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TT Business Intelligence Report Vol. 2, No. 37, 9 January 2003 Business Intelligence, Crime, Corruption and Debt in C&E Europe and the former Soviet Union  UPCOMING CONFERENCES EUROMONEY'S "CENTRAL & EASTERN EUROPEAN ISSUERS & INVESTORS FORUM" To take place on 14-15 January 2003 at the Hotel Inter-Continental, Vienna, Austria. For further information, tel: +44 (0)20 7779 8968, email: [email protected], W: www.euromoneyconferences.com ADAM SMITH INSTITUTE'S "CIS & EAST EUROPEAN STEEL SUMMIT" To take place on 5-6 February 2003 at the Radisson SAS Portman Hotel, London, United Kingdom. For further information, contact Tom Blackwell on tel: +44 (0)20 7490 3774 or e-mail: [email protected], W: www.asi-conferences.com ADAM SMITH INSTITUTE'S "THE RUSSIAN AUTOMOTIVE SECTOR" To take place on 18-19 March 2003 at the Marriott Grand Hotel, Moscow, Russia. For further information, please send enquiries [email protected] or call Louise Pasha on tel: +44 (0)20 7490 3774, W: www.asi-conferences.com BELARUS CONVICTED JOURNALIST TO BEGIN SERVING TWO-YEAR TERM Viktar Ivashkevich, editor in chief of the Minsk-based independent newspaper "Rabochy" and deputy chairman of the Belarusian Popular Front(Vyachorka's faction), has been ordered by police to arrive by 17 December at a labor colony in Baranavichy (Brest Oblast), where he mustserve a sentence of two years of "restricted freedom" for defaming President Alyaksandr Lukashenka, Belapan reported on 13 December.Ivashkevich's case stems from an article titled "Thief Must Be In Prison" in a special edition of the newspaper published during lastyear's presidential campaign. The edition never reached readers, since all copies were seized by police. The story implicated Lukashenka andhis entourage in serious economic crimes. (RFE/RL 27.xii.02) BOSNIA EUROPEAN UNION TO SUPPORT MEDIA PROJECTS IN WESTERN BALKANS Media and media-related organizations in Albania, Bosnia-Herzegovina, Croatia, the Federal Republic of Yugoslavia, and the former Republic ofMacedonia, or in the European Union, are invited to apply for grants from the 1.5 million-euro ($1.54 million) fund of the EuropeanCommission. Media organizations eligible for grants include trade associations, trade unions, public journalism-training schools anduniversities, and nongovernmental organizations. Proposals are due by 24 February 2003. For more information, seehttp://europa.eu.int/comm/europeaid/cgi/frame12.pl. (RFE/RL 27.xii.02) CROATIA US AMBASSADOR RESPONSIBLE FOR WAR CRIMES ISSUES TO VISIT ZAGREB Pierre Richard Prosper, the US ambassador with responsibility for war crimes issues, is to visit Zagreb later in January to urge the Croatiangovernment to arrest generals Ante Gotovina and Janko Bobetko. The UN war crimes tribunal in The Hague has indicted the two. In interviewswith Vecernji list and Vjesnik, Ambassador Pierre Richard Prosper is quoted as saying the demand is clear and that he will personally conveyit to the Croatian government and people. He urged that the time for waiting is over and that a solution was needed before the whole storydoes Croatia even more harm. He said the generals could only prove their innocence in The Hague, definitely not by hiding. US assistance toCroatia's judiciary depends on the solving of the Bobetko case, Vjesnik quoted Prosper as saying. Once the Bobetko case is solved according toprinciples and in the spirit of co-operation with the Hague tribunal, the US will do everything it has announced, said Prosper. He expressedconfidence that 2003 will be the last year in which Croatia encumbers itself with problems in relations with the Hague tribunal. The USambassador said he has not heard anything about new indictments, and that the tribunal's prosecutor's office has not officially notified theUnited States of anything new. (NewsBase 09.i.03) CZECH REPUBLIC CESKA SPORITELNA TO FUND SMALL AND MEDIUM COMPANIES Savings bank Ceska Sporitelna has set up in cooperation with Dutch company K+ Venture Partners a fund for the development of small andmedium firms in the CR with the planned funding of CZK 1 bln in the next 4-6 years. Czech laws define a medium company as that with up to 250employees, assets of up to CZK 980 mln and an annual turnover of CZK 1.45 bln. Funding for one firm should range from EUR 750,000 to EUR 3mln. (PBJ 09.i.03) SENATE HEARING OF TV NOVA GENERAL DIRECTOR VLADIMIR ZELEZNY POSTPONED The Senate's mandate and immunity committee on Tuesday did not decide on recommending whether TV Nova general director Vladimir Zelezny should bestripped of his immunity as a senator and it adjourned the discussion on his case until Wednesday, January 8. The committee wants to give Zeleznyanother opportunity to comment on the police request that the Senate enables his prosecution. Zelezny was invited to attend the committee'smeeting, but he did not turn up. According to Zelezny's spokesman Martin Chalupsky the invitation was not received. "Zelezny was informed inwriting, through standard channels," Senator Zdenek Barta, a member of the committee, told journalists. The committee chairman Jan Hadrava saidthat the committee would probably make a decision on the matter on Wednesday regardless of whether Zelezny attends its meeting or not. Mostcommittee members tend to recommend that the Senate release Zelezny for prosecution, Hadrava said, adding that a general vote in the Senatewould probable end in a similar way, he said. Zelezny is suspected of having harmed a creditor, the Central European Media Enterprises CMEcompany and of tax evasion. (NewsBase 08.i.03) HUNGARY GOVERNMENT BUYS SOFTWARE WORTH FT 11.25 BILLION The Prime Minister's Office Procurement and Economic Directorate (MKGI) will buy Microsoft and Novell software products worth a total of Ft11.25 billion, MKGI announced. The Ft 8.75 billion worth of Microsoft and Ft 2.5 billion worth of Novell software will be dispersed to 1,010institutions. Some fourteen companies won the tender for Microsoft products with a joint bid in an invited tender. (BBJ 09.i.03) KAZAKHSTAN JOURNALIST'S TRIAL GETS UNDER WAY Journalist Sergei Duvanov went on trial in Kazakhstan on rape charges on 24 December. Duvanov, who has reported extensively on secret Swiss bankaccounts reportedly held by Kazakh President Nursultan Nazarbaev, claims the charges are politically motivated. Duvanov is charged with the rapeof an underage girl that is alleged to have occurred at his dacha. The OSCE, along with several human rights organizations, have expressedalarm over the arrest of Duvanov, who was taken into custody on 28 October, the day before he was set to leave for the United States todeliver a speech to the Carnegie Endowment for International Peace in Washington on Kazakhstan's human rights situation and to receive ajournalism award from the New York-based International League for Human Rights. The United States has also urged Kazakhstan to give Duvanov afair trial and noted that there have been cases of media harassment in the country. Duvanov edits the weekly bulletin of the InternationalBureau for Human Rights and the Rule of Law in Almaty. This is not the first time an unusual event has taken place before he was scheduled toleave the country. On 28 August, on the eve of an OSCE conference in Warsaw, where Duvanov was scheduled to discuss human rights and themedia in Kazakhstan, he was attacked by three masked men outside his Almaty apartment, viciously beaten, and slashed with a knife. Despitehis injuries, he attended the meeting. (RFE/RL 27.xii.02) LITHUANIA NEW LITHUANIA LEADER Lithuanian President-elect Rolandas Paksas, who claimed a surprise victory in a presidential runoff Sunday, said he would continue to guide the country toward the West, but hinted at changes in the country's domestic politics. "Membership in the European Union and NATO are thekey priorities, as well as good relations with our neighbors," he said Monday after the country's election commission declared him the winner."In domestic politics, some things may be done faster and better." Paksas, 46, and a former stunt pilot, won Sunday's runoff with 54.91percent of the vote, compared with incumbent President Valdas Adamkus' 45.09 percent, according to official preliminary results. The commissionwill announce final official results Friday. The inauguration will be Feb. 26. (The Moscow Times 09.i.03) POLAND AXEL SPRINGER VERLAG EYES MARKET FOR NEW NATIONAL DAILY Axel Springer Verlag, Europe's largest newspaper group, is considering launching a daily in Poland as it looks to increase its business despiteweak market conditions, its country manager said yesterday. "Our research shows there is room for another daily in Poland, but it isstill a subject for analysis. We are also thinking of launching new magazines," said Wieslaw Podkañski, chief executive of Axel SpringerPoland. The German group owns 33 Polish titles, mostly computer, car and women's magazines, but has yet to launch a rival to the top-sellingGazeta Wyborcza, published by domestic media group Agora. In 2002, Axel Springer Poland increased revenues by around 25% to zl. 250 million toreturn to profit after heavy investments in 2001. (WBJ 09.i.03) YUKOS AGREES TO SUPPLY PKN ORLEN WITH CRUDE OIL FOR 7 YEARS FROM 2003 Russia's second largest producer, Yukos, has agreed to supply PKN Orlen, with crude oil for seven years beginning in 2003, according to a recentradio report. Under the terms of the agreement, Yukos is to supply about 3 million tonnes in 2003; and as much as 3.6 million tonnes in 2004 and2005 and 5.2 million tonnes by 2006. The contract can be renewed for an additional three years on its expiry in 2009. PKN Orlen is the country'slargest refiner, operating Plock refinery that refines 13.5 million tonne per year. It also operates about 2,000 service stations around thecountry. (NewsBase 08.i.03) ROMANIA CSR RESITA STEELMAKER TO BE RETURNED TO STATE OWNERSHIP Privatisation Minister Ovidiu Musatescu has announced that the CSR Resita steelmaker will be returned to state ownership. The US-basedNoble Ventures purchased a 94.4% stake in CSR Resita in June 2000, but has been accused of repeatedly failing to meet the obligations itassumed under the deal. Musatescu said the ministry would search for alternative investors and hopes to find them by early April. He said CSRResita's 3,000 employees, who have not received their wages for months, are in a difficult situation and that a meeting with trade union leadersis to take place in order to determine immediate ways to help them out. Musatescu also said that 23 state-owned enterprises would be privatisedin the first three months of 2003. Two of these enterprises, the Brasov-based Roman truck manufacturer and the Sidelurgica steelmakerfrom Hunedoara, have long been "black holes" of the state budget, surviving on huge state subsidies, according to Musatescu. (NewsBase 09.i.03) RUSSIA DEBT RESERVE FUND TOPS $8 BILLION High world crude prices and the successful sell-off of state stakes in LUKoil and Slavneft in 2002 have left the government with nearly $8billion of extra cash it can use to pay this year's record debt bill and cushion against external shocks. Finance Ministry spokesman Yury Zubarevsaid Wednesday that the government had surpassed its goal of setting aside 197 billion rubles ($6.2 billion) in the financial reserve fund,which was created within the 2002 budget to ensure this year's $17.1 billion external debt obligations are met. "This amount meets the budgettarget of 197.4 billion rubles and does not include revenues from privatization," Zubarev was quoted by Interfax as saying. The governmentsold its 5.9 percent stake in top oil producer LUKoil in August for $775 million and received $1.86 billion for its 75 percent stake in Slavneftlast month, allowing the government to forgo a planned $1 billion eurobond. According to most estimates, the fund, once the money from theSlavneft sale is received next month, will hold 250 billion rubles, leaving the government with $1.5 billion it did not plan on having. Someanalysts think the windfall should be used to buy back some of the nation's debt, but with parliamentary elections later this year manyworry that the money will be misappropriated or channeled into the budget to cover growing expenses. "The higher-than-expected reservefigure will allow for a more flexible budget policy in 2003," said Alexander Kudrin, fixed income analyst with Troika Dialog. Kudrin saidthe surplus will likely be used as insurance against a significant drop in oil prices between now and April. If prices remain stable, however,the government will likely start buying back debt in the second quarter, he said. (The Moscow Times 09.i.03) DEATH TOLL IN GROZNY BLAST AT 72 Suicide car bombers have set off two explosions at the headquarters of the Kremlin-backed Chechen administration in Grozny, killing more than70. Chechen Prime Minister Mikhail Babich said Sunday that the death toll from the Dec. 28 attack was 72, Itar-Tass reported. Previousreports had placed the toll at up to 83. Some 120 people were wounded. The blasts dealt a severe blow to President Vladimir Putin's efforts toconvince Russians and the world that life in Chechnya is returning to normal after more than three years of war. Officials said three suicidebombers used military uniforms, IDs, and license plates to drive their trucks through security checkpoints in Grozny. They burst through thebuilding gates and set off the explosions, blowing away doors, windows, and the interior walls and leaving the building a concrete shell. Thehead of the Moscow-backed Chechen administration, Akhmad Kadyrov, has offices in the building but was in Moscow at the time of the blast. Manyof the wounded were flown to Moscow and other cities to help ease the burden on the overwhelmed hospital in Grozny. Officials saidinternational terrorists were behind the attack. A counterterrorism official, Colonel Ilya Shabalkin, said Chechen rebel warlord ShamilBasayev and an Arab militant, Abu al-Walid, ordered the Grozny bombing, Itar-Tass reported. Shabalkin said Basayev and al-Walid, a member of theMuslim Brotherhood organization, met with other rebels in the Nozhai-Yurt region of Chechnya before the bombing and al-Walid urged therebels to carry out major terrorist acts in Grozny and other regional centers in Chechnya. Shabalkin also implicated Chechen rebel leaderAslan Maskhadov in the bombing. A spokesman for Maskhadov denied the rebel leader played any role in the attack. (The Moscow Times 09.i.03) MOSCOW, TOKYO SEEK CLOSER RELATIONS Speaking in advance of the 9 January arrival in Moscow of Japanese Prime Minister Junichiro Koizumi, Deputy Foreign Minister Aleksandr Losyukovsaid on 8 January that the two countries have already agreed to a document outlining "the development of a creative partnership,"ITAR-TASS reported. The document touches upon all aspects of bilateral relations, including political cooperation, trade and economic ties,cultural exchanges, and cooperation in law enforcement and defense. It also contains a chapter devoted to the problem of negotiating a peacetreaty between the two countries, which have remained formally at war since World War II. The signing of a treaty has been blocked by adispute over the Kurile Islands, which the Soviet Union occupied in the closing days of the war. Losyukov said that many factors are pushingJapan and Russia closer together and that the time is ripe for a businesslike discussion of a peace treaty without excessive emotionalrhetoric. Speaking to reporters in Tokyo, Koizumi said on 8 January that "Japan has said in the past that a close relationship would be difficultif the islands were not returned, which was extremely unrealistic," Reuters reported. "Now both sides are taking steps that are quieter butmore productive," Koizumi said. During Koizumi's visit this week, it is expected that the Kurile issue will be set aside and talks will focus onNorth Korea and the fight against international terrorism, Reuters reported. (RFE/RL 08.i.03) CBR AIMS TO SELL 10% STAKES IN MOSCOW NARODNY BANK AND BCEN EUROBANK TO EBRD AND IFC The Central Bank of Russia aims to sell 10% stakes in the London-based MOSCOW NARODNY BANK and Paris-based BCEN EUROBANK to the European Bankfor Reconstruction and Development and International Finance Corporation. CBR said investors of this magnitude will allow it to findcustomers for the two banks. CBR now holds 89% in MOSCOW NARODNY BANK and 87% in BCEN EUROBANK. (NewsBase 08.i.03) NEWSPAPER MAKES PREDICTIONS FOR 2003 "Komsomolskaya pravda" on 4 January made a series of predictions for 2003 and concluded that there is no chance that President Putin will notremain the country's leader this year. There is only a 10 percent chance that Prime Minister Mikhail Kasyanov will be replaced. However, thedaily figures that there is a 50 percent chance that Deputy Prime Minister Valentina Matvienko will be given her walking papers. It alsoprojects that both the Communist Party and Vladimir Zhirinovskii's Liberal Democratic Party of Russia will do better than the pro-KremlinUnified Russia party in the State Duma elections in December. Among the governors who might be seeking re-election in 2003, it reckons that St.Petersburg Governor Vladimir Yakovlev has a 90 percent chance of being replaced. Moscow Mayor Yurii Luzhkov, who will be seeking his thirdterm, is given a 15 percent chance of failure, and Ulyanovsk Governor Vladimir Shamanov and Sverdlovsk Governor Eduard Rossel were each given10 percent chances. The paper is optimistic about Russia's entry into the World Trade Organization, putting that possibility at 90 percent.(RFE/RL 07.i.03) NEWSPAPER: COST-OF-LIVING RISE WILL EXCEED GOVERNMENT EXPECTATIONS The government has estimated that inflation in 2003 will be between 12-14 percent, but there are reasons to believe the figure will actuallybe much higher, "Izvestiya" speculated on 3 January. The paper argued that the government's prediction is based on an ideal consumer in anideal economy rather than on actual circumstances. Independent experts whom the paper surveyed believe the prices of meat and related productswill rise from 15-20 percent, while the prices of vodka and beer will increase by at least 20 percent. Likewise, the experts predicted thatthe cost of gasoline will rise by 45 percent and the prices of tobacco products will jump by 80 percent. (RFE/RL 07.i.03) INTERIOR MINISTRY CONFISCATES MILLIONS OF COUNTERFEIT DOLLARS The Interior Ministry's (MVD) Investigations Committee has announced that more than 600 MVD agents together with officers of the Alfaantiterrorism unit participated in an operation to break up a ring of counterfeiters that had a virtual monopoly on the production of fakeU.S. dollars within Russia, RTR and other Russian news agencies reported on 26 December. During the operation, tens of millions of counterfeitdollars were seized and more than 30 offices and apartments were searched in Moscow. An unspecified number of people were arrested. MVDspokesmen said the fake dollars were of very high quality and have all the built-in security measures that real dollars have, making themvirtually impossible to detect using normal anticounterfeiting equipment. (RFE/RL 07.i.03) MVD SAYS MOST CONSUMER GOODS IN THE COUNTRY ARE FAKE Nikolai Bobkov, head of the Interior Ministry's Economic Crimes Directorate, said that 90 percent of the goods for sale on the Russianconsumer market are counterfeit, RTR and other Russian news agencies reported on 26 December. Bobkov added that most counterfeit goods arebrought to Russia from Southeast Asia, while Russia itself produces counterfeit food products, clothes and shoes, chemicals and medicines,and video and audio products. The main centers of the counterfeit production in Russia are Moscow and St. Petersburg, and Sverdlovsk,Ryazan, and Yaroslavl oblasts. Bobkov said 2002 his agency investigated about 2,000 suspected intellectual-property crimes in 2002. (RFE/RL 07.i.03) MEDIA-MOST CHIEF FINANCIAL OFFICER CONVICTED, AMNESTIED A Moscow raion court on 24 December convicted former Media-MOST Chief Financial Officer Anton Titov of embezzlement and sentenced him to threeyears in prison and then immediately amnestied him, TVS reported. The court did not find him guilty of money laundering or using forgeddocuments. Titov spent nearly two years in pretrial detention since his arrest in January 2001. At that time, the struggle between Gazprom, amajor Media-MOST creditor, and oligarch Vladimir Gusinskii's allies for control over the media holding was escalating. Titov was the most seniorMedia-MOST executive who had not moved abroad. Court hearings in Titov's case were repeatedly postponed over the past year. According to the 25December edition of "Gazeta," Gazprom filed a civil lawsuit against Titov as well but dropped it around the time Gusinskii agreed to sellhis remaining shares in Russian media companies to the gas monopoly. (RFE/RL 07.i.03) DUMA DEPUTY LAMENTS KGB-IZATION, MEDIA REPRESSION State Duma Security Committee Deputy Chairman Yurii Shchekochikhin (Yabloko) told journalists in Samara on 17 December that he has theimpression that Russia has "returned again to the period at the end of the 1970s and early 1980s," regions.ru reported. "Now in Russia alike-mindedness is observable absolutely everywhere...a constant fear and the strengthening of the position of the first committee for statesecurity," he continued. "For any society, the KGB-ization of the government is an abnormal occurrence," Shchekochikhin added. In terms ofthe media, he noted that Russia ranks second after Algeria in terms of the number of journalists killed and that any official can now go tocourt against a newspaper and receive "a completely abnormal sum in compensation" that can close a publication down. He also noted thatwebsites containing false information keep popping up for one day and then disappear. But somehow "all publications manage to comment on thisinformation," he noted. (RFE/RL 27.xii.02) MOODY'S RAISES RUSSIA RATING Ratings agency Moody's Investors Service raised Russia's rating on 17 December from Ba3 to Ba2, still two notches below investment grade,"Vedomosti" reported on 18 December. The move, which puts Russia on a par with such developing countries as Colombia, Belize, India, and Fiji,frustrated those who had hoped for a quicker path to the sought-after investment grade that will make Russia more attractive to conservativeinvestors. "This might disappoint some in the market who were gunning for a two-notch upgrade," Bear Stearns strategist Tim Ash was quoted assaying by "The Moscow Times" of 18 December. Standard & Poor's upped Russia's rating in early December to BB, also two notches belowinvestment grade, with a "stable" outlook; but is unlikely to review the country's standing in the near future because of upcoming parliamentaryand presidential elections. (RFE/RL 24.xii.02) SERBIA KOMERCIJALNA BANKA - EXPANSION PLANS Komercijalna Banka plans to increase its share capital this year to E90m and expand total assets and liabilities to E1.3bn from 928m in 2002. Thebank also hopes to expand to Kosovo, Albania and Croatia. It already has a network of its affiliates along the Kosovo border, but plans to returnto Pec, Prizren, Pristina and Gnjilane. Komercijalna Banka also plans to open an office in Tirana to further facilitate trading ties betweenSerbia and Albania and Kosovo, and has already applied for a license to open its office in Zagreb, to cover Croatia and Slovenia. KomercijalnaBanka is majority owned by private investors while the state holds a 30% stake. (NewsBase 09.i.03) 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; 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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