Names, passwords, and safe houses!

- What exactly are minority shareholders dissatisfied with in the way Surgutneftegaz operates? - First and foremost, we are concerned about how efficiently shareholder capital is being used. At the meeting, we learned that the return on our securities is 60 kopecks per share. Frankly, that is not a particularly high payout, and it is not comparable to what shareholders of major global oil companies receive. Another issue troubling us is the company’s relationship with oil traders, and in particular with Gunvor, where enormous profits appear to accumulate. Its co-owner, Mr. Timchenko, is on the list of the world’s richest people. Surely shareholders are entitled to ask why that money goes to a foreign oil trader rather than to the shareholders or the Russian state budget. Another question concerned the company’s owners. Surgutneftegaz is one of Russia’s largest commodity companies, yet no one knows who actually owns it. To this day, no one knows the names of its beneficial owners, and we raised that issue at the meeting as well. Analysts say that disclosing those names would sharply increase the company’s market capitalization, which would of course benefit us as shareholders. And the third issue we raised was a technical one: we insisted that the company publish its reports online. We set out all of our complaints in a letter that we sent to the company’s management a month before the meeting. - Who is “we”? - Me and several other minority shareholders, some of whom do not want their names made public. - What percentage of shares do you collectively own? - A very small one. But it was important for us to raise publicly the issues I’ve just mentioned. - And how did the other shareholders react? - First, with surprise. Let me remind you that the meeting took place in Surgut, and many of those attending simply did not expect minority shareholders to show up, much less to voice their dissatisfaction openly. We assumed they might not let us speak at the meeting, so, as I said, we contacted the company’s management a month in advance. Then we repeated our request to speak just before the meeting began. To Vladimir Bogdanov’s credit, he did not stand in our way. The speech itself, it seemed to me, made quite a strong impression on those present. It was not exactly like a bomb going off, but the resonance was serious. Only five people spoke at the meeting: Bogdanov himself, the chief accountant, the chief lawyer, the meeting secretary, and me. Bogdanov was forced to provide explanations, and to his credit he did so quite courteously, going through every point. - Were you satisfied with those explanations? - No, of course not. Bogdanov assured us that everything was proceeding normally. In particular, he said that he owned only 2 percent of the company’s shares and therefore had no right to demand disclosure of the ownership structure. It should be said, however, that he said this with a very telling smile. - And what did he say about the traders? - That all relations with them are conducted on the basis of tenders. He did, however, suggest that the head of the export department meet with us and answer our questions. - Did he meet with you and answer them? - Yes. But it did not make things any clearer. Verbally, he explained in fairly detailed terms how the tenders work, but he refused to provide a written report on what share goes through Gunvor, saying that everything would continue as it always has — “the dogs bark, but the caravan moves on” (a Russian proverb meaning criticism changes nothing). He did not even promise any transparency on this issue in the future. - So your demarche was in vain? - I don’t think so. We received support from some foreign minority shareholders who were present at the meeting. They said they would support us, especially in clarifying who the beneficial owners of Surgutneftegaz are. Now we will try to rally minority shareholders who, like us, are concerned about these issues, bring in lawyers, and continue moving forward while maintaining a dialogue with the company’s management. - Do you seriously believe you can force them to name the real owners? - They will, of course, resist, and we will try to persuade them to change their position. It seems to me that our potential allies are not only minority shareholders, but also the country’s leadership. It is absurd for a company of this scale to conceal its ownership structure. There are plenty of rumors and zero reliable information. I am sure that sooner or later this situation will change. What surprises me is that before us, no one raised this issue with the shareholders. - How do you explain that? - Possibly people were afraid to do so because of the rumors surrounding Surgutneftegaz and Gunvor regarding their beneficial owners. - Is this a political issue for you? - When the country’s largest oil exporter does not disclose the names of its owners and trades raw materials through opaque companies like Gunvor, that is not only an economic problem but a political one as well. But in this case, above all, I am defending the interests of minority shareholders.