By John Helmer, Moscow

This week it’s hot and humid in Conakry, capital of the west African Republic of Guinea. It will hit 30 degrees in the day; the humidity will be 100%. Until Saturday, when the much-postponed, much-rigged parliamentary elections will be held, there will be occasional thunderstorms, sunny spells, and an inch of rain per day.

But there’s not enough water to douse the allegations that the President of Guinea, Alpha Conde, took payoffs through go-betweens to rig the presidential elections of June and November 2010; put up Guinea’s mining concessions for a fresh round of corrupt awards; and let Rusal off the hook of a billion-dollar compensation order by the Guinean Government and local courts.
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by John Helmer - Tuesday, September 24th, 2013
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By John Helmer, Moscow

How many angels can dance on the point of a pin was a trick question for medieval scholars: that’s because, theologically speaking, angels have no substance. So the correct answer is that an infinity of them can sit on the point. Alternatively, since Thomas Aquinas (d. March 7, 1274) claimed two angels cannot occupy the same space, the answer is only one angel.

Fill a modern room on the bank of Lake Valdai last week with a couple of hundred academicians and reporters, most of them from states bent on regime change in Russia, and the headline question they want to debate is: will President Vladimir Putin (standing figure centre) run for re-election in 2018?
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by John Helmer - Monday, September 23rd, 2013
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By John Helmer, Moscow

If QIWI, the Russian electronic payments operator, is such a good thing, why did the market cut the stock price the minute QIWI announced this week that it’s planning to sell off more of the control shareholders’ shares?

QIWI was co-founded by Alisher Usmanov’s internet portal company, Mail.ru, and Usmanov continues to be one of QIWI’s biggest clients and sources of cashflow. In May, QIWI launched an initial public offering (IPO) of 12.5 million shares on the US Nasdaq exchange. Usmanov was the biggest seller at the time. Through Mail.ru, he started with 21.4% of the issued share capital, and ended up with 19.4% of the voting shares. He was followed by Andrei Romanenko, QIWI’s board chairman and one of the co-founders, who started with 12.7%, and ended with 8.6%. For the May 3, 2013, prospectus, read this.
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by John Helmer - Friday, September 20th, 2013
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By John Helmer, Moscow

The last time President Vladimir Putin publicly criticized Oleg Deripaska, chief executive of United Company Rusal and Russia’s most indebted man, it was at Pikalevo, Leningrad region, in June of 2009. Putin tossed his pen at Deripaska, told him to sign a back-pay agreement, and demanded his pen back. Referring to the failure to pay wages to the town’s alumina and cement factory workers, Putin told Deripaska: “Why has your factory been so neglected? They’ve turned it into a rubbish dump. Why was everyone running around like cockroaches before my arrival? Why was no one capable of taking decisions?..you’ve made thousands of residents of Pikalevo hostages of your ambition, your nonprofessionalism and maybe your greed. Thousands of people. It’s totally unacceptable.”

The pen-tossing and televised chastisement of Deripaska were followed by substantial new state bank and budget funds to cover Deripaska’s payouts at Pikalevo. In September, after everyone had taken their summer holidays, Deripaska claimed Putin hadn’t meant what he seemed on camera to be doing. “The problem”, said Deripaska, “was that the reality of the meeting event and the picture, which was transmitted by the television channels, did not coincide. This was a simple case of editing. Actually, everything went in another way. What happened at the meeting was very productive; the decisions taken to revive manufacture have been implemented.”
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by John Helmer - Thursday, September 19th, 2013
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By John Helmer, Moscow

Diamond prices have been growing in the global market since January, but depending on your choice of accounting period, the growth rate is either not much; or not at all; or negative since July. Alrosa, the state-owned diamond miner directed by Fyodor Andreyev (image left), reported its latest financial results this week, noting “positive dynamics in the diamond markets in H1 2013, which resulted in a 7% growth of rough diamond prices since the beginning of 2013.”

The company is hoping to make a start selling 14% of its shares on the Moscow Stock Exchange next month, so it’s putting its best foot forward. A bloc of 7% will come from the 51% shareholding of the federal government; another 7% bloc will come from the Sakha republic’s 32% holding. The regional authorities want the privatization to go no further; so they won’t be too unhappy if share sale demand fails to reach Andreyev’s top of the range valuation at $15 billion. Vladimir Potanin, who was interested in taking over the company in the late 1990s, announced this week he isn’t interested in buying shares, and for good measure accused the federal government of artificially stoking demand.
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by John Helmer - Wednesday, September 18th, 2013
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By John Helmer, Moscow

The international ratings agency Fitch has downgraded its assessment of the Ukrainian pipemaking group Interpipe, owned by Victor Pinchuk, warning that Russian action since July to impose penalty duties on Ukrainian pipe imports is causing a serious loss of sales and a grave shortage of cash for Interpipe. If that continues, a release from Fitch says, the company “is unlikely to be able to meet its scheduled debt repayments.” The Fitch report was issued in London on Monday. It comes just three months after the agency had reported that the outlook for Interpipe as stable, confirming at the time Interpipe’s B- rating.

In the latest action Fitch says it is downgrading Interpipe to CCC. Sources close to recent talks between Fitch and Interpipe describe the triple-C rating as indicating, according to the Fitch methodology, the high probability of default.
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by John Helmer - Tuesday, September 17th, 2013
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By John Helmer, Moscow

The takeover announced at the start of this month by Global Ports Investments (GPI) of the National Container Company (NCC) gives control of more than 72% of container transportation volume in Russia’s west, including the Black and Baltic Seas; and more than 82% of Russian box volume in the northwest, from the Gulf of Finland to the Arctic. Calculations by Moscow maritime expert Alexei Bezborodov indicate that with accumulated capacity of 1.7 to 1.8 million Teu per annum, Global Ports is taking “a monopoly position in the market”. Teu stands for twenty-foot equivalent unit, a measure of container length and of cargo capacity roughly equal to 22.6 tonnes.

As of August 31, the volume of the total Russian market stands at 3.5 million Teu. In the Russian Fareast, volume is currently 1 million Teu.
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by John Helmer - Sunday, September 15th, 2013
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By John Helmer, Moscow

In Gogol’s well-known story Dead Souls, Chichikov (left), the central character and villain of the piece, makes a lucrative business of buying the names of dead serfs from local census rolls in order to cut the tax liabilities of landowners, accumulate fake collateral against which he intends to borrow, and then retire in wealth. In the more up to date case of the state-funded aluminium monopoly, United Company Rusal, the business is to keep filling the names on the employment rolls while disposing of their jobs and eliminating the unsellable surplus of their production.

The idea of Oleg Deripaska (right), Rusal’s chief executive and trustee for the state owners of the company, is that if the souls protest their loss of work and income, they won’t be convincing to the Kremlin so long as Rusal claims to be paying them for work no longer done. Rusal’s published rationale for what is happening is that until international demand for aluminium raises the price of the metal in trade, it must cut supply to the market. That’s problematic because of the large accumulation of unsold aluminium in uncounted warehouse inventories. That story can be read here.
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by John Helmer - Wednesday, September 11th, 2013
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By John Helmer, Moscow

To the disability of being unable to speak his mind in public Suleiman Kerimov has the added handicap of being unable to accept how short his arms are, particularly when handling money from state banks. In overreaching himself Kerimov has provided a case study of how President Vladimir Putin expects the Russian oligarchy to conduct its business when state interests are at stake; and also of the continuing importance of former deputy prime minister Igor Sechin, now chief executive of the Rosneft oil company.

In July Kerimov got too big for his boots when he believed he had Kremlin support for upsetting the potash cartel known as the Belarusian Potash Company (BPC), directly threatening President Alexander Lukashenko of Belarus. The BPC, headquartered in Minsk since 2005, was a Russian creation — successor to a line of trading organizations for the concealment of potash sale profits with names like Ferchimex (Belgium), Bermont (Switzerland), Fertexim (Cyprus), and Uralkali Trading (Switzerland). All of them were the creation of the fertilizer, I mean fertile, mind of Dmitry Rybolovlev, whom Sechin drove out of the potash business in 2010, replacing him with Kerimov. Sechin failed to oust Rybolovlev’s trader, Oleg Petrov, who stayed on to teach Kerimov the tricks of the trade.
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by John Helmer - Tuesday, September 10th, 2013
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By John Helmer, Moscow

Nothing so reveals the character of the men on the commanding heights of the Russian economy than a lawsuit in an international court initiated by their wives against one of their tradesmen.

In the case which recently came to light, Aleksandra Melnichenko (nee Nikolic), wife of the fertilizer oligarch Andrei Melnichenko, sued a New York art dealer for more than €5 million, including triple punitive damages, for putting the wrong thing in her garden. This beats the record for a backyard claim previously set in a Washington, DC, court by Elena Pinchuk – daughter of the ex-President of Ukraine, Leonid Kuchma, and current wife of Victor Pinchuk.

The New York case turned on Mrs Melnichenko’s claim that she had ordered her sculpture to be 220 centimetres in height, but she got only 120 centimetres. The missing 100 centimetres, she claimed, was not only an aesthetic violation and a lapse of taste, but also a breach of contract, and worse, a case of fraud. Hence the triple damages.
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by John Helmer - Monday, September 9th, 2013
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