Outgoing President Dmitry Medvedev urged the government on Tuesday to take energetic efforts to carry through its privatization plan in full.
“The government should summon the courage and implemennt the privatization program in full, as it was approved, item by item. If this is not done, this means there will be no privatization,” Medvedev said at a government meeting.
Medvedev said the government’s decisions on privatization were often torpedoed by lobbyists.
“Decisions are taken but then the government is swept by a stream of lobbyists pursuing their different goals. Some of them are absolutely convinced that nothing should be privatized, while others say time has not yet come for privatization,” Medvedev said.
The Russian government will approve in the next few weeks an extended list of state properties slated for privatization, First Deputy Prime Minister Igor Shuvalov said on Monday.
In June 2011, Medvedev urged the government to intensify its work to sell state assets and demanded the Cabinet present a broader privatization list by August 1. On August 3, 2011, the government published a preliminary plan extending the list of the largest state companies slated for privatization.
The privatization plan will include share packages in the Novorossiysk Merchant Sea Port, Sovcomflot shipping company, Sberbank, VTB Bank, and Sheremetyevo and Vnukovo airports.
By 2017, the government intends to fully privatize state oil major Rosneft, RusHydro hydropower holding, oil company Zarubezhneft, Inter RAO UES electricity trader, Alrosa diamond giant, Russian Agricultural Bank and Aeroflot.
The government intends to halve its stakes in fully state-owned United Shipbuilding Corporation and United Aircraft Corporation. By 2016, the government intends to cut its stakes in Federal Grid Company, Transneft oil pipeline monopoly, Russian Railways rail company and Uralvagonzavod machine-building plant to 75 per cent.
Medvedev, who is in the last month of his presidency, said Russian business should not delay in ceasing to use cumbersome Russian accounting standards and switching to International Financial Reporting Standards (IFRS).
In March 2011, Medvedev instructed the government and the Central Bank to ensure the recognition of the IFRS in Russia by December 30, 2011. The Finance Ministry said in December some Russian public companies must present their 2012 consolidated reports to the IFRS.
These requirements apply to companies of special importance for the Russian economy such as banks, insurance companies and companies with shares admitted to organized trading floors.
IFRS standards will also apply to companies currently presenting their financial statements to US GAAP. They will be required to switch to IFRS from 2015.
Medvedev also said he was against a full ban for state companies on the purchase of non-core assets, but insisted on special government permission for such transactions.
Medvedev has previously instructed the government to prepare proposals for limiting Russian state companies’ ability to buy private assets. In response, the Economics Ministry has proposed to prohibit these deals in law, without a government decision.
“I believe we should try to do something but we should not simply impose a ban because in this case there will be efforts to dodge it,” he said. “I believe we should embark upon a different path and prescribe some form of highest consent or a government decision or a ministry decision and this should be done publicly,” he said.
Medvedev admitted that state companies indeed “purchase a lot and very often these purchases are not justified” and supported the idea of creating a program for state companies to get rid of non-core assets.
Medvedev, who has recently promoted adoption of more lenient legislation on economic crimes, said the legal record of Russian businessmen was “a disaster, and he was “surprised to hear every sixth Russian businessman had a criminal record.”
“I called the law-enforcement agencies to understand whether this is true or not,” he said. “If this is true, this is a disaster. But I still have the impression that this information that every sixth businessman was brought to criminal account is a virtual reality figure,” he said.
“We have some 120,000 people serving prison terms for economic crimes, but these are people who are serving real prison terms.”
“Our business climate will be entirely and fully dependent on the work of the criminal justice system. We have to do something radical about that,” he said.