This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Wild East, A Russia! Magazine Blog, Picks Top 5 Business Scandals Of 2012

NEW YORK, Feb. 1, 2013 /PRNewswire/ -- According to Wild East Blog, 2012 was a busy year for lawyers, investigative reporters and corporate social responsibility activists in Russia as a number of high-profile corporate scandals and conflicts erupted, or continued to smolder, across the nation. This escalation in corporate battles is best explained by lack of quality assets still up for grabs after privatizations and property redistributions of the 1990s and early 2000s. Ongoing effects of the 2008 credit crunch and more recent economic disruptions in Europe and elsewhere have made credit scarce, forcing Russian entrepreneurs, who have their heart set on juicy morsels in other businessmen's hands to resort to somewhat unconventional means of corporate action.

Russia! magazine experts voted the more than a decade-long litigation between Russian tycoons Berezovsky and Abramovich over Russian resource assets as the top scandal as "the longest and most expensive [ US$ 5.5 bln] saga" of them all. It finally came to end in 2012, after a British charge deemed Berezovsky an "inherently unreliable witness," awarding the case to Abramovich.

Asset redistribution also continued in Russia's base, precious metals and steel sectors. In repercussions after a multibillion-dollar scandal between two Russian mining magnates Mikhail Prokhorov and Vladimir Potanin, control over Norilsk Nickel, a global nickel, copper and palladium major, shifted away from Potanin to an Oleg Deripaska-led consortium. Prokhorov had good reason to congratulate himself on washing his hands of the asset two years earlier, in 2010, when he walked away with approximately US$ 10 bln in cash after an asset split with Potanin, who stayed on, to fight, and lose, another day.

Russian steel baron Vladimir Lisin's fight against a smaller steel magnate Nikolay Maximov over misstated asset price in a four year-old deal was taken to a new level in 2012, as Maximov obtained "an injunction against Lisin's assets in France," after essentially losing the legal war in Russia.

Several scandals have smaller scale (in the hundreds of millions of dollars, rather than billions), but they stand out by viciousness of attacks and variety of methods use to undermine an opponent and take control of a coveted asset. The fight for major ammonia and fertilizer producer Tolyattiazot (ToAZ) based in the Volga industrial city of Tolyatti has gone to extremes, jeopardizing the livelihood of city residents and threatening the normal operation of basic city services. The man behind the attempts to prevent ToAZ from reinvestment in expansion and maintenance of its assets and from financing socially-responsible projects on which many in the city depend appears to be Dmitry Mazepin, desperate to uphold the chemicals and fertilizers empire he started building in 2008 out of stakes in fertilizers producers. He has a strong motive, as he needs all the cash he can get from his assets to service the debt he took out to finance the acquisitions. This could explain his outraged statements about any expenditures restricting the cash flow to shareholders in ToAZ and Voskresensk Fertilizers, his other acquisition. He could also be the instigator of numerous environmental and other audits, as well as a media campaign accusing the current management and core shareholder of ToAZ of wasteful practices and environmental and other violations, in a thinly-veiled attempt to make the company cheaper. If successful, he would be able to increase his stake to majority and take control over the company's operations and cash flows. These attempts, if successful, could "starve the company of reinvestment" and force it to "scrap its social programs," Russia! Magazine reports. Voskresensk Fertilizers, controlled by Mazepin, serves as a demonstration of what these efforts are likely to bring: that company "is beginning to show the poor condition of assets and is in arrears on payroll," according to the magazine.

Former Moscow Mayor Yuri Luzhkov's wife Elena Baturina won a complete, crushing victory in 2012 over her brother Viktor Baturin, not only stripping him of his share in Inteco, a real estate and construction conglomerate, but also landing him in jail for alleged fraud.

"The total value of the top five business scandals is approaching an estimated US$ 17 bln, but they make an even bigger impact on society as they undermine the trust in free enterprise, the rule of law and the government among the populace – not Russia's strong suits to begin with," says Michael Thompson, editor of Wild East Blog.

Michael Thompson  m.thompson@readrussia.com  917 475 6452 wildeast.readrussia.com

SOURCE Wild East

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs