"Vedomosti": "New Form for State Corporations"
The presidential executive office has ruled that three state corporations - the Russian Technologies Corporation (Rostekhnologii), the State Nanotechnologies Corporation (RusNano) and the state development bank Vnesheconombank (VEB) - will be floated next year.
President Dmitry Medvedev said in his state of the nation address that a state corporation was inefficient. Presidential aide Arkady Dvorkovich added that Rostekhnologii, RusNano and VEB will be floated next year. The Housing and Utilities Reform Fund and Olympstroi (which is constructing Olympic venues in Sochi) will remain as state corporations but will be liquidated in 2012 and 2014 respectively. "There is no urgency about the Rosatom nuclear power corporation and the Deposit Insurance Agency since their activity is very specific," Arkady Dvorkovich said.
Six of the seven Russian state corporations were established in 2007, in the last year of Vladimir Putin's presidency. His press secretary Dmitry Peskov believes that such entities were then efficient and justifiable and adds that Rostekhnologii, for example, was set up to be privatised in 2015. He believes that the government will carry out the president's order.
Medvedev first said that state corporations as an entity were ineffective three months ago and tasked the Prosecutor General's Office and the Presidential Control Department with a systematic audit of the corporations. They reported to the president on Tuesday that irregularities had been found in all the corporations except for Rosatom.
"We are not afraid of the market, it is our goal," Rostekhnologii's chief Sergei Chemezov told Vedomosti. He added that the main thing for the corporation was to accept the assets, to streamline them and introduce them into the market. RusNano management board member Andrei Trapeznikov said that the form of a joint-stock company was better for RusNano since it was more comprehensible for investors. A VEB manager said that it would be "rather costly" to transform the bank since it had to increase its equity by 1 trillion roubles to meet the Central Bank's capital requirements. A VEB spokesperson declined to comment.
Andrei Trapeznikov said that the transformation could be completed in one year: First, special laws on transforming the corporations into joint-stock companies shall be passed." Anton Sitnikov, a partner at the Goltsblat BLP law firm, said that there should be a separate law for every corporation. Alexander Yermolenko of the FBK audit and law consulting firm added that after that the property was inventoried, a transfer and acceptance act should be drawn up and share issue procedure established. Neither lawyer thought that the process could be completed in less than one year.
RusNano's flotation would be the easiest, a Presidential Executive Office official said. The process should not be too complicated for Rostekhnologii, since de facto only the managing company was a state corporation, whereas all the assets were in a joint-stock company. A high-ranking official from the Finance Ministry admitted that VEB's flotation would be the most complicated, since the bank had to meet the Russian Central Bank's requirements. "VEB would first have to adjust its loans and assets and even possibly reduce its capital," he told Vedomosti.
State corporations would have to spend considerable amounts on their flotation, the lawyers added. Alexander Yermolenko forecast expenditures of up to several tens of millions of roubles. Anton Sitnikov added that a regular company could spend up to $1 million on consultants' fees in its reorganisation. The Finance Ministry official said that the government would not provide the funds for this: "They will have to spend their own funds on it. It does not take much effort or money to change the legal status." A high-ranking official from the ministry added that VEB would manage with one million roubles and could spend that amount from its revenues.
Yulia Tseplyaeva of Merrill Lynch supports the president's plans as state corporations will be reporting under corporate accounting standards and become more transparent after flotation.
