At a meeting with the head of the Hong Kong Stock Exchange on Sunday, President Medvedev said that half the work of creating an international financial center in Moscow had already been completed I have no idea how Medvedev is measuring the progress toward creating this IFC. Maybe by the posts on his Twitter: he’s already written 430 tweets, so he just needs another 430 and Moscow will have its IFC. Or maybe by the number of apps installed on his iPad with the Russian coat of arms: Angry Birds and horoscope apps are already there, he just needs to add some tank games, and then one morning I’ll wake up and—there it is, an IFC in Moscow. Brokers rushing around, bumping into traders. Billions changing hands. Now let me tell you about the harsh reality of investing in Russia. I’ll explain with a simple example why Moscow is not going to get any kind of International Financial Center. As you may remember, yesterday I was in court with Rosneft over the right to obtain the minutes of board meetings. And tomorrow I’ll be in court over the same issue with Transneft. Let me note that both outfits are state-owned companies. In theory, they are supposed to comply with decisions made by the president and the government. And yet, despite the fact that Medvedev has said a hundred and fifty times that shareholders have the right to information (and even made it a separate point in his program to improve the country’s investment climate), we still have to spend months in court just to obtain the most basic information. So then. Transneft sent me the text of its appeal.
Now this is a document. No Twitters, iPads, or IFCs. President Medvedev ought to read it. It’s an excellent way to get back to harsh reality. The document is signed personally by Transneft president Mr. Tokarev.
You can read the full text here, but so as not to bore anyone, I’ll focus on the two main points. First, Transneft is once again, in all seriousness, pushing the line that I’m a CIA agent and therefore not entitled to any documents.
My favorite part is: "He described all his steps in detail and with great care in his blog on the Internet." Obviously, because of a typist’s error, they left out: "encrypted them and transmitted them to Headquarters". But all of that is complete nonsense compared with the following passage:
Read that carefully. Then rub your eyes and read it again. Russia’s largest state monopoly, a publicly traded company with enormous market capitalization, is officially declaring that it does not consider it necessary for money earned by the company to be distributed to shareholders holding preferred stock—on the grounds that they are "offshore funds." At this point, this is no longer about me, a humble CIA and MI6 agent, but about the largest investment funds investing in Russian companies. Prosperity Capital Management East Capital International Vostok Nafta Investment We won’t pay money to offshore entities; better to spend it on charity! But let’s remember who is saying this. A company that spent $500 million (five hundred million U.S. dollars) on this charity in 2007–2008, and nobody has ever actually seen any of that charity. All data on this "charity" is classified. I’ve been trying to obtain it for three years. The only "charity" recipient identified so far is the "Kremlin-9" foundation. Well]({{URL_10}}) of course—who gives a damn about investors and dividends when there’s money to "ship out and deliver." As for Transneft’s favorite word, "offshore," they’d do better to keep quiet. The use of ... uh ... questionable jurisdictions for financial optimization has long since been mastered. Ag]({{URL_11}})ainst that backdrop, it’s going to be rather difficult to lure in foreign investment, a significant portion of which (even genuine investment, not just Russian money previously taken out of the country and disguised as foreign capital) comes into Russia from offshore jurisdictions. I am now going to send official letters to every member of Transneft’s board of directors and ask them to explain this position of the company to me. This is not just some scrap of paper or a newspaper article. It is a document submitted to a court (which means cleared by all the lawyers) and signed by the company’s president. I’m very curious to hear the response of, for example, the chairman of Morgan Stanley, who sits on the board. Or Vyugin. Or [Dergunova. ]({{URL_15}}) I am also, of course, very interested in the reaction of Prosperity, East Capital, and Vostok Nafta themselves. I think their shareholders will find it interesting to assess the prospects of these investments. I would also like to hear the opinion of the rating agencies. And most importantly, I’d like to understand how President Medvedev is doing in all this. It must be frustrating when you spend a long time selling a story to someone in Hong Kong, and then some guy skimming money off pipeline construction spits on it and grinds it into the dirt. A piece of advice for President Medvedev: when you finish reading this post on your iPad with the coat of arms, summon Tokarev and smash that iPad over his head. And then kick him out of the corporate governance system. Into retirement. Let him write books about the global conspiracy against Russia. Sitting somewhere on Capri in a mansion worth twenty million. Only then will there be the first modest grounds for hope that the Russian Federation might one day get an international financial center.