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It’s stupid to shoot the messenger. That’s a message the billion-dollar Russian corporate public-relations industry fails to understand because it pays so often, and so lavishly, for distorting the truth, it can’t believe there isn’t a rival or a hostile commercial plot at work when the unvarnished truth slips out unexpectedly.

Take, for example, Russia’s shipping industry, slowly emerging now after a decade of capital flight offshore and bankruptcy onshore. After months of investigations and personnel reorganization, officials in the Transport Ministry are beginning to get a grip on the managements of the leading shipping companies, in order to point them in a direction that would benefit more than their own pockets. Naturally, the pockets are resisting.

“Integration of businesses is one of the main factors that will enable Russian companies to be competitive,” Transport Minister Sergei Frank told a session of maritime officials in Moscow three weeks ago. “Even the largest Russian transportation companies are not among the world’s top companies,” he added, referring to Sovcomflot and Novoship shipping companies.

“This cannot leave us indifferent because of the integration of the Russian economy into the world market and the preparation of Russia to join the WTO,” he added. Those who won’t take this into account will be subordinated to the role of apprentices in the market.”

A high-ranking Russian maritime official explained that Frank’s statement was not accidental. “It will take some time before the plan for consolidation of Russian shipping companies materializes, but it is realistic to expect some greater cooperation between Novoship and Sovcomflot, since these companies are not competitors in the dry-cargoes sector. Novoship doesn’t have dry-cargo carriers, and there will be enough work for tankers of both companies after the launch of the Caspian oil terminal at Novorossiisk,” he explained.

Sovcomflot and Novoship operate the largest shipping fleets, albeit under foreign flags. They are the largest Russian investors and if their fleets were to be consolidated, they would have one of the largest tanker operations in the world, with more than 150 vessels and more than 6 million deadweight tons.

“Consolidation of business is necessary not for the Transport Ministry, but for the companies themselves,” Frank added. “Such consolidation may take place not only in the form of corporate merger, but also in the form of market alliances and pools between the companies.”

Novoship refused to respond to Frank’s remarks at the time. However, on Tuesday this week, Tagir Izmaylov, Novoship’s chief executive officer, issued a press release claiming Novoship has no plan for a merger with Sovcomflot. “The state controls 100 percent of the shares of Sovcomflot and slightly more than 67 percent of the shares of Novoship,” Izmaylov said. The structure of the fleet of the two companies is significantly different, and we compete on some markets and do not compete on others.”

He claimed that a government-approved strategy for Novoship is “based on the premise that Novoship will remain an independent joint-stock company, given the financial obligations that Novoship has towards foreign banks.” He denied that Novoship is “involved in any discussions concerning possible merger with other companies.”

Valery Paliy, Izmaylov’s assistant, said the company won’t comment on Frank’s statement, but conceded that “various forms for cooperation may be considered, probably a pool with Sovcomflot.”

According to the official, Novoship currently owes more than $500 million to foreign banks for its new fleet. That’s not a Gazprom level of foreign debt, but it’s not small potatoes either. It is close to the loan levels of much better known, and cash-rich, Russian companies such as Russian Aluminum and Sibneft.

A few weeks ago, government sources said the Transport Ministry was behind the purchase of a 10 percent foreign-owned stake in Novoship. That deal, incidentally, ended another Boris Jordan foray into the Russian heartland, as the seller was his Sputnik Fund.

Earlier, the Ministry arranged the dismissal of Novoship’s chief executive Leonid Loza, after he had tried to place company’s shares in the hands of offshore companies close to him. Izmaylov, a maritime administrator in the Ministry, was named to replace Loza.

I’ve been told that the clean-up of Novoship and the buyback of the Sputnik shares are part of a comprehensive scheme to reorganize fleet management, bringing capital back onshore and ensuring that the boom of the oil business will do more than trickle through to shipping, ports, shipbuilders and their suppliers in the metal and machine industries. The next step is to bang heads together at Novoship and Sovcomflot.

However, Sovcomflot chief executive Dmitry Skarga said earlier this month that his company is not interested in acquisition of shares of Novoship.

Industry sources disclose that the state has not yet decided whether Sovcomflot or another Russian company would take over the 10 percent bloc of Novoship shares. Right now, what everyone knows, but is reluctant to admit, is that there is a struggle between the fleet managements and the Transport Ministry to stave off new controls and new rules of the game.

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