Publication: Monitor Volume: 3 Issue: 148

Prime Minister Viktor Chernomyrdin once lamented that every time a privatization auction is held in Russia, the result is a big row. And a row is still going on over last week’s auction of a quarter of the shares in Russia’s Svyazinvest telecoms giant. Yesterday, First Deputy Prime Minister Boris Nemtsov lashed out at the owners of Russia’s biggest TV companies, ORT and NTV, which have alleged that the auction was rigged. Nemtsov accused ORT and NTV of acting out of spite because the big financial groups with which they are associated (Boris Berezovsky’s Logovaz and Vladimir Gusinsky’s Most Group) were part of the losing consortium in the Svyazinvest auction. Nemtsov insisted last week’s auction was conducted honestly and that the share packet went to the highest bidder. Nemtsov said Most Group had been hoping to buy the shares "for a song." Most responded by accusing Nemtsov of telling "barefaced lies." (RIA Novosti, July 29; Financial Times, July 30)

Nemtsov was supported by First Deputy Prime Minister Anatoly Chubais, who met yesterday with Oneksimbank head Vladimir Potanin. Oneksimbank led the wining consortium, in which the financier George Soros turns out also to be a leading member. The deal is due to be formally signed tomorrow.

It is still not clear whether, as Nemtsov claims, the deal went to the highest bidder or whether, as ORT, NTV and associated newspapers continue to insist, the deal was conducted dishonestly. The fact that Oneksimbank came out on top adds weight to the bank’s claims earlier in the month that accusations of fraud leveled by the head of Russia’s Central Bank against Potanin may have been intended to discredit Oneksimbank. Some commentators believe the Svyazinvest auction may indeed have been conducted fairly, but that this in itself is such a departure from recent Russian tradition that it has provoked howls of rage from the losing side. In any case, with control of such desirable Russian companies as Rosneft and Norilsk Nickel coming up soon, it seems a sure bet that additional such rows are in the offing.

Russian and Japanese Ministers Applaud Improved Relations.