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*** Due Diligence *** Business Intelligence *** Asset Retrieval *** *** Debt Recovery *** Disappearance Response ***  TT Business Intelligence Report Vol. 2, No. 56, 2 October 2003 Business Intelligence, Crime, Corruption and Debt in C&E/SE Europe and the FSU UPCOMING CONFERENCES LVA'S "METEX 2003 - 5th EURASIAN METAL TRADE, MINING AND INVESTMENT FORUM" This event will take place on 13-17 October 2003 (during LME week) in London, United Kingdom. For further information, please contact Arthur Poliakov, tel: +44 (0)20 8795 2970; fax: +44 (0)20 8795 2977; email: [email protected]; W: www.lva.co.uk 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 IPC'S "NEW DEVELOPMENTS IN ANTI-MONEY LAUNDERING MEASURES" This event will take place on 25-26 November 2003 at the Radisson SAS Daugava Hotel, Riga, Latvia. For further information, please contact Judith Halliwell, tel: +44 (0)20 8943 4903; fax: +44 (0)20 8977 7150; email: [email protected]; W: www.ipc-conferences.co.uk BELARUS GAZPROM REPORTEDLY SEEKING TO NEARLY TRIPLE GAS PRICE TO BELARUS Gazprom head Aleksei Miller told the director of Belarusian gas-pipeline operator Beltranshaz in Moscow on 25 September that Belarus should pay $80 per 1,000 cubic meters of Russian gas in 2004, Belapan reported, quoting the Gazprom press service. Under this year's deal, Gazprom is supplying Belarus with 10.2 billion cubic meters of gas at a preferential price of $30 for 1,000 cubic meters. The Belarusian and Russian presidents agreed earlier this month to adopt market prices in contracting purchases of Russian gas. In response to this suggested price hike, Minsk is expected to raise duties on the transit of Russian gas across Belarus. (RFE/RL 26.ix.03) BOSNIA AND HERZEGOVINA BOSNIA STARTS ITS FIRST CASE AGAINST ORGANIZED CRIME The Bosnian state prosecutor's office filed charges on 1 October against six members of an alleged organized criminal gang for counterfeiting euro banknotes. This is Bosnia's first case against members of an organized criminal group, the broadcast added. In Banja Luka, the authorities are expected to announce shortly the results of a crackdown by Republika Srpska police against organized crime. In Vienna, Erhard Busek, who heads the EU-led Southeast European Stability Pact, said that it is wrong to regard the Balkans as the main source of organized criminal activity. A large quantity of smuggled illegal drugs comes from Afghanistan, while those who benefit from human trafficking live primarily in Western Europe. (RFE/RL 01.x.03) BOSNIA DRAWS CLOSER TO NATO After some 100 days of heated debate, local authorities in Bosnia agreed on 25 September to a document presented by the international community's Defense Reform Commission that calls for a unified command of the country's separate armed forces. The document, which is intended to serve as a draft defense bill, must now be passed by Bosnian State Parliament. If passed, it will be the first time since the end of the war in 1995 that Bosnian-Muslim, Bosnian-Serb, and Bosnian-Croat soldiers will serve under one flag and one state insignia. A joint command and control of Bosnia's separate armed forces is the most pressing condition the country must meet in order to join NATO's Partnership for Peace program (PfP). The Defense Reform Commission was established in May 2003 by the Office of the High Representative(OHR), the international body governing the country, and its board consists of representatives from NATO and the defense ministries from Bosnia's two entities, the Bosnian-Serb-dominated Republika Srpska and the Bosniak - (Bosnian Muslim) and Bosnian-Croat-dominated federation. According to the commission's recommendations, the armed forces should be under the civilian command of the country's tripartite, rotating presidency. It also calls for the formation of a state-level Defense Ministry, whose defense minister and two deputies should represent all three ethnic groups. Bosnia officially has two armies, one operating in Republika Srpska and one in the federation. The federation army is divided into Bosniak and Croatian components. The OHR, which has vast legislative and executive powers, had earned agreement in May from both entities for the formation of a joint, state-level command of the armed forces under civilian control. Since May, the Defense Reform Commission has been working on the draft bill. The defense bill does not demand the formation of a single army, allowing the Federation Army and the Republika Srpska Army to maintain their separate independence. The Federation Army will also be allowed to retain its two separate Bosniak and Bosnian-Croat components. Both entities will keep their separate Defense Ministries. High Representative to Bosnia, Paddy Ashdown, paid tribute to the political leaders of Bosnia who supported the reforms. The European Union also welcomed the defense reform bill. (TOL 29.ix.03) BULGARIA BULGARIAN PARLIAMENT UNANIMOUSLY ADOPTS CONSTITUTIONAL CHANGES Parliament on 24 September passed a series of constitutional amendments regarding the mandates and immunity of magistrates and judges, Bulgarian media reported. In the presence of Supreme Court judges, religious leaders, and representatives of the international community, all 230 lawmakers who attended the session voted for the amendments. The amendments are part of a wider legal reform aiming at improving the efficiency of the judiciary and expanding the fight against organized crime. Justice Minister Anton Stankov and President Georgi Parvanov said after the vote that further amendments to the constitution might be necessary in the course of the country's EU-accession process, mediapool.bg reported. Both Stankov and Parvanov warned against rushing additional changes, adding that it would be prudent to wait until the EU adopts its new constitution. (RFE/RL 25.ix.03) CROATIA BRITISH PARLIAMENT TO RATIFY CROATIA'S STABILISATION AND ASSOCIATION AGREEMENT WITH EU The UK Minister for Europe Denis MacShane said on Tuesday the British parliament would ratify Croatia's Stabilisation and Association Agreement (SAA) with the EU after former general Ante Gotovina was arrested or voluntarily surrendered to the Hague war crimes tribunal for the former Yugoslavia, Croatia's European Integration Ministry Neven Mimica said. Mimica was in London to inform MacShane what the Croatian government was doing with respect to the fugitive general. The talks focused on further co-operation in the fulfilling of commitments from the Stabilisation and Association process. MacShane said Croatia had made considerable headway towards full European Union membership. He stressed meeting political criteria was the principal requirement for the UK parliament to start ratifying the SAA. It was said Croatia had made headway in the reform of the judiciary and the return of refugees and displaced persons. MacShane applauded President Stjepan Mesic's recent apology in Belgrade as well as the activities the Croatian government had undertaken to meet obligations from the SAA. (NewsBase 25.ix.03) CZECH REPUBLIC ISPAT NOVA HUT SHARES TO BE SOLD AT PUBLIC TENDER Hutnicka vzajemna pojistovna and Nadacni fond prevence zdravi have decided to sell their stakes in metallurgical firm Ispat Nova hut together. Investors will have the opportunity to acquire 4.53 percent of the firm's shares in a public tender. The price of the package is to be a minimum of CZK 106.5 mln. Both parties do not want to go below a price of CZK 225 per share. However, if the price set during the mandatory purchase from the majority stakeholder of the metallurgical firm exceeds CZK 225, the minimal asking price will increase accordingly. (PBJ 30.ix.03) MINISTRY OF INFORMATICS DECISION DELIVERS BLOW TO CESKA POSTA MONOPOLY The Ministry of Informatics' rejection of a complaint by Ceska Posta against the press distribution company MediaServis is expected to erode the state-owned mail deliverer's monopoly. Ceska Posta filed a complaint with the ministry in June after MediaServis ran a direct mail campaign for a large bank in Prague. The company delivered thousands of letters to individual addresses of potential customers containing information about the new bank service. Ceska Posta said the campaign infringed its protected monopoly area which it is granted in return for it providing a nationwide public mail delivery service. The monopoly covers personal letters up to 350 grams in weight. Direct marketing companies are allowed to send out non-addressed, non-personalized marketing materials. The question facing the ministry was whether MediaServis' letters to individual addresses counted as personal letters within or outside Ceska Posta's monopoly. The ministry decision last month upheld MediaServis' claim that it had found a loophole in the law that allowed it to send personally addressed marketing letters if the contents were all the same. Ministry of Informatics spokeswoman Klara Volna confirmed to PBJ that the ministry decision was that MediaServis hadn't broken the law. MediaServis now expects to take further advantage of the opening it has found. Mediaservis said it had distributed large amounts of personal direct mail in the past two years, but Ceska Posta only reacted this summer. MediaServis updates address lists for clients and operates a call center employing 150 people who track mail deliveries. Several days after mail is sent, they call the addressees to check whether it has been received. MediaServis charges on average 15 percent less than Ceska Posta for regular mail, depending on the volume of the mail, Koliandr said. Last year, MediaServis controlled 5 percent of the mail service market. MediaServis is majority-owned by F-Log, part of the German company Fiege. Publisher Mafra, owner of the daily Mlada Fronta Dnes; Vltava Labe Press and Economia, own the rest of the company. With 8,000 staff members, Mediaservis' core business is distribution of newspapers and magazines to subscribers. It cooperates with 150 publishers in the country and controls around 65 percent of Czech magazine distribution and almost 100 percent of newspaper distribution. Some of the major mail sector customers are insurance companies, banks and B2B firms. In June, MediaServis took over the non-addressed direct mail company Tempo Team. Although MediaServis claims that many companies are leaving the state mail deliverer, Ceska Posta said that it doesn't fear the competition. Jaroslav Jurek, director of Ceska Posta's business strategy department, said it hadn't received official word from the ministry about the decision. Ceska Posta runs 3,400 post offices in the country. Its profit shrank in 2002 by 30 percent year-on-year to Kc 392 million. Already facing serious competition on delivery of parcels and express mail, Ceska Posta is going to face even fiercer competition for regular mail delivery next year. The Cabinet decided in early September that its letter delivery monopoly should be restricted to letters up to 100 grams, from next May. The measure is aimed at liberalizing the Czech postal market in line with European Union requirements. (PBJ 29.ix.03) HUNGARY MVM TO SHOOT FT 80 bln INTO NETWORK The state-owned Hungarian Electricity Works Rt (MVM) is planning to invest Ft 80 billion into network development over the coming three years, CEO László Pál said yesterday. Some internal funds will be available to finance the developments, but the CEO was unable to say how much, as the purchase price MVM pays for electricity will no longer be centrally regulated from next year, although the selling price will remain centrally fixed. Network developments are required by the limited resources of the newly liberalized Hungarian electricity market. (BBJ 30.ix.03) HUNGARIAN PRIME MINISTER URGES SPEEDY INVESTIGATION OF K&H SCANDAL Peter Medgyessy said on 29 September that the embezzlement scandal at K&H Equities has created a public outcry and that delays in investigating that scandal might undermine investors' confidence in the Hungarian banking system. In a meeting with Prosecutor-General Peter Polt and leaders of the national security services and police forces, Medgyessy urged investigating authorities to cooperate more closely and to complete the probe as soon as possible. Although the meeting took place behind closed doors, "Nepszabadsag" reported that Medgyessy asked those present to explore the case in all its details regardless of the political affiliation of those involved. In other news, the Hungarian National Police have frozen 4.2 billion forints ($19 million) in the account of the State Highways Management Company (AAK) at the request of K&H Bank. The bank claimed the money was transferred to the AAK account illegally by broker Attila Kulcsar, a prime suspect in the K&H affair. (RFE/RL 30.ix.03) KAZAKHSTAN KAZAKH OPPOSITION FIGURE FACES TRIAL ON TAX CHARGES Former head of the Republican People's Party of Kazakhstan Amirzhan Kosanov told a press conference in Almaty on 25 September that he is scheduled to go on trial on charges of tax evasion and forgery on 29 September, Interfax-Kazakhstan reported. According to Kosanov, the tax police allege that the party, which he headed until recently, had failed to pay 5 million tenges (about $34,000) in taxes on grants over five years. The forgery charge is connected with checks signed by Kosanov as party leader. The Republican People's Party, originally headed by now-exiled former Prime Minister Akezhan Kazhegeldin, was denied re-registration under new legislation on political parties. Kosanov told journalists that he has been forbidden to leave the country. (RFE/RL 26.ix.03) LITHUANIA LITHUANIAN GOVERNMENT APPROVES SALE OF GAS-UTILITY STAKE TO GAZPROM A closed-door cabinet session on 24 September approved setting the minimum price for the sale of a 34 percent stake of the utility Lietuvos Dujos (Lithuanian Gas) at 91 million litas ($30 million), BNS reported. This is the exact price that Russia's Gazprom has offered for the shares. Last year, the German companies Ruhrgas and E.ON Energie paid 116 million litas for a similar 34 percent stake in the company. Lithuania will continue negotiations with Gazprom on an additional payment of 9 million litas contingent on the Lithuanian government's agreement to refrain from capping gas prices for large industrial users and to liberalize its gas market as of 2004. Deputy Economy Minister Nerijus Eidukevicius said the sale agreement will likely take a month to work out and will contain guarantees for a long-term (until 2015) supply of gas at stable prices, set according to a specific price formula. (RFE/RL 25.ix.03) POLAND GLOBAL RECESSION RESULTS IN LOWER VALUE OF FOREIGN INVESTMENTS The global economy recession resulted in the fact that last year the global value of investments amounted to a mere $651 billion, which was only half of the amount recorded in 2000. Central and Eastern Europe was an exception, as after a minor drop in 2001, it recorded a record high value of foreign investments amounting to $28.7 billion. However, according to a report presented Tuesday by the Polish Information and Foreign Investment Agency (PAIiIZ), Poland did not benefit from results of the whole region, as the value of FDI amounted to $2.5 billion by the end of June 2003. Over half of this amount came from Dutch companies. Moreover two thirds were the result of taking over existing companies or mergers, with only 3% in greenfield investments. In terms of the accumulated value of FDI, Poland still remains the regional leader with total investments of 24%. "However, in comparison to neighbouring countries the value of FDI in Poland per capita is twice smaller," said Renata Hayder, from Ernst & Young. (WBJ 01.x.03) EMERGING VENTURE LTD ANNOUNCES PLANTS TO SELL OFF MULTIMEDIA POLSKA Venture capital fund Emerging Ventures Limited (EVL) has announced plans to sell its wholly controlled company, Multimedia Polska, which runs the second largest domestic cable television company. "Negotiations are still at in the infant stages. The Initial estimated value of the company is $130 million," says an anonymous informer quoted by Puls Biznesu. The offer for the sale has been sent to Advent, Enterprise Investors and AIG controlled funds. However the most serious candidate for the purchase is the U.S.-based fund, Hicks Muse Tate & Furst (HMT&F), which last year purchased Aster City from Elektrim. "This is information which appeared on the market. I cannot disclose whether negotiations are currently in progress," said a representative of one of the potential investors. If Multimedia Polska will be taken over by the American fund, the purchase will lead to a serious consolidation in the industry, as a merge of Multimedia and Aster City would become a serious competitor to current market leader UPC. (WBJ 30.ix.03) ROMANIA CHUBU ELECTRIC POWER: GOVERNMENT SHOULD RE-THINK PRIVATISATION OF ENERGY SYSTEM The Romanian government should re-think the privatisation of the country's energy system by conglomerating power producers and suppliers and distributors into one entity, said Hiroji Ota the general manager of Japan firm Chubu Electric Power. "A high fragmentation of the power sector may lead to a collapse of the power system," said Ota during an economic seminar in Bucharest. He recommended that Romanian authorities have more talks with international companies in the sector on the power system privatisation. "Romania's power system should be very carefully technically assessed ahead of sell-off launching," Ota added. Romania plans to privatise two electricity distributors as well as power producers Hidroelectrica, Termoelectrica and power grid operator Transelectrica. (NewsBase 01.x.03) RUSSIA RUTSKOI FACES CHARGES OF ABUSE OF OFFICE IN KURSK Former Kursk Governor Alexander Rutskoi will be charged with abuse of office over deals that allegedly cost the Kursk region millions of rubles when he was governor, the Interior Ministry said Wednesday. Investigators summoned Rutskoi to appear at the ministry's Voronezh branch Wednesday to face charges on suspicion of authorizing the purchase of agricultural equipment at inflated prices, said the office of Kursk Governor Alexander Mikhailov. Mikhailov's office said in a statement that Rutskoi authorized regional authorities to take a loan of 25 billion non-redenominated rubles from the Parex bank in 1998 to purchase wheat mills and combines. The statement said these "illegal deals" caused millions of rubles in damages to the regional budget. Rutskoi denied the accusation Wednesday and said the charges were an attempt to prevent him from running for a State Duma seat in a single-mandate constituency in the city of Kursk, Interfax reported. He said his blood pressure shot up after he received the summons and he had to check into a Moscow clinic, where he remained Wednesday. Rutskoi could not be reached for comment Wednesday. Investigators declined to comment on the case. Two of Rutskoi's former deputies, Yury Kononchuk and Vladimir Bunchuk, were investigated on suspicion of misusing the Parex loan in 1998 and charged with overpaying $1.8 million for the Czech-made mills, Kommersant reported. Bunchuk was convicted in 2001 and sentenced to four years in prison. Rutskoi served as vice president to Boris Yeltsin but was ousted after helping lead a failed uprising against the parliament in 1993. He was later reconciled with Yeltsin but fell out of favor after Vladimir Putin came to power. Rutskoi was elected governor of the Kursk region in 1996. He ran for re-election in late 2000 but was barred from standing after election officials ruled he had submitted incorrect information about his property. (The Moscow Times 02.x.03) ZURICH FINANCIAL SERVICES RAISES HOLDING IN ZURICH RUS FROM 49% TO 99.7% The Swiss ZURICH FINANCIAL SERVICES insurance group has raised its holding in the Russian ZURICH RUS company from 49% to 99.7%. The shares were bought from individual stockholders. The remaining 0.3% belongs to the company's management. Analysts have said that the rise in the stake of the foreign shareholder will prevent the insurer from rendering certain types of insurance, including motor liability insurance. Meanwhile, representatives of the company deem its transparency a more important issue. (NewsBase 02.x.03) YUKOS TO RECEIVE $1 BILLION SYNDICATED LOAN A syndicate of banks will loan oil giant Yukos $1 billion in long-term credits, Interfax reported on 25 September, citing sources in the banking industry. Yukos officials would not confirm the Interfax report. A day earlier, RBK, citing Yukos' press office, reported that the oil company had signed an agreement to secure long-term credit with a group of banks including: Citibank, Commerzbank, Credit Lyonnais, Deutsche Bank, HSBC, ING, and SG Corporate and Investment Banking. The loan will be allocated in two tranches, for three and five years, respectively, and secured with revenues from oil exports. Investments in Russia's fuel-and-energy sector will total about $13.12 billion in 2003, Deputy Energy Minister Ivan Matlashov said on 25 September at an investment forum in Khanty-Mansiisk, RBK reported. Matlashov added that he does not foresee a drop in fuel and energy investments in 2004. In the first half of this year, the sector accounted for 29 percent of Russia's GDP, 35.4 percent of revenues to the consolidated budget, and 57 percent of foreign-currency revenues. (RFE/RL 01.x.03) MEDICS SAY CHECHEN PRIME MINISTER WAS NOT DELIBERATELY POISONED Chechen Deputy Prime Minister Magomed Vakhaev and doctors in Moscow both told Interfax on 29 September that there are no indications that Chechen Prime Minister Anatolii Popov, who was hospitalized on 27 September with what seems to be acute food poisoning, was deliberately poisoned. Popov reportedly announced on 29 September that he was much better, and would return to Chechnya on 30 September. But ITAR-TASS reported early on 30 September that Popov's condition has deteriorated. According to ng.ru on 30 September, the toxin Popov ingested has a destructive effect on the liver. (RFE/RL 30.ix.03) PUTIN'S RATING HOLDS STABLE AT HIGH LEVEL The rating of President Vladimir Putin remains high. Some 75% of Russians approve of his activities, while 22% said the opposite, in September (74% and 23% in August), sociologists from the All-Russia Center for Public Opinion Studies - A (VTSIOM-A) told Interfax. They referred to a poll of 1,600 Russians conducted in 40 regions on September 19-22. The poll was done at VTSIOM-A's initiative. The margin of error is 3.4%. 39% of respondents approved of the activities of Prime Minister Mikhail Kasyanov, and 50% disapproved. 33% approved of the government's work, and 59% disapproved in September. Putin is the absolute leader in confidence ratings. 44% of Russians said they trusted the president. Minister for Civil Defense and Emergencies Sergei Shoigu ranked second with 17%, and Communist Party leader Gennady Zyuganov ranked third with 12%. Liberal Democratic Party leader Vladimir Zhirinovsky followed with 10%. Moscow Mayor Yuri Luzhkov, Kemerovo Governor Aman Tuleyev, and Yabloko leader Grigory Yavlinsky had 8% each. Prime Minister Mikhail Kasyanov and candidate for St. Petersburg governor Valentina Matviyenko had 7%, and Duma Vice- Speaker from the Union of Right Forces Irina Khakamada had 5%. 21% of respondents said they do not trust any Russian politician. (Interfax 29.ix.03) RUSSIAN BANKS CLINCH DEAL WITH U.S. EXIMBANK Russia's Vnesheconombank and Roseximbank signed a trilateral agreement with the U.S. Eximbank on Friday. The banks pledged to increase long-term cooperation to facilitate sales of Russian and U.S. goods and services to other countries, to co- finance projects in other countries, and to exchange information. They will share legal experience and experience in structural financing with each other, including project financing and lending for trade with the use of funds from several sources, Vnesheconombank and Eximbank said in a joint release. Industries in other countries where they will fund projects include the aerospace industry, the manufacture of agricultural machinery and the manufacture of equipment for the energy sector. The agreement was signed during Russian President Vladimir Putin's visit to the New York Stock Exchange. (Interfax 29.ix.03) RUBLE STRENGTHENS 11.6% AGAINST U.S. DOLLAR IN JAN-AUG The Russian ruble strengthened 11.6% against the U.S. dollar from January to August 2003, the Russian Ministry for Economic Development and Trade has announced. The ruble's real exchange rate strengthened by 4.7% in the first eight months the year, the ministry said in an overview of the country's socioeconomic development for the period and the year as a whole, which was circulated on Wednesday. The strengthening ruble's negative impact on the competitiveness of Russian commodities was softened by the ruble's slower (2.2%) growth against the euro. About one-third of Russian imports go to Europe, the ministry noted. Previous reports said the Central Bank had set itself the task of limiting growth in the ruble's real exchange rate to 6% in 2003. (Interfax 24.ix.03) DERIPASKA BUYS UP OTHER HALF OF RUSAL Roman Abramovich, the billionaire owner of Chelsea football club, is selling his stake in top aluminum firm Russian Aluminum to his partner. Metals analysts put the value of the stake at between $2.5 billion and $3 billion. Vedomosti quoted a source close to shareholders of Abramovich's investment vehicle Millhouse Capital as saying that the 50 percent stake in RusAl is being sold to Base Element, owner of the other half of RusAl. Base Element is controlled by another tycoon, Oleg Deripaska. Rumors about the sale being planned have been around for some time. Base Element and Millhouse Capital both declined to comment. Abramovich, 36, the governor of Chukotka, a remote icy region in the Far East abutting Alaska, hit the international headlines in July when he bought London's Chelsea football club. In August, Abramovich said he might sell some Russian assets, but dismissed rumors he planned to pull out of the country altogether. Press reports have suggested that Abramovich, one of the country's richest men with good political connections, could dump his Russian interests ranging from oil to pig farms after the arrest of another billionaire. Police in July arrested Platon Lebedev, a key business ally of the country's richest man, Mikhail Khodorkovsky, head of oil major Yukos. Lebedev was charged with theft of state property in a 1994 privatization deal. Abramovich began selling his assets last spring, when Millhouse sold a 26 percent stake in flagship carrier Aeroflot to National Reserve Bank for an estimated $135 million. Following that, Abramovich-controlled Sibneft signed a merger agreement with Yukos. According to the agreement, Sibneft's 92 percent stake is transferred to Yukos, while Sibneft's stockholders get 26.1 percent of Yukos and $3 billion. Pukhayev said if Abramovich had waited another year, his stake in RusAl could have fetched another $1 billion, as the company is undergoing an aggressive modernization and restructuring program and plans to launch an IPO. RusAl has said it aims to become the world's top aluminum producer in about a decade. It is currently the world's second-largest primary aluminum producer. Its output of the metal was 2.48 million metric tons last year. The company's major holdings include 98.6 percent stake of the Bratsk aluminum plant, 95.7 percent of the Krasnoyarsk plant, 99.2 percent of Sayansk, 99.7 percent of Achinsk and 79.2 percent of Belokalitvinsk. (The Moscow Times 24.ix.03) SERBIA AND MONTENEGRO LUKOIL SIGNS DEAL TO ACQUIRE 79.5% STAKE IN BEOPETROL Lukoil has signed an E210m deal to acquire a 79.5% stake in Serbia's second largest fuel chain Beopetrol. Under the agreement, signed by officials of the Russian oil company, the Serbian Privatisation Agency and the Serbian Share Fund, Lukoil will be obliged to pay E117m in the first year, invest E85m over the next five years and provide a social welfare programme of E8m. The world's sixth largest oil producer also promised to not cut any of Beopetrol's 1.7k jobs and agreed to invest E65m next year to modernise the fuel chain. Following the signing ceremony, Serbian Privatisation Minister Aleksandar Vlahovic said that the acquisition will help raise competitiveness in the local oil market and privatise parts of state oil company Naftna Industrija Srbije (NIS) following a company restructuring. The minister also rebuffed allegations that Croatian oil company INA and the late Prime Minister Zoran Djindjic had agreed to set up a joint venture to include INA's property in Serbia and NIS's assets in Croatia, and stressed that Beopetrol's ownership is clear. Lukoil will help Beopetrol bolster competitiveness and raise profit, said Lukoil's Valentin Zlatev and added that the Russian company has also taken over Beopetrol's property in Kosovo. (NewsBase 29.ix.03) MILOSEVIC CHARGED IN MENTOR'S MURDER The Special Prosecutor in Belgrade charged Slobodan Milosevic on 23 September with masterminding the murder of former Serbian President Ivan Stambolic and the attempted murder of a political opponent, Vuk Draskovic. Stambolic, Milosevic's former mentor, was abducted while he was out jogging and murdered in August 2000. Two months earlier, opposition leader Draskovic survived an assassination attempt with minor injuries. Stambolic's body was found in March 2003 while police were investigating the assassination of Serbian Prime Minister Zoran Djindjic, who was shot dead by a sniper outside the parliament building on 12 March. Stambolic is credited with helping Milosevic rise through the ranks of the Communist Party of Serbia during the 1980s, but Milosevic turned on his mentor and ousted him from power in 1987. In a 23 September statement, the prosecutor said that Milosevic has been charged with having "created among the perpetrators the decision to commit" both crimes. Special Prosecutor Jovan Prijic said that the investigation showed that the same people who murdered Stambolic attempted to kill Draskovic in Budva, Montenegro, in June 2000. Citing the indictment, local media in Belgrade said that Milosevic "incited" the perpetrators to assassinate Stambolic and Draskovic ahead of presidential elections. Draskovic, the leader of the opposition Serbian Renewal Movement (SPO), however, is not satisfied with the prosecutor's indictment of Milosevic and is protesting the fact that Milosevic is not being charged with having ordered the attempted murder. Draskovic is also questioning the prosecutor's decision to classify certain information, regarding Milosevic's role in both crimes, as a state secret. Draskovic accused the government of attempting to cover up certain truths that were discovered during the investigation. A lawyer for the Stambolic family also protested the indictment, calling on the prosecutor to define Milosevic as the organizer of the murder. The trial of those indicted for the murder of Stambolic and the attempted murder of Draskovic is expected to begin in late November or early December. Milosevic, who is on trial at the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague for war crimes, will be tried in absentia. The Special Prosecutor's Office said that three additional indictments involving some 70 suspected members of organized crime groups would be handed down by mid-October. Milosevic's Socialist Party of Serbia (SPS) called the indictment a "shameless act of political terror," and Milosevic has denied the charges. Milosevic has also been accused of allegedly embezzling and transferring millions of dollars in state money abroad. On 25 September, Serbian Justice Minister Vladan Batic met with ICTY Chief Prosecutor Carla Del Ponte to give the court information on Milosevic financial crimes. In return, Del Ponte gave the Serbian government information on the investigation into alleged war crimes committed by former members of the Kosovo Liberation Army (UCK). (TOL 28.ix.03) SERBIAN MINISTER QUITS Slobodan Ruzic resigned as Serbia's acting energy and mining minister on 24 September, saying that state power company EPS is blocking his reform plans, dpa reported. He noted that there is little cooperation or trust between the ministry and EPS, adding that he cannot guarantee that EPS will perform sufficiently well during the coming winter. Ruzic has held his post since July, when his predecessor, Kori Udovicki, became governor of the National Bank. In August, the ministry tried unsuccessfully to fire thedirector of EPS for incompetence. (RFE/RL 25.ix.03) SLOVAKIA PRVA KOMUNALNA BANKA WILL CHANGE ITS NAME TO DEXIA BANKA SLOVENSKO Prva Komunalna Banka, a.s. (PKB) Zilina will change its name to Dexia Banka Slovensko, a.s., from October 1st, according to PKB spokeswoman Lenka Serafinova. The supervisory board on September 26th accepted the resignation of Jozef Mihalik from the posts of president and chairman of the board of directors. PKB executive vice-president Francis Jacques Teynier will act in the post until a new head of the board is appointed. PKB started providing its services in 1993. The majority owners are Dexia Credit Local and Kommunalkredit Austria, controlling 79%. Other shareholders are town councils and private individuals. PKB reported a net profit of 346.2 million crowns last year. Compared with the previous year the bank improved its profit by 51.3 million crowns, achieving the best result in its history. (NewsBase 01.x.03) EC CRITICAL OF SLOVAKIA'S PREPAREDNESS FOR EU MEMBERSHIP Following a meeting of the ministerial committee for European integration, Deputy Prime Minister for European Integration Pal Csaky told journalists that the European Commission is critical of Slovakia's preparedness for European Union membership in the fields of agriculture, free movement of goods and services, and the state language. Brussels sees shortcomings in the country's food security, and has objections towards the new law on retail chains, seeing it at odds with the free market principles. Csaky said he already talked with the economy minister and asked him to draft a revision to the law. The European Commission also raised some objections regarding the use of the state language in Slovakia. It pushes for products offered in Slovak stores to also bear labels in the languages of country's minorities. Brussels will check next year whether Slovakia has made progress in the most criticised issues. If not, the European Commission will implement its right to take protective measures from May 1, 2004, when new members enter the bloc. Csaky said that the Brussels assessment of Slovakia is divided into three grades. The green group features 18 chapters out of the total of thirty, in which Slovakia is totally prepared. The yellow one includes problematic chapters and the third, the red one, features the chapters in which Slovakia is seriously lagging behind, including the three aforementioned fields. Recently, regional policy and preparedness to draw EU funds were also in the red group, but Csaky reported that Slovakia has made progress in these arenas. Slovakia has had problems with public procurement; However, a draft bill incorporating all related EU directives is already waiting in parliament, and Csaky believes that deputies will not alter its wording. The committee also discussed additions to Slovakia's stance on the EU evaluation report. The European Commission will issue the report on November 5th. On Wednesday, Csaky will hand over Slovakia's position to the head of the European Commission Delegation to Slovakia, Eric van der Linden, and on the following day he will negotiate in Brussels. On Thursday, Brussels will also see the last talks with Slovakia on Euro-funds. After they conclude, Slovakia should sign a financial assistance framework that will serve as basis for Slovakia's drawing on EU structural and cohesion funds. (NewsBase 24.ix.03) UKRAINE KUCHMA: FORGET EU, WE HAVE RUSSIA President Leonid Kuchma said Tuesday it was time Ukraine stopped aspiring to EU membership, saying the bloc had kept his country waiting too long and had little need for its planes, coal or tractors. Kuchma said Ukraine should instead use other trade blocs to boost growth, playing to fears the country could run back into Russia's sphere as the European Union prepares to expand its borders eastward. It was not clear whether Kuchma's remarks represented an official change of policy. Ukraine, which will border the European Union next year when Poland, Hungary and Slovakia join, has been slow to reform since independence in 1991 and is criticized by the West for failing to protect human rights and freedom of speech. Kuchma, who has ruled for nine years, had once said it was his goal to take Ukraine into the European Union by 2011. But he has become increasingly frustrated by the lack of movement on talks and on EU policies which he says close Europe's markets to Ukraine. Last year, European Commission President Romano Prodi said Ukraine had no place in an enlarged European Union, but other EU officials have said if Ukraine carries out reforms it could have a chance of becoming an associate member. Kuchma said he would instead look for an economic boost from Ukraine's traditional trade partners -- Russia, neighboring Belarus and Kazakhstan. Earlier this month, Kuchma signed an economic union agreement with those countries to end border tariffs, form a customs union and create a unified tax regime. Diplomats have said the agreement is a clumsy attempt by Russia to keep neighboring states under its thumb. (The Moscow Times 01.x.03) UKRAINIANS IN LVIV DISTRUST TAX INSPECTORS Some 5,000 people gathered at the Lviv Oblast Council on 25 September to demand the dismissal of Lviv Oblast Tax Administration head Serhiy Medvedchuk. In June, Lviv Oblast councilors supported a no-confidence vote in Serhiy Medvedchuk, charging that he has used his position in the State Tax Administration to exert pressure on companies and organizations opposed to the Social Democratic Party-united, including Viktor Yushchenko's Our Ukraine. State Tax Administration head Yuriy Kravchenko did not sack Medvedchuk. The Social Democratic Party-united is led by Serhiy Medvedchuk's brother, presidential administration head Viktor Medvedchuk. Yushchenko, who attended the Lviv Oblast Council session on 25 September, called on Serhiy Medvedchuk to step down. The same day, Lviv councilors supported a vote of no confidence in Lviv City Tax Administration chief Myroslav Khomyak. 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