Will the real Norilsk owner please stand up? – by Andy Home (Reuters U.S. – December 7, 2012)


Dec 7 (Reuters) – The Economist Intelligence Unit (EIU) has just issued a report on doing business in Russia.

“Nothing ventured, nothing gained: Changing international perceptions of Russian business” is based on a survey of 195 senior executives from outside Russia, with particular focus on those who have been or are considering joint venturing with Russian corporates.

“Non-Russian executives have decidedly mixed views of their Russian partners,” the report notes, explaining: “Access to energy and financial resources, and technical know-how, are the big pluses (…) poor language skills, inefficient management and corporate governance are the big minuses.”

Third on the EIU’s recommended list of nine ways for Russian companies to break free of outsiders’ “stereotypes” is to “avoid ‘insider’ practices and back-room deals”. Oh, and one other thing. The study was commissioned by Russian aluminium giant UC RUSAL and is available for download from the company’s website (www.rusal.com).


The irony is delicious since RUSAL’s oligarch owner Oleg Deripaska just seems to have participated in one of the biggest back-room deals imaginable.

At stake is the ownership of Russian metals giant Norilsk Nickel, one of the world’s leading suppliers of nickel, copper, palladium and platinum.

Deripaska, second-largest shareholder, and Vladimir Potanin, the largest shareholder in Norilsk, have been taking potshots at each other ever since RUSAL picked up a 25-percent stake in Norilsk at the height of the financial crisis in 2008.

Deripaska has flung repeated allegations of poor corporate governance, questionable share buy-backs and just about everything else bar the kitchen sink at his rival oligarch.

All vigorously denied by Potanin, who has repeatedly offered to buy Deripaska out.

The battle has raged through numerous Russian courts and was due to go before a London arbitration court before a compromise deal was announced earlier this week.

Enter stage left a third oligarch, Roman Abramovich, co-owner of FTSE-100-listed steel giant Evraz but more popularly known for being the owner of English football club Chelsea.


Abramovich’s investment vehicle Millhouse Capital will buy a 7.3-percent stake in Norilsk, valued at $2 billion, and then transfer it into an escrow account.

The other two feuding oligarchs will each transfer equivalent stakes into the same account, with the resulting 22-percent stake to be voted on by Millhouse.

Abramovich becomes de facto controller of the board in a deal, to quote RUSAL’s press release, aimed at “integrating the efforts of all parties to maximize profitability and shareholders’ value, as well as delivering improvements to the existing corporate governance structures.”

It’s a very Russian solution.

Non-Russians labouring under what the EIU report calls “stereotypes” about Russian business practices might be forgiven for wondering how a third Russian oligarch is going to help make things better.

For the rest of this article, please go to the Reuters U.S. website: http://www.reuters.com/article/2012/12/07/column-home-norilsk-nickel-idUSL5E8N790C20121207