Strip 028 Number No. 25 (380) dated 07/03/2002

Worldcom deceived investors

The US stock market is experiencing a huge scandal: last week the American telecommunications giant Worldcom was caught in fraud. Now the issue of bankruptcy of a company that made gross errors in drawing up its balance sheet is considered almost resolved.

The history of the second largest long-distance operator in the United States began in 1983. Worldcom gained its current position in the American telecommunications sector through countless mergers with other companies and acquisitions of smaller enterprises. The largest such deal was Worldcom's purchase of the American telecom operator MCI in 1998: the merger resulted in a giant with an annual income of more than $30 billion. The aggressive policy of the company's management in the field of business expansion and Workldcom's debts, which increased to $30 billion, were one of the reasons scandal that erupted last week.
Worldcom was caught falsifying the balance sheet: when compiling it, managers “forgot” to include expenses in the amount of $3.8 billion, thereby hiding the company’s unprofitability. This made a shocking impression on investors: Worldcom shares instantly lost value, and the American Securities Commission (SEC) has already begun legal proceedings - the company is directly accused of deceiving its shareholders. Indirectly, Worldcom has already admitted its guilt: its representatives stated that “the company’s indicators were artificially inflated.”
To avoid bankruptcy, Worldcom intends to lay off 17 thousand employees. The cuts have already begun: WorldCom CFO Scott Sullivan has been fired. Vice President and Controller David Myers has tendered his resignation. In addition, WorldCom is going to attract additional loans to pay off part of the debt. But, according to analysts, Worldcom will not succeed: America is facing the largest corporate bankruptcy in its history.

YELLOW CARD

Slavneft was captured again
On the evening of Thursday, June 27, the building of the Slavneft oil company in Moscow was seized by the police and employees of the private security company BIN-Zashchita (protected by BIN-Bank) and Interbezopasnost (a structure of Mezhprombank). On Friday, none of the company's employees were able to get to work. Well, on Saturday, that is, after this issue of “Money” was signed for publication, the annual meeting of Slavneft shareholders was scheduled. We would venture to assume that it did take place.

On Friday, the Slavneft building was closed - there was a notice on the door that “in connection with investigative actions

June 28 was declared a non-working day." The police did not allow the company's president, Yuri Sukhanov, or the rest of the employees into the office. The press service of the Investigative Committee under the Ministry of Internal Affairs explained the incident as follows: "The search at the head office of the Slavneft company is being carried out as part of a previously initiated criminal case. cases of abuse of power."
The company building was seized on the eve of the annual meeting of Slavneft shareholders, which was scheduled for Saturday. On Friday, company vice-president Andrei Shtorkh expressed doubt that it will take place. According to him, most of the documents required for the meeting are located in the office, where Slavneft employees do not have access. However, by the evening the tone of Mr. Storch’s statements changed: “Despite the difficulties, the lack of office equipment and the necessary papers, we will do everything possible to ensure that the meeting takes place.” The Ministry of Property, which owns 55% of the company’s shares, is also confident that the arrest of the office will not lead to disruption of the event. Ministry press secretary Alexander Parshukov told Dengi: “The Ministry of Property is confident that the meeting will take place. The situation is under control, and there is no information about its postponement.”
PETER SAPAZHNIKOV

UNSTANDARD POSITION

Airlines' taxes have been recalculated
Last week, a scandal erupted between representative offices of foreign airlines and Moscow tax officials. Ukraine Airlines lost a dispute in arbitration over the collection of taxes from them that were not provided for in the interstate agreement on air services. Thus, a precedent was created allowing fiscal authorities to interpret in their favor the legal shortcomings contained in all such interstate agreements.

Tax Inspectorate #38 of the Moscow Tax Inspectorate (it checks foreign companies and citizens) conducted an audit of the financial activities of Belavia, Ukrainian Airlines and AeroSvit. It turned out that airlines do not pay taxes on road users and the maintenance of housing stock. Ukrainian Airlines was assessed (including fines) about 10 million rubles. taxes, AeroSvit - about 3.3 million rubles, and Belavia - about 1.8 million rubles. The companies say that paying sales taxes for the use of roads and the maintenance of housing is a tax on transportation income. Under the terms of interstate agreements on air services, foreign carriers do not pay this type of taxes. But the document says nothing specifically about those that the tax authorities remembered. Representatives of airlines say that collecting arrears will deprive them of their working capital, and are threatening to stop flights to Russia. The inspectorate’s lawyers are confident that the interstate agreement is not violated: “The taxes collected have a different object of taxation and a different economic content and are not taxes on income.”
Interestingly, Aeroflot may suffer as a result. The fact is that tax officials are going to check the activities of the Moscow representative offices of all foreign airlines. And in the countries of origin of the affected companies, they may take retaliatory measures. And the first target will be the 130 foreign missions of the Russian national airline.
LEONID ZAVARSKY

CHALLENGE CUP

Metromedia will have a sale
Last week, the American holding company Metromedia International Group said it was going to sell its shares in Russian and Georgian telecommunications enterprises. Russian companies may become buyers.

MIG intends to put up for sale shares of the Moscow telecom operators Comstar and MTR-Svyaz, the St. Petersburg company Peterstar, the national telecom operator of Georgia Telecom Georgia, the GSM operator Magticom and some other telecom enterprises. MIG authorized the Russian investment company United Financial Group to sell its assets. It is not yet known how much money MIG will earn from the sale of stakes, but it is possible that this amount could be quite significant. For example, the capitalization of Comstar and Peterstar (Metromedia owns 50% of the shares of the first and 71% of the shares of the second company) is, according to some estimates, $100-125 million - that’s what each company is worth.
Potential buyers of shares include companies that are already involved in the above-mentioned enterprises in one way or another. For example, the Telecominvest holding, which owns a 29% stake in the telecom operator, is ready to consider the possibility of purchasing Peterstar. The Moscow-based AFK Sistema is interested in Comstar shares: its representatives have repeatedly stated this. The acquisition of a stake from MIG will allow AFK to establish almost complete control over Comstar.
VALERY KODACHIGOV

TACKLE

ALROSA was left without a government “Guarantee”
A loud scandal is brewing among ALROSA shareholders. The Social Guarantee Fund for Military Personnel under the Government of the Russian Federation ("Guarantee") is negotiating the sale of a 5% stake in ALROSA. This could disrupt the federal center's plans to consolidate the financial flows of the diamond mining company.

The most likely buyer of a 5% stake in ALROSA is said to be a well-known entrepreneur - President of the ESN group Grigory Berezkin. It is with him, according to Kommersant's information, that the president of the Garantiya fund, Roman Blokhin, is negotiating the sale of 5%

If Grigory Berezkin really decided to buy a stake in ALROSA, then he needs to be ready for deals at the very top

ALROSA shares. According to a Kommersant source in ALROSA, the agreement of intent has already been signed, but the fund has not yet received the money.
Apparently, at first the transaction will be formalized as collateral. This is the only opportunity for the fund to legally sell ALROSA shares. The fact is that ALROSA is a closed joint stock company, and according to the law “On Joint-Stock Companies”, shareholders have the preemptive right to repurchase its shares.
According to ALROSA estimates, the value of 5% of the company’s shares is at least $100 million. “This is based on the methodology of Berezkin himself, who valued ALROSA at $2 billion. He proceeded from the fact that in Yakutia, shares of the company can be bought from employees for $500 per share,” — the source told Kommersant. Thus, it is possible that in the end the structures controlled by Mr. Berezkin managed to form a significantly larger package.
According to ALROSA, Mr. Berezkin has long been interested in the shares of the diamond company. However, many here are confident that he acted in the interests of the Yakut authorities, who are actively trying to resist the plans of the federal center to take control of ALROSA. In them, the Guarantee Fund played an important role. The block of shares belonging to him was traditionally added to the federal share. It is possible that now the authorities will decide to confiscate them in favor of Russia.
ELENA KISELEVA

FINAL WHISTLE

Insurance scammers are landing
Last week, the Presnensky Intermunicipal Court sentenced clients of the insurer VSK to five years probation for insurance fraud. And the traffic police officer who participated in the conspiracy received a real sentence of 6.5 years in prison. This is the first case in Russia of punishing insurance fraudsters.

Four scammers, one of whom was a traffic police officer with twenty years of experience, managed to cash in on another large insurer, RESO-Garantiya, back in early 2000. In May of the same year, convicts Moisak, Kurkina, Sobolev, Makhamedeeva tried to get compensation from VSK.
VSK experts revealed the scheme used by the scammers. As the head of the legal department of the Moscow branch of VSK, Evgeny Orlov, told Denga, one of the group members, the owner of the VAZ-21043, insured his car owner’s liability for $20 thousand. Meanwhile, another was buying an expensive but broken foreign car. The traffic police officer fabricated documents about the accident, which occurred due to the fault of the owner of the "four". The owner of the foreign car submitted a claim for compensation to the insurer.
RESO-Garantiya specialists found the payment documents impeccable and compensated the fraudsters for the damage. However, the scammers were caught on the second insurer. As a result, three of them were sentenced to 5 years probation (including assistance to the investigation). And the traffic police officer, citizen Sobolev, will spend 6.5 years in a maximum security colony. Insurers consider this case unprecedented. And they hope that the story of those convicted will be a lesson for others: with the entry into force of the law on compulsory liability insurance for car owners, questionable payments from insurers, according to their own estimates, will amount to 10-15% of $1 billion in total fees.
TATYANA GRISHINA

FRIENDLY MATCH

Tatneft has triplets
Last week it became known about plans to merge three banks owned by Tatneft - ZENIT, Ak Bars and Devon Credit. The new one could become the largest regional bank in Russia.

Rumors about the merger of ZENIT and Ak Bars appeared in mid-June. But until recently, both denied such plans. True, ZENIT’s denials were not very convincing. From the comments of representatives of this bank it followed that the merger would rather look like a takeover, in which their bank would be the main one. However, as it turned out, the information about the merger of the two banks was indeed not entirely accurate.
And only last week the situation was clarified. The general director of the shareholder of both banks, Tatneft, Shafagat Takhautdinov, said that not two, but three banks will participate in the merger. ZENIT and Ak Bars will be joined by another bank owned by Tatneft, Devon-Credit. This bank, based in Almetyevsk, was created in the early 90s specifically to serve Tatneft. At the same time, Devon-Credit is noticeably smaller than ZENIT and Ak Bars. As of April 1, ZENIT ranked 23rd in assets and 26th in capital, Ak Bars was 34th in assets and 28th in capital. While Devon Credit was only 111th in terms of assets and 162nd in terms of capital. However, the bank that will result from the merger will become the largest domestic regional bank and will take 7th place in Russia in terms of capital and 15th in terms of assets.
IVAN KOZLOV

Sick kidneys forced Alexei Miller to vote alone

REPLACEMENT

Gazprom's extra chair
The meeting of Gazprom shareholders last Friday began with a sensation: the head of the concern, Alexey Miller, did not participate in it. This did not prevent him from being elected to the board of directors of Gazprom, the legitimacy of which, however, is questionable.

93.67% of shareholders took part in the meeting. The chairman was Rem Vyakhirev, it was his farewell to Gazprom - he decided to leave. But Mr. Vyakhirev’s successor, Alexey Miller, did not appear at the meeting at all: at the end of the working day on Thursday, his health worsened and doctors forbade him to participate in the meeting due to kidney disease. Which, however, did not stop him from coming to Gazprom in the morning and voting on behalf of the state on all issues on the agenda.
The elected board of directors has changed little. It still includes six state representatives: Minister of Property Relations Farit Gazizullin, Minister of Economic Development and Trade German Gref, First Deputy Chief of Staff of the Government Alexandra Levitskaya, First Deputy Head of the Presidential Administration Dmitry Medvedev, Deputy Prime Minister Viktor Khristenko and Minister of Antimonopoly Policy Ilya Yuzhanov (they received an average of 8.5% of the votes). About 9% of shareholders voted for Boris Fedorov and Ruhrgas Chairman of the Board Burkhard Bergman.
But the legality of the election of three members of the board of directors to the board of directors of Gazprom raises doubts (in addition to Alexey Miller, the director’s chairs were given to the chief of staff of the board, Mikhail Sereda, and the deputy chairman of the board, Alexander Ananenkov). The fact is that the regulations on the board of directors of Gazprom state that “members of the company’s board of directors cannot constitute more than one-fourth of the composition of the board of directors.” There are 11 members in total on the board of directors, which means that a quarter of the composition is less than three people. It turns out that the third is odd.
IRINA RYBALCHENKO

Magazine "Kommersant Money" No. 25 dated 07/03/2002, p. 28

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