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*Due Diligence, Business Intelligence, Asset Retrieval, Debt Recovery* TT Business Intelligence Report Vol. 2, No. 53, 21 August 2003 Business Intelligence, Crime, Corruption and Debt in C&E/SE Europe and the FSU UPCOMING CONFERENCES WORLD REFINING ASSOCIATION'S "CENTRAL AND EASTERN EUROPEAN REFINING AND PETROCHEMICALS 6th ANNUAL ROUNDTABLE" This event (co-hosted with both SNP Petrom and The Rompetrol Group), will take place on 6-8 October 2003 at the Bucharest Marriott Grand Hotel, Bucharest, Romania. For further information, please contact Claire Pallen, tel: +44 (0)1242 529 090; fax: +44 (0)1242 529 060; email: [email protected]; W: www.wraconferences.com EUROMONEY'S "SOUTH EAST EUROPE: THE 3rd REGIONAL FINANCE & INVESTMENT CONFERENCE" This event will take place on 21-22 October 2003 at the Hotel Croatia, Dubrovnik, Croatia. For further information, please contact Susie Teuton, tel: +44 (0)20 7779 8366; fax: +44 (0)20 7779 8795; email: [email protected]; W: www.euromoneyconferences.com THE ENERGY EXCHANGE'S "OIL AND GAS TRANSIT AND SUPPLY IN CENTRAL AND EASTERN EUROPE AND THE BALKANS" This event will take place on 23-24 October 2003 at the Radisson SAS Palais Hotel, Vienna, Austria. For further information, please contact Steve Church, tel: +44 (0)1242 529 090; fax: +44 (0)1242 529 060; email: [email protected]; W: www.theenergyexchange.co.uk BELARUS DISMISSED BELARUSIAN DEPUTY PREMIER BECOMES DEPUTY CHIEF President Alyaksandr Lukashenka on 18 August appointed former Deputy Prime Minister Alyaksandr Papkou as first deputy chief of the presidential administration, Belapan reported. Lukashenka dismissed Papkou on 10 July, together with Prime Minister Henadz Navitski and two other members of the government responsible for the agricultural sector, charging them with falsifying reports on the economic situation and failing to pay state-run farms on time for milk and meat deliveries. In his new capacity, Papkou is to deal with "personnel issues and regional policy," coordinate "work with soviets of all levels," map out a "strategy of rural development," and "secure continuity in reforming the agro-industrial complex," Belarusian Television reported. (RFE/RL 19.viii.03) BOSNIA AND HERZEGOVINA MEETING ON ESTABLISHMENT OF A SINGLE BIH ARMY Members of the armed forces of Republika Srpska (RS) and the Federation of BiH (FBiH) as well as the NATO-led SFOR representatives held a closed door meeting yesterday in Bihac that reportedly focused on the formation of a single state army in BiH. Talking to the press later yesterday, SFOR's Deputy Commander Simon Yong explained that such a joint army would comprise of two units from each of the two BiH entities. In order to implement this project, the competent authorities are taking measures to reduce the number of soldiers in both entities' armies as well as the storage locations of weapons across BiH. These are also essential pre-conditions for BiH's admission to the NATO Partnership for Peace (PfP) programme, reminded Yong. (IntelliNews 20.viii.03) NATO TROOPS FAIL TO NAB BOSNIAN SERB WAR CRIMES SUSPECT An unspecified number of Italian SFOR peacekeepers supported by military helicopters, combat vehicles, and sniffer dogs sealed off the home of Stana Mladic, the mother of former Bosnian Serb General Ratko Mladic, in Kasindo near Sarajevo on 13 August shortly after her death, Reuters reported. Mladic, whom the Hague-based war crimes tribunal has indicted for crimes including genocide, did not appear at her funeral, as NATO apparently had expected. SFOR said in a statement that the "operation did not result in the detention of Ratko Mladic. No military or civilian casualties or injuries were incurred in this operation." Dpa quoted unnamed local "witnesses" as saying he stayed away from the funeral because he feared NATO would try to arrest him there. The Bosnian Serb news agency SRNA quoted a local elderly woman as saying that the foreigners "can perhaps find Mladic but they cannot take him out of our hearts." (RFE/RL 14.viii.03) BULGARIA VIVA VENTURES SEEKS NEW COURT INTERVENTION ON BTC PRIVATISATION Viva Ventures appealed the Supreme Administrative Court (SAC) yesterday on the latest decision of the supervisory board of the privatisation agency referring to the deal for 65% of the state telecom BTC. Viva Ventures asked the court to pronounce on the validity of the board decision to return the contract for new revisions and also to pronounce whether its draft privatisation contract for BTC should be considered approved by a tacit agreement. In our earlier analyses on the deal, we have mentioned this scenario as a good alternative for the bidder to seek a quick ratification of the contract. Interestingly enough, the ignorance of the supervisory board could provide the fastest possible way for completing the deal, in case the court rules of existing tacit agreement. In that case, Viva Ventures could even argue that the draft contract has been approved without the improvements asked by the government. However, we do not expect Viva Ventures to risk its reputations and to look for new complications in the deal. Moreover, the privatisation agency announced yesterday that it had signed with Viva Ventures all relevant documents asked by the supervisory board and would submit them for approval by the board in 2-3 days. The quick response from the agency showed that the moves of the executive and supervisory boards were probably co-ordinated in a bid to find a creative solution for avoiding legal barriers to the deal. This gives hopes that the state authorities are committed to finalise the deal but the risks for failure remain significant due to the very complicated legal situation. (IntelliNews 19.viii.03) CROATIA CULTURE MINISTRY PRESENTS MEDIA BILL The culture ministry presented the media bill that was forwarded to the cabinet's review after a two-year preparation. The aim of the law is to allow freedom of media and aligning legislation with EU standards. The draft proposes ways for protecting media from political influence, preventing monopoly on the media market and protecting the rights of journalists. According to the bill, the publisher whose daily and weekly newspapers hold more than 40% of the total copies sold could not be an owner or gain ownership in another printing publication. The cabinet should discuss the media bill on Aug 28. (IntelliNews 21.viii.03) CROATIAN WAR-TIME ARMS DEALER FOUNDS POLITICAL PARTY Zvonko Zubak, a war-time arms dealer in Croatia, on Sunday founded the Democratic Social Union (DSU), another political party in the country. The 45-year-old Zubak was unanimously elected party president at today's founding assembly. The DSU's inner leadership also includes Marijan Sunjic, a former Zagreb University head. "I'm not getting into politics for money but because I've felt that man needs the freedom that he has deserved but doesn't have today," said Zubak. He said he founded a party "because it is time" people left misery behind them, in order to return dignity to people, to deliver them from the poverty and state of social and moral neglect the majority had been sinking in for the past decade because of an irresponsible government. Journalists were interested in Zubak's arms trade. He said he had been an arms dealer in Croatia and not some other country at a time when Croatia was defending itself and weapons could not be bought legally. "I didn't give out arms at prices I might be ashamed of today and if (my record) were the least bit unclean I would go to Switzerland or some place else." Zubak said he had been an entrepreneur since the age of 26 and that today he was dealing in fuel and raw petrol and had a number of companies abroad. (IntelliNews 17.viii.03) CZECH REPUBLIC KCP INVESTIGATING ATLANTIK FT´S FISCHER PURCHASE The Securities and Exchange Commission (KCP) is investigating whether the purchase of Fischer's debts, totalling nearly CZK 0.5 bln, would not damage oil mogul Karel Komarek's broker company Atlantik FT. The Anti-Monopoly Office (UOHS) is investigating potentially unacceptable public support that might have taken place when Atlantik purchased Fischer's debt from the partially state-held Czech Airport Authority (CSL) and Czech Airlines (CSA). (PBJ 20.viii.03) PRUNEROV POWER STATION KNOCKED OUT OF ACTION The country's largest power station, Prunerov, was knocked out of action by a violent storm on the night of Thursday, August 14, the same day that New York and other North American cities were plunged into darkness. The damage at Prunerov will take up to two months to put right, CEZ, the Czech power company told Mlada fronta dnes. Neither businesses nor homes will be unduly affected in the meantime, CEZ added, without elaborating. The sharing of electrical power across the country is thought likely to result in rotating blackouts that used to be a common feature of life, particularly in Prague, during the 1990s. The loss of Prunerov from the power grid is also likely to put more pressure on output from the controversial nuclear plant at Temelin, close to the border with Austria. (NewsBase 19.viii.03) A NEW ENVIRONMENT The Czech Republic's accession to the EU next May will bring big changes to the country's environmental protection laws and entail expenditures of an estimated Kc 250 billion over the next seven years. While such large-scale spending would seem to imply big improvements, environmentalists have mixed feelings. They say that while some of the new rules will help the Czech environment, others will hurt it, especially plans that could turn some of the country's most beautiful vistas into thoroughfares for polluting traffic. No matter what, businesses, local governments and the state will have to dig deep to pay for the changes. "Otherwise the country will not be able to meet European standards," said Frantisek Pelc, the deputy chairman of the Chamber of Deputies environment committee. "[The cost] is about one-third of the annual state budget," he added, although some subsidies from the EU can also be expected. The Czech Republic lags far behind EU norms in water protection, so one of the most pressing-and most expensive-environmental challenges is construction of wastewater-treatment facilities. Current regulations require such facilities in all municipalities of 2,000 or more inhabitants, with estimated costs running as high as Kc 63 billion. "We must complete construction of these facilities by 2010, or we will not get any EU funds," Pelc said. Connections to the sewerage network alone will cost some Kc 38 billion, and the rest will be spent on the repair of existing water treatment plants and the construction of new facilities. The country also faces many changes in its waste disposal system. By the year 2005, at least 50 percent of all packaging must be returnable and 15 percent of plastic packing material recycled. "Only a marginal part of packing material is recycled at present," Pelc said. He added, however, that he did not want the Czech Republic to follow the example of EU countries in every aspect. They have, for instance, one-third higher production of communal waste per capita than the Czech Republic does. Meanwhile, the country is already nearing EU standards for air cleanliness, meeting the requirements of the Kyoto Protocol on the concentration of greenhouse gases in the atmosphere. (PBJ 18.viii.03) HUNGARY EM ELECTRONICS AND MECHANICS MANUFACTURE SELECTED FOR SALE BY REORG EM Electronics and Mechanics Manufacture, Service and Trade's (currently under liquidation) factory in Vac (North of Budapest) was selected for sale by the liquidator firm Reorg Economics and Finance. According to current plans the other factory in Szecseny is expected to continue operation in the long term. Gyorgy Szondi chief liquidator said that Reorg intends to sell the factory in Vac as an operating production unit through a public round of applications. The factory currently employs 230 people and is involved in powder metallurgy technology, manufacturing independent products. The production unit to be sold contains a number of manufacturing halls. Its sale would help establish a firm financial basis for the continued profitable operation of the other EM factory in Szecseny. Assets not essential to production will also be sold. The Hungarian owned firm manufacturing mainly for export to Western Europe has had a long history of liquidity problems. (NewsBase 20.viii.03) DRAFT LAW TO CLEAR UP STATE PROCUREMENT A new, fully EU-conform public procurement law is expected to bring a high level of transparency to the Hungarian public sector and equal opportunities to entrepreneurs wishing to bid in public tenders, executives and public officials say. The law, scheduled to go before Parliament in September, is among the last pieces of legislation Hungary needs to modify to come into compliance with EU norms. "Although we have pointed out several areas in the draft law that our members think need clarification, the good thing about the new law is that it has a completely new approach to transparency," said Márta Szili, managing director of the Hungarian Joint Venture Association. The draft introduces new concepts regarding tender procedures and defines more clearly who falls within the scope of the law, according to Anita Németh, head of the European Community Law department at the Justice Ministry. "Since the last modification of the procurement law in 1995, a number of loopholes have been detected in the regulations, which the new version addresses," Németh said. One issue she pointed out is the need to specify the circle of entities obliged to call public procurement tenders when purchasing goods and services. "The previous law tried to list all the entities with such an obligation, but the problem with this system was that certain entities, mostly new ones, could slip out of the scope of the law," Németh said. The new law contains a similar inventory, though smaller. However, it also introduces some general framework categories that describe the features of public entities. The aim is to prevent entities that are not on the specific list from avoiding the law, Németh explained. (BBJ 18.viii.03) KAZAKHSTAN 12 REJECTED LOCAL ELECTION CANDIDATES ALLOWED TO RUN AFTER ALL An open meeting of Kazakhstan's Central Election Commission (CEC) held in Astana on 18 August overturned the decisions of local election boards to reject the candidacies of 12 people seeking to run for local councils, khabar.kz reported. The nationwide elections for seats on local councils is scheduled for 20 September. Altogether, 142 candidacies were rejected, while 7,473 hopefuls were registered. According to the report, all refusals were checked by the CEC and Prosecutor-General's Office. The present law on elections states that candidacies may be rejected only if a court case is filed against the applicant, not for the type of minor infractions allegedly committed by the 12 people whose candidacies were reinstated by the CEC. (RFE/RL 19.viii.03) KAZAKSTAN, BELARUS, RUSSIA, AND UKRAINE TO SIGN COMMON ECONOMIC SPACE Belarus, Kazakhstan, Russia and Ukraine will sign the agreement on the establishment of common economic space on Sep 18 in Yalta. This was agreed at the Friday meeting of the four countries' deputy prime ministers in Astana. President Nazarbaev said that the meeting resulted in finalising preparatory works on the three most important documents related to the common economic space idea, namely the agreement itself, the concept of common economic space and roadmap for its implementation. The initiative was first presented on 23 February this year in Moscow, when the presidents of the four countries expressed their will for a new stage of economic integration and set up high-level group to co-ordinate work on the issue. In the end, the four countries are expected to sign an agreement on the formation of Common Economic Space, co-ordination of economic policy, harmonisation of respective legislation and establishment of common inter-state independent Commission on Trade and Tariffs. The final goal in the works of the high-level groups is creating the Organisation for Regional Integration. (IntelliNews 18.viii.03) LATVIA PRESIDENT VIKE-FREIBERGA AND PM EINARS REPSE TO COOPERATE FOR EU MEMBERSHIP At their regular weekly meeting on Thursday, August 14, President Vaira Vike-Freiberga and Premier Einars Repse decided they should co-operate more closely in urging citizens to vote for EU membership in the referendum scheduled for September 20, the BNS news agency reported. They expressed the need to make it clear to the people that there should be no connection between the EU referendum and current discussions on the draft of the 2004 budget or the popularity of the government. Vike-Freiberga said she is ready to attend a cabinet meeting to urge ministers to take a more active role in explaining the need for EU membership to the general public. Repse said the forthcoming referendum will be a decision of major importance, "whether Latvia is in the family of modern, developed Western European countries, or remains in the group of backward states oriented toward the east." (NewsBase 19.viii.03) LITHUANIA PRICES FOR SOME IMPORTS MAY HIKE 300% AFTER LITHUANIA JOINS EU In many cases, the conditions for Lithuanian exporters will hardly change after Lithuania becomes a member in the European Union next year, whereas the importers may encounter huge metamorphoses as prices for some of the imported goods may go up by 300%, the study done by Ekonomines Informacijos Centras showed. The study authors pinpointed to rather big changes expected in Lithuanian foreign trade links with Russia, US, Ukraine, Belarus, Japan, China, and Kazakhstan, Lithuania's major foreign trade partners from the other than EU nations' group, after the Baltic country will join the bloc. However, experts suggested the imports from the enumerated countries will encounter few times bigger changes than the exports to them. Lithuanian imports from Russia, US, Ukraine, Belarus, Japan, China, and Kazakhstan makes about 33 percent of total imports and is considerably bigger than the exports to these nations, which account for 13 percent of total exports of Lithuanian origin goods. Especially big modifications may occur in imports from and exports to Ukraine or other countries which have been imposed special custom duties by EU. The size of the duty in such case depends not on the imported good customs value, but the quantity imported. Because of the differences in customs policy many goods (grain, milk powder, pastry, meat, and fuel for engine vehicles), the customs price of which in entry bills of importers or exporters was very low, will hike most probably by 300% and even more. The researchers from Ekonomines Informacijos Centras say that for some imported goods "the price hike" will be bigger than "the price slump" making up 181 million and 14 million litas respectively. The EU applied customs duties would be the major reason for these differences, as in many cases they are higher than the current ones. The price hike for imports from Japan will make about 38.6 million litas, US, 33.8 million litas, and Russia, 24.5 million litas. (IntelliNews 18.viii.03) POLAND CABINET'S POPULARITY REMAINS LOW, DESPITE SLIGHT IMPROVEMENT A poll released by the CBOS polling agency on 12 August found that 70 percent of Poles assess the government led by the Prime Minister Leszek Miller negatively and only 16 percent positively. Support for the government grew by one percentage point from July, while the number of opponents fell by two percentage points. The poll also found that 19 percent of respondents are pleased with Miller as prime minister, which is four percentage points higher than in July. Simultaneously, 62 percent are displeased with the prime minister, which is six percentage points lower than in July. Thus, one can see a slight improvement in the generally poor ratings of Miller. (RFE/RL 19.viii.03) FINNISH CONCERN TO BUY LEADING ARMS PRODUCER The Defense Ministry has officially informed that Finnish Patria intends to buy the Military Equipment Plant (WZM) in Siemianowice Slaskie. The Ministry has also announced that due to nature of the confidential negotiations it c ould not reveal any more precise information. Factory director Grzegorz Prz erwa told the Polish Press Agency that the firm needed about three months to present all the necessary documents for privatization to the State Treasury. Only after concluding these legal proceedings, the company could be privati zed. "Patria has a dozen plants in its structure. Our direct partner is Pat ria Vehicles," said Przerwa. Last year WZM in consortium with Patria won a tender to deliver armor vehicles to the Polish army. "Naturally we confirm that we are conducting negotiations and that we are seriously interested in the privatization of the plant in Siemianowice, but we cannot reveal any further details," said Satu Palm, deputy president of Patria. (WBJ 19.viii.03) ROMANIA ROMANIA'S DEMOCRATIC PARTY WANTS CHAIRMAN TO RUN FOR PRESIDENT Democratic Party Deputy Chairman Sorin Frunzaverde told journalists on 14 August that many in the party want Democratic Party Chairman Traian Basescu, also the mayor of Bucharest, to run for president in the elections slated for 2004, RFE/RL's Bucharest bureau reported. Frunzaverde also said the Democrats and the National Liberal Party (PNL) have agreed that if they form an alliance, the joint presidential candidate would be that person who is best placed in opinion polls. Frunzaverde said he does not rule out that Basescu would be better placed in the polls than the PNL candidate. PNL Chairman Theodor Stolojan said last month that if his party designates him as a candidate for the presidential elections, he will accept the nomination. (RFE/RL 15.viii.03) RUSSIA CHUBAIS TO RUN ON SPS TICKET Anatoly Chubais is getting back into politics. The head of Russia's electricity monopoly will run in the third spot on the Union of Right Forces' electoral list to try to help the pro-business party get the votes it needs in December's parliamentary elections, a party official said Tuesday. "We thought long and hard and then decided that we thought that Chubais was the right person to help our party increase its rating," the official said, speaking on condition of anonymity. Some, however, say that bringing in Chubais, whose controversial role in the privatizations of the 1990s won him many enemies among ordinary people and among the elite, could backfire for the party, known as SPS. On the other hand, even some who do not like Chubais see him as a man able to get things done. The party also is bringing in Alfred Kokh, like Chubais a privatization chief who was involved in the tainted sell-offs of the last decade. He left government in 1997 and returned to the scene in 2001 to spearhead Gazprom's takeover of NTV television. Kokh will run the party's campaign. Duma Speaker Gennady Seleznyov, a former Communist who heads his own party, was quoted in Kommersant on Tuesday as saying that Chubais will only help SPS "get out of the political scene." In the 1999 Duma election, SPS got 8.52 percent of the vote, passing the 5 percent threshold for winning seats on the basis of the party lists. The SPS faction now has 38 deputies in the 450-seat lower house. But the party's rating has fallen. The latest poll by the All-Russia Center for the Study of Public Opinion, or VTsIOM, showed a mere 4 percent rating for SPS, although the poll has a margin of error of 3.4 percentage points. According to a July survey carried out by the Public Opinion Foundation, 52 percent of Russians have a negative feeling about Chubais, while only 8 percent have a positive feeling. (The Moscow Times 20.viii.03) NEW HEAD FOR MOBILE TELESYSTEMS Mobile TeleSystems (MTS) announced in a 11 August press release that the company's board of directors has recommended Vasilii Sidorov for the top post at the leading cellular operator. Currently the first vice president of Sistema Telecom, the 32-year-old Sidorov studied at the Moscow Institute of International Relations and the Wharton School of Business in the United States. Before joining Sistema Telecom in 2000, he was the deputy director for finance of Svyazinvest. Sidorov does not come to MTS as an outsider -- Sistema Telecom is part of the same AFK Sistema holding company that holds a controlling stake in MTS. Troika Dialog analyst Evgenii Golosnoi told "Vedomosti" on 12 August, "The market reacted positively to this news. The key people stay where they are, and the team doesn't change." "Ekspert" No. 29 noted, however, that the Western-educated Sidorov "faces the difficult task of fine-tuning the management process at a company that is home to the MTS old guard, who are used to an authoritarian style." Current MTS President Mikhail Smirnov is set to become the president of the Moscow City Telephone Network, also a part of AFK Sistema. (RFE/RL 19.viii.03) IN A FIRST, A REPORTER IS CONVICTED OF LIBEL In an unprecedented case that media rights advocates say may open the way for a barrage of criminal cases against independent journalists, a Chelyabinsk reporter has been sentenced to one year in prison on libel charges filed by the regional administration. German Galkin, publisher of Rabochaya Gazeta newspaper and deputy chief editor of Vecherny Chelyabinsk daily, was tried in connection with articles that accused the regional administration of misspending budget funds and suggested that Deputy Governor Konstantin Bochkarev had pedophiliac tendencies. Galkin denied that he was the author of the nonbylined articles, and Vecherny Chelyabisnk's politics editor, Andrei Koretsky, said Monday that the writing style was quite different from Galkin's. But the court decided otherwise. The articles, published in Rabochaya Gazeta in July 2002, said the Chelyabinsk administration spent millions of dollars -- or about 10 percent of the local budget -- over the past few years on the creation of a regional television channel that would promote the adminstration's views, Koretsky said. Considerable funds also were used to buy Mercedeses, Volvos and jeeps for local officials, the articles said. Koretsky insisted that the reports were accurate. The articles also hinted that Bochkaryov had a predilection for young boys. But "nobody has directly accused him of pedophilia," Koretsky said in a telephone interview from Chelyabinsk. The Rabochaya Gazeta issue that the articles appeared in never reached the streets because all copies of the newspaper were seized shortly after leaving the printing house. The criminal case against Galkin was opened in July 2002 on the request of Bochkaryov and another deputy governor, Andrei Kosilov. After a trial of several weeks, Galkin was sentenced Friday. He plans to appeal. Galkin, who is also a local leader of the Liberal Russia party, said in his closing statement Thursday that the case was clearly politically motivated. Since the start of President Vladimir Putin's tenure, authorities have opened scores of actions against independent media, and in one of the most high-profile examples, the country's last privately owned national television channel was shut down in June. But the case against Galkin is the first time a journalist has been actually sentenced to a prison term for criticizing government officials.Galkin said in his closing statement that a sign that the charges against him were politically motivated was the fact that his indictment begins with a statement accusing him of being motivated by personal objections to the regional administration's financial policies.Koretsky said that after the verdict was handed down, two deputy governors came out of the courthouse and warned reporters that similar charges would be filed in the future. They wanted to "make other journalists understand who is the boss," Koretsky said. (The Moscow Times 19.viii.03) RUSSIA'S 30 LARGEST BANKS SLASHES INVESTMENTS IN NON-STATE BONDS BY 25% In June, Russia's 30 largest banks slashed their investments in non-state bonds by 25%, replacing them with GKO and OFZ bonds in their investment portfolios. In the first five months of 2003, the banks boosted their investments in non-state debt obligations by 2.5 times to R60 billion. The reason lay in the fact that the yield on OFZ bonds dropped below 8% at the start of the year, while returns on corporate paper varied between 13% and 16%. In June, the yield on corporate bonds narrowed while returns on OFZ bonds widened to between 10% and 11%. This prompted banks to cut their investments in non- state securities to R120.7bn over the month, using the funds saved to buy OFZ bonds. In June, investments in OFZ bonds by the top 30 Russian banks hiked by R36bn, while their total investments in securities declined from R611bn to R602.8bn. (NewsBase 19.viii.03) SELL-OFFS FOR 2004 APPROVED Prime Minister Mikhail Kasyanov signed off on the government's privatization program for 2004 over the weekend, providing for the sale of state shareholdings of less than 25 percent. The 2004 program will be sent to the State Duma as an appendix to next year's draft budget, Interfax reported Monday. The program will send 1,050 state unitary enterprises and 629 state stakes to the auction block next year. The largest sale will be a 7.6 percent stake in LUKoil, as well as the state's shares in the Novorossiisk, St. Petersburg and Vladivostok sea ports. In the case of the ports, the government will retain a so-called golden share or veto vote. As part of the government's efforts to modernize the economy next year, 123 state unitary enterprises and 215 blocks of shares will be incorporated into vertically integrated structures of the defense sector. The government plans to complete the privatization process by 2008. In 2005, the state plans to sell stakes of between 25 percent and 50 percent, and in 2006 it will pull out of companies in which it owns more than 50 percent and which are not on its list of strategically important enterprises. Earlier, the Property Ministry had said the government plans to raise 35 billion rubles ($1.1 billion) per year from state asset sales in 2004 to 2006, according to a draft program posted on the government's web site. Russia will sell assets both to raise cash to pay debts and improve efficiency by reducing the state's role in the economy. (The Moscow Times 19.viii.03) PUTIN TELLS BUSINESS TO GET READY FOR WTO MEMBERSHIP Speaking to a Kremlin gathering of leading industrialists on 13 August, President Vladimir Putin said that joining the World Trade Organization (WTO) is "a crucial element of the country's economic policy," polit.ru and other Russian media reported. He said that the efficiency of domestic industry depends on its readiness to compete in the global environment. As a member of the WTO, Russia would be able to participate in elaborating global trade regulations which, in turn, would have an impact on the national economy, Putin argued. However, WTO membership will not be a panacea for Russia, and it will not solve crucial economic problems such as the lack of investment. These problems must be addressed by boosting the economic-growth rate, Putin said. He also urged business to help create an attractive image of Russia abroad. He said that to do so, Russia should change the structure of the economy, create a civilized business environment, and develop democracy. At the same meeting, Economic Development and Trade Minister German Gref said that it is realistic to expect that Russia will join the WTO in 2005-06. (RFE/RL 19.viii.03) END OF THE YUKOS AFFAIR? The Russian Anti-Monopoly Ministry has approved the creation the merger of the oil giant Yukos with its smaller rival Sibneft. The decision creates the largest oil company in Russia and ends speculation that highly controversial investigations relating to Yukos could block the deal. The merger was announced four months ago. The head of the Anti-Monopoly Ministry, Ilya Yuzhanov, told reporters that the process of decision-making had not been dragged out, an indirect response to suggestions that political intrigues had affected the decision-making process."This is one of the largest deals in the history of our office, so we had to shovel a heap of materials," Yuzhanov told reporters. The merger was also the largest in Russian corporate history, allowing Yukos "to purchase up to 100 percent in Sibneft Oil Company." The merger should be completed this year. It will create the world's fourth-largest oil producer behind British Petroleum, ExxonMobil and Royal Dutch Shell. The new company will be called YukosSibneft. Its daily oil output is expected at 2.06 million barrels, more than a quarter of total production of Russia, the world's second-biggest oil supplier behind Saudi Arabia. The new company will have total reserves of around 19.4 billion barrels of oil equivalent, the Associated Press reported. The deal, as well as creating a giant, appears a strong strategic move, as the two companies are dominant in different regions. Yukos's CEO and the richest man in Russia Mikhail Khodorkovsky will head the new oil company. The chair will be Sibneft's president, Eugene Shvidler. (TOL 18.viii.03) FORMER KREMLIN INSIDER SAYS CORRUPTION CONTINUES TO GROW Georgii Satarov, a former adviser to President Boris Yeltsin who is now president of the INDEM research foundation, told TV-Tsentr on 13 August that corruption in government and society continues to grow and is now more prevalent than during the Yeltsin years. He said that there is now an unofficial price list for government positions. An appointment as a deputy minister costs $500,000, while one as deputy prime minister costs several times that figure, Satarov said. Although senior officials do not necessarily know about the corruption of their subordinates, President Putin certainly knows the extent of the corruption problem because competing groups within the administration bring him compromising materials about one another, Satarov said. Putin, however, understands that the problem cannot be solved all at once or by means of brute force, he added. (RFE/RL 18.viii.03) RUSSIAN PROSECUTORS SAY YUSHENKOV MURDER CASE SOLVED Russian prosecutors have declared the investigation into the April assassination of parliamentarian Sergei Yushenkov closed, but many of the late politician's colleagues--particularly those in the Liberal Russia party Yushenkov led--remain unconvinced of the prosecutor's conclusions. The Prosecutor General's Office on 14 August announced that Mikhail Kodanev, Liberal Russia's executive committee chair, and Alexander Vinnik, his assistant, have been charged with ordering the assassination. Two individuals, Alexander Kulachenko and Igor Kiselyov, have been charged with carrying out the assassination, while two others, Vladislav Palkov and Anton Drozd, stand accused of preparing the crime. Further details about the identities of Kodanev and Vinnik's alleged co-conspirators have not been made available. Yushenkov--the head of the Liberal Russia party that was created by financial tycoon and former Kremlin insider Boris Berezovsky--was gunned down 17 April on his way home. Russian prosecutors are ascribing a purely financial motive for the crime. Natalya Vishnyakova, spokesperson for the Prosecutor's Office, said that "financial arguments within the party's management" prompted Kodanev and Vinnik to arrange Yushenkov's assassination, RIA Novosti news agency reported on 28 July. "Six people have now been detained, including those who carried out the assassination, those who organized it, and those who ordered it," Vishnyakova added. Kodanev and Vinnik were detained on 26 June in Kudymkar, a town in the northern Russian region of Komi-Permyatski. Kodanev has refused to speak to police, citing Article 51 of the Russian Constitution, which allows defendants the right to refuse to testify against themselves, a spouse, or another close relative. Genry Reznik, a lawyer for Kodanev, said he has doubts that the Prosecutor's Office has enough evidence to prove his client's involvement in the case. Liberal Russia founder Berezovsky has also said that he is convinced Kodanev is not guilty because he did not have any involvement with financial policy within the party. (TOL 18.viii.03) SERBIA AND MONTENEGRO TENSIONS IN KOSOVO CONTINUE TO MOUNT Tension in Kosovo has continued to mount, as new terrorist attacks on Serbian citizens in the province were reported yesterday. Even though there was just one casualty, the new incident has provoked an uproar among Serbian politicians. Deputy Serbian PM Nebojsa Covic accused the international community in letting the situation get out of hand as well as incapable of eliminating terrorist groups in the province. A KFOR official admitted that there existed terrorist organisations in Kosovo, but did not mention anything about the Albanian National Army (ANA), which is believed to be the organisation responsible for the murder of the two Serbian children last week. At the same time, Kosovo's PM Bajram Rexhepi commented that Serbia had used to occasion to launch a new series of diplomatic attacks on Kosovo's government. He viewed the Serbian request for a UN Security Council summit, where Kosovo's representatives were not admitted. Rexhepi expressed concerns that the UN would get a distorted story, which did not suggest that Kosovo's authorities tolerated terrorism. (IntelliNews 19.viii.03) INDICTED BOSNIAN SERB GOES TO THE HAGUE On 15 August, Serbian authorities extradited Mitar Rasevic to the Hague-based war crimes tribunal, which has indicted him in connection with the murder, torture, and inhumane treatment of prisoners near Foca between 1992-94, Reuters reported. Guard commander Rasevic, who surrendered to Serbian authorities on 8 August, "generally...was present during the selection of the detainees [for beatings]. Sometimes he read out the names of the selected detainees from the list. The guards and soldiers assaulted the detainees with all sorts of weapons," according to the indictment. Rasevic faces charges stemming from seven counts of crimes against humanity, five counts of violations of the laws and customs of war, and six counts of grave breaches of the Geneva Conventions. (RFE/RL 18.viii.03) SLOVAKIA DEPUTY CHAIRMAN REFUTES SPECULATION OF POLITICAL MERGER The opposition People's Party-Movement For A Democratic Slovakia (LS-HZDS) is not contemplating becoming part of the present government, nor does it consider supporting a possible minority government, the party's deputy chairman Jan Kovarcik said at a party press conference, adding that claims to the contrary are pure media speculation. According to Kovarcik, the party must prepare for early elections, the possibility of which was further suggested by one of the government coalition members. He refused to comment on possible partners with which LS-HZDS could form a new government. Kovarcik commented on media speculations about a switch of some parliament deputies of the People's Union (LU) to the New Citizen's Alliance (ANO): "He who has betrayed once, will betray again." In reference to the new draft election bill, prepared by the interior ministry, Kovarcik said that the LS-HZDS is mainly against the proposed four election districts. It would enable someone to become a parliament deputy with a mere 50k votes. The LS-HZDS supports the current one-district system, in which a parliament deputy requires 200k votes to get elected. According to Kovarcik, the party proposes the establishment of two parliamentary chambers: the first chamber would vote on laws, while the second would examine them. The speaker of the second chamber would also be the vice president. (NewsBase 14.viii.03) UKRAINE GOVERNMENT TO EVALUATE COST OF REVERSE USE OF THE ODESSA-BRODY PIPELINE The Ukrainian Fuel and Energy Ministry has announced a tender to select a company to evaluate the economic cost of reverse use of the Odessa-Brody oil pipeline. According to the tender conditions, contenders will have at least 10-years experience of international strategic consulting and experience in consulting in oil industry. Companies which had earlier participated in the Odessa-Brody project will not be allowed to participate. TNK had suggested reverse use of Odessa-Brody and said it was ready to transport about 9m tonnes of oil from Brody to Odessa. Ukrtransnafta, which operates Odessa-Brody, is against its reverse use. Ukrtransnafta is supported by the EU and the USA on this issue. (NewsBase 21.viii.03) UKRAINE STILL NOT DECIDED ON EU-CEA CHOICE The economy minister Khoroshkovskyi considered the claims that Ukraine has changed its policy course from EU integration to forming a common economic area (CEA) with Russia, Kazakhstan and Belarus as premature. The previous week the deputy PMs of the four countries agreed on a package of documents on the creation of a CEA. European Comissioner on EU expansion Verheugen earlier expressed his concern with the compatibility of the Ukrainian participation in the CEA with its objective of achieving an EU candidate country status. Khoroshkovskyi, however, noted that the documents signed last week do not have legal power and Ukraine still does not have a final position on the CEA matter. The issue of the redirection of Ukrainian external policy will become clear only when such a position is formed. (IntelliNews 20.viii.03) INFORMATION PROVIDERS - For either a free trial, or for further information on the services of our Information Providers, please contact: 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 and Budapest 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 INTERNET SECURITIES, INC. (IntelliNews articles) Internet Securities, established in 1994, is the pioneering provider of electronically delivered emerging markets business information. Contact: Ludek Macha T: +420 2 2421 9055 F: +420 2 2421 9060 E: [email protected] W: www.securities.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 TRANSITIONS ONLINE (TOL) TOL is a nonprofit Internet magazine and media development organization that produces timely, original news and analysis, covering all 28 countries in the post-communist region through its network of local journalists and editors. Contact: Eugen Babau-Iladi T: +420 (0)2 2278 0805 F: +420 (0)2 2278 0804 E: [email protected] W: www.tol.cz 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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