MOSCOW, September 4 (RIA Novosti) Release of president's Duma election decree delayed to suit United Russia/Russia may limit grain exports this year /German authorities trying to link Deripaska to "Russian mafia"/Rosoboronexport ready to become a state corporation/Severstal to pay $500 million in dividends for 1H07
Release of president's Duma election decree delayed to suit United Russia
Rossiiskaya Gazeta, an official Russian government media source, has not yet received the presidential decree setting the date for the State Duma elections, even though many pre-election procedures have been timed to coincide with its formal release.
The Presidential Executive Office has explained the delay by citing "technical reasons," while experts have suggested it was actually meant to give the United Russia party enough time to prepare all the documents required for the elections.
"We are not authorized to use electronic sources, and have to wait for the official copy [of the decree] to be delivered," said Timofei Kuznetsov, deputy editor-in-chief of Rossiiskaya Gazeta.
The Kremlin source reiterated that the decree was not sent yesterday for technical reasons, but that it would certainly be delivered later today and published tomorrow, September 5.
It has nothing to do with politics, the source assured, because the one or two additional days the parties will have to collect documents will hardly make a difference.
Central Election Commission (CEC) member Yevgeny Kolyushin thinks otherwise. He is convinced that the release of the decree has been delayed to give the pro-Kremlin United Russia more time.
According to the media, the party has scheduled its congress to approve the list of Duma candidates for October 2.
If the presidential decree had been published Monday, the deadline for submitting the lists to the CEC would have been October 3, leaving United Russia too little time to prepare and submit the documents. This way, it will have one or two days to spare.
The CEC had compiled a day-by-day election schedule well in advance, assuming the decree would come out September 3. The schedule must be approved after the president sets the election date.
However, on Monday an instruction was circulated to draft three versions of the schedule, each assuming a different day of the decree's publication (Tuesday, Wednesday or even Thursday).
The later the parties hold their congresses, the better for them, according to political scientist Alexander Kynev.
Canvassing starts on the day of the official nomination of candidates, and has to be paid from the party's election account, whereas before the formal presentation of the list, the party can advertise itself without any restrictions.
That is, United Russia is trying to use its administrative resources and control of the media as fully as it can, the expert concluded.
Russia may limit grain exports this year
The Russian government is looking into the possibility of limiting exports of grain, primarily of wheat, as a way of curbing inflation, and could decide to do so as early as September 13.
Grain sales from state reserves should stop the rise in bread prices and the government included them in its package of anti-inflation measures.
Accrued inflation in Russia from the beginning of the year through August reached 6.6%, while the annual figure should not exceed 8%. The government has no intention to revise its inflation forecast.
"The government is ready for grain intervention," German Gref, Russia's economics minister, told the president September 3.
Such statements may add to nervousness on the world markets, where grain prices have reached a 10-year high even without the new Russian restrictions.
Experts explain the steep surge in prices by poor harvests in Europe, Canada and Australia.
Apart from that, Ukrainian authorities imposed a restrictive duty on wheat exports in June, with Ukraine being the world's sixth-largest grain exporter.
Therefore, if Russia (which is the world's fifth-largest grain exporter), limits grain supplies, wheat prices may hit a new high.
"There is an opportunity to limit [grain] exports. A special working group has been set up by the Russian Agriculture Ministry to conduct consultations on these issues," said Arkady Zlochevsky, president of the Russian Grain Union.
However, he said he believed no concrete decisions would be taken before the end of the harvesting season.
Analysts fear that the introduction of export duties may have more negative than positive effects on price dynamics.
"We risk losing the world market with its high and attractive prices for our producers. In addition, if we keep all our grain in the country, we will crush our own market," said Igor Pavensky, a leading expert with the Agrarian Market Development Institute.
The decision to introduce high export duties on grain may be taken September 13, when the inter-departmental commission for the agro-industrial market meets in session.
"These are just rumors, but the market is nervous," Pavensky said.
German authorities trying to link Deripaska to "Russian mafia"
The German magazine Der Spiegel has reported that the Stuttgart Prosecutor's Office was linking Russian aluminum king Oleg Deripaska to the notorious Izmailovo gang, which is engaged in money laundering in Germany and even supposedly received a contract on eliminating some of his rivals.
Deripaska, a majority shareholder in aluminum giant Russian Aluminum, has repeatedly denied the allegations.
Basic Element, a company controlled by Deripaska, refuted the Der Spiegel story and called it groundless and absurd.
Corporate officials said the publication had probably been ordered by rivals trying to prevent Russian business from entering foreign markets.
Many experts linked the latest media reports with the aluminum concern's plans to hold an IPO on the London Stock Exchange in the next few months.
Vyacheslav Zhabin from BrokerCreditService said the allegations would undermine the reputation of Russian Aluminum, because foreign investors were usually concerned about the possible criminal ties of corporate shareholders.
Der Spiegel said Deripaska was buying into U.S. automotive giant Chrysler and Germany's Hochtief construction company. Moreover, he owns a 30% stake in the Austrian building concern Strabag SE.
Deripaska is also moving to buy Russneft, a company formerly owned by disgraced oligarch Mikhail Gutseriyev.
He and Alexei Mordashov, owner of steel giant Severstal, are planning to acquire a blocking stake in Silovye Mashiny (Power Machines), the largest national producer of equipment for the power engineering industry.
This and other deals remain unaffected by rumors concerning Deripaska's past record, and it appears that there will be no repercussions this time, either.
Rosoboronexport ready to become a state corporation
The idea by Sergei Chemezov, head of Rosoboronexport, the state arms export monopoly, to turn the state company into a state corporation, is beginning to take shape.
The presidential executive office has submitted to the government a bill on establishing the Rostekhnologii Corporation, and Rosoboronexport will be incorporated and join the state corporation with all its subsidiaries.
As a result, Russia will get a powerful state entity, which will not only control trade in Russian arms, but will also start producing and selling civilian products.
The company expects the State Duma to adopt the law during its fall session ahead of December parliamentary elections.
Rosoboronexport has lobbied to set up a state corporation since 2005, but real work on the package of documents did not begin until this summer, after the first three state corporations were established - the Development Bank (Vneshekonombank), RosNanoTech, and the Nuclear Industry State Corporation.
Earlier, Rosoboronexport general director Chemezov explained the fact that Rostekhnologii was the last on the list as a "misunderstanding" at the inter-departmental level.
He himself expects to head the state corporation, while one of Chemezov's current deputies will most likely be appointed head of Rosoboronexport.
In the view of a source on the government staff, the main impediment is that the "management of the enterprise is trying to introduce a number of contentious points into the package of documents."
Rosoboronexport, for example, is seeking to legalize the system of weapons sales established at the enterprise and mediated by agents close to the governments of their countries," he said.
State corporations are not directly controlled by the government, their heads are appointed by the president personally, profits of the corporations may not be distributed, and rules for disclosing information for such entities are less stringent than for open joint-stock companies.
In effect, a state corporation is a state holding company with a special status, and its subsidiaries can carry out any market operations, including IPOs.
In that way, following its transformation into a state corporation, Rosoboronexport will finally turn into a shadow ministry of industry, which will supervise only for defense plants, but also civilian export-oriented enterprises.
Severstal to pay $500 million in dividends for 1H07
Russian metals giant Severstal has become the leader among Russian steelmakers in terms of the size of dividends it paid to its shareholders in January through June 2007 - $500 million, with $400 million of that amount going to its core owner, Alexei Mordashov.
Severstal announced it would pay 10 rubles per share, which added up to 10.07 billion rubles ($393 million) for the first six months of 2007. The company's shareholders are to approve the decision September 28.
Serverstal has already calculated that its shareholders are entitled to $100 million in dividends for the first quarter of 2007. Therefore, Severstal shareholders are to be paid around $500 million for January through June, a record amount for Russian steel producers.
NLMK, another metals company, will pay shareholders 8.99 billion rubes (about $348 million) for the first half of 2007. Evraz does not make any midterm payments, while MMK approved midterm dividends of 4.88 billion rubles ($190 million).
Severstal Group head Alexei Mordashov really needs the money, as he is now saving up for personal expenses, UBS analyst Alexei Morozov said.
For example, he is eyeing the stocks of Silovye Mashiny (Power Machines), a company with a market capitalization of $1.66 billion.
The tycoon controls 80% in Severstal, and is therefore entitled to $400 million in dividends - all the more so since Severstal is currently planning no major mergers and acquisitions, and can afford to pay large dividends, the analyst added.
According to Morozov's estimate, Severstal will post a net profit of $1.74 billion in 2007, up 50% on the 2006 figure.
Its dividends policy involves an annual payment of at least 25% of its consolidated net profit to its shareholders.
This time, the company fulfilled that commitment in six months, as it has already paid $0.48 per share, while UBS had forecast a yearly dividend of $0.44, Morozov said.
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