| Mikhail Fradkov and Vladimir Potanin demand an understanding of salary schemes Only the lazy have not spoken or written about the conflict between government and big business over the past year, especially after the arrest of Mikhail Khodorkovsky. However, yesterday it turned out that they found a common language on at least one issue. This happened at the conference “Corporate Governance and Economic Growth in Russia”, organized by the National Council on Corporate Governance (NSCG).
Both the representative of the government - Prime Minister Mikhail Fradkov, who managed to greet the forum participants before the government meeting - and the representative of large business - the head of NSKU, President of the Interros holding Vladimir Potanin - said almost in unison: corporate governance in Russia needs to be improved, and the faster the better. They were echoed by foreign guests, including the head of the World Bank, James Wolfensohn, who came specially to the conference, as well as the President of the European Bank for Reconstruction and Development, Jean Lemierre.
The reason for this unanimity is simple: the state, large domestic businesses, and Western bankers need high-quality corporate governance like air. After all, only if the company is open, the structure of its ownership is transparent, and the relationship between managers and shareholders is as honest as possible, according to experts, can one count on large investments. Consequently, only then can it be possible to modernize production and produce more competitive products, which cannot but affect economic growth (as well as investor profits) - up to doubling GDP by 2010.
A breakthrough in this area is important, if only because, according to a survey by the Standard & Poor's rating agency, more than 80% of investors believe that corporate governance can become a determining factor when making investment decisions. In the meantime, the level of investment, especially foreign direct investment, is indecently low, despite the fact that in recent years the growth of investor confidence in the Russian market has been increasing. According to a report prepared within the framework of the NSCU, the average annual influx of such investments into Russia in recent years is about $3 billion, their volume in Russian GDP does not exceed 1%. This, the authors of the report are confident, “is clearly not enough for radical changes in the sectoral structure of the economy.” This unsightly situation is further complicated by the fact that, as the report states, investment in fixed capital should become a catalyst for economic growth in Russia.
Mikhail Fradkov bluntly stated that “solving the large-scale economic problems facing Russia is impossible without radically improving the work of Russian companies, introducing international standards of corporate governance, mechanisms for developing the resolution of corporate conflicts, and improving the quality of management.” The Prime Minister inherited “gray” salary schemes, which the government failed to overcome, even by reducing income tax to 13% in 2001. “Everything here must be fair, and therefore in accordance with the law. “Gray” salary schemes do not fit into the norms of civilized corporate governance,” said the head of government.
It is noteworthy that Vladimir Potanin, who, as they say, feels the full weight of the tax system, in particular the unified social tax, the size of which forces many to pay salaries in envelopes, supported the prime minister. “The government’s call to abandon “gray” salary schemes and other non-transparent mechanisms when doing business is fair,” he said. Moreover, the head of Interros spoke in favor of harsher punishment for those who use semi-legal salary schemes. During the conference break, Mr. Potanin explained to reporters why the position of the state and big business on this issue is the same. It turns out that, firstly, “gray” salary schemes today are relevant only for medium and small businesses (it is already more profitable for large businesses to pay “in white”, through accounting), and secondly, those who pay in envelopes get an advantage in competition - because it avoids taxes.
And one more problem. Vladimir Potanin is going to talk about it at the first meeting of the Government Council on Competitiveness and Entrepreneurship, scheduled for the next few days (yesterday the Prime Minister signed a regulation on this council). According to the businessman, for some reason the inspection authorities give preference to those “who have spoken about themselves, and not to those who continue dishonest business.” “We need to create a scheme so that people who go out into the world win and don’t go broke,” Mr. Potanin said.
The head of the Federal Service for Financial Markets, Oleg Vyugin, drew attention to the gaps in legislation that do not yet allow the use of a high culture of corporate governance for the benefit of business and the state. The law, in particular, makes it possible to hide the true (beneficiary) owners of the company, which leads to insufficient investor protection. Also, the investor is in danger due to the fact that there is no legislative barrier to hostile takeovers of companies. Mr. Vyugin noted with sadness that “now the mechanism of a hostile takeover is the main mechanism for the redistribution of property.”
However, it is gratifying that this state of affairs does not suit not only the supervisory authorities, but also the companies themselves. According to the National Council on Corporate Governance, today approximately 78% of Russian companies plan to improve corporate governance on their own initiative. Mikhail VOROBYEV |
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