The Shareholders Data Was Broken In
// The database of registered holders of NIKoil is for sale on the internet.
Raiders already familiarized themselves with this information a month ago.
For a first time in Russian corporate history the database of one of the largest registrars became a possession of con artists. Last week, the announcement about the sale of NIKoil database appeared in the Internet. The data base contains registers of several hundred Russian companies. Many from the stolen list are facing the risk of hostile takeover, and the companies’ minority shareholders might loose their stocks.
Last week, the Web site zakhvat.ru published in the section “Hostile Takeovers” an ad, offering to buy the database of registering company NIKoil until Aug. 1. The ad gives the price -$12,000 – and electronic address of the vendor. NIKoil is one the largest Russian registrars: the Moscow office a of the company alone carriers the registrations of the stockholders from 380 publicly trading companies. Among the clients of NIKoil are such large corporations as LUKOIL and Moscow Telephone Station.
“The ad on our site can be published by any user under any name,” Andrey Tyukalov, publishing editor of zakhvat.ru, told Kommersant. “We do not verify the information, and no agreement with the administration of the site is necessary to place the ad. But, when we saw the ad about the sale of NIKoil database, we were shocked. We know what kind of clients this registrar has and the appearance of such announcement in the open for users area has shown the vulnerability of the registering system.”
The law considers such database of the stockholders registrations as closed information, which the issuer must reveal only in very few required cases and in limited amount. For instance, the addresses and passport information of the stockholders should not be revealed. Such closeness can be explained by the fact that all shares in Russia exist not as a paper copies but as a records on the accounts within the registration. Having the personal data of a stockholder, one can write off his shares with counterfeited power of attorney, which is quite widely used in Russian “entrepreneur practice.” Not only the stockholder suffer could from such action, but the corporation that issued the stock as well, because it would have to compensate the damage. Let’s remind that the precedent for such compensation was created recently by the Presidium of Highest Arbitrage Court. The opening of the personal data of the smaller stockholders can be help during the hostile takeover.
When Kommersant, pretending to be a buyer, started to exchange letters with the anonymous seller, the journalists found out that for $12,000 they can obtain a CD with the list of 350 corporations – 95 percent of the clients of NIKoil’s Moscow office. To confirm the legitimacy of the database, the seller provided the passport information of one LUKOIL’s stockholder and number of the shares this person owns. The information was provided after Kommersant request. While, answering the question about another stockholder of other large company, the vendor ask to precise a patronymic name of requested person, because there are two people with the same last name in the register. The seller also named five stockholders of certain requested company -- only three names from five could be located in the electronic database Spark, which is available for subscription.
One of the corporate “raiders,” who asked not to be named, told Kommersant that professionals already found out about the sale of this database about a month ago. In that time the data base was offered for sale for $100,000. This, according to raiders’ opinion, a “real price”, because the data base only for one stock issuer costs in average $15,000 -$30,000. The raider explained current $12,000 price tag by the fact that seller already found a serious buyer and now he is trying to make money on the secondary sales.
The clients of NIKoil asked by Kommersant expressed their surprise by the fact of the database theft. “It is impossible,” Andrey Pan’kovsky, deputy director of the House Building Plant No. 1, said. “NIKoil is known to us as a reliable partner which can keep its own and other people’s secrets. However, if the information about the leak is true, this is very unpleasant.”
“In reality we have nothing to be afraid of because this information is not really closed. Although the loss of the database is unprofessional and we might think about changing the registrar,” Yuri Skorokhodov, chairman of the board of directors of Volgogradsky River Port, told Kommersant. “We chose NIKoil as the largest independent registrar,” Andrei Braginsky, director for investor communications of MTS said. “Currently we do not have information that NIKoil’s base was broken into, however, even it’s true, neither us nor our shareholders will incur damage because MTS is an open, public company. Our registration of the stockholders contains only a few legal entities and a few individual their stocks in depositaries which are the nominal holders.” LUKOIL refrained from making any comments.
The management of NIKoil in the meantime is rushing to calm its clients. “The investigation, which we are currently conducting, shows the vendors have some sort of information, but it is very small and confined to a very few corporations. Among those corporations there are no large companies,” Maxim Kalinin, general director of NIKoil told Kommersant. “The vendors might compile the information that we provided in different times to law enforcement and tax organs. So for that matter there is a 97 percent chance that the information was not leaked from us.”
According to raiders information, there was a case of large, but not publicly known sale of the database that happened two years ago with the registrar Reester. As a result, Reester lost the main part of its clients and still regularly visits arbitrage courts. According to Reuters’ opinion, in both cases the databases were stolen probably by hackers. The database of Reester attracted them most likely because it contained large number of companies that owned real estate. And their stocks were spread out among a lot of share holders, who were a prime target for the corporate raiders. In this sense, NIKoil’s database will not endanger the large clients because their controlled shares are usually consolidated.
“That could also be an attempt to compromise the registrar,” Maxim Kalinin suggests. “Moreover, in the next year, there will be tender expected to choose a basic registrar for Russian Railroads and its affiliates. However, I think they could act little bit differently if they wanted to get maximum publicity. Most likely, it’s just somebody probing the market just to measure the demand. What’s bothersome is that this is an unprecedented case.” Kalinin agrees that this case will significantly affect the market situation by making all the registrars introduce much more sophisticated methods of defense.
Only the general director of the registrar R.0.S.T. Oleg Zhiznenko is sure: If the market digested the appearance of the Central Bank database for sale it will digest very easily this case as well. NIKoil has strong management and it can defend its reputation in the way that would prevent publication of such ads in the future. I am sure that NIKoil has a high level of defense for the information—maybe even higher than the Central Bank.” Kommersant will monitor further development.
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How Database Are Getting Stolen
In the middle of 1990’s the first computer CDs with the data base containing telephones numbers from the Moscow State Telephone Station were sold by the Moscow’s street vendors. The investigation did not bear any results.
In 1996 the lists of the Beeline cell phone subscribers was offered for sale. The company did not reveal the source of the leak, but said that perpetrators were punished.
In October of 2002 after the completion of All-Russian census the CDs with the census result were offered for sale. State Statistic Agency rejected allegation of possible leaks. There was no investigation conducted.
In the end of November of 2002 first issue of the telephone numbers from the Moscow Telephone Station went for sale. In January 2003 the second issue was offered for sale as well. The press service of MTS announced about the beginning of internal investigation and rejected the media allegations about possible provision of the database to the law-enforcements. There was no information about the results of investigation.
On May 20, 2003 it became known that the date base from all large St. Petersburg telephone companies were in the open market. The set, containing three CDs carried the price of 1650 rubles. The phone companies said that the information was stolen through one law-enforcement agency.
In the summer of 2004 the company Vympelkom discovered the website sherlok.ru, which was providing the information about subscribers of cell-telephone services from Beeline, MegaPhone, and MTS in Moscow and St. Petersburg. On Nov. 29, 2004 it was announced about the arrest of six organizers of this ill-fated Internet project. Three of the perpetrators were employees of Vympelkom. The group was charged with Articles 138 (Breaking the law about the confidentiality of telephone conversation, letters …) and 272 (Illegal access to computer information) of Criminal Code of Russian Federation.
In Nov. 2004 Russian Forbes reported that part of the database of Pension Fund of RF, containing information about a residence and income of 3 million Moscow residents, appeared on the street for sale. The representatives of the Pension Fund announced the internal investigation. There were no reports about the results of this investigation.
In April of 2005 the data base, containing the information about banking operations of the Central Bank of Russia for IV quarter of 2005, including the information about the sale of main YUKOS’ company Yuganskneftegas (the information allowed to make a conclusion that the money from the budget was used to buy Yuganskneftegas), was offered for sale. The Central Bank started an internal investigation, and in July General Prosecution started to investigate the leaks after the request from the State Duma. On Oct.25 Vladimir Babkin, Deputy Director of Security and Defense Department of Information of Moscow Branch of the Bank of Russia, announced the channel of the leak was blocked, however he did not give any names.
On May 18, 2005 Krasnoyarsk District Court sentenced Dmitry Andreev, officer of District Police Headquarters, and Alexander Burkov, Andreev’s former colleague, to three years in prison. Both men were getting ready for sale a database of organized crime groups, containing information about investigations of these groups. They were charged with Article 272 of Criminal Code of RF.
Largest the clients the registrar "NIKoil"
Among largest clients of "NIKoil" are: JOINT STOCK COMPANY NK LUKOIL, JOINT STOCK COMPANY " Novorossiysk Sea Commercial Port ", JOINT STOCK COMPANY" MECHEL ", JOINT STOCK COMPANY "Mobile Tele-systems ", PRIVATELY HELD COMPANY Of "Skylink", JOINT STOCK COMPANY "House-Building Plant No. 1", JOINT STOCK COMPANY "Kirov -Cherepovets Chemical Plant ", JOINT STOCK COMPANY "Kol'chugtsvetmet", PRIVATELY HELD COMPANY AKB " Absolute Bank ", THE PRIVATELY HELD COMPANY "Insurance Company " Uralsib '", JOINT STOCK COMPANY "Bank "Uralsib '", JOINT STOCK COMPANY "MSK "Uralsib '", JOINT STOCK COMPANY "Fleet of Novorossiysk Sea Commercial Port ", JOINT STOCK COMPANY "Volgogradsky River Port ", JOINT STOCK COMPANY Of " Ice-Fili", PRIVATELY HELD COMPANY "Soyuz-Viktan", PRIVATELY HELD COMPANY " Orenburg Broiler ", THE PRIVATELY HELD COMPANY "Euro-Service Sugar", JOINT STOCK COMPANY "Group of companies RAZGULYAY", PRIVATELY HELD COMPANY "Grain company RAZGULYAY ", PRIVATELY HELD COMPANY "Sugar Company RAZGULYAY ", PRIVATELY HELD COMPANY " RAZGULYAY - Center", JOINT STOCK COMPANY " Sun Interbrew ".
Olga Pleshanova, Andrey Voskresensky, Sergey Ryzhkin
All the Article in Russian as of Oct. 31, 2005
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