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TT Business Intelligence Report Vol. 1, No. 28, 20 August 2002 Business Intelligence, Crime, Corruption and Debt in Europe and the former Soviet Union  UPCOMING CONFERENCES LVA's "3rd INTERNATIONAL BUSINESS SUMMIT OF THE COMMONWEALTH OF INDEPENDENT STATES: DOING BUSINESS IN THE CIS - IMPLICATIONS OF WTO ACCESSION" This event will take place on 1-3 October 2002 at the Evian Congress Centre, Evian, France. For further information, tel: +44 (0)20 8795 2970, fax: +44 (0)20 8795 2977, email: [email protected], W: www.lva.co.uk THE ADAM SMITH INSTITUTE'S "RUSSIA'S ACCESSION TO THE WTO" To take place on 16-17 October 2002 at the Moscow Marriot Grand Hotel, Moscow, Russia. For further information, tel: +44 (0)20 7490 3774, fax: +44 (0)20 7505 0079, email: [email protected], W: www.asi-conferences.com CROATIA CROATIA DETERMINED TO ACHIEVE HIGHEST DEMOCRATIC STANDARDS Without the rule of law, Croatia has no place in the circle of democratic countries, and outside this circle Croatia has no future, President Stjepan Mesic, said in Washington on Friday evening. Mesic arrived in the US as a guest of the American Bar Association that has proclaimed him as this year's recipient of its annual award for the contribution to democratic and economic changes. At the dinner to honour Mesic, the Croatian head of state gave thanks for the award and confirmed that Croatia was determined to achieve the highest democratic standards and become a law-based society. New authorities, although not always sufficiently resolute, have firmly committed themselves to the full democracy and the establishment of the rule of law, Mesic said at the dinner. He said he was convinced that Croatia without the rule of law would have no place inside the circle of democracies, and outside this circle the country faced bleak prospects. Mesic said Zagreb would like to fully contribute to the stabilisation of the situation in the region. The ABA award was bestowed on President Mesic during a ceremony on Saturday evening. Previous recipients of the award are the presidents of the Czech Republic and Bulgaria, Vaclav Havel and Peter Stoyanov respectively and former Slovak president Michal Kovac. (NewsBase 14.viii.02) CZECH REPUBLIC AGROFERT BACKS OUT OF UNIPETROL DEAL Agrofert, which won a tender last November for the state 63% stake in Unipetrol, yesterday withdrew its EUR 361 mln bid for the petrochemical giant. Agrofert CEO Andrej Babis says the situation within Unipetrol has completely changed and asked the government to change the conditions of the sale. Babis says his firm wants to complete the transaction within a joint venture and that the price is too high given the present situation. Unipetrol shares reacted to the announcement with a 7% increase in value. The Finance Ministry says it wants to resolve the Unipetrol sale quickly, but does not favour changing the conditions. (PBJ 20.viii.02) ERSTE BANK POSTPONES LAUNCH OF STOCK ON PSE Ceska Sporitelna owner Erste Bank has postponed the planned launch of its stock on the Prague Stock Exchange this month due to the floods. The PSE committee will discuss the issue next week and the shares will probably be launched in September. (PBJ 20.viii.02) ESTONIA CULTURE MINISTER OFFERS RESIGNATION Culture Minister Signe Kivi announced on Thursday that she has submitted her letter of resignation to Prime Minister Siim Kallas after an audit alleged that the manager of Kultuurkapital (Fund for Furthering Culture), Avo Viiol, embezzled 6.5 million kroons, $425,000, from the fund's account and gambled it away, the local press reported. Kivi said that as chairwoman of the fund's supervisory council, she feels she has to accept political responsibility for the scandal. The premier has not yet decided whether to accept the resignation. (NewsBase 20.viii.02) HUNGARY PAPER SAYS JARAI HAD SECRET SERVICE TIES National Bank of Hungary Rt (MNB) President Zsigmond Járai said he sent reports to secret services in the 1980s about his trips abroad, daily paper Magyar Nemzet reported. The revelation comes a day after Járai voiced protests about a committee probing whether government officials had links with the secret service under communism. Járai rejected several attempts by the secret services to recruit him as an informant, the paper said, but agreed to report on the assessment of Hungary's economy in other countries. Járai was appointed to the helm of the central bank in March last year for a six-year term after working as finance minister for three years in the Orbán government. (BBJ 20.viii.02) KAZAKHSTAN KTK JOURNALIST BEATEN Three men attacked journalist Artur Platonov late on 16 August as he parked his car outside his apartment, beating him up and breaking his nose, Interfax reported. The state-run television station Khabar reported the following day that three former police officers have been arrested in connection with the assault, but a police spokesman said that their testimony is inconsistent with that of Platonov. Platonov, who worked for the KTK television channel, had earlier been threatened for his criticism of law enforcement agencies. (RFE/RL 19.viii.02) LATVIA LATVIA EXPECTED TO RECEIVE INVITATION TO JOIN NATO IN PRAGUE IN NOVEMBER California's Republican Congressman Elton Gallegly, the chairman of the House of Representatives' Subcommittee on Europe of the Committee on International Relations, told Prime Minister Andris Berzins in Riga on Tuesday that Latvia will be at the top of the list of countries expected to receive invitations to join NATO in Prague in November, the local reported. Gallegly said the expansion of NATO would promote stability in Europe. The congressman also discussed integration and naturalisation processes in Latvia with justice ministry officials and inquired about the competition for the head of the Corruption Prevention Bureau, stressing the importance of fighting corruption. Gallegly completed his three-day trip to Latvia on Tuesday and travelled on to Tallinn. (NewsBase 16.viii.02) POLAND STATE ASSISTANCE FOR COMPANIES FACING BANKRUPTCY The government on Tuesday adopted a package of bills relating to Finance Minister Grzegorz Kolodko's anti-crisis programme, according to a report on Polish television. The package provides opportunities for state assistance to companies facing bankruptcy. Enterprises employing over 1,000 people and "of particular importance to the economy" can count on state help after they prepare a revitalisation programme; the implementation of the revitalisation programme is to take place under the supervision of a court and with the cooperation of creditors. The government also endorsed changes in the bankruptcy law that has been in force for 70 years. Under these changes, a firm declared bankrupt will not be able to sell off its assets in order to pay off its obligations. "The bankruptcy law is revolutionary, since it surrenders the bankruptcyprocedure to the audit of creditors and not to the commissioner forbankruptcy, who [has always] sought the sale of the company assets. Inthis way, an opportunity is given for the cleansing and reconstructionof the enterprise, and under the supervision of the creditors," Polishtelevision quoted an unidentified government official as saying.(NewsBase 16.viii.02) ROMANIA EC TO INVESTIGATE ALLEGATION THAT PHARE FUNDS WERE 'CHANNELLED' INTOPRIVATE HANDS The European Commission's mission to Romania said on Wednesday that it is launching an investigation into allegations in the Romanian media that PHARE funds allocated for the development of small and medium-size enterprises were "channelled" into private hands, according to reports on Romanian radio. Angela Filote, the mission's spokeswoman, said the EU will send a team of experts to Brasov, where reports in the Romanian media allege that local officials are suspected of misappropriating the funds for their own benefit. Filote said that if the allegations are proven, Romania must return the funds to the EU. Development Ministry State Secretary Mihai David has denied the allegations. (NewsBase 16.viii.02) RUSSIA GAZPROM BOND TALK Gazprom said Monday its board of directors on Tuesday would discuss a new Eurobond, its second this year, as well as the placement of a domestic bond, but gave no further details. Gazprom said in a statement the board would also discuss the firm's draft budget for the next year. The statement follows mixed reports last week that quoted unnamed sources at Gazprom as saying the company planned to place one or two Eurobonds this and next year worth $450 million to $750 million. The company has made no official comment. (The Moscow Times 20.viii.02) CB RESERVE FORECAST The Central Bank's gold and hard currency reserves will grow only slightly to around $44 billion to $45 billion by the end of 2002, said first deputy head Oleg Vyugin in an interview with the daily Gazeta on Monday. The Central Bank's reserves started the year at $34.5 billion and have grown to $44.1 billion as of Aug. 9. Growth slowed in July and is likely to remain slow in August, Vyugin said. He said the slowdown was due to a seasonal narrowing of the trade balance and an increase in demand for hard currency and would continue in the second half of the year as the Finance Ministry faces higher external debt payments. (The Moscow Times 20.viii.02) VAT REDUCTION? Value-added tax may be reduced from the current 20 percent to 16 percent in 2004 and 2005, Alexander Zhukov, chairman of the State Duma budget and tax committee, told Ekho Moskvy radio Monday. "The idea of VAT reduction has already been discussed for a long time, as the current 20 percent VAT rate is too high," Zhukov said. He added that the government has not yet introduced a proposal to reduce VAT to the Duma, so it is unlikely that the reduction could occur in 2003. (The Moscow Times 20.viii.02) SIBNEFT LOOKS TOWARD KUWAIT Energy Minister Igor Yusufov announced that the state-controlled oil giant Sibneft intends to expand into Kuwait and will take part in a tender for the exploration of some of the country's northern oil fields, Russian news agencies reported on 19 August. Speaking after a meeting of the Russian-Kuwaiti intergovernmental commission on trade and technical cooperation, Yusufov said that Russia is interested in cooperation with Kuwait because the country is a key OPEC member. He added that Russia also would like to attract Kuwaiti investment not only into its energy sector, but also into automaking, the health care sector, and tourism. (RFE/RL 19.viii.02) GOVERNMENT READY TO LIBERALIZE PRECIOUS-METALS AND DIAMOND MARKETS Deputy Prime Minister and Finance Minister Aleksei Kudrin has announced that the government intends to deregulate the diamond-export market and plans to transform the state-owned diamond monopoly Alrosa into a public company, gazeta.ru reported on 19 August. Speaking in the diamond-producing region of Sakha (Yakutia), Kudrin said that soon the government will publish new export quotas for Alrosa that will reduce its dependence on global diamond giant DeBeers. Similarly, the government wants to liberalize the export of precious metals and, as a first step, is preparing to declassify data about state reserves and the recovery volume of precious metals. (RFE/RL 19.viii.02) GOVERNMENT CERTAIN THAT RECOVERY IS COMPLETE Finance Minister Kudrin said that economic indicators for the first half of 2002 give every reason to believe that the post-1998 recovery has been completed, RTR reported on 19 August. Kudrin noted that the country's gold and hard-currency reserves stand at more than $42.3 billion, a record for the last 10 years. He also pointed to the relatively stable dollar-ruble exchange rate and Russia's success in coping with its foreign debt. Deputy chief of the presidential administration Volin told RTR that personal savings have grown by nearly 51 percent, reaching $7 billion. He added that the crisis marked the end of the "speculative economy" and that over the last four years, business engaged primarily in investment in the real economy. (RFE/RL 19.viii.02) FSB CHARGES FBI WITH HACKING The Federal Security Service (FSB) has opened a case against FBI Special Agent Michael Schuler, who investigated two accused Russian hackers arrested in the United States in 2000, "The Moscow Times" and "Komsomolskaya pravda" reported on 16 August. The two Russians from Chelyabinsk -- Vasilii Gorshakov and Aleksei Ivanov -- were indicted by the FBI for breaking into the computer systems of American banks and stealing credit-card numbers. The case against Schuler was initiated by the territorial FSB directorate in Chelyabinsk and charges that Schuler illegally accessed Russian Internet servers to gather evidence against Gorshakov and Ivanov. The two were eventually lured to the United States and arrested. According to the FSB public-relations center, the case is "a matter of principle." "If FBI agents used hackers' methods against hackers, they might also use them on other occasions." (RFE/RL 16.viii.02) HACKERS STRIKE AT SATELLITE TV COMPANY The NTV-Plus satellite television company has lost as much as $300,000 to computer hackers in Ivanovo who learned how to create false smart cards, ITAR-TASS reported on 8 August. Genuine smart cards are produced in France and were developed for the banking industry. They had been believed to be 100 percent secure until false ones began appearing at markets in Ivanovo, Moscow, Vladimir, Kostroma, and Nizhnii Novgorod. According to the report, which cited local Interior Ministry sources, an unspecified number of hackers have been arrested and a criminal case against them is being developed. (RFE/RL 15.viii.02) PUTIN DISMISSES THE LEGALIZATION OF PROSTITUTION A senior Interior Ministry (MVD) official on 8 August sharply denounced efforts by some Duma deputies to legalize prostitution, strana.ru reported the next day. Anatolii Polyakov, head of the eighth section of the MVD's criminal manhunt department, said, "If we legalize prostitution, yet one more monster will arise with which it will be very difficult for us to struggle." He said that, far from legalizing prostitution, the country needs stronger laws against organizing andengaging in the practice. One of the co-authors of the bill that would legalize prostitution, Andrei Vulf (Union of Rightist Forces), responded to the remarks by saying, "We support the struggle against prostitution through its legalization." Vulf's views might run into obstacles at the Kremlin. In one of his meetings with Russian feminists in 2000, President Putin energetically rejected a remark that in Germany, a role model country for him, the prostitution is legalized. "Yes, but most women working in the German brothels are not German," said Putin. "So, we will wait until the Russian living standard will be higher." (RFE/RL 15.viii.02) MOSCOW TO PAY DEBTS TO SOUTH KOREA WITH WEAPONS Moscow and Seoul have reached an agreement to partially repay Soviet debts to South Korea with supplies of Russian heavy military equipment, "Izvestiya" reported on 14 August. The deal includes helicopters, tanks, armored personnel carriers, and ships worth $1.95 billion. Russia is also ready to transfer to South Korea advanced military know-how and is already training Korean submarine-building specialists in St. Petersburg. Seoul is interested in Russian weaponry in part because rival North Korea's military is equipped with Russian hardware, albeit obsolete. (RFE/RL 14.viii.02) ORGANIZED CRIME ACCUSED OF STEALING MILLIONS OF BARRELS OF OIL General Boris Gavrilov, deputy chief of the Interior Ministry's Investigative Committee, announced that over 10 million tons -- roughly 60 million barrels -- of oil are stolen each year as a result of various machinations on the Russian oil-products market, RIA-Novosti reported on 13 August. In 2001, Gavrilov's agency closed down 395 local pipelines that illegally diverted oil from the state oil network Transneft and arrested 158 people, Gavrilov said. In the first half of 2002, his agency investigated over 3,000 crimes in involving oil recovery, processing, transportation and sale, he said. (RFE/RL 13.viii.02) INTERIOR MINISTRY ARRESTS MAN WHO ALLEGEDLY POSED AS POLICE GENERAL Officers of the Internal Security Directorate of the Interior Ministry (MVD) have arrested a man who allegedly extorted money from businessmen by posing as an MVD general and a Hero of Russia, "Kommersant-Daily" reported on 8 August. According to the police, Aleksei Sharokhvostov moved from Kazakhstan to Moscow in 2000, where he purchased at a market a complete general's uniform with a genuine Hero of Russia medal that belonged to a veteran of the fighting in Chechnya. Then, posing as an MVD general, he allegedly took bribes from businessmen in exchange for promising to help them settle various matters. Police are now investigating the origin of Sharokhvostov's armored Mercedes, which is reportedly so heavy that an MVD tow truck was unable to remove it. (RFE/RL 13.viii.02) YUGOSLAVIA GOVERNMENT OFFERS STAKES IN MSK KIKINDA AND AZOTARA TO REPAY DEBTS TOGAZPROM GAZPROM, to which Yugoslavia owes $355 million for gas supplies, may become a co-owner of local chemical businesses MSK KIKINDA and AZOTARA. The Yugoslav government has offered stakes in these businesses to repay debts to GAZPROM. The Russian gas monopoly would prefer to write off Yugoslav debts in exchange for access to local gas transportation networks through a joint venture with the state-controlled NAFTNA INDUSTRIJA SRBIJE (NIS). The problem of Yugoslav debt repayment is to be resolved by September, when GAZEXPORT's short-term contract for gas supplies to Yugoslavia expires. GAZPROM is the sole gas supplier to Yugoslavia, which meets the local demand by approximately 75% (the rest is met by local gas suppliers of Vojvodina). The gas supply debts were accrued under the Slobodan Milosevic regime. (NewsBase 15.viii.02) INFORMATION PROVIDERS NEWSBASE NewsBase is a leading provider of business and economic news and intelligence from Russia, Central Europe and the FSU. Daily bulletins and industry specific weekly reports backed by an archive containing over 10 million words combine to provide a comprehensive service to a global blue chip client base. Contact: Jon Laurijssen T: +44 (0)131 478 8537 F: +44 (0)131 478 7001 E: [email protected] W: www.newsbase.com, www.newsbaseworldmonitoring.com NEW WORLD PUBLISHING New World Publishing is a primary source of business-related information for Central Europe, through its publications the Prague, Budapest and Warsaw Business Journals. Contact: Mark Child T: +420 2 4608 6524 F: +420 2 4608 6501 E: [email protected] W: www.ceebiz.com, www.pbj.cz, www.wbj.pl, www.bbj.hu THE MOSCOW TIMES The Moscow Times offers readers an independent and precise view of the political, economic and business life of Russia. Contact: Andrew Boag T: +7 095 232 3200 F: +7 095 232 1761 E: [email protected] W: www.themoscowtimes.com RADIO FREE EUROPE / RADIO LIBERTY Radio Free Europe/Radio Liberty is a private, international communications service to Central, Eastern and Southeastern Europe; theCaucasus; and Central and Southwestern Asia funded by the U.S. Congress through the Broadcasting Board of Governors. Contact: Peter Baumgartner T: +420 (0)2 2112 2039 F: +420 (0)2 2112 2012 E: [email protected] W: www.rferl.org EVENTS NEW WORLD PUBLISHING - Prague Business Journal Business Breakfast with Esther Dyson Date: Thursday, August 22, 2002 Location: Hotel Andel's, Stroupeznického 21, Prague 5, Czech Republic This is a special invitation to interact with the world's foremost Information Technology guru, and to discuss Central Europe's IT industry and how its needs are being met by local venture and human capital providers, entrepreneurs, corporate investors and the government. Further details about this event can be found at: www.pbj.cz/events/edbb.htm TEMPLETON THORP T +44 (0)20 7520 9380 F +44 (0)20 7504 8180 E [email protected] W www.templetonthorp.com |
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