RIA NOVOSTI. June 14, 2006, 8:49 PM

MOSCOW, June 14 (RIA Novosti) - Moscow's Arbitration Court has added the Federal Tax Service's major taxpayers inspectorate to the list of creditors of embattled oil company Yukos.
The inspectorate's claims against the oil company stand at 353.8 billion rubles ($13 billion).
Other companies on the list of Yukos creditors include the Siberian Service Company, with claims of 228 billion rubles ($8.4 billion); Yukos-RM with 131.2 billion rubles ($4.8 billion); Yukos-EP with 109.2 billion rubles ($4 billion); and Sibintek-leasing with 57 billion rubles ($2.1 billion).
The next hearings in the Yukos bankruptcy case are scheduled for June 27.
July 12, the court will consider claims including those of Yukos former core production unit, Yuganskneftegaz (32 billion rubles, or $1.2 billion), and Mazeikiu nafta (63 million rubles, or $2.3 million).

European Convention on Human Rights and Fundamental Freedoms, and its impact on Russian legal framework

RIA NOVOSTI. June 14, 2006, 8:37 PM

MOSCOW. (RIA Novosti political commentator Yuri Filippov) - The impact of the European Convention on Human Rights and Fundamental Freedoms on the Russian legal system has been steadily increasing.
Of special importance here are verdicts of the European Court of Human Rights (ECHR). Human rights court decisions are compulsory for all European Convention on Human Rights signatories, Russia being no exception. This also applies to ECHR precedents, whose influence on the Russian legal practice is even more marked. As the European Court considers cases, it practically never omits analyses of national legislation features and law enforcement practice. That is why the importance of ECHR decisions for streamlining national legal systems cannot be overestimated.
ECHR decisions are, in fact, among the sources of the Russian law, as follows from the Constitution of the Russian Federation . The federal Constitutional Court has formalized the point, and referred, on more than ninety occasions so far, to the European Convention on Human Rights, related protocols, and decisions by bodies established on the Convention basis, and by other Council of Europe institutions.
Let us now consider the influence of the ECHR precedent-based practice on the Russian legislative evolution. One of the most vivid examples is Criminal Procedural Code amendments concerning the right to legal assistance at the pre-trial stages of criminal proceedings. Thus, in its Resolution of June 27, 2000, the Russian Constitutional Court referred to the ECHR verdicts of May 24, 1991, on the Quaranta case; of November 24, 1993, on the Imbrioscia case; of February 8, 1996, on the John Murray case; of February 27, 1980, on the Deweer case; of July 15, 1982, on the Eckle case, and a number of others, to proclaim certain clauses of the Criminal Procedural Code as unconstitutional. In this way Russia recognized that the failure to provide legal assistance to the suspect immediately after detention clashed with the European Convention on Human Rights and Fundamental Freedoms. The later Russian criminal procedural legislation envisages that kind of legal assistance.
Standing apart in the Russian legal practice are ECHR decisions on complaints against Russia. The federal Constitutional Court has so far recurred to only one of such decisions - on the Burdov vs. the Russian Federation, of May 7, 2001. That was how a new precedent was set in Russia, stipulating that the government cannot site shortage of funds as a reason not to pay compensation in accordance with a court ruling. Burdov's case concerned compensations for damage done by the Chernobyl nuclear plant disaster. Several thousand Chernobyl rescuers received legal assistance to protect their civil rights thanks to the case.
Complaints against Russia have a political content, and influence the country's public image in the world. Naturally, such complaints and related ECHR decisions have the greatest chance to influence the national legislation by speeding up its evolution and helping to abolish clauses that clash with the European Convention on Human Rights and Fundamental Freedoms.
As we know, Russia's international agreements stipulate the right of every Russian citizen to apply to interstate human rights and freedoms institutions in case all national legal assistance means have been exhausted. The ECHR, in its turn, accepts for consideration only those cases that have come through two national instances - the first and the court of appeal, plus another one on cases within the competence of justices of the peace.
What legal implications do particular ECHR decisions have for Russia? As the European Convention on Human Rights has it, such decisions demand effective measures to prevent further Convention violations similar to those the court decision concerns. What the point implies in practice is a pledge not to tolerate similar precedents, as exposed by the ECHR. The latest Russian criminal and arbitration legislation is created in line with that obligation. Thus, the Russian Criminal Procedural Code qualifies a violation of the Convention on Human Rights in considering a criminal case, when ascertained by the ECHR, as new facts offering grounds to reopen criminal proceedings. The review of a court verdict in such instances is up to the federal Supreme Court Presidium on its president's representation. The Russian Arbitration Procedural Code establishes analogous norms.
Special situations appear when a national legislative norm clashes with the Convention on Human Rights, as confirmed by an ECHR decision. In such instances, the legal defects are to be corrected by the legislator, i.e., the Federal Assembly (Russia's parliament) and the President. The Constitutional Court of Russia can come out with its own verdict on certain similar instances.
International treaties to which Russia is signatory regard its national law as part of the united European legal environment. The European Convention on Human Rights and Fundamental Freedoms is evidently one of the pillars of that unity. The legal practice of other European countries, and judicial dialogues with the ECHR and with those countries' constitutional courts promote Russia's progress in that direction

Gref praises results of St. Petersburg economic forum

RIA NOVOSTI. June 14, 2006, 8:35 PM

ST. PETERSBURG, June 14 (RIA Novosti) - Russia's economics minister said Wednesday he was satisfied with an international economic forum in St. Petersburg that had resulted in the signing of contracts worth $1 billion.
"Some ten contracts [were signed] with foreign and Russian investors, and we can talk about investments worth at least $1 billion," German Gref told the forum's final news conference, calling the event Russia's "key international economic forum."
The main deals signed during the forum include a contract with Japan's carmaker Nissan on industrial assembly in Russia, to be launched in 2008; agreements on the construction of a new Moscow-St. Petersburg highway and a mountain ski resort in southern Russia; and a governmental program to allocate $7 billion for the Black Sea resort of Sochi if it wins the right to host the 2014 Winter Olympics .
Finance Minister Alexei Kudrin said on the sidelines of the forum that his ministry would draft proposals on additional taxation of energy giant Gazprom's profits.
"The government has not ordered us to do this, so we will do it ourselves," he said. "We will conduct an analysis and draft proposals."
St. Petersburg governor Valentina Matviyenko also praised the results of the forum, saying that her city presented major projects worth $8 billion during the event.
Matviyenko also said the start of construction of a GM plant in St. Petersburg was an important result of the forum.

Update: 4 projects recommended for Investment Fund financing-1

RIA NOVOSTI. June 14, 2006, 8:31 PM

(Adds details throughout article)
ST. PETERSBURG, June 14 (RIA Novosti) - A commission has picked four projects to get money from Russia's new Investment Fund, but the choice has yet to be approved by the government, a deputy economics minister said Wednesday.
Kirill Androsov said at an economic forum in St. Petersburg that the commission had picked projects including a plan to build a toll highway in St. Petersburg and a highway between St. Petersburg and Moscow.
The other two projects will build a network of oil refineries and petrochemical plants in Nizhnekamsk, a town in the Volga River republic of Tatarstan, and develop infrastructure in Nizhneye Priangarye, the least developed eastern part of Russia's giant Krasnoyarsk Territory in Siberia.
The first project, proposed by St. Petersburg-government-owned ZSD Co., will cost an estimated 82.69 billion rubles (some $3.05bln). The developers are asking for 28.02 billion rubles ($1.03bln) from the Investment Fund, set up in 2005 to develop infrastructure projects across the country with public and private financing.
Building a St. Petersburg-Moscow road would cost 54.93 billion rubles ($2.03bln), while 25.80 billion rubles ($953mln) has been requested from the fund.
In the Volga area, Tatneft, a major oil company owned by the government of Tatarstan, wants 34.10 billion rubles ($1.26bln) of fund money to build a network of modern refineries with an annual capacity of 7 million metric tons of sour oil (140,575 bbl/d) and other petrochemical facilities, which cost a total of 130.30 billion rubles ($4.8bln).
And the Siberian project requires 358.71 billion rubles ($13.25bln) in investment, while 34.22 billion rubles ($1.3bln) were requested from the fund. But Androsov said the investment commission had cut potential investment in Nizhneye Priangarye to 16.5 billion rubles ($609mln) of private funds.
The investment commission examined a total of 46 bids for Investment Fund money Wednesday, selecting four.
The four projects have still to be considered by a government commission, Androsov said

Bilateral defense ties will suffer if Ukraine joins NATO - Ivanov

RIA NOVOSTI. June 14, 2006, 8:26 PM

ST. PETERSBURG, June 14 (RIA Novosti) - Defense and industrial ties between Ukraine and Russia will be torn in a painful and expensive process if Ukraine joins NATO, Russia's defense minister said Wednesday.
"We hear Ukraine's leadership speaking about joining NATO," Defense Minister Sergei Ivanov said. "This is a sovereign choice, but in this case, sooner or later, the defense and industry complex of the two countries will be severed naturally."
Ivanov said Russian officials were considering the possibility and planning measures to be taken should Russia's former Soviet neighbor join the Atlantic alliance.

Russia likely to fly fifth generation plane in 2009 - Ivanov

RIA NOVOSTI. June 14, 2006, 8:17 PM

ST. PETERSBURG, June 14 (RIA Novosti) - Russia's first fifth-generation plane could make its maiden flight as early as in 2009, the defense minister said Wednesday.
"We should see the first fifth-generation plane in the air in 2009," Sergei Ivanov said following a meeting with defense industry officials in Russia's second largest city.
Ivanov said the state, including the Defense Ministry, was planning to invest in manufacturing planes, helicopters and aircraft engines.
General Vladimir Mikhailov, the commander of Russia's Air Force, said in March that a fifth-generation plane, development of which should be completed in 2007, would be virtually invisible to air-defense systems.

Russia's Gref says unruffled by speculation about sacking

RIA NOVOSTI. June 14, 2006, 8:12 PM

ST. PETERSBURG, June 14 (RIA Novosti) - Russia's economic development and trade minister said Wednesday he was ready to take on a new job if the situation demanded, but that he was unconcerned about possibly being fired.
Rumors have been circulating of Gref's imminent departure since Prime Minister Mikhail Fradkov proposed at a cabinet meeting June 1 to effectively hive off part of German Gref's ministry and make a separate trade ministry as a way to boost declining Russian exports.
"I do not like promotions, but I do not care about being sacked, since I am positive that can I adapt on the market," Gref said, answering reporters' questions on his possible departure.
"These rumors are not important. This is all trifles," he said.
A high-ranking source in the government said earlier that the creation of a new ministry was plausible, but was linked to cadre shortage and balance between trade and production, rather than the reason announced by Fradkov. A separate trade ministry should be staffed by at least 300 highly qualified professionals, he said.
"I believe that a separate ministry is not necessary, and where this function [trade] should be performed and how it should be integrated - with industry or the economy - remains open for discussion," the source said, adding that trade could become a function of the Ministry of Industry and Energy.

Global stocks fall unlikely to affect Russian economy - minister

RIA NOVOSTI. June 14, 2006, 8:06 PM

ST. PETERSBURG, June 14 (RIA Novosti) - Russia's economics minister said Wednesday that the Russian economy was unlikely to suffer any drastic consequences following losses on global stock markets Tuesday.
Russian shares dropped more than 10% and the benchmark RTS index lost 9.37% Tuesday after sharp one-day falls on all the world's major stock markets, nervous about rising interest rates and prospects of an economic slowdown.
Speaking to reporters at the close of an international business forum in St. Petersburg, German Gref said: "I don't think there will be any implications for the Russian economy."
Gref said the fall of the RTS, Russia's main stock index, was a natural consequence of the country's integration into the world economy.
The minister said other states' monetary policy decisions could have some short-term impact on the flow of investment into Russia, but that no far-reaching consequences were likely.

Russian state to retain 70% of Rosneft stock after IPO - Gref

RIA NOVOSTI. June 14, 2006, 7:38 PM

ST. PETERSBURG, June 14 (RIA Novosti) - The state will control over 70% of Rosneft, Russia's No.3 oil company, after an initial public offering likely to take place before next month's G8 summit, the economics minister said Wednesday.
Rosneft Monday officially announced that its shares would be up for sale at Russian banks from June 26 through July 10. Experts expect the IPO to be complete by July 15, when the Group of Eight industrialized nations, which Russia currently chairs, starts its annual summit in St. Petersburg.
"The state will retain more than 70% of [Rosneft] shares," German Gref said, without specifying the size of the stake to be floated on Russia's two largest trading floors - the Russian Trading System and the Moscow Interbank Currency Exchange - and the London Stock Exchange.
The oil company will use part of the funds it raises to pay off a $7.5 -billion loan granted last year by a consortium of banks that Rosneftegaz, a state-owned company that owns 100% minus one share of Rosneft, took to buy 10.74% of stock in Russian energy giant Gazprom.
Rosneft has a charter capital of 90.92 million rubles (about $3.3 million), and its ordinary shares have a face value of 1 ruble each. Company experts estimate its value at $25 billion.

Naftogaz takes $200 mln loan to repay gas debt

RIA NOVOSTI. June 14, 2006, 7:20 PM

KIEV, June 14 (RIA Novosti) - Naftogaz, Ukraine's national oil and gas company, secured a loan to repay its $600 million debt to trading company RosUkrEnergo, the country's fuel and energy minister said Wednesday.
Rosukrenergo, a Russian-Swiss joint venture and the sole supplier of Russian and Central Asian gas to Ukraine, was the key company in a deal to end a bitter price row early this year between Ukraine and Russia.
"Naftogaz has secured the first tranche of the $200 million loan to repay its debt to RosUkrEnergo," Ivan Plachkov said. "I think the money has already been transferred."
Plachkov said Naftogaz was planning to secure another loan worth $300 million. He also said Naftogaz and RosUkrEnergo had agreed on restructuring older debts worth $100 million.
The minister said Naftogaz' total debt for natural gas stood at $700 million.

State should take time privatizing Svyazinvest - govt. official - 1

RIA NOVOSTI. June 14, 2006, 7:01 PM

(Adds paragraphs 4-8, 10-14)
ST. PETERSBURG, June 14 (RIA Novosti) - The head of Russia's government staff said Wednesday that the privatization of the giant Svyazinvest telecoms holding should not be rushed.
"I think that it would not be worth the state's while to hurry the privatization of a company such as Svyazinvest," Sergei Naryshkin told reporters at an international economic forum in Russia's second city.
The Russian Federal Property Fund holds 25% minus two shares in Svyazinvest, with 50% plus one share belonging to the Federal Property Management Agency and the remaining block held by Cyprus-based Mustcom Ltd.
But a deputy head of the Information Technologies Ministry said it would be pointless putting the privatization on hold after issues connected with providing the military and security services with communications services were resolved. "Svyazinvest's privatization is in principle technically and technologically possible," Dmitry Milovantsev said, commenting on Naryshkin's earlier statement. He added that the decision did not depend on his ministry.
"There are objective problems now that are holding back this process," he said. "First of all, these are issues due to an unregulated situation with providing services to special consumers."
Milovantsev said the interests of such consumers - the military and security services - should be protected during the switch to a competitive market.
"When these issues are resolved, competition on the very competitive telecommunications market should be restrained no longer," he said.
Svyazinvest controls 51% in Rostelecom, Russia's largest long-distance telecom services provider (RTS: RTKM), and has a minority interest (28%) in Moscow City Telephone Network (RTS: MGTS).
Russia's information technologies minister said June 6 that parliament could pass a bill necessary for the privatization of Svyazinvest in the next six weeks.
The bill sets out how the rights of the military and security services will be protected - something Russia's Security Council has insisted on - if the privatization goes through.
"The bill is currently in the State Duma [parliament's lower house]," Leonid Reiman said. "I spoke with deputies and they promised it would be adopted at the spring session."
The session ends on July 16.
Russia's economics minister said Wednesday that the privatization of Svyazinvest would probably not take place this year.

Correction: Government could sell stake in Moscow's MGTS, official says-1

RIA NOVOSTI. June 14, 2006, 6:59 PM

In St. Petersburg story dated June 14 and headlined: "Government could sell stake in Moscow's MGTS, official says," please read paragraph 7 as follows:
Svyazinvest, which holds 28% of voting shares in MGTS, has not responded to the offer because government representatives on the company's board of directors failed to decide on the issue in the absence of a government resolution. The latest offer expired on May 17, but the government had not decided on selling its stake in MGTS.
A full, corrected version follows below:
ST. PETERSBURG, June 14 (RIA Novosti) - A government official said Wednesday the government could be willing to consider a new offer from Comstar UTS telecoms holding for a stake in Moscow City Telephone Network (RTS: MGTS).
Government staff head Sergei Naryshkin said the government was likely to allow state-owned telecoms holding Svyazinvest to sell its minority stake in the Moscow fixed-line phone monopoly if Comstar UTS announced a third bid.
"I believe an offer for MGTS will be made for the third time, and the government could allow Svyazinvest to sell its stake in MGTS," Naryshkin said.
Comstar UTS, which already holds a controlling stake in MGTS, made an offer in mid-December to buy the remaining shares in the fixed-line operator at 490 rubles (about $17.13) per share. A second offer to buy up common shares from minority shareholders in the Moscow fixed-line telephone company, also at 490 rubles ($17.50) per share, was made in March this year.
Earlier, information and communications minister Leonid Reiman said the price offered by Comstar United TeleSystems, in which leading Russian consumer services firm Sistema owns a majority stake, was fairly good.
But Comstar UTS general director Semyon Rabovsky earlier said the company did not intend to make a third offer to repurchase MGTS' minority stake from Svyazinvest. He said the issue could be solved through negotiations, if the government failed to decide on allowing Svyazinvest to sell its holding in MGTS before the expiry of the second offer.
Svyazinvest, which holds 28% of voting shares in MGTS, has not responded to the offer because government representatives on the company's board of directors failed to decide on the issue in the absence of a government resolution. The latest offer expired on May 17, but the government had not decided on selling its stake in MGTS.
The Svyazinvest board of directors then made a decision to valuate its stake in the Moscow phone operator. Deputy Information and Communications Minister Dmitry Milovantsev said Wednesday the valuation could be completed in late June.
"The process of valuation is under way. It will be completed in the next few days. The stake is being valuated by specialists from [British company] PMG," Milovantsev said

Government could sell stake in Moscow's MGTS, official says -1

RIA NOVOSTI. June 14, 2006, 6:46 PM

(Adds paragraphs 3-9)
ST. PETERSBURG, June 14 (RIA Novosti) - A government official said Wednesday the government could be willing to consider a new offer from Comstar UTS telecoms holding for a stake in Moscow City Telephone Network (RTS: MGTS).
Government staff head Sergei Naryshkin said the government was likely to allow state-owned telecoms holding Svyazinvest to sell its minority stake in the Moscow fixed-line phone monopoly if Comstar UTS announced a third bid.
"I believe an offer for MGTS will be made for the third time, and the government could allow Svyazinvest to sell its stake in MGTS," Naryshkin said.
Comstar UTS, which already holds a controlling stake in MGTS, made an offer in mid-December to buy the remaining shares in the fixed-line operator at 490 rubles (about $17.13) per share. A second offer to buy up common shares from minority shareholders in the Moscow fixed-line telephone company, also at 490 rubles ($17.50) per share, was made in March this year.
Earlier, information and communications minister Leonid Reiman said the price offered by Comstar United TeleSystems, in which leading Russian consumer services firm Sistema owns a majority stake, was fairly good.
But Comstar UTS general director Semyon Rabovsky earlier said the company did not intend to make a third offer to repurchase MGTS' minority stake from Svyazinvest. He said the issue could be solved through negotiations, if the government failed to decide on allowing Svyazinvest to sell its holding in MGTS before the expiry of the second offer.
Svyazinvest, which holds 287% of voting shares in MGTS, has not responded to the offer because government representatives on the company's board of directors failed to decide on the issue in the absence of a government resolution. The latest offer expired on May 17, but the government had not decided on selling its stake in MGTS.
The Svyazinvest board of directors then made a decision to valuate its stake in the Moscow phone operator. Deputy Information and Communications Minister Dmitry Milovantsev said Wednesday the valuation could be completed in late June.
"The process of valuation is under way. It will be completed in the next few days. The stake is being valuated by specialists from [British company] PMG," Milovantsev said

Rostelecom buys out Zebra Telecom for $13.5 million

RIA NOVOSTI. June 14, 2006, 6:20 PM

MOSCOW, June 14 (RIA Novosti) - Rostelecom (RTS: RTKM) said Wednesday it had acquired 99.99% of Zebra Telecom, a leading Russian Internet and IP-telephony provider, from Cyprus-based Starford Investments Ltd.
New telecoms market regulations set to be introduced by the government is forcing many phone and Internet service providers in Russia to either merge or get out of business, while state-controlled giant Rostelecom is using this opportunity to increase its share of the telecoms pie.
"The purchase of a controlling stake in Zebra Telecom follows [Rostelecom's] strategy to strengthen its position on the telecoms market for end users," Rostelecom said in a statement.
State-controlled telecoms holding Svyazinvest holds a 50.67% stake in Rostelecom, Russia's largest long-distance telecom services provider.
Rostelecom is included in the RUXX (Russian Industrial Leaders Index), a composite economic index of 17 Russian companies with financial instruments (shares and depository receipts) placed on bourses including the New York Stock Exchange, the London Stock Exchange, the Nasdaq and AMEX.

Georgia's Saakashvili urges thaw in relations with Russia

RIA NOVOSTI. June 14, 2006, 6:16 PM

TBILISI, June 14 (RIA Novosti) - Georgia and Russia should concentrate on rebuilding currently strained relations, the president of the South Caucasus nation said Wednesday after talks with his Russian counterpart in St. Petersburg.
Mikheil Saakashvili and Vladimir Putin met late Tuesday on the sidelines of an international economic forum in Russia's second city.
"The important thing to us now is to make the climate of our relations warmer," Saakashvili told RIA Novosti in an interview. "They have reached freezing point, and are in need of a thaw."
"Now our relations are in such a bad state that they just cannot get any worse," he said. "A flywheel of hostility is actually spinning in Georgia. We must halt this flywheel and set it off in the opposite direction."
Bilateral relations have deteriorated in recent months, in particular over the role of Russian peacekeepers in conflict zones within Georgia and a Russian ban on imports of Georgian wine and mineral water, ostensibly over health and safety concerns, although Georgia has denounced the bans as politically motivated.
Saakashvili described his latest talks with Putin as "enjoyable," and said he had always been "impressed" by the Russian president.
"The dialogue was suspended, but now we have resumed talking to each other. That's something very important to me," Saakashvili said.
But he added that Russia is a centralized country, where "everything has to go from top to bottom and sometimes does so quite slowly," which means it could take some time for relations between the two nations to get back to normal.
Speaking of the Georgian parliament's plans to adopt another resolution calling for the withdrawal of Russian peacekeepers from the breakaway South Ossetia and Abkhazia regions, Saakashvili said he could not predict what the legislature's decision would be.
Georgia's parliament has repeatedly urged the withdrawal of Russian peacekeepers from South Ossetia, and is now likely to call for the pullout of Russia's peacekeeping contingent from Abkhazia as well.
Saakashvili said the controversy over the peacekeepers was inextricably linked to the conflict surrounding the breakaway provinces.
"The [issue of the] peacekeepers cannot be taken out of the conflict context," he said. "I hope, however, that we will be able to make some headway toward settling the conflict, as part of an effort to improve the relations in general, and then the issue of the peacekeepers' withdrawal would take an entirely different position."