Publication: Monitor Volume: 6 Issue: 137

Yesterday, it was United Energy Systems (UES) chief Anatoly Chubais’ turn to get unwanted attention from the authorities. Officials from the Audit Chamber, the independent state agency authorized to monitor the use of federal budget funds, said that an investigation of UES, Russia’s electricity monopoly, had found that foreigners who bought shares in the company had failed to register them properly. The auditors said they would recommend to a UES collegium set to meet today that some of these violations, which took place while the energy holding was partially privatized from 1992-1998, be turned over to the Prosecutor General’s Office. This would mean that at least a few criminal investigations would probably follow. UES, which is 51-percent state-owned, allows foreigners to hold no more than 25 percent of its shares. Aleksandr Voloshin, head of the Kremlin administration, is also the chairman of UES’s board, while former Prime Minister Sergei Stepashin now heads the Audit Chamber (Moscow Times, July 14). Chubais said today that the Audit Chamber had no legal basis for ruling that the UES shares were improperly sold to foreigners, and charged that such plans were politically motivated and an attempt to “destroy the basis of the state system” by “those who need things to be bad and unstable in the country.” Chubais, meanwhile, revealed a new plan to restructure UES which apparently takes into consideration some of the criticisms by minority shareholders of Chubais’s original restructuring plan (Russian agencies, July 14: see the Monitor, June 16).

Indeed, despite Chubais’ attempts to mend fences with the minority shareholders, there is reason to believe the probe into UES’s privatization is the first part of a campaign to remove him as head of the holding, and perhaps worse. A newspaper claimed today that the Federal Security Service (FSB) planned to go after Chubais for various things–including his alleged role in illegal funding of Boris Yeltsin’s campaign in 1996 and, above all, the notorious 1995 loans-for-shares privatization scheme (Moskovsky komsomolets, July 14). The Prosecutor General’s Office has threatened to revive criminal investigation into the sale of Norilsk Nickel to Oneksimbank, which was part of the loans-for-shares scheme and was allegedly the result of collusion between Oneksimbank head Vladimir Potanin and Alfred Kokh, a Chubais protege who at the time headed the State Privatization Committee. All of these may be coming back to haunt Chubais: According to a report last month, Chubais feared that his arrest would follow he Media-Most’s Vladimir Gusinsky’s in May (see the Monitor, June 19). Chubais thus appears to have joined Gusinsky, Potanin and LUKoil chief Vaget Alekperov on the authorities’ enemies list. A number of newspapers have compared the current crackdown to 1929, when the Soviet Union’s relatively liberal New Economic Policy ended with a series of criminal investigations and the arrests of tycoons (Moskovsky komsomolets, July 14).