Let the city rule

Moscow fights for industrial production growth in court

Capital officials reiterate that the growth of Moscow's industrial production is limited by the intractability of the federal government. At yesterday's press conference, the head of the Moscow Department of Science and Industrial Policy, Evgeny Panteleev, said that on June 11, representatives of the Moscow and federal governments will meet in an arbitration court to hear the bankruptcy case of the Moskvich automobile plant.

Moscow's appeal to the court was the result of a long-standing bargaining with the federal authorities about writing off Moskvich's colossal debt and transferring to the city a controlling stake in the federally owned plant. According to Mr. Panteleev, in protracted negotiations, the federal authorities have not found a way to write off the $700 million debt that Moskvich inherited from Soviet times for equipment supplied to its subcontractors. “It is impossible to repay this debt, and it is impossible to restart the plant,” said the capital’s minister and promised to immediately sell off the non-core assets of the enterprise after the reorganization procedure.

The Moscow government takes a similar position regarding the corporate scandal surrounding the Moscow Fat Plant (MZhK). Moscow is not yet one of its shareholders, but the capital’s authorities are convinced that the conflict between the co-owners will be settled as soon as the federal stake in the MZHK is transferred to the city. Today, the plant’s shareholders are the Russian Federal Property Fund (24%), the Saratov group of companies “Buket” (40.1%), Monaco Cinema LLC and Neoscala Ltd. (24%), Nizhny Novgorod Fat Plant owns about 10%, the remaining shares are distributed among members of the workforce. The companies Monaco Cinema and Neoscala Ltd with a 24% stake are blocking the decisions of other shareholders and are trying to take control of the company by not allowing representatives of Buket to attend shareholder meetings. Evgeny Panteleev does not hide his sympathies with the mayor's office: Moscow will support the enterprise development plan proposed by Saratov businessmen.

Of the large Moscow enterprises, only ZIL can boast that the Moscow authorities have no claims against the federal government. However, while controlling the plant, the mayor's office was faced with a lack of the required level of management. Mr. Panteleev said that the Moscow government recently initiated a meeting of ZIL shareholders, which amended the charter, which allows for the transfer of the functions of the plant's general director to a management company selected through a competition. The management companies initially showed interest in the project, but upon hearing that their remuneration did not include being among the owners, they cooled down to the mayor’s office’s initiative. At the same time, the unprofitability of the main production of the capital's automobile plant, which occupies 300 hectares of not the worst Moscow land, does not greatly concern the Moscow authorities. The mayor's office plans to use the territory of the plant to move other industrial enterprises out of the center, and also to form a “Small Business Center” in the Nagatinskaya floodplain, which will unite thousands of small enterprises on the territory of the current ZIL.

Alexander GUDKOV