Vneshekonombank (VEB) has been rewarded for its bailout operations. Ever since the crisis erupted, the Government has been turning this bank, commonly referred to as the Russian Development Bank, into a universal instrument for delivering anti-crisis assistance, including targeted assistance. So universal has VEB become to date, that it has complained more than once that it does not have enough funds to develop (its core activity) and to put up bailout money.
Now the state corporation has received its reward: it will be given back the 100 billion roubles it had earned by investing the money from the National Welfare Fund (FNB) in the stock market. Of that sum, 30 billion roubles is in cash, says Finance Minister Alexei Kudrin.
Yet, in return, VEB will again help its major debtor, aluminum company UC Rusal, by purchasing 3% of its shares at an IPO (the company has already received $4.5 billion of government money through VEB). VEB will pay an estimated 14-18 billion roubles for these shares.
This time around, in order to rescue UC Rusal, VEB will use pension money. The reason for that is probably that the FNB "is called upon to become part of a stable mechanism of providing pensions", as the Finance Ministry claims on its website. And pensions are usually provided to those very pensioners whom the government has proclaimed to be its policy priority and for the sake of whom it pledged it would substantially increase the tax on companies in 2011.
Prime Minister Vladimir Putin yesterday suggested that in order to implement pension reform, the state should "jump over its own head." To give away part of pensioners' money to a state corporation with the ultimate goal of helping a private company registered in an offshore zone (on Jersey) is indeed a stunning leap.
What is more, it imposes no encumbrances for the owners of the company being rescued, no sanctions, and no change of owner or management. Putin, however, did not have to make the unpopular decision himself, as the transfer of money can be authorised by the finance minister, so should anything untoward happen, Kudrin will again take the blame. He has already been accused of violating the Finance Ministry's holy of holies, the Budget Code, whereby the income from trust management of FNB assets is not the property of the trust manager and is added to the fund's increment of assets.
It turns out, however, that the letter of the law has not been broken. The sum of 175 billion roubles was not transferred from the FNB to VEB in trust management, but was instead placed in a deposit account (at 7% annual interest). So, VEB will use pensioners' money to support UC Rusal in strict compliance with the law: just clever juggling of terms and no violations.
Fillip Sterkin