "The new bill contradicts the Civil Code, so Putin had every right to veto it," said Edward Neigebauer, head of the legal and corporate finance department at investment house Prospekt. "The Duma was trying very hard to lobby the interests of certain industrial groups, and as a result the law was not ready to work," Neigebauer said. "It means that various political groups received more room for lobbying and it is hard to say what the final version of the law will look like." (The Moscow Times 07.viii.02) CONDOMS STICKUP Armed with a single gun, six robbers made off with more than 1 million condoms during a raid on a medical warehouse in St. Petersburg, Agence France Presse quoted police as saying Monday. In addition to the 88 boxes of condoms, each containing some 12,000 contraceptives, the robbers also stole a photocopier, the report said. Before escaping in a car, the thieves tied up two female warehouse employees, the agency reported. Police said there were no immediate leads in the case. (The Moscow Times 07.viii.02) PUTIN SUGGESTS MAKING LOCAL ADMINISTRATIONS MORE TRANSPARENT At a government meeting on 5 August, President Vladimir Putin called for making public the details of regional budgets and regional-level backlogs of unpaid wages to state-sector workers, ITAR-TASS reported. Putin suggested that such a measure is necessary so that the public can know the real state of affairs, Interfax reported. Trade union leaders have been suggesting for some time that greater transparency of regional government finances might help eliminate situations in which regional governments use money earmarked for the wages of teachers and doctors for other purposes. They have argued that if information about budget transfers from Moscow was reported in local newspapers, then it might be possible to track how the money is spent. Also at the meeting, Deputy Prime Minister Valentina Matvienko reported that 16 regions are currently behind in paying wages. However, she added, these backlogs will be completely paid off by 1 September. (RFE/RL 06.viii.02) LUKOIL HEAD WANTS TO EXPAND IN EUROPE LUKoil head Vagit Alekperov said his company participated in the tender to privatize the oil refinery in Gdansk, one of the biggest in the country, gzt.ru and "Vedomosti" reported on 5 August. However, Alekperov added that the Polish authorities are -- "without reason" -- suspicious of LUKoil's bid and might ignore it. He added that LUKoil does not intend to purchase any other refineries in Europe and is concentrating on its program of buying gasoline stations throughout Central and Eastern Europe. "Vedomosti," citing Bloomberg, reported that LUKoil is seeking to expand its presence on the Spanish market and wants to purchase Austria's Avanti International, which owns 329 gas stations in Austria, the Czech Republic, Slovakia, Romania, Bulgaria, and Hungary. (RFE/RL 06.viii.02) SHEFLER STAYING ABROAD Yury Shefler, the vodka magnate who controls the production of Stolichnaya vodka outside of Russia and who is wanted by prosecutors for allegedly threatening to kill a senior official in the Agriculture Ministry, will return to Russia as soon as he has completed his commercial activities abroad, his attorney said Monday. The lawyer, Alexander Gofshtein, said the accusation by former Deputy Agriculture Minister Vladimir Loginov that Shefler threatened to kill him over a dispute over trademarks was "conjecture." Shefler has categorically denied making any threats. Loginov's statement alleges that during a telephone conversation, which took place in March, Shefler referred to certain individuals who would "reckon with" Loginov if the trademark dispute was not resolved. Loginov is the head of Soyuzplodoimport, a state company resurrected by the Agriculture Ministry to control the domestic rights to Stolichnaya, Moskovskaya and the other trademarks that the government says Shefler's Swiss company, S.P.I., illegally acquired in the late 1990s. (The Moscow Times 06.viii.02) IDEOLOGUE OF GLASNOST COMMENTS ON SERVILITY OF RUSSIAN JOURNALISTS Aleksandr Yakovlev, the ideologue of former Soviet leader Mikhail Gorbachev's policy of liberalizing the mass media and a former Politburo member, told "Nezavisimaya gazeta" on 5 August that freedom of speech in Russia is going through a difficult time both because of government policies and the behavior of journalists. "I am enraged by certain ursine actions of the government toward the mass media, but one should not expect anything else. It is much more unpleasant, however, to see how some journalists themselves are trying to serve the authorities, to line up with them. This is a real misfortune," said Yakovlev, who is now a member of the board of trustees of the TVS television company. Another powerful blow against freedom of the press came in the 1990s when the mass media were involved in a "war of kompromat" among financial clans, Yakovlev continued. "If journalists write and tell lies, freedom of speech is perceived as the freedom to lie," Yakovlev noted. "Aggressive cynicism murders freedom of speech." (RFE/RL 06.viii.02) SIBUR OFFICIALS TO REMAIN IN CUSTODY A municipal court in Moscow on 6 August refused to release from jail any of the defendants in the Sibur trial, despite the fact that the original plaintiff in the case, Gazprom, has dropped its complaint and stated that it has no claims against them, gazeta.ru reported. Former Sibur officials Yakov Goldovskii, Yevgenii Koshits, Larisa Abramenko, and Austrian citizen Boris Blagerman are accused of embezzlement, fraud, money laundering, and abuse of office. Their lawyers had asked that they be released on bond pending their criminal trial in view of Gazprom's decision to drop its civil complaints. The website reported that a spokesman for Sibur, which is a Gazprom subsidiary, repeated earlier statements that the company had suffered no losses as a result of the activities of the accused. The trial will continue with the testimony of witnesses on 7 August. (RFE/RL 06.viii.02) INTELLECTUAL-PROPERTY THEFT AT EPIDEMIC PROPORTIONS Forty percent of all musical compact discs produced in Russia are illegal, pirate copies, RosBalt reported on 5 August, citing an Ekho Moskvy interview with the head of the Russian Chamber of Commerce and Industry's intellectual property commission, Oleg Gordiiko. Gordiiko said that this represents enormous losses for the Russian economy. Commenting on a recent letter from U.S. Ambassador Alexander Vershbow claiming that Russian defense plants, including one headed by Gordiiko himself, are largely responsible for producing pirate discs, Gordiiko said that U.S. producers currently have no presence in the Russian market and "they just want to clean up the market for themselves." (RFE/RL 06.viii.02) RUSSIAN LIVING STANDARDS By this summer, the living standards in Russia had surpassed their levels before the financial crisis in August of 1998, announced Vladimir Sokolin, chairman of the Russian State Statistics Committee. Thus, in June 2002, Russians' real incomes exceeded their levels in August of 1998 by 5.4% and the wages and salaries were also up 18.7% in real terms. At the same time, current pensions in Russia are 7.5% lower than they were before the ruble crash in 1998. Since August 1998, the jobless rate in Russia has decreased by 30%, the amount of wage arrears shrunk by 60% and consumer prices shot up by 2.5 times. (NewsBase 02.viii.02) BUSINESSMAN PROFILED IN 'THE NEW YORK TIMES' SHOT ONE DAY LATER Andrei Chunyak, who was featured in an article about his cafe in Vladivostok in the "The New York Times" on 30 July, was killed the next day, Interfax-Eurasia reported. Chunyak was shot four times in the head and chest with a nine-millimeter "Baikal" pistol with a silencer, according to the agency. According to "The New York Times," in addition to being a co-owner of Studio Coffee, Chunyak was also a trader in scrap metal. Chunyak dismissed questions about the connection between organized crime and his sector. "What you see on TV -- it's rubbish. The main thieves are the bureaucrats. They are the mafia," the newspaper quoted him as saying. The article profiled the trend of "businessmen" turning from "thuggery to tamer, more lawful business." (RFE/RL 01.viii.02) AUDIT CHAMBER SEEKS GREATER POWER TO BATTLE CORRUPTION Sergei Stepashin, chairman of the Russian Audit Chamber, has presented a plan on fighting corruption in Russia, Interfax news agency reported on 21 July. Speaking at a conference on corruption outside Moscow, Stepashin put forth three possible options to help combat the scourge. He said existing economic laws need to be revised, since they currently make it difficult to punish corruption; bureaucratic red tape must be reduced, since "the more officials, the more sources for corruption"; and the influence of state officials in economic matters must be drastically reduced. Stepashin also called for granting the Audit Chamber greater authority to inspect not only the federal component of regional budgets, but local components as well. (RFE/RL 25.vii.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: Jon Laurijssen T: +44 (0)131 478 8537 F: +44 (0)131 478 7001 E: [email protected] W: www.newsbase.com, www.newsbaseworldmonitoring.com NEW WORLD PUBLISHING New World Publishing is a primary source of business-related information for Central Europe, through its publications the Prague, Budapest and Warsaw Business Journals. Contact: Mark Child T: +420 2 4608 6524 F: +420 2 4608 6501 E: [email protected] W: www.ceebiz.com, www.pbj.cz, www.wbj.pl, www.bbj.hu THE MOSCOW TIMES The Moscow Times offers readers an independent and precise view of the political, economic and business life of Russia. Contact: Andrew Boag T: +7 095 232 3200 F: +7 095 232 1761 E: [email protected] W: www.themoscowtimes.com RADIO FREE EUROPE / RADIO LIBERTY Radio Free Europe/Radio Liberty is a private, international communications service to Central, Eastern and Southeastern Europe; theCaucasus; 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 EVENTS NEW WORLD PUBLISHING - Prague Business Journal Business Breakfast with Esther Dyson Date: Thursday, August 22, 2002 Location: Hotel Andel's, Stroupeznického 21, Prague 5, Czech Republic This is a special invitation to interact with the world's foremost Information Technology guru, and to discuss Central Europe's IT industry and how its needs are being met by local venture and human capital providers, entrepreneurs, corporate investors and the government. Further details about this event can be found at: www.pbj.cz/events/edbb.htm 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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