Russian mining company boss attacks fellow businessmen as ‘adolescent’

The chief executive of the latest Russian mining company heading for the FTSE 100 has attempted to distance himself from the corporate governance woes afflicting his compatriots by slamming businessmen from the former Soviet Union as “showy” and “adolescent”.

Vitaly Nesis, the head of precious metals group Polymetal, added that many of his country’s industrialists think it a “requirement to circumvent or massage around [corporate governance standards]” and that they need to either “rationalise or take a leap of faith”.

“The Russian business culture is still an adolescent culture,” he said. “It has not learned patience or humility. It is still showy and wide-mouthed. This is just youth.”

The comments come after Polymetal announced last week that it is to list on the London Stock Exchange and hopes to raise $500m (£319.9m) in new money.

The remarks also follow a string of negative stories about the corporate governance standards of companies from the former Soviet Union, an issue which has caught the attention of David Cameron who has commented: “When these companies come to London, they’ve got to understand we do have rules of corporate governance that need to be obeyed.”

The prime minister’s intervention followed the debacle at the top of Kazakh copper miner Eurasian Natural Resources Corporation, which was described as “more Soviet than City” by departing director Ken Olisa earlier this year after major shareholders clashed with the board. Furthermore, two of Russia‘s most famous oligarchs – Roman Abramovich and Boris Berezovsky – are currently playing out their long-running feud in a London court.

Nesis added: “The perception of the Russian oligarch is negative in London. Such news only adds to the struggle.”

Polymetal, Russia’s fourth-largest gold producer and the country’s biggest silver producer, has a market capitalisation of around 200bn roubles (£3.9bn) on the Russian stock market, a valuation that should put it in the third quartile of the FTSE 100 by early December. Entry to the benchmark index would force UK funds seeking to replicate FTSE 100 performance to buy the miner’s shares, which is likely to add to recent criticism of the index for being too heavily exposed to foreign natural resources companies.

The group says it is switching its shares to London to give it access to capital for future projects while the listing will also create a more acceptable currency for global acquisitions. Around 15% of the group’s shares are also traded via Global Depository Receipts (a financial instrument used to own foreign companies) meaning the Russian limit of 25% would be breached if any of the three major investors wanted to sell. Polymetal’s leading shareholders are Czech billionaire Petr Kellner’s investment group PPF which owns around 20%; Nesis’s brother Alexander who holds around 18%; and billionaire Waterstone’s owner Alexander Mamut with around 10%. The trio are locked-in for 180 days.

Nesis said he receives no intereference from any of the main shareholders and is confident they will cause a London-listed company no embarrassment. “I know for sure that my brother never dealt with the devil. What I know of Mr Mamut and Mr Kellner, they haven’t either.”

Polymetal was Russia’s fourth-largest gold producer and the country’s biggest silver producer last year. After enjoying a stellar run on the back of its status as a safe haven, the value of gold has dropped slightly recently. Nesis said that if “there were a dramatic fall [in the gold price over the next few weeks] we will have to cancel the offer”, although he insisted that the company’s existing shares would still be listed in London.

Leave a comment