Ruminations on Russia

It's been a while since I have heard anything on the Reiman IPOC front but this little tidbit dropped in to the feed-reader this morning from the Royal Gazette.

Apparently IPOC is no longer a mutual fund regulated by Bermuda, which to be frank it was not in the first place.  Not sure what this means or indeed the silence generally - is peace breaking out?

Technorati Tags: Reiman vs Alfa

English Russia which is never less than mildly amusing reports a whale in Moscow.  If you have time also look at their pictures of the only correct way to deal with a Khruschevka.

Underground Whale in Moscow City:
Some people say something strange is happening deep beneath Moscow city streets.
Some even think there live a some sort of underground whale.
Those pictures and one video are about such rumour.
Also on those pictures can be seen what a warm winter this time is in Moscow city.
There is now snow at all and there are places where is green grass can be seen. That’s not typical at all.





And a video of this stream from underground:

via webpark.ru
Tags:&nbspmoscow city  strange things

Technorati Tags: Russia

Saturday, day of rest etc was ruined and wasted and your Ruminator finished the day truly pissed off and not out enjoying himself.

It started on Friday evening.  Having failed to get to the gym due to a power failure in the building I returned home to discover that I am a valued BA customer.  Not so valued that they were willing to tell me directly that I had flown back and forth to the UK three times on planes that have, or had traces of Polonium 210 on them.  To do that you need to know which BA flight leaves at around 09.00 and around 13.00 from London and similarly around 17.00 and 21.00 from Moscow and compare with your own schedule.

Note to BA;  As a valued customer I don't particularly care that you have two airplanes grounded and one that has just been un-grounded (which is not the same as taking off).  If I was daft enough to be a shareholder, I would care about planes that are stuck on the ground.  As a person, I want to know that BA would go out of its way to let me know that I was on a plane that is deemed to be a sufficient health hazard that no other passengers were allowed to fly on it.

Having worked out that I was on a plane three times which is deemed not to be safe, I wanted to know what risks I was exposed to and what should be done to confirm that I was not sick.  NHS direct (the UK's public health call centre) the first place the BA website directs you to knew nothing and acknowledged that they knew nothing despite being the first place to call.  Next step was Moscow's own European Medical Centre, which was better prepared, if only to tell me to go to Hospital Number 6 to be tested.  No explanation of the risks.

Fortunately my brother-in-law poisons people professionally; he's an hematologist oncologist with a speciality in bone marrow transplants.  The good news is that I would have had to have been unbelievably unlucky to have suffered any ill-consequences as I did not eat any part of the plane or borrow anybody's drink.  Polonium-210 is an alpha-emitter.  In short it does have enough power to penetrate your skin and clothes are an even better barrier.  You can't get ill from just being around it, or it you.  It has to get in to you and directly attack vital organs.

Being the caring sharing type he did point out that I should just go out and enjoy life as there was nothing that could be done anyway.  Advice I took to heart.  Saturday was a slow start.

But as I would rather know than assume I found Hospital Number 6 knows a little about radiation poisoning as a result of the Chernobyl-related work that it did.  It was even prepared for stupid foreigners who insisted on flying BA.  Well as prepared as a Russian hospital can be.

I arrived at around 12.00.  I left at 17.00.  What is it about medical services worldwide which allow time to disappear in to a Dr. Who-like Tardis.  It's at times like this that you realise how poor your grasp of the language is.  Formal Russian-lessons and I parted ways at verbs of motion.  So answering the question when I flew to and from the UK were somewhat complicated by the fact that the first time I left Moscow I apparently was not supposed to come back, which I promptly did of course, and then left again.  And whilst I did return, it was not on a contaminated plane.  One hour gone.  Wait thirty minutes; piss in to jar.  Wait one hour.  Offer to speed the process with oodles of rubles.  Have full body check; nice doctors.  Told to wait.  Do so (thank goodness for iPods).  Wait in queue for blood test.  Wait.  Wait some more.  Get told to go home.  Death more likely imminent from traveling to and from the hospital than radiation.

In case I was unclear above, No. 6 is an oncology hospital.  Generally not great places to spend an afternoon.  As the brother-in-law pointed out I was more likely to be ill as a result of worrying about being ill than as a result of Polonium poisoning.

So no more Litvinenko stories here until they catch the man, behind the man who poisoned Mr. L.

Cuts to the heart of the matter;

No this is not a rant at service in Russian shops.  Whilst it leaves much to be desired it is a massive improvement over the way that we are treated by the MPAA.

The old DVD player has finally given up the ghost so off we trotted to one of Moscow's white good stores. Given that I have no knowledge of what is a good and a bad DVD player the range seemed OK.  We passed on the karaoke versions.

Shipped the blessed piece of metal coloured plastic home, plugged it in, connected it to the screen, popped in a DVD.  And out it popped again.  Turn on screen for a hint - “DVD not authorised for your region.”

Now this was a DVD which SWMBO had lavished vast mounts of cash on in Heathrow's departure lounge.  Not one of your Gorbushka knock-off's.  So we had legitimately bought a DVD in Region 2 (Europe) and brought it to Region 5 (the FSU - broadly) without any warning that it might well not work in the place to which we were flying.  You can just imagine the signs around HMV in Heathrow;

“Due to anti-customer policies the DVD we are offering you to buy here will probably not work where you are going.  As it is unlikely that you will be passing back through this airport again in the near future I am afraid that our money back guarantee is worthless. Enjoy this piece of moronically stupid entertainment featuring talentless actors earning enormous sums of money.”

Three hours later, an hour of which was spent with the mighty Google, and two syncing and unsyncing and re-syncing SWMBO's hijacked Treo, the newly-acquired DVD player had been fed with code which convinced it that it was everywhere simultaneously.

So now we can legitimately watch our legitimately acquired DVD's on any machine we care to, whenever we care to.  There is a fairly good chance that we will also take a more liberal view of the benefits of the kiosk knock-offs.

Paying Tom Cruise an obscene amount of money to star in crap films does not give you the right to restrict how and where I watch what I have paid for.

Treat me like shit and I will reciprocate.

[composed and posted with ecto]

I've been a little confused by the Litvinenko stories that have taken over MSM in the UK.  I don't care that much who killed him, but the story is being pushed very hard by someone.  Why might tell us more about life in Russia today than the simple fact of his death.  Or it might just indicate that London's climate is preferable to Chita's.

The core of the argument coming from the western-Russia blogs is that VVP's thugs were barely aware of Litvinenko and his strident criticism.  Even well-informed Russians have barely heard of him.  There is no chance of the narod, hearing or caring.  He lived in London, not in Moscow and was incidental to Russia.  If you are unaware, then you don't go to great length to find a rare radioactive material and stage a lengthy and painful death played out, finally, in the press.

If you turn on english language news you don't need me to tell you that VVP did it.  There are however a number of alternate views.  To give him his due copydude was the first of the Russian blogs was the first to offer up the Berezovsky connection with Saint Sasha, The Toenail Puller, which is a great headline.  In quick time he followed it up with Limonov and Litvinenko, highlighting the British press' rather pathetic ability to buy a line from PR agencies.  Given that copydude's previous posts (I know not all of them) have concentrated in rather different areas the strength of his convictions came through forcibly.

Sean's Russia Blog also weighs in with a meaty piece of analysis.

And its not just the blogosphere.  Tom Parfitt writing in the Guardian warns that we should not rush to judgment.

Back to work, need to hire myself a PR Agency.  Not that I am planning any murders; well not actively anyway.

Technorati Tags: death, Litvinenko, Putin, Russia

The redoubtable Jerome a Paris has provided a remarkable example of how your potato is my tomato.  In his piece he compares and contrasts Le Monde's coverage of the report with the FT's.

I am afraid that you need to click through to see his tables as I can't/don't know how to import them.

Technorati Tags: OECD, FT, Russia

The Duma, concerned over Russia's plummeting international image and the possible knock on impact on investment in the banking sector have, far-sightedly some would claim, prepared legislation allowing aliens to invest in banks.

As with many Russian laws it is slightly lacking in detail and does not differentiate between Martians and other aliens.  Nor does it state whether aliens can only come from planets and former planets.

Anyway its nice to know that our duma deputies are hard at work (when they aren't crashing their ferraris.)

Portfolio Investors to Press Strategic Investors:
Russia’s State Duma passed in the first reading Friday the bill whereby it will be easier for aliens to get stakes in Russia’s banks. Market players say the money inflow from foreign portfolio investors will step up capitalization of Russia’s banks and, therefore, lower the threat of the loss of control over the bank system.

[composed and posted with ecto]

Technorati Tags: Russia

VVP wrote a comment in the FT on 21st November (paid for subscription required) Europe has nothing to fear from Russia.

I share his sentiment, as long as you define Europe as being west of the "near abroad."

There were a number of strange things about the article.  Not least of which is that it was originally written in Russian and translated by a non-native english speaker.  Which meant that it was full of long-winded meaningless statements which have no meaning in english.  They are beloved of Russian writers, not that anyone can explain what they mean;

"Though it is not striving to join the EU, when I consider the future of our relations I do not see any areas that are not open to equal, strategic co-operation based on common objectives and values."

It was also strange in that the target audience was solely EU heads of state and their foreign policy governments.  So much so that the FT wrote a translation of the article yesterday.  In fact the piece was so abstruse that it did not even appear in the physical version of the FT delivered to me here in sunny Moscow.   

Despite the FT's translation there remain passages which still remain beyond my understanding (not being the sharpest pencil in the pile).  Wrap your collective brains around this paragraph;

"Russia is closely watching the EU’s evolution, not least because the pace of development of our relations and their future depend largely on changes in the EU. The Union could remain a predominantly intergovernmental association or acquire supranational functions. Russia wants its largest neighbour to be stable and predictable, and hopes that changes and expansion will not erode the EU’s uniform legal framework, primarily in the sphere of ensuring equal rights to all EU people irrespective of country of origin, nationality and religion."

"When speaking of common values, we should also respect the historical diversity of European civilisation. It would be useless and wrong to try to force artificial “standards” on each other."

Other than the english being truly horrible the translation is; let us develop our kleptocracy our way and we will laugh at your Chirac's, Spanish mayors and British paid for peerages.

Technorati Tags: Putin, Russia

My decision to stick my neck out has proven to be mostly correct; Gas Decision Put Off until Next Month.  I could claim that I was completely correct however, the job of blogs like this is to try to explain the nuance that the MSM either cannot or will not.

The apparent decision not to progress with the deal which seems to have been worked out between GAZP, UES and Gref's MEDT Ministry is that the fundamental answers on energy balance between gas, coal and oil (mazut) going forward have not been worked out.  It's a point which has some merit after the failure of the Energy 2020 policy.  Adopted in mid/late 2003 it was already out of date by mid-2005.  With the government forecasting a requirement for $60bn of annual investment in the gas industry (by GAZP) some clarity on the return on that investment is needed.  Given the personal economic interests at stake it is hard to believe that some understanding has not been reached on future gas price liberalization.

UFG/Deutsche note in their morning comment that;

“the President requested the government to work out a consolidated position on whether to benchmark the domestic gas price in the long-term contracts against the international price.”

From other comments elsewhere there is a sense of basic economic misunderstanding from the Kremlin.  VVP thinks that as much gas as possible should be exported west where it will earn $250/mcm.  Yet the long-term price for gas in Europe, assuming $40-ish/bbl of oil is closer to $140/mcm.  More importantly GAZP, UES and MEDT have been basing their forecasts on netback parity pricing (the price where it makes no difference whether you export gas or not.)  I genuinely feel that this point has been missed somewhere out there.

Conspiracy theorists will wonder why VVP is so concerned that Russia should be shielded from international price movements.  Is Russia seeking to corner the European energy market?

The main reason for the delay in the decision seems to me to have two interrelated causes.  Firstly the good Tsar can't be seen to be hurting “his” people.  Secondly with so much media coverage being provided by the main participants (who were clearly muzzled after yesterday's meeting) it will be difficult for the bad news to be buried.  I reiterate my forecast that whatever decision will be, or has been, made will be made public in late-December.

Meanwhile, Mezhregiongaz held the first public trading session for gas.  GAZP and Novatek both participated with the average price being around $60/mcm.

“The market was not very active today. It is probably because of the mild weather. The main buyers were utilities from near Moscow and farther down to the Urals”

Whilst it would be naiive to describe this as the open market it is at least an indication of real pricing.  For specialist interests it is as yet unclear where the price is quoted.  If delivered the real price increases are not as huge as they would seem upfront.

The contracts are for physical delivery.

[composed and posted with ecto]

Technorati Tags: Gas, GAZP, Putin, Russia, UES

The spelling of banker is correct.  Dangerous business banking.  Who would have thought that lending and borrowing money could be so hazardous to one's health; if a banker from Spetznatsroibank (sp?) actually borrowed or lent.

“MOSCOW, November 22 (RIA Novosti) - The killing of another Russian banker in Moscow, the third in a few months, is set to draw heightened attention to crime in the country's banking sector.

Prosecutors said Konstantin Meshcheryakov, co-owner of a small Moscow-based bank, Spetssetroibank, was shot dead late Tuesday outside his apartment building in northern Moscow. An unidentified gunman shot him in the back at point-blank range, and then in the head after the banker fell.

”Investigators are considering all possible motives, including those linked to the victim's professional activities,“ a spokesperson said.

Meshcheryakov is the third Russian banker to be killed in three months.

Alexander Plokhin, the director of a Moscow branch of Russia's state-owned foreign trade bank Vneshtorgbank was shot in the head on the staircase of his apartment building in mid-October.

Andrei Kozlov, first deputy chairman of the Central Bank of Russia who led the CBR's effort to close down dozens of banks for violations of banking legislation, particularly on money laundering, died in September after gunmen opened fire on him with semi-automatic weapons.

President Vladimir Putin earlier ordered officials to crack down on crime in the sector.

Contract killings in Russia were frequent in the 1990s as gangsters sought to take control of lucrative assets in various fields; however, the murder of the Central Bank's deputy head was the most high profile since that time.”

Technorati Tags: death, Russia

Another putative VVP energy meeting tomorrow (update its today now).  Headlines started flying around pretty thick and fast.  Most of which are meaningless with comment.

Russia's domestic gas price may double by 2010:
MOSCOW, November 21 (RIA Novosti) - Russia's wholesale gas price for domestic consumers could more than double in four years' time, a gas market regulator said Tuesday.

Which is about 50% slower than the market wants it to happen.  Equally importantly GAZP is threatening to double transport tariffs over the same period.  Which would be fair if it was not Gazprom benefitting.
Gas Output Up 2.5% y-o-y
But domestic gas consumption was up more;

“Domestic gas consumption rose 2.9% in first ten months to 313.8 bln cu m.”

[composed and posted with ecto]

Technorati Tags: Energy, Gas, GAZP, Russia

The long-delayed government meeting on, inter alia, gas tariffs and energy policy is due to be held tomorrow.

A quick forecast which will may well come back to bite me early; the meeting will not be held tomorrow, if it is held tomorrow the results will not be made known until some point when we are all so drunk or otherwise celebrating that no one will really notice.

Expect an update tomorrow.

[composed and posted with ecto]

Technorati Tags: Gas, GAZP, Russia

Moscow's traffic is becoming legendary.  Yury Mikhailovich who has clearly never read a single traffic management article in his life has determined that the best way to deal with this is not to invest in more communal transport but to widen the roads.

All the theory says that if you build more roads the amount of traffic will increase until the weight of traffic reaches previous proportions and people start using the over-crowded metro again.

Apparently no one has thought of actually investing in traffic control management software and fining drivers for “blocking the box” nor for actually forcing cars to actually meet the regulated requirements.  None of which makes as much money for YM and his lovely wife as building more roads.

I love the concept that something as complicated as Moscow's traffic management can be resolved in one week -

“The mayor gave the city's Transportation Department a week to set deadlines for the construction of such transit hubs.”

[composed and posted with ecto]

Technorati Tags: moscow, Russia

Visitors, work or otherwise, coming to Moscow are a serious pain in the neck as finding a hotel room that does not cost several arms and legs is virtually impossible.

Snowquare.com reports below that the new Ritz-Carlton, replacing the Intourist is not going to change the world much.  A superior room (I think that's a standard room to you and I, with a bed, shower and TV) will set you back a cool $940.  Add a little NDS at 18% and that's $1,109 and 20 cents if you are still counting.

Clearly not a place for a short overnight stay.

Nice pictures though.

The new Intourist: Moscow's Ritz-Carlton hotel app...:
As the Hotel Rossiya goes down, Moscow's new Ritz-Carlton hotel on Tverskaya approaches completion.

The Ritz-Carlton (a brand of the Marriott group) is scheduled to open in March 2007. You can already book online: one night in a superior room costs RUB 23,000 (USD 940) and in a deluxe suite, a cool RUB 125,000 (USD 4,690).

The Ritz-Carlton takes the place of the legendary (for want of a better word) Hotel Intourist, which was demolished in 2002.

Seen from the same spot on Manezh Square, in the foreground, the National Hotel, with the Intourist in the background.

Photo: Wikipedia

and (on a less sunny day this weekend) with the Ritz-Carlton in the background.



Luxurious as the Ritz-Carlton - no doubt - will be, one can't help think of the building as a missed architectural opportunity, taking the form essentially of a concrete cube, coated in a veneer of bricks and mouldings inspired by the side facades of the next door Hotel National.  So similar is the brick-work and detailing that if you paste photographs of the two buildings together, it's tough to see which is which.



(hint: the National's mouldings are more detailed, and the Ritz-Carlton's bricks look newer!)

[composed and posted with ecto]

Technorati Tags: Russia

Russian oil fund chief shot dead:

This turned in to the parentheses post.  But its too late to re-write and there are more important things to do.

I have it on reasonably good authority that our the victim had not been shy about handing it out .  In a (failed deal) when asked if he had any “skeletons in the closet” he (apocryphally) replied that he would never keep them there.

Notwithstanding, in the days between Putin's appointment and his election (oh those innocent days of winter 2000) whilst traveling in St. Petersburg I was somewhat shocked to come across a number of billboards; not overly professional (oh why does that seem so true today) but the message was clear;

“We must and have to control the people” (if you agree that the“narod” are the “people”)

“The director general of a Russian oil consultancy company has been killed in an apparent contract killing in Moscow, officials say.

Zelimkhan Magomedov, 50, was shot twice in the head, prosecutors told Itar-Tass news agency.

Ms Magomedov was the head of the National Oil Institute Fund, which seeks to develop small and medium-sized oil and gas producers.

The killing was described as a ”contract hit“ by officials.

”A criminal case has been opened over the contract hit,“ a representative of the city prosecutor's office told Tass.

Ms Magomedov's murder is the latest in a series of apparent professional killings in Moscow.

Last month, campaigning Russian journalist Anna Politkovskaya was shot dead in the city, while in September, Andrei Kozlov, the deputy chairman of Russia's central bank, was killed by gunmen.

The recent murders are reminiscent of a wave of assassinations which swept through the city in the 1990s, targeting businessmen and bankers.”

[composed and posted with ecto]

[composed and posted with ecto]

Technorati Tags: Corruption, death, Putin, Russia

As well he might, but a five-fold increase in five years.

Has no one told him the people are revolting.  Well not exactly but the “I”-word (inflation) is getting louder and louder.

[composed and posted with ecto]

Technorati Tags: Gas, inflation, Russia

The gas news is getting louder and louder;

• Yesterday, and most uselessly, in the FT, Arkady Ostrovsky rehashed Kakha' visa-less UBS report and Vladimir Milov's criticisms.
• Alfa Bank (no link love) in a research report suggested that over the next few years the regulated price of gas will rise by 20% per annum on average.  Albeit they seem to have missed the fact that UES already buys a substantial amount of its gas in the “open” market.
• This morning rumours bubble (again) that Gazprom is about to buy up to 50% of Novatek - confirming Milov's comments that they are better “on Wall Street” than with the drill bit.
• Vedoms yesterday reported that Gref and Kudrin are fighting a rearguard action to stop regulated price rises with fears of inflation on the horizon. I've been here before.
• Today Pun hosts a Government meeting on energy.  I feel a Kanutian moment coming on; keep inflation down and raise tariffs, find more gas, preferably by January.

There is, of course, a fairly simple solution to all of this.  Demerge GAZP from UGSS and allow everyone access to the same export contracts and force all gas producers to sell a fixed portion of production for heating.  Unfortunately super-profits for individuals would disappear even if the lights stayed on and the radiators warm.

I think that UES and GAZP's PR departments are being more active than Gref's and Kudrin's.  Control of inflation is very important.  Somewhere before I have commented that the Kremlin is most afraid of the people.  This will win out in the immediate future over tariffs and Gazprom's desire to make more money even if they don't want to spend it on gas.

[composed and posted with ecto]

Technorati Tags: Energy, Gas, GAZP, Novatek, Russia

Ukrainian-based (?) blogger Foreign Notes is chronicling the rapid return of Ukraine to its previously corrupt state after a brief moment in the weak early morning sunlight of being only mostly corrupt.

There has been much (well some anyway) conversation recently of those heady days in Russia of Putin's first presidency before the Yukos affair.  Again there was a brief moment when we were naive enough to believe that the rule of law was going to prevail.  And then Khordokhovsky went to jail and Yukos was bankrupted.  Every petty Chinovnik and plenty who weren't realized that if the Kremlin could abuse the law in their favour so could everyone else.  All those businesses which had turned white(ish) and were telling the (insert name of favourite corrupt government department) to take a hike when they came with the begging bowl realized it was a futile game and went back to paying bribes.

I think the nostalgia is for earlier less cynical days when we all had hope that Russia would........well not be like Russia today.

And a happy fascist holiday Holiday of National Unity to you all.

VAT fiddles..:
Bits from an article it today's 'Delo' business daily entitled:

“Economy returning to the shadows”

The number of business enterprises in Ukraine who paid their taxes honestly in 2006 has dropped dramatically compared to the previous year.

The Institute of economic research and political consultations calculates that Ukrainian companies paid almost 80% of what was due last year, but this year the figure is around 55%.

According to the State Tax Administration, Ukrainian financial-industrial groupings [FIGs] are taking advantage of the links between their numermous enterprises to set up fictitious deals and avoid payment of taxes.

The FIG's who 'minimize' their financial responsibilities to the greatest extent, according to deputy head of the STA Mykola Romaniv, are 'Privat', 'Industrial Union of Donbas' [IUD], and 'Interpipe', [owned by Kolomoyskiy, Taruta/Hayduk, and Pinchuk resp.]

Akhmetov's System Capital Management, [SCM] was not mentioned on the list of transgressors. [What a surprise..]

Romaniv said that in order to minimize their VAT payments, the FIGs use 'pseudo-exporting' operations to obtain refunds [Well, well, well..]

“The mentality of Ukrainians is such that does not accept taxes which can be recompensed from the budget. If there is even a minimal possibility of return of tax from the budget, then there will certainly be abuses. To administer this nightmare in the present form is quite impossible, ” considers Dmitriy Svyatash, member of the VR committee on questions of finances and bank activity. [It's all the fault of Ukrainians' mentality then.]

Meanwhile other companies are complaining that they they are not receiving the VAT repayments to which they are entitled.

Newly appointed NSDC secretary Vitaliy Hayduk [see above] has recently been asked by the President to sort out the problem of VAT fiddles - obviously the right man for this vital task.

See also VAT-man Azarov

[composed and posted with ecto]

Technorati Tags: Russia

Reuters reports that GAZP is warning of power shortages in the regions;

Gazprom Warns of Fuel Crisis
Reuters

Gazprom on Thursday called for the state to step in to prevent a repeat of last year's winter fuel crisis, which it said was likely because of a poor state of readiness in the regions.

Gazprom, which supplies one-quarter of Europe's gas needs, had to restrict deliveries to some of its European customers last year to ensure there were sufficient supplies for domestic users who were enduring an exceptionally cold winter.

“The unsatisfactory current level of reserve fuel stocks in the regions causes serious concern. There is a threat of a repeat of last winter's events, when many regions turned out to be unprepared for a sharp decline in temperatures,” Gazprom said in a statement.

“The situation that has developed requires immediate intervention by state regulatory bodies.”

Gazprom had to briefly cut its gas supplies on the route to Hungary by 20 percent in January, and said it could also reduce flows to Italy and Austria, although it said it has never fallen below its contractual obligations.

It soon restored supplies to 7 percent above contractual volumes to European customers and 40 percent more than the contracted amount to Russia.

The company said it planned to significantly raise investment in 2007 -- to 531.78 billion rubles ($19.82 billion) compared with 373.14 billion rubles planned this year. It also slightly increased its 2006 production forecast by 3 billion cubic meters to 551 bcm.

[composed and posted with ecto]

Technorati Tags: Gas, GAZP, moscow, Russia

In the interests of fairness I should report that having acquired a favourable decision in Russia IPOC is requesting that everyone who knows the truth undergo a suspension of disbelief.

From my early morning read the Royal Gazette:

[composed and posted with ecto]

Technorati Tags: Reiman vs Alfa, Russia

Let me help you translate this;

A sports fund headed by chums of VVP, the great leader, is building a residential complex cunningly named to make it sound as though it might have something to do with information in a tax free zone.

It is with great sadness  that a cynical view that I took a year ago has proven to be so true.

Putin Allies to Build Sports and IT Town:
The little-known Sport Fund, whose board is headed by Rosoboronexport chief Sergei Chemezov and stocked with close allies of President Vladimir Putin, is to build a vast residential complex dubbed Info-City in the Moscow suburb of Zelenograd, one of the government's high-tech special economic zones.

[composed and posted with ecto]

Technorati Tags: Corruption, Russia

Which is not entirely unlike my mum saying I am a nice guy.

Ipoc cleared of money laundering charges

Ipoc cleared of money laundering charges

By Stephen Fidler in London

Published: October 24 2006 18:43 | Last updated: October 24 2006 18:43

Ipoc International Growth Fund, a Bermuda based entity locked in a three year battle over ownership of a 25.1 per stake, in Megafon, Russia’s third largest mobile phone operator, said on Tuesday it had been cleared of money laundering charges by Russian prosecutors.

Ipoc is in a bitter dispute over the Megafon stake with Alfa, the conglomerate owned by Russian oligarch, Mikhail Fridman. The conflict has generated legal and arbitration proceedings in Switzerland, Bermuda, Russia, Sweden and New York.

Ipoc, which in May was hit by a decision from a Zurich arbitration tribunal that supported Alfa’s claim to a majority of the shares, said the prosecutors’ ruling that Ipoc was the true owner of the stake was the first by a body with investigative powers.

The general prosecutor’s office also said it found no evidence that Leonid Reiman, Russia’s communications minister, had abused his position. Alfa has repeatedly claimed that Mr Reiman was Ipoc’s true owner.

[composed and posted with ecto]

Technorati Tags: Reiman vs Alfa, Russia

The Oil Drum is slowly waking up to what UBS refers to as a tight supply/demand scenario.  Further to your comments on Gazprom.  Given that I live and breathe this stuff every day some thoughts;

At the bottom I have summarized the arguments, nothing new, just note that the consumer who suffers is the Russian exporting industry, not your warm London, or Moscow, for that matter, apartment.

Vladimir Milov, the Politkovskaya of Russia's energy industry (uncomfortable truths, rather than female and dead) believes that Gazprom's state-sanctioned monopolistic behaviour (the link leads to a PPT pres) will cause a significant short fall in gas production.

The counter argument is that gas price liberalization will cause independents, Novatek, and the vertically integrated oil and gas companies, LUKoil et al, to fill the domestic gap and that domestic industry will invest to use more energy more efficiently.

To which Milov et al, argue that as GAZP controls UGGS (pipelines) you can shift the price as much as you like but GAZP will seek non-market rents (bribes) to sell gas at that price.  Thus wellhead net backs will remain below actual local market prices.  And he is right.  Price liberalization means nothing without releasing other parts of the system - mostly UGGS.

To which the optimist camp (me) would argue, without foundation, that the one thing that the 5th Directorate Thugs are truly frightened of is the Narod (the “People”).  If your Russia interest stretches beyond European gas shortages, the most significant event of early 2006 was the entirely botched reform of pension entitlements to travel.  At least one Thug has read Paine - I defy you to agitate a man on a full stomach.  Gas will be provided to heat our apartments whatever the economic cost.

Having said that UES has been preparing the press all summer for power cuts due to gas, Milov's graphs are partially UES inspired.  If we get a cold snap (-25) I would not bet against an eastern spalny raion (dormitory region) of Moscow or the business centre suffering a complete power, but not heating, outage.

The risk is that rent-seeking (corruption) moves too slowly to understand what the Narod really feels.  To the extent there ever was a Putin, the Good Tsar, he is too isolated to understand, or care.

Anyone for a heating revolution?

The arguments in short, though you have read this before;

Big Gazprom fields are in decline
Gazprom keeping production flat with mid-size fields and acquisitions
Gazprom's next big fields will not come on stream until 2015 at the soonest
European demand is growing
Russian demand is growing faster
The US wants its disproportionate share of the world's energy
Supply from Central Asia (generically referred to as Trashcanistan) is filling the gap but the pipeline infrastructure needs $2-3bn of upgrade capex to provide the supply in 2+/- years

Where TOD's analysis falls down are the economics, and again you have heard this before.

Gazprom's sales to Europe (old not new) are approximately $240 per thousand cubic meters (mcm)
Regulated domestic prices are $41/mcm (net back equivalent price ~ $58/mcm)
Unregulated prices are around $69/mcm (net back equivalent ~ $128/mcm)

There is a clear economic argument in favour of Gazprom meeting its export obligations.

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Technorati Tags: Energy, Gas, GAZP, Putin, Russia

I am also making headway in my attempt to become a billionaire.  Not having an oil company to rape or a telephone license to issue does however, make it problematic.

Notwithstanding, I am closer to becoming a billionaire than the real killers are to being captured.  And you have no idea what a gap the former is.

Politkovskaya Update:
Prosecutors said Friday that they had made headway in the investigation of the killing of journalist Anna Politkovskaya but did not disclose details.

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Technorati Tags: politkovskaya, Russia

My early morning reading has delivered this gem from the Royal Gazette.

It is an article originally published in the WSJ by WSJ staffers, a kind reader had already provided me with a copy, but the pressure of work had kept me from commenting.  Now the weekend has arrived here are my thoughts.

Whilst the article assumes that you have some knowledge of the underlying case in order to truly understand the case, it make good reading.

For what its worth from the bits that I know, as opposed to suspect, its well written and researched and accurately reported.  Albeit that you can feel the dread hand of WSJ's legal team removing the juicier bits.

I heard on the grapevine that Alfa was beginning to despair over the damage that the row was doing to its business.  But now that the press has its teeth in to the story, mostly because there is evidence that can be sourced outside Russia, it strikes me that this is a story that won't go away.  Or at least until a couple of ex-Commerzbank investment bankers are languishing in jail (they were crappy bankers anyway) and a Danish lawyer is enjoying his “ownership” of a large chunk of the Russian telecom industry in a country where arrest warrants can't reach him; Russia in the summer and Maui in the Russian winter?

Here are some of the more interesting paragraphs selectively culled from the piece.  To get the whole story read the article;

In late 1994, Mr. Reiman gathered his state-controlled employer’s interests in the growing ventures into a firm called Telecominvest. His employer owned 95% of it. Mr. Galmond, the Danish lawyer, says that he indirectly owned the rest.

But just over a year later, the interest held by Mr. Reiman’s employer and another state company had shrunk to 49 percent. Now, 51 percent was in the hands of an obscure Luxembourg company called First National Holding.

What had happened was that Telecominvest issued new shares. Though the state-controlled companies, represented by Mr. Reiman, had a right to invest in these shares and maintain their dominant stake, they didn’t. Instead, First National Holding put up a modest $1.8 million for the new shares and wound up with the majority stake. Later its stake rose to 85 percent through the same process.

Who was this First National Holding? The question intrigued Russia’s then-telecom minister, who says he learned about the new ownership in the local press and called state telecom executives for an explanation. They told him First National Holding was just a vehicle for the actual owner – Commerzbank – says the former minister, Vladimir Bulgak. So “we didn’t make a scandal. We thought the Petersburgers found a good partner who would invest,” he says.

Telecominvest also portrayed Commerzbank as the owner. It said in regulatory filings that the bank owned First National Holding. And the German bank itself said the same. Commerzbank in a 2000 European Union regulatory filing, in annual reports and in letters to business partners said it owned First National. Now it admits that wasn’t the case.

German police found a long internal report from Commerzbank’s Moscow office warning that the bank was improperly helping Mr. Reiman conceal ownership of state assets, says a senior German police official. According to the official and to others with knowledge of the case, the employee who wrote the internal report told investigators that in 2001 he tried to give it to Commerzbank chief executive Klaus-Peter Müller at bank headquarters in Frankfurt, but Mr. Müller turned his back and wouldn’t acknowledge it.

For instance, a 2002 letter to a Liechtenstein bank said the telecom empire belonged to Mr. Reiman. The letter bears Mr. Galmond’s signature, according to an affidavit filed in a British Virgin Islands court. Mr. Galmond said the statement that the businesses belonged to Mr. Reiman was made by his staff in error.

Commerzbank executives considered Mr. Reiman to be the bank’s client, said a person familiar with its handling of the matter. The bank did due diligence on him as “the economic beneficiary” of the assets, said an affidavit filed in the Privy Council, quoting a Galmond adviser. Mr. Reiman’s explanation is that the bank’s lawyers looked into whether it would be legal for him to get a stake in some of the companies in the late 1990s as part of a deal Mr. Galmond proposed but that such a transaction never happened.

German prosecutors say their money-laundering investigation is complicated by the need to establish that a crime occurred at the beginning of the chain in Russia. They would need to show that the money that coursed through Commerzbank was dirty to begin with.
In Russia, authorities have shown little interest beyond a 1997 investigation by prosecutors in St. Petersburg, which found no significant violations in the 1994 formation of Telecominvest. No senior Russian official other than Mr. Reiman has publicly commented on the allegations against him. Russian prosecutors, when asked by legislators to respond to the Zurich tribunal’s ruling, said they saw no evidence that IPOC had engaged in suspicious financial operations.

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If you want to understand what a Muzhik is then start at the top.

Don't worry boys you can bankrupt companies at will and then in celebration rape a couple of women and whilst your at it why not shoot a central banker, a journalist and a mayoral candidate.

And you know that you will get off scott free.

Kremlin explains Putin rape 'joke' - CNN.com:

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Technorati Tags: Despair, Putin, Russia

You would think me remiss if I did not keep you abreast of the latest Megafon, Alfa, Reiman news.  Its from the shit-for-brains Moscow Times so its copied at the bottom.

In using Google's excellent search engine (I am such a trademark good boy) to find a link-friendly version (no luck I am afraid) I came across this from The Royal Gazette.  Here's the pertinent bit;

THE Bermuda Supreme Court has recognised a Swiss arbitration ruling that described the island-based IPOC International Growth Fund as a money-laundering organisation.

So here's my precis.  A Russian court has issued an arrest warrant for an individual who failed to sell his stake in Megafon to a fund which has been acknowledged by two courts as being involved in money-laundering and backed by a senior official in MinSvyaz.

As The Royal Gazette has it:

It is believed by sources close to the case that a Russian court would be seen as a “friendly” venue by IPOC.

A Moscow court has issued an arrest warrant for the man who sold a 25 percent share in MegaFon in 2003, sparking an international legal battle over the stake.

A court official said Wednesday that a ruling had been handed down Monday to arrest Leonid Rozhetskin on suspicion of serious fraud.

Rozhetskin is an American citizen and his current whereabouts are not known; Russian media have said he divides his time between Britain, France and the United States. It was not immediately clear whether the Russian arrest warrant would be enforced abroad.

Rozhetskin's spokeswoman said she was unaware of the court ruling.

“We have no confirmation of an arrest warrant issued,” Debra Reed said by telephone from Washington.

The dispute began in 2003 when Rozhetskin's company, LV Finance, sold 25.1 percent of MegaFon, the country's third-biggest mobile phone company, to Alfa Group, an investment vehicle for billionaire Mikhail Fridman, for $300 million.

A Bermuda-based emerging markets fund, IPOC, challenged the purchase, saying it had a prior option that gave it the right to buy the MegaFon shares.

The case has been followed closely because a Swiss tribunal ruled this year that IPOC's real master was IT and Telecommunications Minister Leonid Reiman. Reiman has denied that.

IPOC and LV Finance have crossed swords many times in international courts, but no court has issued a final ruling.

In June, IPOC filed a suit in a New York court alleging Alfa conspired with Rozhetskin to steal the fund's 25.1 percent stake in MegaFon through money laundering, bribery, wire fraud and other criminal acts.

Officials from the companies involved declined to comment on the latest court ruling.

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Technorati Tags: Corruption, Reiman vs Alfa, Russia

I referred to this earlier.  Sean's Russia Blog has the details.

Sean's Russia Blog: Moscow Police Documents Show Attempted “Proverka” of Georgian School Children:

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Technorati Tags: Russia