Publication: Monitor Volume: 4 Issue: 67

Leading shareholders in Russia’s UES Electricity monopoly have appointed a new board of directors for the company. The appointments, made at an extraordinary shareholders’ meeting held on April 4 in Tver oblast, seem unlikely to definitively resolve the battle between reformers and apparatchiks for influence over one of Russia’s largest companies. They have, however, strengthened the government’s direct control over UES. (Itar-Tass and other Russian agencies, April 4, 5)

The meeting accepted the resignation of board of governors’ chairman Boris Brevnov, an ally of First Deputy Prime Minister Boris Nemtsov, who had sought to reform UES’s Byzantine financial and managerial practices. Viktor Kudryavy, previously a deputy minister in the Fuel and Energy Ministry, and selected as the new head of the board of directors, is not known as a reformer. Neither is Gazprom Vice President Petr Rodionov, a former Fuel and Energy Ministry official who will represent on the UES board of directors the interests of Gazprom, Russia’s natural gas monopoly that owns 4.5 percent of UES stock.

On the other hand, Brevnov was appointed to the board of directors, and Oleg Britvin, Brevnov’s deputy, was appointed acting chairman of the board of governors. Likewise, Brevnov’s nemesis and former Chairman of the Board of Directors Anatoly Dyakov was not re-appointed. Outgoing First Deputy Prime Minister Anatoly Chubais was appointed to the board of directors thanks to support from an unnamed foreign shareholder (who, judging from Russian press reports, would be the Credit Suisse First Boston investment bank).

Perhaps the most important outcome of the meeting, however, is that the federal government, which holds some 52 percent of UES equity, managed to increase the number of its representatives on the eighteen-member board of directors from nine to eleven. This could increase the federal government’s control over UES which, like Gazprom, has often acted in the interests of its management rather than in those of its largest shareholder, the Russian state.

…Highlights Confusion Over Reform of Natural Monopolies.