Putin’s TARP Plan

January 6, 2010 Leave a comment

According to Jacob Plieth of the Wall Street Journal, if the Rusal IPO goes as planned later this month, it will be a “latter-day miracle.” As you recall, Goldman Sachs declined to be an underwriter for this deal and the Hong Kong Stock Exchange has dragged its feet, even though completing this complex IPO would mean millions in fees and additional revenue for the exchange and the investment bankers willing to bring troubled Russian companies to the international capital markets counter.

Rusal is a company that operates with $16 billion in debt and even with a partial sale of Norilsk Nickel and the pending partial IPO, there are doubts that a company hasn’t reported operational profitability can keep up with its interest payments.

Categories: Rusal, Russia Tags: , , ,

Igor Sechin – Russia’s New Decider?

December 29, 2009 Leave a comment

In a recent Newsweek article, “Sechin Evolution into Reportedly Number Two Man in Russian Government Examined,” Vice Premier Igor Sechin is revealed to be the true power broker in the Russian White House, “the country’s main manager” and “expanding…spheres of influence.” Additionally, IHS Global Insight recently reported:

…that Deputy Prime Minister, Igor Sechin, has reminded investors that new amendments to the law on foreign investment in state–controlled strategic mineral fields are not designed to relinquish state control over the strategic assets but rather to offer an asset-swap to gain a foothold in Russia’s natural resources industry. Sechin’s comments are a stark reminder why the investors are wary of venturing into Russia in the first place. The Kremlin needs to do more to assure the foreign investors, already guarded by the infamous Yukos and BP nationalisation cases, that they will be offered fair compensation and will have a clear explanation of what constitutes strategically important resources. IHS Global Insight Daily Analysis, Russian Prime Minister Seeks Foreign Investors’ Advice to Improve Investment Law, by Lilit Gevorgyan, 23 December, 2009

Indeed, with Sechin as Russia’s Vice Premier for Industry and Energy, the risk of corporate raiding by government officials remains high and President Medvedev’s talk of ending legal nihilism, will be just that, talk.

Free Platon Lebedev

December 23, 2009 Leave a comment

On the heels of the Moscow Times op-ed, “A Year of Increased Graft and Deadly Disasters,” the Russian Supreme Court found the 2003 arrest of Platon Lebedev illegal on procedural grounds.

Before his politically motivated arrest on July 2, 2003 as part of a case against former Yukos owner Mikhail Khodorkovsky, Lebedev was director of Group MENATEP, a holding company with diversified assets of $20 billion. Group MENATEP was the majority shareholder of Yukos.

Lebedev’s arrest and prosecution were widely perceived to have been a warning to Khodorkovsky, as well as a means for the government to facilitate the re-nationalization of Russia’s oil and gas industry. Lebedev’s ordeal has been replete with violations of the most basic human rights.

After his arrest in his hospital bed in July 2003, the denial of independent medical attention during the trial, and his sentence at a work camp in Russia’s inhospitable Arctic, this ruling will hopefully bring an end to Lebedev’s six year legal farce.

Now President Medvedev needs to make good on his talk of ending legal nihilism, battling corruption and respecting the rule of law by setting Platon Lebedev free.

Der Welt – Khodorkovsky’s lasting shadow

December 15, 2009 Leave a comment

Via the EU-Russia Centre, Der Welt published an article on why Mikhail Khodorkovsky remains significant to Russia’s economic development. According to the article “at least one third of the population expressed according to the survey Institute Levada-Center at the beginning of the conviction that people like Khodorkovsky could help with their know-how of the country in crisis.”

The full article translated below via Google Translate:

Khodorkovsky’s long shadow
Yukos was once an example to be established early on ethics and years later Vladimir Putin again lives in fear of the dead and a group jailed billionaire
Eduard Stein
December 2009, 04:00 Clock 14h

For some reason, Vladimir Putin, sensing a need for clarification. After six years of evasive answers and arcane information about the rise and fall of the government-imposed oil company Yukos was Russia’s most powerful man on television two weeks ago suddenly on the offensive. For years, curious person urged the former President and current Prime Minister, a plausible explanation. Vain. Finally, it was a dish that had sent the once-largest oil company in the country several years ago in the bankruptcy, said Putin and his top officials free of the responsibility: Finally, the court on a repeated sentence or the release would be the Mikhail Khodorkovsky, once Russia’s richest decide.

But it was still Putin himself, who forestalled suddenly in the course of his TV Question Time the court and in unexpected detail, commented on the case. What should spontaneously appear, therefore, ultimately came more through-composed. Do not go there about when to release for whom, “said the Prime Minister go there so that repetition of such economic crimes. They also maintained that the money from the auction of Yukos assets RULE in social housing has been set, “Putin said to the astonished spectators”. Then, to dare the legal tightrope: the ex-security chief of Yukos, Alexei Pitschugin, who has been convicted of three contract killings in 2007 to life imprisonment without the guilt, “has clearly acted in the interest of and on behalf of the owner.

Since Putin knows his opponent over the court, “said Mikhail Khodorkovsky, who himself was never accused of murder, from prison. You may still call upon the Premier to give evidence.

In seven days on the beginning of the Causa Yukos, the topic is thus again a household word. For years, the Russian authorities had hoped that the interest in his most prominent prisoner, who was once estimated at 15 billion U.S. dollars assets, more and more abated. And in the end perhaps totally dies. Too much the case had tarnished the image of the rulers and the country already. No other matter beyond the Chechen war had made the perceptive world opinion against Russia’s development under Putin. No subject had clearly signaled observers abroad that began with Putin after a decade of attempts in a market economy and democracy in a new era of statism and the authoritarian power vertical in Russia.

None other than 25 October 2003 was so obvious. Early in the morning landed on that day a Russian Tupoljew with Khodorkovsky aboard in the Siberian city of Novosibirsk. A few minutes later, the domestic intelligence service FSB special forces stormed the plane. “When I saw the siege was everything to me clearly,” to the then forty-year multi-billionaire said.

Already months before a string of incidents had indicated that was the most modern and most efficient oil company in the country with his boss and major shareholder in the crosshairs of investigators. What followed after the arrest, was an unprecedented geheimdienstgeschulten tug of war between the Kremlin and the relentless head of a mega company with 105,00 employees. At the end Khodorkovsky was convicted of fraud and tax evasion in 2005 with eight years imprisonment in the remotest Siberia. Subsequently, Yukos was filleted and mostly incorporated into the state oil company Rosneft, which rose to the market leader.

Since the spring of this year, Khodorkovsky is in Moscow again in court. Shake about the new indictment not only Putin’s critics around: the tycoon is the whole Yukos flow have been stolen. Previously he had been convicted solely because of tax evasion for the Yukos oil. Now the prosecutor has accused him of having illegally sold oil worth 20 billion euros. In extreme cases, this latest charge threaten to bring more than 20 years in prison.

One should remember the Mafia boss Al Capone, the “30 year old was formally sentenced in the U.S. for tax fraud – but in reality for all crimes he committed,” Putin initiated at the end of November in France. His answers to answer the questions about Khodorkovsky was drastic. He likened his rival on this occasion with the U.S. billion fraudster Bernard Madoff, who was sentenced to 150 years in prison. Nobody has felt the injustice and “even a beep given by itself,” complained Vladimir Putin. Why just the other Causa Khodorkovsky with a measure would be measured?

Because it was politically motivated to be Khodorkovsky’s lawyers never tires of stressing. That’s what Putin himself admitted behind closed doors, said a few months ago, none other than Mikhail Kasyanov, the beginning of the affair, Prime Minister under Putin. The former president had echauffiert about the fact that Khodorkovsky without permission of the Kremlin’s next Liberal parties also began to sponsor the Communists,’ said Kasyanov. Immediately after his assumption of office, Putin had called all the oligarchs to abide by political non-interference. All other tycoons, who like Khodorkovsky, seized during the privatizations of the 90s to questionable nature and at bargain prices, huge fortunes under the nail, and great power within the state itself, had understood Putin’s message – and Khodorkovsky was warned. The wealth had gone to his head and caused a feeling of integrity, he would tell later companions. “Was Chodor,” as his intimates call him, just a strong person with principles to keep his followers against it.

Khodorkovsky has indeed has strong international support. Unlike court proceedings, the lobbying machine of the volatile Yukos billionaire runs very fast. Together with lawyers, they instigated in an information war with the Kremlin, which they have won very early on. In early December, they also achieved a real part of success: An international arbitration tribunal in The Hague ordered former Yukos shareholders to legal action against the Russian government because it had allowed, despite binding to the International Energy Charter, the expropriation of the Group. As the claim will be circulated to the shareholders of 100 billion U.S. dollars.

“In the end, the European Court, but not 10,000 dollars compensation claim,” warns Alexei Makarkin of the Moscow Center for Political Technologies to realism in a new information war. But also includes Makarkin – such as Khodorkovsky’s supporters – not that Putin’s attacks against the detainee associated with the decision of the Court of Holland and the prime minister had once built a defensive line.

For just as likely, but observers think that is on the rise in the Russian government panic because the politicians are afraid because of the absurdity of the charge in the current second trial in Moscow for an acquittal.

Domestically, such a defeat would have to get over, however. The nation does not feel any great sympathy for Khodorkovsky. But at least one third of the population expressed according to the survey by the Institute Levada-Center at the beginning of the conviction, that people think Khodorkovsky could help with their know-how of the country in crisis. “If Khodorkovsky was set free, he would become perhaps less economically, but socially active,” says Sergei Guriev, rector of New Economic School in Moscow: “As a moral authority he could collect a lot of people around.”

An acquittal would have still another effect: When would this year have a pregnant Yukos lawyer suffering from AIDS and the former deputy leader of the group have been released from prison, the verdict further evidence of potential investors that the new president, Dmitry Medvedev, with the modernization seriously. “It would be a sign that the country does not drift to a halt,” says Guriev.

But that when it comes to power, the investment climate for the governance of secondary, Makarkin said: “Being a strong character Khodorkovsky is ready to fight. Putin has made clear with his recent statements that he did not want to see him in freedom.”

NEWS: Mikhail Khodorkovsky and Platon Lebedev Defense Team Seeks Testimony

December 14, 2009 Leave a comment

From the Khodorkovsky and Lebedev Communications Center

On October 28, 2009, Mikhail Khodorkovsky’s defense counsel served a federal subpoena on former PricewaterhouseCoopers (PWC) audit partner Douglas R. Miller, requiring the accountant to provide sworn testimony about his work in Moscow on behalf of the expropriated oil giant and the various legal proceedings initiated by the Russian authorities concerning PWC’s work for Yukos.

But on December 11, 2009, the Russian Prosecution attempted to disrupt Miller’s deposition. Its representatives filed a motion with the Khamovnichesky Court in which they asked the court to issue a decision finding Miller’s scheduled deposition inadmissible as evidence. The court found the motion did not comply with Russian law and denied it.

Miller was the lead partner on the Yukos account in Moscow for PWC, Yukos’ longtime outside auditor and consultant. At the end of 2006, the Russian authorities started a criminal investigation, which is ongoing, targeting PWC and its employees, including Miller, in connection with alleged illegal operating activities and tax evasion in Russia. As a result of increasing pressure on PWC by Russian authorities, in a manner clearly designed to undermine the reliability of the Yukos audited financial statements and to secure incriminating testimony from the management and employees of PWC against Khodorkovsky and Lebedev, PWC subsequently withdrew 10 years of audits of the Yukos financial statements. Miller signed one of the letters officially withdrawing PWC’s audits.

The subpoena already has provided dividends to the defense and established the Russian Prosecution’s further violation of Khodorkovsky and Lebedev’s rights. Miller has produced documents which reveal the prosecution selectively submitted records into the case materials and intentionally withheld documents containing exculpatory evidence.

Andrew Meier’s Interview on ABC Radio

December 14, 2009 Leave a comment

On December 11, 2009, Andrew Meier, author of the NYTimes article “Who’s Fears a Free Mikhail Khodorkovsky?” speaks with Ramona Koval of The Book Show on ABC Radio about writing the article and his decades-long relationship with Khodorkovsky.

During the interview, Meier mentions that Vladimir Putin has “lashed out at Khodorkovsky personally. Ennuerated what was latent in the piece, things that I had just sketched…and he’s gone far beyond what our fact checkers were concerned about, enunciating how much this case means to Russia.”

Listen to the interview here.

Why Is the Rusal IPO Worrying Goldman Sachs and the Hong Kong Stock Exchange?

November 30, 2009 Leave a comment

According to the WSJ’s article, “Rusal Listing Delay Won’t Derail IPO,” the various hurdles to Rusal’s IPO are just bumps on the road to the first Russian listing in Hong Kong. Rusal is the world’s largest aluminum producer and is expected to raise about $2.5 billion in the IPO.

But an exchange not known for onerous listing requirements has requested more information from Rusal and Goldman Sachs was dropped as a book runner “after the investment bank expressed reservations about sponsoring the deal.”

The proceeds from the Rusal IPO would go to repay part of its $4.5 billion loan largely held by the Russian state-run VEB bank, also Rusal’s biggest single creditor. It seems like Goldman Sachs and the Hong Kong Stock Exchange are having second thoughts about facilitating a deal that would line the pockets of an oligopolistic petrostate.