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*** Due Diligence *** Business Intelligence *** Asset Retrieval *** *** Debt Recovery *** Disappearance Response *** *** TT Meerkat 500 ***  TT Business Intelligence Report Vol. 2, No. 61, 11 December 2003 Business Intelligence, Crime, Corruption and Debt in C&E/SE Europe and the FSU UPCOMING CONFERENCES EUROMONEY'S "COMPETING IN A NEW EUROPE: THE 9th EUROMONEY CENTRAL & EASTERN EUROPEAN FORUM" This event will take place on 13-14 January 2004 at the Hotel Inter-Continental, Vienna, Austria. For further information, please contact Jane Colwill, tel: +44 (0)20 7779 8968; fax: +44 (0)20 7779 8795; email: [email protected]; W: www.euromoneyconferences.com EASTEURO LINK'S "FACE TO FACE WITH THE GOVERNMENTS OF CENTRAL & SOUTHEAST EUROPE" This event will take place on 29-30 January 2004 at the Sheraton Sofia Hotel Balkan, Sofia, Bulgaria. For further information, please contact Biba Jovanovic, tel: +44 (0)20 7689 1618; email: [email protected]; W: www.finance.easteurolink.co.uk BELARUS NEW HUMAN RIGHTS ORGANIZATION EMERGES IN BELARUS A convention of some 30 prominent opposition politicians, lawyers, and human rights activists set up the Human Rights Alliance of Belarus in Minsk on 9 December, Belapan reported. The founders include Valyantsin Holubeu, Mikalay Markevich, Alyaksey Marachkin, Pavel Mazheyka, Yuliya Chyhir, Ales Shaternik, and Vasil Shlyndzikau. Former lawmaker Lyudmila Hraznova was elected the organization's leader. Alyaksey Khadyka, Henadz Barbarych, Henadz Kesner, Syarhey Tsurko, Nina Yermalitskaya, and Alyaksandr Silich were named board members, while Andrey Klimau, Uladzimir Kudzinau, Vasil Staravoytau, former Belarusian Prime Minister Mikhail Chyhir, former Estonian Prime Minister Mart Laar, and Irina Khakamada, a leader of Russia's recently trounced Union of Rightist Forces, were elected to its supervisory council. Hraznova said the organization will seek registration in Lithuania, adding that registration would be all but impossible in Belarus. She expressed hope that the new group will manage to "sow new seeds of freedom in Belarusian society." Hraznova added that the alliance was founded in response to the government's purported effort to rid Belarus of independent human rights organizations. (RFE/RL 10.xii.03) BELARUSIAN PRESIDENT DENIES HE PRAISED HITLER In an interview with "Der Spiegel" on 8 December, Belarusian President Alyaksandr Lukashenka denied that he praised Adolf Hitler and the Nazi political system in a 1995 interview with the German newspaper "Handelsblatt." Lukashenka was quoted as telling a "Handelsblatt" journalist in November 1995: "Not everything that was connected to a certain Adolf Hitler in Germany was bad. Remember his rule in Germany. The German order had grown over centuries. Under Hitler, this process reached its culmination. This is perfectly in line with our understanding of a presidential republic and the role of its president". "Handelsblatt" chose not print the passage in question. But the interview, which was taped, was broadcast twice by Belarusian Radio. "If I had really said that, I would have been driven out of my post the next day," Lukashenka told "Der Spiegel" in the more recent interview. (RFE/RL 9.xii.03) BULGARIA DEREGULATION OF ENERGY MARKETS AGREED UPON BY 7 BALKAN COUNTRIES Representatives of seven Balkan countries agreed in Athens on Monday to begin deregulating their energy markets in mid-2004 and to allow mutual access to utilities infrastructure, Jutarnji List reported. The agreement was signed by ministers from Albania, Bulgaria, Croatia, Macedonia, Romania, Serbia and Montenegro and Turkey and is based on an EU model that allows competition in those state-dominated and highly regulated markets. European Energy Commissioner Loyola de Palacio called the step "momentous" and said EU member governments would soon begin discussing plans to link the Balkan energy grid with the main EU grid as a result. (NewsBase 11.xii.03) U.S. DIPLOMAT CRITICIZES BULGARIA OVER CRIME AND CORRUPTION Speaking in Sofia on 8 December, U.S. Ambassador to Bulgaria James Pardew said rule-of-law issues such as organized crime, corruption, and ineffective law enforcement, prosecutors, and courts "hinder investment and individual initiative," according to a press release on the U.S. Embassy website (http://www.usembassy.bg). "Today, organized crime dominates significant elements of the economy," Pardew's statement said. "Bulgaria presently interdicts more drugs and counterfeit money than any other country in Europe, but those responsible are never punished." He also commented on a recent wave of underworld-related killings: "This violence has produced no sustained arrests, much less court convictions. If this kind of violence continues, at some point innocent citizens are going to be injured". Pardew said the embassy will provide more than $9 million in assistance to law enforcement, prosecutors, and judges who are serious about bringing criminals to justice. (RFE/RL 9.xii.03) CROATIA CROATIA'S NEW LEADER GETS TO WORK Following his designation by Croatian President Stipe Mesic as prime minister on 9 December, Ivo Sanader of the Croatian Democratic Community (HDZ) said his "priorities are raising living standards at home, gaining membership in NATO and the European Union, and resolving open issues with our neighbors," Reuters reported. Sanader stressed that he intends to form his cabinet by 22 December. It is not clear whether he will have a minority government including the small Democratic Center (DC) and the Social Liberal Party (HSLS) and backed by the legislative support of the Croatian Peasants' Party (HSS), or whether he will succeed in enticing the HSS into joining the cabinet. Sanader has said he wants a smaller government than the outgoing one and that nominees will be chosen on the basis of their professional qualifications. Most observers predict a tough time for a minority government from the outset, starting with the presentation of the 2004 budget in March. (RFE/RL 9.xii.03) CZECH REPUBLIC TRADE UNIONS URGE CABINET TO HALT MINE PRIVATIZATION A congress of the Czech-Moravian Trade Union Confederation (CMKOS) yesterday called on the government to halt the privatization of coal mining company Severoceske Doly (SD). CMKOS chief Milan Stech claims the move jeopardizes the development and employment in the region. CMKOS mainly criticizes the exclusion of power giant CEZ from the bidding. Ludek Prokop, a member of the crisis headquarters of the SD and CEZ unions, accuses the cabinet of corruption in the SD privatization process and of adjusting the criteria of the tender to suit one of the bidders, Appian Group. (PBJ 11.xii.03) BOEING REQUEST TO CZECH GOVERNMENT TO PAY AERO VODOCHODY'S DEBTS TURNED DOWN US company Boeing has asked the government to pay several billion crowns to cover the debts of aircraft maker Aero Vodochody in which Boeing owns about a third of the shares but the request has been turned down, according to a report in Mlada fronta Dnes. Last week, top managers from Boeing arrived in Prague to discuss possible government assistance with Prime Minister Vladimir Spidla and representatives of the finance ministry but failed to receive it. "They wanted the government to pay about 8 billion crowns from the 9-billion crown debt and guarantee new loans. They said that if the government does not help, the company will lay off a half of its 2,000 staff," the newspaper quoted an unnamed source. Deputy Finance Minister Eduard Janota confirmed to the daily that the two sides failed to reach agreement. "I told them they have been provided with exclusive conditions at the company but missed the opportunity. The result is that Aero has no orders," Janota said. The government decided that it will not give Aero money any more. "No government injection can be counted with," Finance Minister Bohuslav Sobotka said. In summer, the government extended a guarantee to Aero for an investment loan of $300 million until the year 2008. Janota said Boeing representatives warned that if their request is not met they will leave the company. Mlada fronta Dnes said that the government has already opened talks with some European aircraft producers on their possible entry into Aero. However, as long as Boeing remains a shareholder in Aero, the government cannot sell the state-owned stake to a rival and Boeing could in this way block government efforts for the company's revival. Aero's principal shareholders are the company Letka, owned by the National Property Fund, with 36%, Boeing with 35.3%, and bail-out agency Ceska konsolidacni agentura (CKA) with 29%. (NewsBase 10.xii.03) ING BANK REPORTS 22% DROP IN PROFIT Dutch ING Bank, operating in the Czech Republic, in the first 9 months of 2003 reported an increase in client deposits by 36 percent y/y to CZK 8.7 bln, while the volume of credit fell slightly 0.2 percent to CZK 15.2 bln. The bank's net profit fell 22 percent y/y to CZK 77.6 mln. By contrast, total assets grew 10 percent y/y to CZK 41.7 bln. Insurer ING, ranking second on the Czech insurance market, also recorded a 4 percent drop in profit to CZK 537 mln. The insurer subscribed CZK 3.7 bln-worth of premiums, up 8.8 percent y/y. The volume of assets grew 18 percent to CZK 20.7 bln and the number of clients rose 9.5 percent y/y to 288,000. Assets managed by Pension Fund ING grew nearly 30 percent y/y to CZK 7.79 bln in the same period. ING Group, operating in 60 countries worldwide, has been active in the Czech Republic since 1991. (PBJ 9.xii.03) GEORGIA GEORGIA SLAMS RUSSIAN VISA DECISION The Georgian Foreign Ministry released a statement on 9 December condemning as "a crude violation of Georgia's sovereignty" Moscow's decision to relax the visa requirement for residents of Georgia's Adjar Autonomous Republic, Interfax reported. Zurab Abashidze, who is Georgia's ambassador to Russia, noted that the Russian decision was made unilaterally without informing the Georgian authorities in advance. Adjar Supreme Council Chairman Aslan Abashidze (no relation to Zurab) told journalists in Batumi on 9 December that the simplified regime, under which residents of Adjaria may obtain Russian visas at Russian airports, could be extended to the rest of Georgia provided that Georgia's new leaders "abstain from harsh criticism and insulting statements" about the Russian leadership, Interfax reported. In Moscow, U.S. Ambassador Alexander Vershbow said Washington expects Russia to explain the rationale for its visa decision, Interfax reported. Moscow imposed a visa requirement for Georgian citizens four years ago, shortly after the beginning of hostilities in Chechnya, but exempted from that requirement residents of the breakaway unrecognized republics of Abkhazia and South Ossetia. (RFE/RL 10.xii.03) HUNGARY MOL - GOVERNMENT STOPPED SALE OF 17.6% AS BIDS WERE TOO LOW The government on Tuesday stopped the sale of up to 17.6% in oil and gas group MOL, the country's biggest revenue earner, as the bids were too low, Magyar Hirlap reported. State privatisation agency APV said the bids had not satisfied either itself or MOL, but it did not reveal where the issue price had been set after the book-building process. Finance Minister Csaba Laszlo said that both MOL's domestic public offer and institutional private placement had been oversubscribed, but the bids were not acceptable. The maximum price had been set at 7,100 forints per share. "We decided to postpone the sale as we must not sell MOL at a price which does not reflect its value, the company has very good growth potential," Laszlo said. He said the state's remaining stake in MOL will be put up for sale at a later date when the shares can be sold "at a more acceptable price." He said MOL's privatisation would continue next year when conditions are likely to be more favourable. Laszlo also said the decision to put off the MOL deal would not affect the budget, as this year's 196 billion forints revenue target for APV would almost be met. Early in the day MOL surged 2.8% to 6,240 forints as players were closing short positions in active trade. The forint eased slightly against the euro as a result of uncertainty over how the decision will affect the budget, but recovered after Laszlo's reassuring comments. MOL is in talks with Poland's top fuels group PKN Orlen on forging closer ties, which may ultimately end in a merger of two firms, currently valued at around $6 billion. A PKN spokesman declined to comment on what it called "an internal matter for our partner," and said the next round of talks on the merger was due to take place in Poland next week. (NewsBase 11.xii.03) KEURT PLANS AUSTRIAN AFFILIATE Data recovery and protection company Kürt Computer System House Rt is readying itself to set up an affiliate company in Austria in January of next year in a $1 million investment project, according to unnamed sources. Kuert Austria will be handling the company's already extensive Austrian business. The new company is planned to generate a profit within four years. Kürt, which was launched in 1989, had net profit of Ft 250 million on revenues of Ft 1 billion last year. (BBJ 11.xii.03) HUNGARIAN PROSECUTOR ORDERS PROBE OF INVESTIGATOR IN K&H SCANDAL The Budapest Prosecutor's Office ordered an investigation on 9 December of Lieutenant Colonel Csaba Molnar, the head of the anti-money -laundering unit in the state police department, for suspected abuse of authority, "Nepszabadsag" reported. Molnar was investigating suspected embezzlement at K&H Equities when he allegedly met with a man who was under National Security Office surveillance. The daily noted that it was Molnar who lured former K&H Equities broker Attila Kulcsar into the trap in Vienna, resulting in his detention and a request for his extradition. (RFE/RL 10.xii.03) KAZAKHSTAN KAZAKHSTAN SEEKING ACCESS TO PAKISTANI PORTS Kazakh President Nursultan Nazarbaev ended a two-day visit to Pakistan on 9 December, gazeta.kz and khabar.kz reported. He was accompanied by a delegation of 30 Kazakh businesspeople for talks that focused on trade and economic relations. After talks with Pakistani President Pervez Musharraf on 8 December, Nazarbaev told a press conference in Islamabad that when peace is established in Afghanistan, oil and gas pipelines - and possibly highways and railways -- will provide Kazakhstan with access to Pakistani ports. Nazarbaev added that transport links between Kazakhstan and Pakistan are being developed, with Kazakh businesspeople using the Karakorum Highway from western China and Pakistani Airlines starting flights between Almaty and Islamabad this month. (RFE/RL 10.xii.03) GERMAN LEADER VISITS KAZAKHSTAN German Chancellor Gerhard Schroeder arrived in Kazakhstan on 4 December for a two-day visit, accompanied by 150 businessmen, officials, parliamentarians, and journalists. The main emphasis of Schroeder's visit is on expanding economic ties between the two countries: Schroeder told a news conference in Astana after his talk with Kazakh President Nursultan Nazarbaev that the two sides intend to double the volume of trade between them in the next two years, RIA-Novosti, khabar.kz, and other Kazakh, Russian, and German media reported on 4-5 December. Schroeder said that Germany is particularly interested in Kazakhstan's natural resources, adding that the telecommunications sphere could also be attractive for German businesses; Nazarbaev asked for German participation in developing the hydrocarbon reserves of the Caspian. "Nezavisimaya gazeta" noted on 5 December that the level of German investment in Kazakhstan has been considerably lower than that of other countries including the United States, Great Britain, and Italy, though Nazarbaev characterized Germany as one of Kazakhstan's main trading partners in Europe. Six statements of intent were signed on 4 December between the Kazakh and German sides on training of business managers, financing of technical imports, and establishment of a Kazakh-German University in Almaty. (RFE/RL 5.xii.03) LITHUANIA LITHUANIAN PREMIER LAMENTS POLITICAL ISOLATION In an interview with Lithuanian State Radio on 9 December, Algirdas Brazauskas said he has noticed some signs of Lithuania's diplomatic isolation due to the recent scandal in the president's office, "Lietuvos rytas" reported on 10 December. He noted that in the current situation, "there are no contacts, no visits to Lithuania, and the president does not go abroad." Brazauskas said the scandal has already severely damaged Lithuania's image. "The harm is that we became known not for good reasons," he said. "The talks about ties with Russia's mafia, with international terrorism are terrible words, terrible accusations against Lithuania. Especially when Lithuania does not deserve them, as they are not true." He said that he will not avoid giving direct answers about the scandal during his upcoming visit to Brussels for the EU summit on 12-13 December. Brazauskas repeated his suggestions that President Rolandas Paksas should resign, if possible before the Brussels visit. (RFE/RL 11.xii.03) AGREEMENT DRAFTED FOR SALE OF 34% OF SHARES IN LIETUVOS DUJOS TO GAZPROM The State Property Fund and Gazprom have initialled a draft agreement for the sale to Gazprom of 34% of shares in Lietuvos Dujos, according to a report on Lithuanian Television on Thursday 4 December. The agreement will now be submitted to the Privatisation Commission and the government. The government had announced earlier that it had reached an agreement to sell the shares for not less than 91 million lits, although details of the agreement have not been disclosed. Over six months ago, Lithuania set a price of 116 million lits for the 34% packet, the same price paid in spring 2002 by Ruhrgas. Gazprom offered 80 million lits for the shares, but later said it was ready to pay 91 million lits and to pay an additional 9 million lits, if the government stopped regulating gas prices for large consumers. (NewsBase 8.xii.03) POLAND COMMERZBANK SNAPS UP LOW PRICE SHARES IN BRE BANK German Commerzbank has managed to cheaply acquire an almost 20% stake of BRE Bank increasing its share in the Polish bank to 70%. According to analysts, BRE will have to accelerate building and upgrading its market position, or else it may be taken over by stronger players, particularly if the consolidation of the banking sector on the German market gains speed. Commerzbank offered the lowest possible price of zl. 88.98 per share. Poor Q3 results, as well as the announcement of a new share issue, triggered a drop in BRE's share price on the Warsaw bourse. "This aroused investors interest," said Dariusz Gorski, an analyst with ING Securities. "Commerzbank seems to have taken advantage of this. It certainly did not overpay," he added. The net profit of the BRE Bank group amounted to zl. 66.1 million after three quarters of 2003. (WBJ 11.xii.03) POLISH PREMIER WELCOMES POSSIBLE RELOCATION OF U.S. MILITARY BASES Prime Minister Leszek Miller, who is still hospitalized following a helicopter crash last week, told Polish Radio on 9 December that he would support the relocation of some U.S. military bases from Germany to Poland. "If I were to express an opinion on this,... it's worth making such a decision; and if I were to take part in this decision, then, of course, I would say yes," Miller said. The same day, U.S. Undersecretary of Defense for Policy Douglas Feith held consultations in Warsaw with Defense Minister Jerzy Szmajdzinski on a possible relocation of some U.S. bases. "This project is not directed against Russia, this project is directed against those threats that occur in the modern world," Polish Television quoted Szmajdzinski as saying. (RFE/RL 9.xii.03) AIR POLONIA TAKES OFF WITH A FLYING START Low cost air carrier, Air Polonia has yesterday inaugurated its flights from Warsaw to Gdansk and Wroclaw. The number of passengers on first morning flights amounted to between 34 and 52, filling up an average of 25% of available seats. Jan Litwinski, Air Polonia general director, said that the number of passengers on this route is in accordance with his estimations, however connections from Katowice, Poznan, and Warsaw to London has definitely exceeded all expectations. According to him, several thousand tickets were sold, and for some flights all seats are taken. The carrier plans to introduce flights to Rome, Athens and Madrid in the summer. In related news, Silesian Air, owner of GetJet, announced plans to lease Airbus planes from abroad, as part of its battle against long procedures to register Airbus planes which are not used by any domestic carrier. "The Civil Aviation Office (ULC) has to train people to have competencies to register such planes. The training, the costs of which are party covered by Silesian Air, is not yet finished," said GetJet's spokesman Adam Warzech. (WBJ 9.xii.03) PKN ORLEN ANNOUNCES SUPPORT FOR FAST LAUNCH OF A JV WITH MOL PKN Orlen supports the fast launch of a joint venture with Hungarian counterpart MOL in order to pave the way for a full merger in 2005, Orlen CEO Zbigniew Wrobel told a fuel-industry seminar held in Warsaw on Thursday 4 December, Gazeta Wyborcza reported. Wrobel said that quickly establishing a joint venture would allow for a full merger between the two companies to more or less be completed in 2005. On November 20th, Orlen and MOL signed a memorandum of understanding on strategic co-operation and a possible merger. Both sides have created joint task forces to work out the most suitable areas for co-operation and are expected to report back to management by April 2004. Poland retains nearly 28% of Orlen and has suggested it will wait until the first quarter of 2004 to decide what to do with the stake in order to gauge the result of the Orlen-MOL merger talks. Officials from Nafta Polska, the state fuel-sector holding that holds nearly 18% of Orlen, suggested on Thursday 4 that they could be getting ready to sell some or all of their stake to MOL, Parkiet reported. Hungary has announced that it is selling almost 23% of MOL to institutional investors and would increase capital as a way of letting Orlen in, MOL officials have said recently. An Orlen-MOL merger could create an oil, petrochemicals and gas group stretching from the Baltic to the Adriatic. Orlen's foreign holdings include 500 service stations in northern Germany while MOL has bought Slovakia's Slovnaft and Croatia's INA fuel companies. Both countries have also expressed an interest, albeit separately, in the Czech Republic's Unipetrol and Romania's Petrom. (NewsBase 8.xii.03) ROMANIA GOVERNMENT INVITES BIDS FOR DISTRIGAZ SUD AND DISTRIGAZ NORD Romania's government officially invited bids for its two natural gas distributors Distrigaz Sud and Distrigaz Nord at the weekend. The government plans to sell a 30% stake in the two companies to strategic investors through direct negotiations. The agreed investors should expand their stake towards 51% by a share capital increase. Letters of intent from potential investors are expected no later than January 14. The government said only investors with an annual turnover of $1bn over the past three years who are currently operating in the gas sector are eligible. Earlier this year the government said it had decided to complete the country's natural gas distribution two companies sell off by the end of March 2004. Italy's Enel, Germany's Wintershall and Ruhrgas and Russia's Gazprom said they would be interested in submitting non-binding bids for Distrigaz Nord and Distrigaz Sud, according to local media reports. (NewsBase 10.xii.03) ROMANIA CLOSES MORE CHAPTERS IN EU ACCESSION NEGOTIATIONS Romania closed three further chapters in accession negotiations with the EU on 9 December, Romanian Radio reported, citing European Integration Minister Alexandru Farcas. Farcas and chief Romanian negotiator with the EU Vasile Puscas met the same day in Brussels with EU Commissioner for Enlargement Guenter Verheugen, who praised the progress made by Bucharest in meeting accession conditions but warned that "a lot of work lies ahead in 2004" if Romania is to successfully conclude negotiations next year and join the EU in 2007. Romania has so far closed 22 of the 31 chapters of the acquis communautaire. (RFE/RL 10.xii.03) EU EXPECTED TO CLARIFY ACCESSION DATES FOR ROMANIA, BULGARIA European Union foreign ministers on 8 December approved a draft document containing more specific accession prospects for Romania and Bulgaria, an RFE/RL correspondent in Brussels and AFP reported. The ministers agreed on a text saying, "Over the past years, these countries have significantly brought forward their preparations for membership, which is reflected in the well-advanced state of their accession negotiations." Previous EU documents only expressed the hope that the two countries would be able to join in 2007. While the new text is still conditional, it states "welcoming Bulgaria and Romania in January 2007 as members of the union, if they are ready, is the common objective of the 25 [EU members after the expected May 2004 expansion]." At the same time, the foreign ministers encouraged, "Bulgaria and Romania to continue on the path of economic and structural reforms in order to take full advantage of the benefits offered by the accession process." (RFE/RL 9.xii.03) RUSSIA U.S. BARS RUSSIA FROM IRAQ BUSINESS Russia was woken up by a slap in the face Wednesday, with a Pentagon announcement overnight that implicitly bars the country from competing for $18.6 billion in contracts to rebuild Iraq. The decision, appearing on a U.S. Defense Department web site, effectively says that the Bush administration is punishing countries that failed to support the U.S.-led invasion of Iraq, including France, Germany and Canada. A list of contracts and countries eligible to bid for them was posted on the Pentagon's web site for the reconstruction of Iraq and signed by Deputy Defense Secretary Paul Wolfowitz. "We believe the interests of a political settlement of the situation in Iraq, and the rebuilding of Iraq, are best served by uniting the efforts of the international community and not splitting it," Foreign Minister Igor Ivanov told journalists during a visit to Berlin. "As regards the reconstruction of Iraq, I think that it's a general desire, and all who are prepared to participate in this should be given every possibility to do that." In Moscow, Defense Minister Sergei Ivanov threatened a tit-for-tat response, suggesting that Russia may not restructure some $8 billion in Iraqi debt. "As for the Russian government's position on this, it is not planning any kind of a write-off of that debt. Iraq is not a poor country," he said at a news conference. "When the Soviet Union fell apart, did anyone write off Russian debt?" Russia could also retaliate against the U.S. decision by switching its oil exports to euro-denominated prices, said Dmitry Rogozin, co-leader of the populist Rodina bloc, which mustered a surprise fourth place in Sunday's parliamentary elections. "The decision is obviously an aggressive move by the U.S.," Rogozin said by telephone Wednesday. "Furthermore, it's totally groundless. After all, Russia has pretty much forgiven U.S. actions in Iraq by now." "Coming up with this list also shows the very primitive vindictiveness of the current U.S. administration." Rogozin, who headed the international affairs committee in the last State Duma, said that such treatment could result in foreign policy realigning away from the U.S. toward Europe. French and German leaders also protested Washington's decision. "We noted with astonishment today the reports and we will be speaking about it with the American side," German Foreign Minister Joschka Fischer said after talks with Foreign Minister Igor Ivanov. The directive is posted on the Pentagon's Iraq Program Management Office web site, www.rebuilding-iraq.net. (The Moscow Times 11.xii.03) YUKOS DRIVEN UNDER $10 A SHARE Shares in troubled oil giant Yukos slid to their lowest level in eight months on Wednesday as tax raids on affiliates continued and new charges were filed, spooking investors already worried that its takeover of rival Sibneft is doomed. Fresh reports in Russian and Western newspapers that Sibneft's controlling shareholder, Roman Abramovich, had decided to scrap the $11 billion landmark deal helped to push Yukos shares down 6.76 percent on the day to $9.51 on the RTS exchange. Yukos has lost a third of its market value since the Oct. 25 arrest of company founder Mikhail Khodorkovsky on tax evasion charges. Yukos shares rose above $10 in April this year as news of Khodorkovsky's merger plans with Sibneft leaked -- a deal would create the world's fourth-largest oil company. The shares peaked at $16.35 in October on news of talks with ExxonMobil, but a rumbling dispute between Khodorkovsky and President Vladimir Putin came to a head just weeks later with Khodorkovsky's arrest at gunpoint in Siberia. Putin opponents said the arrest and subsequent raids on Yukos by prosecutors was an attempt by the Kremlin to punish Khodorkovsky for backing opposition political parties. A partial $11 billion merger of the two companies has already taken place, but shareholders from the Sibneft camp, led by Abramovich, have now gone cold on the deal and suspended it. "We believe that Yukos has to fall further on the back of the merger break-up news and possible negative developments related to the company's ownership and/or management before bottom- fishing begins," Aton said in a research note to its clients. After that note came out, the Interior Ministry said it had opened a criminal case against the management of Bank Menatep St. Petersburg, a financial unit of Group Menatep, the largest shareholder of Yukos. The case was opened into allegations that the bank's management evaded taxes, said a spokesman for the ministry's economic and tax crimes unit. The official declined to be identified. Later Wednesday, another Interior Ministry spokesman denied the information. Group Menatep said the company could not immediately comment. Tax inspectors searched the head office of Bank Menatep St. Petersburg on Tuesday, said Alexander Tkachyov, a bank spokesman. Tax officials earlier this year discovered the bank had underpaid its taxes for the period, and Menatep cleared the tax arrears, Tkachyov said. (St. Petersburg Times 11.xii.03) RBC 43rd IN EUROPEAN HIGH-TECH LIST RBC Information Systems is the only Russian company to make Deloitte auditors' list of Europe's 500 fastest growing high-tech firms, Vedomosti reported Wednesday. Italian Internet provider Tiscali, whose revenues grew 56,769 percent in the past five years, tops the list. It is followed by Norwegian software producer East Search & Transfer with 44,108 percent growth and France's networking company Netsize, at 30,620 percent. RBC holding was 43rd with 2,112 percent growth since 1998. The holding controls RosBusinessConsulting Internet news service, RBC-TV business channel and RBC-Soft software company. RBC said its revenues will top $39 million this year. RBC was 72nd in last year's list. Gennady Kuvshinnikov, a partner at Deloitte, told Vedomosti that other domestic companies were not included because they lacked transparent financial reporting. (The Moscow Times 11.xii.03) PUTIN SAYS HE DOESN'T PLAN TO CHANGE CONSTITUTION President Vladimir Putin said on 9 December that changing Russia's constitution to allow him to seek a third term is not on his agenda, Russian and international media reported. "Our task is to stop any talk about the need to change the constitution and focus our attention on preserving the constitution and using all the opportunities it offers to help develop the country," Putin said during a Kremlin meeting to mark the 10th anniversary of Russia's post-Soviet constitution. Putin is widely expected easily to win a second term in March, and many analysts have speculated that he might use his strong majority in the Duma to revise the constitutional two-term limit for presidents. Some observers argued that Putin's statement might not be his last word on the issue. "He's always said that about the constitution, but he is a politician and he can change his mind," the Carnegie Moscow Center's Nikolai Petrov said, according to "The Moscow Times" on 10 December. "However, things like that can be done only after his re-election as president." (RFE/RL 10.xii.03) INVESTIGATORS SAY MOSCOW EXPLOSION WAS TERRORISM Investigators from the Federal Security Service (FSB) and the Prosecutor-General's Office on 10 December completed their examination of the site of the previous day's bomb blast outside the National Hotel, RBK reported. Preliminary findings have shown that the explosion had a force equivalent to that of 5 kilograms of TNT, the news agency reported. Gazeta.ru, however, reported on 9 December that the explosive device used only detonated partially, producing a blast equivalent to 500 grams of TNT. Prime-TASS reported on 9 December that the explosive device used was a so-called "shahid" (martyr's) belt like the one used in a suicide bomb attack that killed 15 people at an open-air rock festival in Moscow in July. There were also contradictory reports about the number of perpetrators involved in the bombing outside the National Hotel. RBK reported on 10 December that it was carried out by "two female suicide bombers," while Prime-TASS the previous day quoted unidentified police officials as saying that three of those killed in the blast were "the supposed female terrorists." (RFE/RL 10.xii.03) FOUR PEOPLE KILLED, SEVEN INJURED IN MOSCOW CAR BOMBING Four people were killed and another seven injured as a result of today's car bombing near the National Hotel in downtown Moscow, the city's law enforcement agencies have told Interfax. The injured people have been hospitalized. One of them is in grave condition. The people killed in the blast are currently being identified, representatives of the Moscow central interior department said. The explosion occurred outside the hotel and "inflicted considerable damage" shattering some windows on the hotel's bottom floors, as well as the windows of four cars parked nearby. Eyewitnesses said that the explosion was so powerful that it could be heard 700 meters from the hotel, on Lubyanka Square. An Interfax correspondent reported that a headless woman was lying near the hotel. A black brief-case, which is presumed to have contained the explosives, is lying near her. The brief-case will be checked by sappers. A Mercedes car with shattered windows is parked near the hotel, but it does not look like that the blast occurred inside of the car, the Interfax correspondent said. Several bodies can be seen at the explosion site. A team from the Moscow Prosecutor Office's detectives led by the city's First Deputy Prosecutor Sergey Borisov have left for the bombing scene. "An urgent investigation has been launched. The issue of opening a criminal case and its classification is currently being considered, " a spokesman for the Moscow Prosecutor's Office said. In the wake of the incident, the section of Mokhovaya Street from Vozdvizhenka Street to Tverskaya Street and Leninsky Avenue's section from Apakov Street to the city's center have been closed to traffic, Moscow's traffic police told Interfax. The cause of the car bombing has not been established yet. Spokesman for the Moscow central interior department Kirill Mazurin said that the hotel houses offices of a large number of commercial firms, and the blast might have been the result of conflicts between criminal groups, rather than a terrorist attack. A female suicide bomber is believed to be responsible for the downtown Moscow car bombing, according to one of the theories. (Interfax 9.xii.03) OSCE, COUNCIL OF EUROPE CRITICIZE DUMA POLL The OSCE and the Council of Europe said on 8 December that the results of the State Duma election were "fundamentally distorted," "The Moscow Times" reported on 9 December. The two groups, which had about 500 observers monitoring the 7 December elections, cited abuses of administrative resources during the campaign, including preferential coverage by the state media and the fact that about one-third of the country's governors were on Unified Russia's party list. While the international observers praised the TsIK for conducting the election "highly professionally," they called the process as a whole "fundamentally unfair." The president of the OSCE Parliamentary Assembly, Bruce George, said the contest "failed in meeting many OSCE and international standards" and was a "regression in the democratization process in Russia." In Washington, White House spokesman Scott McClellan said the Bush administration shares the OSCE's concerns about the fairness of the election. (RFE/RL 9.xii.03) KREMLIN DISMISSES U.S. CRITICISM OF DUMA ELECTIONS A Kremlin source has said he was very surprised by White House spokesman Scott McClellan's remarks concerning the Sunday elections to the State Duma. Asked by Interfax to comment on these remarks, the Kremlin source said, "The record of the last presidential elections in the U.S. hardly entitles the American side to make such comments." McClellan earlier said the U.S. administration shares concerns voiced by OSCE observers over irregularities during the December 7 Duma elections. (Interfax 9.xii.03) U.S. EMBASSY FINGERPRINTING VISA APPLICANTS The U.S. Embassy in Moscow on 9 December began taking fingerprints from all visa applicants between the ages of 14 and 80, lenta.ru, Interfax, and other Russian media reported. The fingerprints are being used to help confirm the identities of applicants in order to combat the forgery of travel documents. The United States plans to introduce such measures at all embassies and consulates worldwide by 26 October 2004. The Foreign Ministry has protested the collection of fingerprints. "One must wonder how this fits into the presidential-summit agreements on expanding contacts between the Russian and the American peoples and the simplification of visa procedures in order to achieve this," a Foreign Ministry statement released on 9 December said. (RFE/RL 9.xii.03) RUSSIA, GERMANY MAY SIGN VISA ACCORD An intergovernmental agreement on simpler visa formalities may be signed during a visit by Russian Foreign Minister Igor Ivanov to Germany on December 10-11. The agreement, which has been drafted at the instruction of the Russian president and the German chancellor, "will be the first serious step in the reduction of visa formalities with EU member-countries. The final goal is the annulment of visas," Foreign Ministry spokesman Alexander Yakovenko said on Monday. "First and foremost, the agreement will concern participants in youth, cultural and scientific exchanges, and businessmen," Yakovenko said. The negotiations will focus on cooperation in international issues and detailed analysis of the implementation of resolutions made at the Yekaterinburg summit in October 2003, he said. Ivanov will also hold a meeting with Chancellor Gerhard Schroeder. In addition, he will address public figures, politicians and businessmen, and present an analysis of the Russia-German partnership. (Interfax 8.xii.03) MOSCOW COMPLAINS TO BRITAIN OVER BEREZOVSKII'S TRAVEL The Foreign Ministry on 5 December summoned British Ambassador to Russia Sir Roderic Lyne and handed him an official protest concerning the 3 December visit of self-exiled tycoon Boris Berezovskii to Georgia, RTR and RIA-Novosti reported. Berezovskii, who remains on the Interpol wanted list at Russia's request despite having recently been granted political asylum in the United Kingdom, traveled to Georgia under a false name using a document provided by the British authorities, the Russian protest charged. This action has "undermined" the trust between Russian and Great Britain, the statement said. (RFE/RL 8.xii.03) BEREZOVSKII THREATENS TO SUE MOSCOW In an interview published in Britain's "Financial Times" on 5 December, Berezovskii said that he intends to file a $1 billion claim against the Russian government in the British courts and the European Court of Human Rights in connection with Moscow's alleged seizure of his media, mining, and oil-sector assets. Berezovskii said that after he began criticizing President Putin, he was forced to sell his stake in major Russian companies, including ORT, TV-6, and Sibneft. Former oligarch Vladimir Gusinskii has filed a similar suit against the Kremlin with the European Court of Human Rights, and Moscow should expect a similar complaint from former Yukos head Khodorkovskii, the newspaper wrote. (RFE/RL 8.xii.03) BOMB ABOARD COMMUTER TRAIN KILLS MORE THAN 30 At least 38 people were killed and more than 150 injured on 5 December by an explosion on a commuter train near the Stavropol Krai town of Yessentuki, RIA-Novosti and other Russian and Western media reported. Local police said that the explosion was caused by a bomb placed in a car on the crowded commuter train, while some reports indicated that a female suicide bomber might have been involved. Police immediately announced that they suspect Chechen militants carried out the attack. On 3 September, a similar incident aboard a commuter train in Kislovodsk killed seven and injured more than 90. (RFE/RL 5.xii.03) SERBIA AND MONTENEGRO U.S. RESUMES NORMAL TRADE RELATIONS WITH S/M The United States resumed normal trade relations (NTR) with Serbia-Montenegro on December 4 2003, in a move confirming the US government's support for the state union's economic reforms, the US Embassy to Belgrade said. With the restoration of NTR, US tariffs on goods imported from Serbia-Montenegro will decrease from the 37% average under the non-NTR tariff schedule to the standard NTR rates of less than 3% average. The restoration of NTR will open a new door for Serbia-Montenegrin companies that can manufacture high quality products and market them to the US, the statement said. NTR, formerly known as "Most Favoured Nation" (MFN) status, was revoked from the former Yugoslavia in 1992 in an international response to Slobodan Milosevic regime's role in the Bosnia-Herzegovina conflict. (NewsBase 8.xii.03) SLOVAKIA FORA-BANK TO DEVELOP MUTUAL CO-OPERATION BETWEEN RUSSIAN & SLOVAK BUSINESS SECTORS Russia's commercial Fora-Bank has set up an office in Bratislava as the bank plans to operate in Slovakia primarily to develop mutual co-operation between the Russian and Slovak business sectors, Hospodarske noviny reported. The Russian bank opened its representative office in Slovakia in September of this year, one year after its approval by the National Bank of Slovakia, Alexander Mikhailovich Shinelnikov, chairman of the bank's board of directors, said at a press conference on Tuesday. Fora-Bank is participating in investments into the construction of business centres in Moscow, St. Petersburg, and Zelenograd with main contractors being Slovak construction companies such as Zilina-based Proma and Bratislava-based ZIPP. "We want to assist in increasing trade between Slovakia and Russia and in guaranteeing payments between the Slovak and Russian entrepreneurial subjects," Shinelnikov said. The Russian bank also plans to support investment projects and the development of joint ventures that might be successful on the markets of the European Union. "The Russian economy is very much interested in integrating into this economic space," Shinelnikov added. According to him, Fora-Bank, which will rely on past good relations between Slovakia and Russia. It expects the turnover this year of mutual trade between the two countries to reach $2.7 billion, which is $400 million more than last year. Fora-Bank was founded in 1992 in Moscow by private individuals and legal entities. The bank provides complex banking services and also has a license for trading precious metals. Since 1994 the bank has also provided mortgages. The bank has branch offices in seven regions of Russia. (NewsBase 11.xii.03) SLOVAKS GET VISA-FREE ENTRY TO U.K. Prime Minister Mikulas Dzurinda told journalists on 9 December that holders of Slovak passports will be able to enter the United Kingdom without a visa within 10 days, CTK and TASR reported. The visa-free regime will enter into force on 18 December. The visa requirement was introduced five years ago to curb the exodus of Slovak Roma requesting asylum in Great Britain. A spokesman for the Irish Foreign Ministry cited by TASR said Ireland will follow the British example and cancel visa requirements later this month or in early January. Slovak Foreign Minister Eduard Kukan welcomed the decision. (RFE/RL 9.xii.03) UKRAINE WORLD BANK APPROVES $250M LOAN TO SUPPORT STRUCTURAL REFORM IN UKRAINE The World Bank's board of executive directors on 9 December endorsed a $250 million loan to Ukraine to support specific achievements in the government's structural-reform program, Interfax reported, quoting a World Bank press release. The World Bank said the facility, called the Second Programmatic Adjustment Loan, "is focused on five thematic areas: financial discipline, regulation, property rights, public sector accountability, and management of social and environmental risks," according to the press release, available on the group's website (http://www.worldbank.org). Its specific aims include improving tax collection; eliminating favorable electricity tariffs to businesses and business sectors; legislating a solution to debt that accrues in the energy sector and launching a tender for the sale of state-owned electricity distributors; enacting a law to unify procedures regarding land and real-estate ownership; and reducing the number of tax exemptions. The first such targeted loan was issued by the World Bank in September 2001. (RFE/RL 10.xii.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 INTERFAX Interfax News Agency is part of Interfax Information Services Group. Interfax is a provider of accurate and reliable general news as well as financial and industry specific news and data from the emerging markets of Europe and Asia. Contact: Roland Hewes T: +44 (0)20 7467 2734 F: +44 (0)20 7486 1826 E: [email protected] W: www.interfax.ru/english 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. 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