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Posts Tagged ‘IPO’

Truthiness Abounds in Russia’s Ratification of Protocol 14

January 15, 2010 Leave a comment

After dragging its feet for four years, the Russian parliament ratified the European Court of Human Rights’ (ECHR) Protocol 14 earlier today. Russia had been the only country out of 47 participating states to refuse to ratify Protocol 14, which improves the efficiency of the Court. The current process has created a backlog of complaints, a third of which are filed against Russia.

Dmitri F. Vyatkin, Russian Parliamentary member mentioned that the impasse was overcome because the ECHR had addressed Russia’s concerns by providing written commitments that Russian judges would be included in reviews of potential cases against Russia, the Court would not begin investigating complaints before cases were formally accepted and the Court would not have new powers to enforce rulings.

Taken together this sounds like Russia wants to transform the ECHR into a Russian court: by hearing complaints against Russia that the Russian government approves of, not delving too much in to the details of complaints filed and if the complaint is accepted for the Court to have no ability to enforce its ruling.

However, Thomas Hammarberg, the human rights commissioner of the Leaders of the Council of Europe, presents a different view of Russia’s approval of Protocol 14, that Russia’s concerns where heard but ultimately Russia will be held to the same rules that apply to other members and that no changes to the protocol were made.

Leaving for now, what Russia’s ratification of Protocol 14 actually means for the ECHR, a central question remains, “What propelled Russia to ratify the protocol after all these years?”

“Smoothing over differences” appears to be the official reason media outlets are reporting, however there may be other reasons political and financial reasons why Russia is offering this carrot to the West.  

Earlier this week, the $100 billion lawsuit YUKOS v. Russia was postponed for the third time because two Russian representatives were unavailable. Perhaps the Russian authorities feel that ratification of Protocal 14 could pave the way for this case to be dismissed.

Additionally, the Financial Times reported earlier this week that Russian companies would be seeking $90 billion over the next two years to finance debt restructuring and capital improvements and perhaps to rebuild the coffers for politically connected Russian business owners who saw their fortunes collapse during the 2008 financial crisis. As demonstrated with the Rusal IPO, concerns over the management of Russian companies remain and ratifying Protocol 14 may be a signal to the investment community that Russia wants to play nice.

Russia may see ratifying Protocol 14 satifying many goals: to reduce the effectiveness complaints against Russia in the ECHR while reassuring investors that Russia abides by the rule of law. But as the trial against former YUKOS chief Mikhail Khodorkovsky and a Russian policeman’s open letter to end authorized corruption demonstrate, Russia remains a feudal state, where

in absence of functional legal or law enforcement systems, people’s only real protection lies in a network of personal and professional relationships with powerful individuals.

YUKOS vs. Rusal

January 11, 2010 1 comment

It was the best of times. It was the worst of times.

On Thursday, January 14th the European Court of Human Rights (ECtHR) is hearing the case of YUKOS Oil Company v. Russian Federation, the first time in six years of litigation that both sides will meet face-to-face in a legal battle on the Russian authorities expropriation of YUKOS and its assets beginning in 2003.  Foreign policy and Russian officials have acknowledged that the imprisonment of YUKOS’s CEO Mikhail Khodorkovsky was due to political reasons stemming from his support of opposition parties.

Meanwhile, the Rusal continues on its IPO path, even as more doubts about the process have surfaced. Its controlling shareholder Oleg Deripaska continues to be linked to organized crime, was refused a visa to enter the United States on those grounds and has received millions in government money funnelled through Russian state-run Vnesheconombank (VEB), controlled by Prime Minister Vladimir Putin.

YUKOS’s Mikhail Khodorkovsky is being charged in a second round of trumped up charges while Rusal’s  Oleg Deripaska is being rewarded for his cooperation and collaboration with the Russian government, stating publicly that he would transfer Rusal back to the government at any time saying, “If the state says we need to give it up, we’ll give it up.”

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: , , ,

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.