| Other Photos |
 |
|
 |
Daughters of “Big Brother”
The developments of the last few days have shown that it is rather dangerous for private companies to enter into arguments not only with the state, but also with its vassals, for this leads to higher risks for any investments in the Russian industry.
The famous phrase from George Orwell's “1984”, Big brother watches you everywhere, acquires a new meaning in Russia. Our “Big Brother”, judging by many indications, has started a big family and now one should watch out all the time not to cross his path, and that of his numerous relatives, even accidentally. We mean the beloved “daughters” of the state.
About a fortnight ago the “Nortgaz” Company risked to enter into dispute with the state-owned “Gazprom”. On April 15, the Moscow Court of Arbitration annulled the licence of the company for the development of the Severo-Urengoi gas and oil deposit. This story is very indicative, indeed. “Nortgaz” was organized in 1993 for the development of the deposit with the estimated reserves of 353 billion cubic metres of gas, 12 million tons of oil and 62 million tons of gas condensate. In 2001 the company was reorganized as a result of which the affiliate of the “Gazprom” Corporation, “Urengoigazprom”, was dropped as one of the company's owners. Since then “Gazprom” has constantly been at law with “Nortgaz” and always lost the case. In February 2004, “Gazprom” applied to the Moscow Court of Arbitration with the claim to annul the licence of “Nortgaz”. However, in July 2004 the case was dismissed under the statute of limitations.
But six months later the Federal Court of Arbitration of the Moscow Region returned the case for reexamination. The defendants on the claim of “Gazprom” were the Ministry of Natural Resources and “Rosnedra” Corporation which had, allegedly unlawfully, issued the licence to “Nortgaz” for the development of the deposit. “Nortgaz” representatives were summoned to the court as the “third person” and were not even given the floor to speak in the debate. The representatives of the state agencies admitted the “well-founded” claims of the state-owned gas monopolist. Taking into account the fact that the disputed deposit is the main asset of “Nortgaz”, analysts began to talk of the possibility of the company's admission of its financial insolvency.
At the end of 2003, “Nortgaz” issued bonds to a sum of 2.1 billion roubles, and the investors who bought them apparently assessed “Nortgaz” as a reliable borrower on the basis of the court decision adopted in 2004, which recognized the “Gazporm” claims unfounded. However, the Russian Themis has suddenly “tempered mercy with justice”, as a result the price of “Nortgaz” bonds dropped to 85% on April 18, and on April 19 it was only 72% of the face value.
What should the private investor orient himself to?
This case has shown the emergence of a new type of risk on the Russian market, the risk of a “conflict with a state-owned enterprise.” It should now be admitted that the sphere of interests of the bureaucracy in the defence of its property has considerably broadened. Another example of this is the recently published decision of the Moscow Court of Arbitration to arrest the basic assets of NK YUKOS as guarantee of the claim of “Yuganskneftegaz”; the former “daughter” of YUKOS has calculated that its “mother” company inflicted a loss on it by the transfer system of price formation (for more details of the last case of YUKOS see p.14). Analysts have noted that behind this claim stands the state-owned company “Rosneft” striving to get the main assets of the disgraced leader of Russian oil extraction.
It's sad that in these conditions investors will be unable to understand who of the emitters they should present their claims to. The newspaper “Vedomosti”, for instance, reported last week that the Federal Tax Service sent an inquiry to the Constitutional Court on whether the statute of limitations on tax evasions corresponds to the Constitution. Tax officials insist that they have the right to present claims to taxpayers irrespective of the time of their violation of the law.
Taking into account the fact that serious tax claims have been presented to “Vympelcom” and TNK, investors should not hope for any benefits. Nikolai Pryanishnikov, vice-president of “Vympelcom”, admitted that the biggest drop in the company's securities took place after tax claims for 2001-2002 were presented to it, and its effect is still felt.
Pyotr Rushailo
All the Article in Russian as of Apr. 25, 2005
|
|
|
Photo: Yury Martyanov
