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*** Due Diligence *** Business Intelligence *** Asset Retrieval *** *** Debt Recovery *** Disappearance Response *** *** TT Meerkat 500 ***  TT Business Intelligence Report - CE/SEE & FSU Vol. 3, No. 64, 12 February 2004 Business Intelligence, Crime, Corruption and Debt in C&E/SE Europe and the former Soviet Union UPCOMING CONFERENCES THE EUROPEAN FINANCE CONVENTION'S "1st CONGRESS ON FINANCING INFRASTRUCTURE, MUNICIPALITIES & SUB-NATIONAL GOVERNMENTS IN CENTRAL, EASTERN AND SE EUROPE" This event will take place on 17-18 February 2004 at the Hotel Intercontinental, Vienna, Austria. For further information, please contact Claudio Cassuto, tel: +44 (0)20 7381 9291; fax: +44 (0)870 134 0064; email: [email protected]; W: www.euroconvention.com THE EUROPEAN FINANCE CONVENTION'S "2nd e-FINANCE CONGRESS FOR CENTRAL, EASTERN & SOUTH EASTERN EUROPE" This event will take place on 29-30 March 2004 at the Hotel Lev, Ljubljana, Slovenia. For further information, please contact Claudio Cassuto, tel: +44 (0)20 7381 9291; fax: +44 (0)870 134 0064; email: [email protected]; W: www.euroconvention.com THE EBRD's 2004 BUSINESS FORUM "COMING OF AGE: OPPORTUNITIES OF AN EVOLVING REGION" This event will take place on 18-19 April 2004 at the Hilton London Metropole (HLM), London, UK. For further information, please contact Georgie Walker, tel: +44 (0)20 7338 6625; email: [email protected]; W: www.ebrd.com/am BELARUS MINSK STILL AT ODDS WITH MOSCOW OVER SINGLE CURRENCY, GAS SUPPLIES During talks in Moscow on 10 February, Belarusian Prime Minister Syarhey Sidorski and his Russian counterpart Mikhail Kasyanov apparently failed to reach agreement over the planned introduction of the Russian ruble as a single currency in the Russia-Belarus Union or Gazprom's halt of gas supplies to Belarus. "We have reached an understanding on this issue [gas supplies]," Sidorski said after the meeting. But Kasyanov qualified Sidorski's statement, saying, "We have not reached any specific agreements on cooperation in the gas sphere." The Gazprom press service told RFE/RL the same day that the company has not resumed gas supplies to Belarus that were halted following failed contract talks and a lingering dispute over the sale of Belarus's Beltranshaz gas-pipeline operator to Gazprom. Kasyanov also said the two sides made no progress toward introducing the Russian ruble in Belarus in 2005, adding that a "political decision" by the Belarusian leadership is required to make such a step. (RFE/RL 11.ii.04) BOSNIA AND HERZEGOVINA DEPUTY DIRECTOR OF INTERPOL BOSNIA ARRESTED Police in Bosnia's mainly Bosniak and Croat federation entity on 4 February arrested the deputy director of Interpol in Bosnia, Asim Fazlic, on suspicion of abuse of power, bribery, and information leaks, the Federation Interior Ministry said on 5 February. The warrant for Fazlic's arrest was issued by the Bosnian Prosecutor's Office's Special Department for Organized Crime, Economic Crime, and Corruption, run by foreign prosecutors appointed by the international community's high representative to Bosnia, Paddy Ashdown. Fazlic is suspected of accepting bribes to tip off suspects wanted by Interpol prior to the release of arrest warrants against them. As deputy chief of Interpol in Bosnia, Fazlic had first access to arrest warrants issued for suspected criminals on Bosnian territory. The charges suggest that he had held onto certain arrest warrants, tipping off their recipients in return for cash payment and allowing them to escape the country before he released the warrants to local police and prosecutors. Upon the request of the department, the Court of Bosnia and Herzegovina on 7 February ruled to hold Fazlic in custody for 30 days while investigators collect evidence and witness statements. Fazlic's lawyer, Senka Nozica, told TOL on 8 February that the court had ruled to keep her client in detention because of the high-profile nature of the case. Nozica appealed the detention order on 7 February. But very few details have surfaced in public regarding the charges. Bosnian authorities have refused to comment on the case, saying that have not been informed of the exact charges against Fazlic. They have also claimed to be unaware of any investigation into Fazlic's alleged criminal activities. Federation police have also refused to comment, saying that no details will be given while the investigation is still in progress. They have also refused to say when the investigation started. News reports have so far been limited to the announcement of Fazlic's arrest and the charges of abuse of power, bribery, and information leaks. Interpol itself has refused to comment in detail, saying only that local authorities must now further investigate the charges. Fazlic, a former member of the nationalist Party of Democratic Action (SDA) and a current member of the Party for Bosnia and Herzegovina (SBiH), is said to have been tipping off high-profile Bosniaks and Arab-born naturalized Bosnian citizens wanted by Interpol. Speaking on condition of anonymity, a high-ranking Bosnian prosecutor told TOL that Fazlic is suspected of helping the suspected murderers of alleged mafia boss Taib Torlakovic escape arrest. Torlakovic, who was killed by a remote-controlled car bomb last month, was the wartime commander of a Bosnian Army unit in Sarajevo. During a search of the apartment of one of the suspected assassins, the source said that police found an Interpol arrest warrant for Torlakovic and for several other Bosnian citizens. The primary suspect in Torlakovic's murder is Zijad Turkovic, an ethnic Bosniak from Serbia and Montenegro who had lived in Germany before coming to Bosnia in 1999, where he established a construction company. Turkovic is now in police custody. In an interview from his cell with the Sarajevo weekly Express, Turkovic said that police investigators have been pressuring him to name the official who had helped him escape seven previous arrest warrants. Turkovic, however, said he had not bowed to the pressure. (TOL 09.ii.04) BULGARIA BULGARIAN ECONOMY MINISTER SAYS TELECOM-PRIVATIZATION DEAL NEARLY CONCLUDED Lidia Shuleva told parliament on 30 January that she expects the state Privatization Agency to sign a contract with Viva Ventures by 20 February under which the Vienna-based consortium will acquire a 65 percent stake of the state-owned Bulgarian Telecommunications Company (BTK) for $287 million, vsekiden.com reported. Under the agreement, Viva Ventures, which is owned by the U.S.-based Advent International investment fund, will not be allowed to sell the stake for three years, according to Shuleva. Shuleva dismissed the opposition's arguments that the deal is "extremely unfavorable" to the state, underscoring that the contract will be in compliance with the terms set by the Supreme Administrative Court. Transport and Communications Minister Nikolay Vasilev said that under the deal Viva Ventures will gradually cut the number of BTK employees to 24,000 in 2004, 22,000 in 2005, and 20,500 in 2006, BTA reported. (RFE/RL 02.ii.04) FIVE COMPANIES BID FOR RIGHT TO ACT AS CONSULTANT FOR SALE OF BULGARTABAC Five companies submitted offers in the contest for privatisation consultant in the sale of Bulgartabac tobacco monopoly before the deadline expired on 02-Feb-04, according to a report on novinite.com. The bidders are SG Corporate Finance Advisory, Paris; JP Morgan Plc, London; a consortium led by Credit Suisse First Boston (Europe), London; Morgan Stanley & Co. Limited, London and UBS Ltd, London, in a tie-in with Balkan Consultancy Company, Sofia. Candidate consultants are required to have experience in successful privatisation deals for enterprises in the tobacco industry, mergers or acquisitions of companies in the same sector, as well as companies' restructuring. The consultant in the deal will be required to prepare the privatisation of Bulgartabac subsidiaries and draw up a strategy for their restructuring. Bulgartabac officially launched the contest for a consultant on the sale of its subsidiaries in mid Dec-93. Leading investment banks can participate in the competition independently or form tie-ins together with international or Bulgarian legal and financial consultant companies. The new strategy for the Bulgartabac privatisation, which the government approved at the beginning of Oct-03, envisages the piecemeal sale of the cigarette production companies and tobacco processing subsidiaries. Bulgartabac includes twelve processing factories and nine cigarette factories. It also runs five cigarette factories in Russia and one each in Ukraine, Romania and the former Yugoslavia. Imperial Tobacco Group (UK), British-American Tobacco, together with Phillip Morris and Gallagher, already declared an interest in the privatisation of Bulgartabac. (NewsBase 04.ii.04) CROATIA US DEFENSE SECRETARY GIVES CROATIA PRAISE AND ADVICE On a brief visit to Zagreb after the Munich conference, U.S. Defense Secretary Donald Rumsfeld told Croatian President Stipe Mesic, Prime Minister Ivo Sanader, and several other top officials on 8 February that Washington appreciates Zagreb's help in the war against terrorism and its deployment of 50 military-police officers to Afghanistan, regional and international media reported. Croatia also supplies some arms and ammunition to the Afghan Army. Rumsfeld added that he hopes Croatia will enact military reforms so that it can qualify for NATO membership. "The Washington Post" reported that Sanader said his government is considering sending an unspecified number of "doctors and aid workers" to Iraq. The war in Iraq is highly unpopular in Croatia. Neither Sanader nor Rumsfeld publicly mentioned a possible bilateral extradition-immunity agreement between Washington and Zagreb that would prohibit the handover of each other's citizens to the International Criminal Court (ICC). Sanader nonetheless said that he and Rumsfeld "discussed Croatia's participation in the antiterror coalition.... We want to be a part of this antiterrorist coalition, and the government will now have to discuss this issue." (RFE/RL 09.ii.04) HUNGARIAN ENVIRONMENT MINISTRY URGES CROATIA TO ABANDON PLANS FOR POWER PLANT The Hungarian Environment Ministry issued a statement on 02-Feb-04 in which it urged Croatia to abandon plans to build a hydroelectric power plant on the Drava River, Jutarnji List reported Building the plant would endanger the ecology of the river, where it forms the border between Hungary and Croatia, the ministry argued. If Croatia starts construction of the power plant, Hungary will appeal to an international court as stipulated in the Helsinki Convention on Shared Waterways, the statement concluded. (NewsBase 05.ii.04) CZECH REPUBLIC FIRST DEPUTY FOREIGN MINISTER ASKS THE 15 EU COUNTRIES TO OPEN LABOUR MARKETS TO CZECHS Jan Kohout, first deputy Foreign Minister, has asked the 15 EU countries to open their labour markets to Czechs after EU enlargement, Mlada fronta Dnes reported. Most of the EU 15 are trying to prevent the immediate access by workers from the ten new member countries to their labour markets. After the meeting with the EU countries' ambassadors on Tuesday, Kohout said that Prague would monitor the measures taken by the current member countries. If it reached the conclusion that they violate the conditions set by the accession treaty and that they discriminate against Czech citizens, it would turn to the European Court of Justice, he said. The Czech Republic is not considering introducing reciprocal measures to restrict free movement of labour, the foreign ministry's press department said. "Nevertheless, where necessary, the Czech government keeps the right to introduce certain restrictions to react in individual cases and on the basis of real developments on the labour market," the foreign ministry said, referring to Kohout's talks. Under the accession treaty, EU countries can impose a transitional period of up to seven years on workforce migration from the new member states. It was mainly Germany and Austria which pushed the provision through and said they would apply it to the Czech workforce, partially at least. Other countries pledged they would open their labour markets immediately after the new countries' entry. However, many of them seem to be back-pedalling now and seeking ways to tighten conditions for immigrants. (NewsBase 12.ii.04) DECISION ON PRIVATISATION OF SEVEROCESKE DOLY AND SOKOLOVSKA UHELNA TO BE MADE BY 15-FEB A decision on the privatisation of brown-coal mining companies Severoceske doly and Sokolovska uhelna will be made in ten days, Prime Minister Vladimir Spidla told a news conference after government meeting, Mlada fronta Dnes reported. More than a month ago, bids for 55% in Severoceske doly were submitted by financial group J&T, Czech-Slovak group Penta and Appian Group. A privatisation commission according to unofficial information recommended to the government J&T as the winner of the tender, but as the best business plan it chose that presented by Penta. J&T offered 6.8 billion crowns for the state-owned shares, while Appian Group's bid was 2 billion crowns lower. Penta originally offered 5.4 billion crowns for the mines through the Oakfield company, but since then it has twice raised its bid to 7.5 billion crowns after the official deadline expired. But Trade and Industry Minister Milan Urban said the prices offered did not correspond to the market estimates of some 7.5 to 10.8 billion crowns. In the tender for a majority stake in Sokolovska uhelna, the only suitor Sokolovska tezebni, controlled by Sokolovska uhelna management, offered some 2.1 billion crowns. Urban said last week there were still four scenarios for the coal mines' privatisation. The cabinet will either decide based on December's recommendation by a privatisation commission or launch exclusive talks on price and the business plan with companies the commission recommended to the government. It could also start talks with all bidders or cancel the tenders, Urban said. (NewsBase 06.ii.04) GEORGIA GEORGIAN PRESIDENT BEGINS MOSCOW VISIT Mikheil Saakashvili arrived on 10 February in Moscow for a working visit and, in what appears to be a demeaning violation of diplomatic protocol, was greeted at the airport by First Deputy Foreign Minister Valerii Loshchinin, Interfax reported. In an address later on 10 February to the Moscow State Institute of International Relations (MGIMO), Saakashvili branded the present level of Georgian-Russian relations "unacceptable" and said they must be improved. He blamed that situation partly on Georgia's previous leadership, but at the same time accused Russia of having distanced itself from the Caucasus in the 1990s. Saakashvili denied that Georgia will host a U.S. military base, saying the country should not become a battlefield in a tussle for influence between Russia and the United States. Saakashvili also denied that the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, currently under construction, is of vital economic significance for Georgia. He predicted that once the BTC pipeline is completed, Turkey will restrict even further the passage of oil tankers through the Turkish straits. He proposed construction of a pipeline from Novorossiisk via Georgia to Turkey as an alternative export route for Russian crude, Caucasus Press reported. (RFE/RL 11.ii.04) HUNGARY VERTESI EROMU SELL-OFF AT RISK OF COLLAPSE Vertes Energia Kft will drop its planned purchase of state-owned power company Vertesi Eromu Rt if it is unable to reach an agreement by Feb. 29 with the State Privatization and Holding Rt (APV) on how it can compensate the buyer for payment of the new environmental tax. The law on the environmental tax was passed by Parliament at around the same time as Vertes signed the privatization contract. However this did contain a clause on compensation, but left the issue unspecified, Jeno Faller, a representative of part owner Faller Consulting, said. Vertes Energia's other owner is the former minister Laszlo Kapoly. (BBJ 11.ii.04) TALKS AIM TO ADOPT STANCE OVER EU CHEMICALS DIRECTIVE Company executives and officials of several ministries will later this month resume a crucial round of negotiations, begun at the end of last year, to determine Hungary's position concerning a far-reaching EU environmental directive. "The measures proposed by the draft directive would mean vast investments by industrial firms," said Gyula Bihari, director responsible for technological safety at Hungarian chemical firm BorsodChem Rt. "This could paralyze the development of the local chemical industry." According to Bihari, compliance with the new directive would mean hundreds of millions of forints in costs for BorsodChem. "The tests proposed by the draft directive would be so expensive that it would seriously harm the competitiveness of the European chemical and pharmaceutical industries," said Erzsebet Odor, head of the environmental committee at the Association of Pharmaceutical Manufacturers in Hungary (MaGyOSz). The draft directive, which the European Commission presented to both the current and the ten candidate member states last October, proposes a new regulatory framework for chemicals. Under the proposed new system, called REACH (Registration, Evaluation and Authorization of Chemicals), enterprises that manufacture or import more than one ton of a chemical substance per year would be required to register it in a single, integrated database. REACH would furthermore assign greater responsibility to industry players to manage the toxic risks from chemicals to human health and the environment, and to provide safety information on the substances. (BBJ 09.ii.04) GROWING EUROWEB TO BUY SMALL ISP ELENDER Nasdaq-listed Euroweb International Corp. is highly likely to acquire 100% of Elender Business Communications Rt, the two companies said last week. This would create the largest independent ISP in Hungary. On Elender's side, the term sheet was signed by all its current owners, of which the largest is investment company Wallis Rt. The announcement comes one week after Euroweb, an ISP that fully owns operations in the Czech Republic, Romania and Slovakia, announced plans to buy out the outstanding shares of Euroweb Hungary Rt, thus becoming full owner of the Hungarian company too. Elender had $22.5 million in revenue in 2003. "Elender's strength in the corporate and public sector, and in its web services, coupled with Euroweb Hungary's traditionally strong corporate base, place the company in a strong position in a region where small ISPs are finding competing with large incumbent operators increasingly difficult," said a Euroweb press release. Koka said the signing of the term sheet does not mean a selling procedure has been closed. "I can't say the bidding procedure is over, but we are more committed to Euroweb. It's progressing at a good pace, though there are certain terms that we have to agree on," he said. Koka added that Elender is not a strategic asset for its majority owner, Wallis. He noted that Elender is not big enough to pose a threat to dominant ISP Axelero Internet Rt, a subsidiary of market-leading telecom Matav Rt, and expressed the view that it is good that consolidation is underway in the Hungarian internet sector, bringing more competition for the market leader. Koka said he is fully comfortable with Wallis' intention to sell. If offered a significant role in the new combined company, he said he would seriously consider it. The acquisition, together with the recently announced intended purchase of the remaining shares of Euroweb Hungary, could bring Euroweb International forecast revenues of approximately $43 million on an annualized basis starting Q2, 2004, an increase of 300% compared to the previous year, said the Euroweb press release. The acquisition price for Elender will consist of both payments in cash and in new shares in Euroweb, according to the press release. Kriszta Hollo, strategic advisor at Euroweb International, said it is too early to disclose details of the Elender deal. (BBJ 09.ii.04) KAZAKHSTAN PM: KAZAKHSTAN TO JOIN WTO BY MID-2006 Kazakhstan is planning to join the World Trade Organization at the end of 2005 or the beginning of 2006, Kazakh Prime Minister Daniyal Akhmetov told a Thursday news conference in Astana. This year Kazakhstan will draft and submit to the WTO working group a document on the basis of which the accession decision will be made, he said. Kazakhstan "has a number of problems related to WTO admission stemming from the need to harmonize its regulatory acts with WTO regulations," Akhmetov said. Another issue is the protection of the Kazakh presence in a number of extracting sectors stipulated by the laws on oil and natural resources, he said. "We will definitely protect this provision," he said. Kazakhstan has passed a number of legal documents supporting and protecting domestic parties to projects involving foreign capital, Akhmetov said Kazakhstan also insists on subsidized farming. (Interfax 06.ii.04) LATVIA ANOTHER GOVERNMENT BITES THE DUST Already famed for its short-lived governments, Latvia has added another one to the list. After almost 15 months in office and shortly before the country's official accession to the EU and NATO, the cabinet announced its resignation on 5 February. While Prime Minister Einars Repse accused the opposition of forcing the cabinet to step down, the majority of politicians and analysts stressed that Repse's working methods had made the further existence of the coalition impossible. What might have come to a surprise to the outside world was a long expected event for most people in Latvia. Some coalition partners have occasionally acted like the opposition since last autumn. Moreover, Repse was recently left with a minority government when one of the coalition parties decided to leave the cabinet in late January. Signs of deep conflicts within the coalition had become visible back in September, when three of the four coalition parties announced that they had lost confidence in the prime minister. The Christian-oriented conservative Latvia's First Party (LPP), the Greens' and the Farmers' Union (ZZS), and the nationalist conservative For Fatherland and Freedom/LNNK (TB/LNNK) said at the time that Latvia was on the brink of dictatorship. They also alleged that "blackmail, threat, and slander have become Repse's daily tool" directed against anyone whose opinion differs from that of his own. The comments also served to spoil the "yes" vote of the country's EU referendum that had just taken place. (TOL 09.ii.04) LITHUANIA LITHUANIAN IMPEACHMENT PANEL DELAYS FINAL REPORT Julius Sabatauskas, deputy chairman of the parliamentary commission formed to investigate possible impeachment proceedings against President Rolandas Paksas, told reporters on 10 February that the commission will not be able to present its conclusions by the planned deadline of 13 February, Lithuanian Radio reported. Sabatauskas cited an unexpected decision by Paksas that morning to present a written response to accusations against him. Other factors include the failure of 10 of the 40 witnesses who testified to the commission to sign the transcripts of the evidence they gave, ELTA reported on 9 February. The 10 include presidential advisers Gintaras Surkus and Vitale Vinickiene, former adviser Remigijus Acas, and leading Liberal Democratic Party members Valentinas Mazuronis and Henrikas Zukauskas. (RFE/RL 10.ii.04) POLAND POLAND SET TO BECOME MAIN BENEFICIARY OF EU BUDGET If the proposed EU budget for 2007-2013 is accepted, than Union expenditures will gradually increase by one third to reach EUR 150 billion annually. The major beneficiary of this move will be Poland, which would receive between EUR 75-80 billion over the six year period. The largest amount would be designated for the modernization of the economy within structural funds, which value could top EUR 10 billion annually. Such proposals were presented on Tuesday by the European Commission in Strasbourg, which means that it ignored demands of the largest net payers into the Common budget. Additional money would be necessary for modernizing the infrastructures in Central Europe and accepting Romania and Bulgaria into the EU soon. (WBJ 11.ii.04) PKN ORLEN SIGNS PRELIMINARY DEAL WITH BRENNTAG PKN Orlen, the nation's leading oil concern, signed a preliminary deal with Brenntag, an international distributor of chemicals, to take over the Polish company's subsidiary, Orlen Polimer, which distributes polyolefin, used in the production of plastics. "The final contract should be signed in March or April and we await a decision of the Interior Ministry to purchase a 100% stake in the company," said Zenon Maslona, head of Brenntag in Poland. He also added that in this way, his company would become Orlen's commercial partner as well as a major player on the plastics market in Poland. "At present, there are 15 distributors of plastics in Poland, but only 2-3 should remain on the market," said a representative of a market competitor. (WBJ 10.ii.04) PM MILLER: GENERAL ELECTION IS HAUSNER PLAN IS NOT BACKED Prime Minister Leszek Miller has declared that either Hausner's budget cuts plan will be accepted or parliamentary elections will take place, although not before June's elections to the European Parliament. However, the leader of the Democratic Left Alliance (SLD) Parliamentary Club, Krzysztof Janik, has suggested that an early general election could take place on May 3, but this would require the term of the Sejm to be terminated and this in turn requires a majority of votes from SLD deputies. According to an opinion poll conducted by Janik among SLD Members of Parliament, most would agree to such a decision. "We support early elections as well as an immediate reform of public finances," said Civic Platform (PO) member, Zbigniew Chlebowski. (WBJ 09.ii.04) ROMANIA ROMANIAN OPPOSITION PARTIES DEMAND GOVERNMENT'S RESIGNATION The opposition National Liberal Party-Democratic Party alliance demanded on 2 February that the government resign for "having damaged Romania's honor and [international] image," the daily "Evenimentul zilei" reported the next day. The alliance claimed that an amendment proposed by Dutch Europarliamentarian Arie Oostlander to the country report about to be debated in the European Parliament is not directed against Romania as a whole but against Prime Minister Adrian Nastase's cabinet, which the alliance says "is in the habit of declaring one thing and doing the opposite. A similar demand for the government's resignation was made one day earlier by the chairman of the Popular Alliance party, former President Emil Constantinescu. (RFE/RL 03.ii.04) RUSSIA KHODORKOVSKY NO LONGER A MENATEP OWNER Jailed oil baron Mikhail Khodorkovsky is no longer a shareholder of Group Menatep, the holding company through which he controlled the embattled Yukos oil major, his lawyer Anton Drel said Wednesday. On Oct. 20, several days before he was arrested at gunpoint in Siberia, Khodorkovsky pulled out of the company that formed the core of the financial empire he built in the 1990s, Drel said. The transfer came on the same day as a leading prosecutor announced that Khodorkovsky would be called in for questioning -- a sign the tycoon was the next target in a widening probe of core Yukos shareholders that began with the arrest of his partner, Platon Lebedev, three months earlier. "This was a planned step," Drel said in a telephone interview. Shortly after his arrest, Menatep revealed that Khodorkovsky had handed over control of a special trust that owned 50 percent of Menatep. But Drel said Wednesday that Khodorkovsky had relinquished all his shares in the holding, including another 9.5 percent that he held personally. At the time of his arrest, the 59.5 percent Khodorkovsky held equaled roughly 26 percent of Yukos, worth $7.8 billion. Drel would not say, however, whether Khodorkovsky had sold the shares or merely transferred them to a nominee to be held in trust. He said he could not disclose the name of the new holder of the shares. He said, however, the change in ownership of Menatep had not affected control over Yukos. "The system of management over the controlling stake was not connected to concrete people, but was made on the basis of agreements between shareholders. There is a special voting procedure," he said. He would not elaborate further. The revelation came a day after Menatep said it would post changes to the group's ownership structure on its web site, www.groupmenatep.com. Some analysts said the changes could still mean that control of Yukos may have changed hands in the seven months of unrelenting pressure on key stakeholders, all of whom have been charged with either massive fraud or tax evasion or both. (The Moscow Times 12.ii.04) NIKOIL FINANCIAL CORPORATION APPLIES TO ANTI-MONOPOLY MINISTRY TO BUY OVER 75% IN URALSIB BANK Acting via Aktiv Holding, Nikoil financial corporation has applied to Russia's Anti- Monopoly Ministry (Russian acronym, MAP) for permission to buy over 75% in the Uralsib bank. Experts put the actual stake at between 75% to 78%. MAP will decide on the issue within a month. Several Nikoil top managers have recently changed over to the Uralsib bank. News about the deal spread last autumn, but the parties have so far held the line of a possible merger between Uralsib and Avtobank Nikoil. (NewsBase 12.ii.04) MISSING PRESIDENTIAL CANDIDATE RYBKIN RESURFACES Former Duma Speaker and presidential candidate Ivan Rybkin, who was reported missing on 5 February, phoned home on 10 February to say that he had spent the last four days in Kyiv with friends, unaware of the current "hysteria" in Moscow about his whereabouts, Interfax reported. "I have the right to two or three days of a private life," Rybkin said. "I came to Kyiv with my friends, had fun, turned off my mobile phones, and did not watch television." Albina Rybkina, Rybkin's wife, told the agency that she "pities poor Russia that such people want to lead it," and confirmed that she was speaking of her husband. Ksenia Ponomareva, the head of Rybkin's election headquarters, said that she is likely to resign, but that she first wanted to hear Rybkin's explanation. When greeted by reporters upon his arrival back in Moscow, Rybkin did not deny that he might withdraw his candidacy, "Kommersant-Daily" reported on 11 February. Rybkin said he returned from a difficult round of talks on Chechnya, but that he was not detained against his will. No other media mentioned any talks on Chechnya. Asked what happened, Rybkin said "no comment," but admitted that he was very upset to hear his daughter crying over the phone. He then said he was glad to be back in his native land and that he had nothing more to say on the matter. (RFE/RL 11.ii.04) THREE YUSHENKOV SLAYING SUSPECTS PLEAD GUILTY Three of the six suspects on trial in the high-profile murder of Liberal Russia co-leader and Deputy Sergey Yushenkov acknowledged in a Moscow court on Monday that they had participated in the killing, Interfax reported. Alexander Vinnik, assistant to Mikhail Kodanyov, head of a rival wing in Liberal Russia, told the Moscow City Court that Kodanyov had given him $50,000 to organize the murder. He said he then contacted Igor Kiselyov and gave him $20,000 to buy a gun and other items needed to carry out the killing. Kiselyov then purchased a gas pistol that was re-fitted to fire bullets and recruited three assistants, Alexander Kulachinsky, Anton Drozd and Vladislav Palkov, according to prosecutors. The four devised a plan and put it into motion on April 17 when they drove to Yushenkov's apartment building on Ulitsa Svobody. It was Kulachinsky who fired the shot that killed the deputy, prosecutors say. Kiselyov and Kulachinsky partially admitted their guilt in court Monday, Interfax reported. It was not immediately clear what they had said. Kodanyov, Drozd and Palkov maintained their innocence Monday. Yusehnkov, 52, was a vocal critic of Liberal Russia co-founder Boris Berezovsky and he co-headed a wing of Liberal Russia that in late 2002 kicked out a rival wing loyal to Berezovsky. Yushenkov was killed just hours after announcing that his wing would take part in the December State Duma elections. Berezovsky, who has been given refugee status in Britain, then appointed Kodanyov as his representative in Russia and chairman of his wing of the party. Kodanyov and Vinnik were arrested in June, while the four other suspects were detained later that year. Investigators said in July that Vinnik had confessed to having helped organize the killing on orders from Kodanyov. Vinnik's lawyer suggested at the time that prosecutors had drugged his client to get the confession. Prosecutors say the murder was carried out in an attempt to take control of Liberal Russia's finances. The trial is by jury, as requested by Kodanyov, who faces life in prison if convicted on charges of masterminding the murder. (The St. Petersburg Times 10.ii.04) RUSAL PLANNING $7BLN EXPANSION Russian Aluminum, which makes one-eighth of the world's aluminum, plans to spend about $7 billion in the next 10 years to increase output by building new plants, making acquisitions and upgrading smelters. The company may invest as much as $2 billion to buy new assets, another $4 billion to build new plants and $1 billion to upgrade existing facilities, Oleg Deripaska, Moscow-based RusAl's controlling shareholder, said on the company's web site. "We need to create and keep advantages that would enable RusAl to win the competition with global aluminum giants," Deripaska said. RusAl plans "to build and acquire new capacity in Russia's Irkutsk region, Kazakhstan, Tajikistan, India, Nigeria and Guinea," he said. The plan is an extension of RusAl's earlier-announced program to spend $4 billion through 2010 on boosting production. Closely held last month said RusAl may sell Eurobonds in 2006 and offer shares to the public in 2007. (The Moscow Times 10.ii.04) THE DEAD AND THE MISSING Four years after Vladimir Putin came to power on a wave of support for his campaign in Chechnya, the ongoing war has returned to haunt his re-election campaign following a terrorist attack in the Moscow subway and the disappearance of a presidential rival and leading critic of his Chechen policy. The latest in a series of terrorist attacks to rock the Russian capital over the past five years came at around 8:30 a.m. on 6 February, when a bomb ripped apart a subway train taking rush-hour commuters to work. Some of the survivors walked 300 meters back to the station they had just left, Avtozavodskaya, making their way over the bodies and wreckage. Others walked two kilometers through the smoke-filled tunnel to the next station, Paveletskaya. Around 700 eventually emerged from the tunnel. In total, 39 people have been confirmed dead so far. Deputy Interior Minister Alexander Chekalin said 122 were taken to the hospital. The figures could rise substantially, though. Officials from the Federal Security Service (FSB) say that the extent of the tragedy will become clear only in a week's time. A hospital attendant was reported as saying that there were "about 60 intact dead bodies and approximately the same amount of mutilated dead bodies." Moscow's mayor, Yuri Luzhkov, says that investigations so far suggest the explosions were the work of a suicide bomber. A suspect was briefly detained on 7 February, police say. No one has admitted responsibility for explosions. However, President Vladimir Putin immediately blamed Chechen rebels led by Aslan Maskhadov. Defense Minister Sergei Ivanov was not so categorical in his assertions when asked for his opinion during a trip to Munich, refusing to ascribe blame yet. However, both were equally adamant in their rejection of opening talks with Chechen rebels. "Russia does not negotiate with terrorists; it destroys them," Putin said, while his defense minister said that "whoever hopes we will start negotiations, let them go and start negotiating with Osama bin Laden or Mullah Omar," referring to the leaders of Al Qaeda and the Taliban. Russia has long maintained that the Chechen rebels are funded by Al Qaeda and the Taliban and have close operational links with the two radical Islamic groups. Maskhadov has denied any connection with the attack. (TOL 09.ii.04) VIMPELCOM UNDER ATTACK AS SPECULATION RIFE What started as a dispute over an unpaid $800 phone bill could turn into a clash of titans involving hundreds of millions of dollars. A criminal investigation into No. 2 mobile phone operator Vimpelcom, reported Wednesday, is pitting oligarch Mikhail Fridman's Alfa Group against the St. Petersburg-based giant Telekominvest. Moscow prosecutors have launched an investigation into Vimpelcom on allegations of enterprising without a license and of illegal, large-scale profit-taking, said Vsevolod Argunov, a lawyer for Mobilny i Sovremenny. Mobilny i Sovremenny, an unknown telecoms company, asked prosecutors to investigate. Market watchers suspect that Telekominvest is really behind the investigation. The conflict has its roots in Alfa's contested 2003 acquisition of a 25 percent stake in Megafon for an estimated $300 million. Until then, No. 3 mobile phone operator Megafon was associated only with Telekominvest and its foreign shareholders. Telekominvest and the Communications Ministry, which is headed by former Telekominvest CEO Leonid Reiman, want Alfa out of the Megafon deal, analysts said. Alfa is rumored to want to merge competitors Megafon and Vimpelcom, in which it also has a stake. Alternately, Alfa could use its Megafon stake as a bargaining chip in any future privatization of Svyazinvest, the state-owned fixed-line monopoly. The Petersburgers are pulling political strings to have the courts and prosecutors target Vimpelcom, analysts said. Telekominvest denies this. Just last December, the press was billing a separate civil dispute between a mobile phone user and Vimpelcom as one man's battle against a corporation. The story quickly changed when telecoms regulators threatened to take away Vimpelcom's license. The affair started last summer when Vimpelcom took Oleg Chubarov to court to force him to pay an outstanding $800 phone bill. Chubarov counter-sued, alleging that Vimpelcom was not authorized to make him pay because of a licensing technicality. Vimpelcom won the case in January, and Chubarov has appealed. Argunov, a lawyer for Chubarov, now also represents Mobilny i Sovremenny Some foreign investors are asking themselves if there are greater forces behind the charges against Vimpelcom - and if the conflict is a replay of the Yukos affair, in which prosecutors put Russia's richest man, Mikhail Khodorkovsky, behind bars. President Vladimir Putin's economic advisor Andrei Illarionov increased concerns when he told participants of the World Economic Forum in Davos, Switzerland, that he could not give "assurances that the attack [on Vimpelcom] is not a personal attack." (The St. Petersburg Times 06.ii.04) GAZPROM TO SAFEGUARD INTERESTS DURING EU ENLARGEMENT Gazprom urged the government to help it safeguard its interests during EU enlargement and Russia's bid to join the WTO, the company said following a meeting of its board of directors. Gazprom provides 26% of all gas consumed in Europe and accounts for 40% of European gas imports. The Russian gas giant supplied 132.9 billion cubic meters (bcm) of gas to Central and Western Europe in 2003, compared with 128.6 bcm in 2002. Revenues from the sale of gas to Europe were just over $16 billion, which was 22% higher than in 2002. (Interfax 05.ii.04) YUKOS, SIBNEFT AGREE ON DIVORCE Yukos and Sibneft said Tuesday that they have reached an agreement to cancel their merger, an announcement that drove Yukos share prices up nearly 8 percent. The announcement comes after weeks of speculation over whether the merger of the two oil giants would go through in the face of a legal assault by prosecutors on Yukos. Traders cheered the news, despite the lack of clarity about the divorce conditions. Yukos shares rose by 7.66 percent to $11.25 on the RTS exchange, while Sibneft shares gained 1.62 percent to $3.13. No details on the conditions of the de-merger were provided by Millhouse, except that it would take place "within the shortest period of time possible." Yury Beilin, a Yukos vice president, said that Yukos will follow the shareholders' decision. Yukos-Sibneft was poised to become the world's No. 4 oil producer. But the merger came into question following the October arrest of Yukos CEO Mikhail Khodorkovsky's and the ensuing legal turmoil surrounding his company. Yukos suddenly faced the prospect of a $3.4 billion tax bill for 2000, as well as a plethora of complaints related to Yukos production licenses. It was unclear Tuesday whether Yukos will be compensated for effectively providing its competitor's shareholders with an interest-free $3 billion loan. A split would serve the best interests of both companies, Nesterov said. Sibneft would limit its exposure to the highly-politicized legal battle around Yukos, while Yukos could finally "get rid of at least one of its four major headaches." Lev Snykov, oil and gas analyst with NIKoil, said the surge of Yukos shares was an indicator that investors linked the company's merger problems with its legal problems. The removal of one problem could lead to the easing up of the other, said Snykov Yukos said this week that it plans to reduce dividends instead of using tax minimization schemes criticized by the government. Snykov, however, said that while these new plans are vague, rumors that Yukos will take money out of the company through dividends have buoyed the share price. Yukos head Simon Kukes met with Natural Resources Minister Vitaly Artyukhov on Tuesday to discuss violations the ministry had uncovered in meeting environmental standards at its Arctic Gas subsidiary, the ministry said in a statement. Yukos has recently come under pressure from the ministry, which is conducting a sweeping probe into whether Yukos is meeting its licensing requirements. The Natural Resources Ministry and Yukos could not be contacted late Tuesday for further comment. (The Moscow Times 03.ii.04) PUTIN URGES CORRUPTION CLAMPDOWN President Vladimir Putin urged prosecutors Friday to step up anti-corruption efforts but warned them against abusing their sweeping powers. In a speech before top prosecutors, Putin also warned them against jailing suspects if they don't have strong evidence to defend their cases in court. He urged prosecutors to conduct "systematic" anti-corruption efforts and not limit the fight against graft to "individual, high-profile cases." The prosecutors must oversee compliance with laws, and "not interfere with economic or any other activities," Putin added. Prosecutors' probe against Russia's largest oil company, Yukos, which reached a peak with the Oct. 25 arrest of its then-chief Mikhail Khodorkovsky and the freezing of about 40 percent of the company's assets, has been widely perceived as a Kremlin-inspired punishment for the magnate's political activities. Putin has denied any political undertones and cast the case as part of anti-corruption efforts. Prosecutor General Vladimir Ustinov said that more than 1,800 people were convicted on corruption charges last year even though his office registered 7,000 such crimes, Interfax and Itar-Tass reported. He criticized courts in many Russian provinces for being too lenient toward corrupt officials. Ustinov specifically targeted military corruption, saying that more than 1,000 servicemen were convicted of embezzlement last year. He said that the amount of food and ammunition stolen in the armed forces last year was enough to feed and dress the huge military armada in the North Caucasus region for one month. Checks at just one air force grouping revealed that 4,000 tons of jet fuel were missing - enough for a squadron of MiG fighter jets to make flights throughout the year, Ustinov said, the agencies reported.While corruption has mushroomed, other crimes have also soared. Of the nearly 3 million crimes registered last year, about 1.2 million have remained unsolved, Ustinov said. (The St. Petersburg Times 03.ii.04) SERBIA AND MONTENEGRO SERBIAN PARTIES APPEAR ON ALLEGED IRAQI OIL LIST Several Serbian political parties appear on a list published by the Iraqi daily "Al-Mada" on 25 January of companies, organizations, and individuals who allegedly received crude oil in return for political support for Saddam Hussein's regime in Iraq. Mira Markovic's United Yugoslav Left (JUL) allegedly received 9.5 million barrels of oil, former Yugoslav President Slobodan Milosevic's Socialist Party of Serbia (SPS) is listed as having been given 1 million barrels, and something called the Italian Party allegedly got 1 million barrels. An individual whose name in Arabic transliteration appears to be that of former Yugoslav President Vojislav Kostunica is also listed as having received 1 million barrels. Persistent but unconfirmed reports in 2002 suggested that Kostunica or his entourage knew of or approved alleged covert Serbian and Bosnian Serb arms sales to Iraq. The top Belgrade authorities at the time denied the charges. (RFE/RL 30.i.04) SLOVAKIA SKY MEDIA MANUFACTURING PLAN TO BUILD IN NOVE MESTO NAD VAHOM The planned production plant that the Sky Media Manufacturing (Switz) will have in Nove Mesto nad Vahom will be the biggest of its kind in Europe and the fourth largest worldwide, Sme reported. The company's director general, Vladislav Khabliev, said on Monday in Bratislava that the new plant will produce 60m CD-ROMs and DVDs monthly. Khabliev said that the construction of the new plant would begin on 1 May 2004, and production would be launched in October. (NewsBase 11.ii.04) SLOVAK PREMIER URGES VOTERS TO IGNORE REFERENDUM Prime Minister Mikulas Dzurinda said on 6 February that Slovaks should ignore a nonbinding referendum on early elections called by President Rudolf Schuster when they go to the presidential polls on 3 April, CTK and TASR reported. Schuster called the plebiscite for the same day as presidential elections after the Confederation of Trade Unions (KOZ) announced it had collected more than half a million signatures backing the vote. Dzurinda reiterated his claim that the nonbiding plebiscite is "unfair." "Just as it is not right to stop a soccer game at halftime, it is also not right to end [the government's] mandate early, when it is clear that positive results come in the second half. People should ignore this unfair affair," CTK quoted Dzurinda as saying. "It is natural that today we are not very popular, and that the opposition wants to use this [lack of popularity] to impose early elections." Opposition representatives criticized Dzurinda's appeal. Movement for a Democratic Slovakia parliamentary deputy Sergej Kozlik said his party will ask supporters to participate in the referendum, according to TASR. (RFE/RL 09.ii.04) UKRAINE KYIV DENIES REPORTS OF NUCLEAR SALES TO AL-QAEDA The Ukrainian Foreign Ministry said in a statement on 9 February that reports in some foreign and Ukrainian media alleging sales of tactical nuclear weapons to the Al-Qaeda terrorist network by Ukrainian scientists are "totally groundless and surprising," Interfax reported. The London-based "Al-Hayat" newspaper, referring to unnamed members of Al-Qaeda, reported on 8 February that Ukrainian scientists traveled to the Afghan city of Kandahar in 1998 and struck a deal with Al-Qaeda for the sale of an unspecified number of nuclear "suitcase bombs." The ministry asserts that "suitcase nuclear weapons" were not stored in Ukraine. The statement notes that all tactical nuclear weapons were transferred from Ukraine to Russia in May 1992 under a bilateral agreement with Russia. "I can say this is a completely dull canard, which highlights once again that certain circles in this world are willing to defame Ukraine," Volodymyr Horbulin, a presidential adviser on national security, commented on the "Al-Hayat" allegations. In September 2002, Communist Party leader Petro Symonenko alleged that the government documented the transfer of 2,200 of Ukraine's 2,400 nuclear warheads to Russia, while the fate of the remaining 200 warheads is unknown. (RFE/RL 10.ii.04) UKRAINE INTENDS TO TRANSPORT OIL TO EUROPE Ukrainian Deputy Prime Minister Andrei Klyuyev has informed the U.S. about Ukraine's intention to use the Odessa-Brody pipeline to transport Caspian oil to Europe and pass a concession law setting the legal foundation for its commercial use. Klyuyev told this to U.S. officials during consultations on the Eurasian oil transport corridor held in Washington on Thursday, the Ukrainian Embassy in the U.S. reported on Friday. The consultations addressed the implementation of the Ukrainian project to transport Caspian oil to Europe. Klyuyev told U.S. officials about recent developments in this project, as well as an agreement with Poland to build a pipeline leading to Plotsk, Poland. U.S. officials emphasized that they back the use of the Odessa- Brody pipeline and the Yuzhny oil terminal to transport oil to Europe. 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