Wednesday 6 April 2011

Confusion over Russian ‘boards purge’

Dmitry Medvedev
Medvedev’s plan to eject Putin’s allies from the boards of national enterprises such as Rosneft has stoked fears of a struggle for power.
Published: 2011/04/06 07:31:51 AM


RUSSIAN President Dmitry Medvedev’s plans to purge Prime Minister Vladimir Putin’s allies from state firms were clouded yesterday by a report naming a new generation of candidates that the government was forced to deny.


Mr Medvedev’s plan to eject Mr Putin’s allies from the boards of national enterprises such as Rosneft has stoked fears of a struggle for power between clans within the elite ahead of Russia’s presidential election next year.


Kommersant newspaper cited unidentified sources as saying that some of the stars of Moscow’s investment banking and corporate worlds could replace Mr Putin’s allies.


Several of those named as potential candidates said they had not even been approached, indicating that the leaked list was preliminary and possibly only one of a number under early discussion.


The Federal Agency for State Property Management said the report was untrue and a senior Kremlin official said it had yet to be decided who would replace government officials. "This is all just gossip," said the Kremlin source . "The struggle for these seats has not started yet. It has yet to be decided who could (replace the officials) and after that these candidates will be suggested to the president."


Mr Putin, Russia’s most popular politician and the leader of the ruling party, has not yet publicly commented on the plans, although the most prominent potential victim is one of his most trusted allies, Deputy Prime Minister Igor Sechin.


When asked about the replacement of state officials on the boards of state-controlled companies, Mr Putin’s spokesman, Dmitry Peskov, said: "The issue is being worked on, but we have not moved on to discussing candidacies yet."


Mr Medvedev’s boards purge is viewed as part of a wider bid to assert his authority and gain support within the elite to run for a second term in the March 2012 election.


Mr Medvedev’s reform could also increase profit for shareholders by helping to cut costs at many of the sprawling state-controlled companies which provide over 15% of Russia’s $1,5-trillion gross domestic product. But much will depend on implementation.


"I think the president was very clear about which boards he wants to reshuffle," said Sergei Guriev, rector at the New Economic School in Moscow. "When he gives orders as direct and as clear as these, the government must follow them otherwise the president’s authority would be openly undermined. I think in this case the government declared its willingness to follow."


Mr Sechin is known as Russia’s oil tsar as he oversees the government’s energy and metals policies. He is set to lose his unpaid posts as board chairman at oil major Rosneft, power company Inter-Rao and Rosneftegaz, according to the Kremlin.


Kommersant said Mr Sechin could be replaced as chairman of Rosneft by Rair Simonyan, nonexecutive chairman at Morgan Stanley in Moscow, or by Vladislav Martynov, regional MD at SAP.


Mr Simonyan served as a Rosneft vice-president in the 1990s and Mr Sechin has hired several of Morgan Stanley’s top bankers to serve in Rosneft. Mr Martynov is an information technology entrepreneur .


In most cases, "the potential independent directors are people who are already rather well integrated into structures close to the government", Kommersant said . Reuters


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