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    Russian Press - Behind the Headlines, February 7

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    Gaddafi’s Spin Doctors in Russia’s Open Government/ Copper Magnate Iskandar Makhmudov Discloses UMMC Partners/ Quite Amendments from President and Government

    MOSCOW, February 6 (RIA Novosti)


    Gaddafi’s Spin Doctors in Russia’s Open Government

    The Monitor Group Company, an American consulting firm now supervising Russia’s Open Government concept, used to promote Libya’s image abroad before the armed uprising there.

    “The Open Government format was developed by consultants from The Monitor Group Company (MGC), a company that worked with Muammar Gaddafi about six years ago,” a source at Open Government told Izvestia.

    A working group responsible for the development of an open government concept was started last spring – about the time Libyan rebels were celebrating the first year anniversary of their revolution.

    In terms of strategy consulting services for governments, MGC is one of the world’s largest firms. Its founder, Michael Porter, a professor at Harvard Business School, advised Ronald Reagan and Mitt Romney.

    The company established a presence in Russia in 1996. Between 2007 and 2011, one of its founders, Mark Fuller, was a member of the Skolkovo International Advisory Board. He left MGC in 2011 when it was revealed the company had been consulting Gaddafi in violation of US law. MGC Managing Partner in Russia, Alexander Tolkachev is now a member of the Open Government Expert Council.

    MGC worked on Libya’s public image in the United States before the coup and also conducted research on the modernization of Libya at the request of Muammar Gaddafi’s eldest son. The recommendations included reforms in the oil sector that would have guaranteed unparalleled growth and competitive strength for the country by 2019. Later, the company published its proposals that were centered around Gaddafi’s ideas, and described the Libyan leader as a man of action and innovation, someone worth considering. Gaddafi’s political image was being polished up nicely before the uprising. 

    Igor Yurgens, Board Chairman of the Institute of Contemporary Development, says there is no reason to criticize Open Government for working with foreign consultants. Another PR company that handles Russia’s publicity, Ketchum, is in a similar situation and is said to be packed with CIA agents.

    Mikhail Omsky, CEO of another consulting firm, Image Contact Group, hopes, ironically, that MGC’s new client (Russia) will not suffer the fate of the former one (Libya).

    Consultations with an American PR firm indicate that Dmitry Medvedev’s Open Government project has links with the US, argues Alexei Mukhin, CEO of the Center for Political Information.

    “It is beyond my understanding why Vladimir Putin even allowed a ministry to be formed to supervise such a peculiar project. More than that, the US in its efforts to control everything doesn’t even pretend to be subtle.”

    Dmitry Medvedev first mentioned the open government idea in 2011 after his announcement that he would not be running for a second term. The new structure in the cabinet of ministers is a format for interaction between expert communities and the government.


    Copper Magnate Iskandar Makhmudov Discloses UMMC Partners

    Iskandar Makhmudov, the owner of 50 percent of Ural Mining and Metallurgical Company (UMMC) has disclosed three minority partners – Andrei Kozitsyn, general director of UMMC Holding with 35 percent, and two UMMC executives and directors, Eduard Chukhlebov and Igor Kudryashkin with 7.5 percent each.

    This information was posted on the Koltso Urala Bank website, which is 95 percent owned by UMMC through a subsidiary. It follows from the statement that Selmareco Limited, which owned 85 percent of UMMC as of January 2013, is controlled by UMMC founder Iskandar Makhmudov through a complex chain of offshore investment vehicles, while Kozitsyn also holds a stake in it through affiliated companies. The two companies that hold minority stakes in UMMC are owned by Chukhlebov and Kudryashkin.

    UMMC, Russia's second largest copper miner and refiner, includes some 50 companies in various industries, while its core assets are concentrated in mining, non-ferrous metallurgy and engineering. Its sales are dominated by copper, as well as zinc, lead, precious and rare-earth metals.

    Its 2012 targets included the sales of 386,000 metric tons of copper, 250,000 tons of zinc and 20,000 tons of lead. Its net profit was $742 million in 2010. Until recently, UMMC’s shareholding structure had not been disclosed. Kommersant has not been able to reach the above partners for comment.

    Makhmudov, 49, with a net profit worth of $8.2 billion according to Forbes, founded UMMC “with partners in 1999,” UMMC said on its website. Kozitsyn (52, $1.2 billion) was appointed general director of UMMC in 1999 and general director of UMMC Holding in 2002.

    Kudryashkin, 51, and Chukhlebov, 50, have been working with Makhmudov for over a decade.

    Neither of the junior partners is well known in the industry. RMG analyst Andrei Tretelnikov suggested that both could possibly be nominal shareholders. “UMMC is one of the least open companies. It has always avoided publicity as well as large loan deals which would require information disclosure,” he said.

    This new information might provide some insight into UMMC’s move to consolidate Kuzbassrazrezugol last year. It shows that Makhmudov’s coalmining partner Andrei Bokarev does not hold any UMMC shares. Therefore, UMMC’s consolidation of the coal business could mean either a breakup between the two businessmen or the possibility of Bokarev gaining a stake in UMMC.

    Rumors that Bokarev is leaving the business have long been circulating in the market, Tretelnikov said. The analyst’s estimated value of UMMC is $7-9 billion, and Kuzbassrazrezugol more than $3 billion. However, the size of Bokarev’s stake in the coal mining company has never been disclosed, except for a mention in its 2010 Eurobond issue memo that Makhmudov and Bokarev jointly owned 85 percent of its stock. In Tretelnikov’s opinion, UMMC’s takeover of Kuzbassrazrezugol means the two shareholders are dividing their assets. Bokarev was unavailable for comment on Wednesday.

    Nezavisimaya Gazeta

    Duma Quiet on Officials’ Property Law Amendments

    The relevant State Duma committee would not disclose the final wording of a law banning officials from maintaining foreign accounts and property yesterday.

    The State Duma Committee on Security approved its work for the current session. But the document did not mention a bill banning civil servants from maintaining foreign accounts and property.

    Meanwhile, committee chairperson Irina Yarovaya is calling a news conference for today to describe the committee’s successes in this area. Nevertheless, Nezavisimaya Gazeta sources in the Duma claim the deputies have received responses from the Kremlin and the government that in effect require the bill to be revised.

    The main intrigue concerns the fact that the government requested the revision. This condition was mentioned in a Council of Ministers memo signed by Deputy Prime Minister Vladislav Surkov. It also voiced the view, later backed by the president and  the prime minister, that while accounts could be banned, property was to be handled more delicately. “It is important to remember that many properties in the former Soviet republics could be inherited from relatives and might have nothing to do with corruption,” the executive branch said.

    The bill was initiated by United Russia State Duma deputies. The idea was for civil servants to keep their property and their money within Russia so as not to yield to outside influences.

    But it turned out that the bill’s proponents couldn’t agree. Some ministers and deputy ministers expressed a cautious disapproval, while Prime Minister Medvedev later described it as extreme, especially concerning property in other countries.

    President Putin seemed to bring an end to the dispute when, in his December 12 Address to the Federal Assembly, he said that while those in office should be banned from having foreign accounts and securities they could be allowed to own property abroad which they merely needed to declare.

    Following Putin’s comments, Duma deputies said they would adopt the law soon. But, according to a Nezavisimaya Gazeta source, there is still no completed package of amendments although the deadline expired on January 21. When asked to name at least the key amendments, Yarovaya simply invited the questioner to attend today’s news conference. Nezavisimaya Gazeta has learned that the State Duma already has all the comments from the presidential state legal directorate and from the government. “Now they will be phrased as specific amendments to be submitted by certain deputies,” the source told the paper.

    Apparently there is one amendment that contradicts the president’s and the prime minister’s views. It allows foreign accounts but only in banks that could be considered Russian affiliates. Curiously, Sberbank Chairman German Gref made a similar suggestion. Yarovaya at once opposed this proposal, which in effect allows foreign accounts and could, by the way, add to the assets of Russia’s largest bank.

    Yarovaya then offered another amendment which she backed in principle: to extend the restrictions to Russian judges, Central Bank staff and the personnel of state-owned corporations and companies.


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    Vladimir Putin, State Duma, Libya
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