Business weekly "Golden Horn"

English Summary
#59, August 3, 1999

Delegates of Primorye Parliament have finally approved the Krai Electoral Committee from Primorski krai Duma. The six out of seven candidatures required have already been confirmed.

The main directorate of the Bank of Russia in Primorski krai was informed of the necessity to reduce the staff by 20%. Russian...

Currently, nine hundred and thirty Primorye companies have got the status of companies which are of social and economic importance for the krai. These companies' heads were offered to appeal to the Board for financial help from the krai budget. Russian...

A festival of "the first oil-extraction" was held in Yuzhno-Skahalinsk on July 30. The delegates of Primorski krai Duma Sergey Dudnik and Alexander Kirilichev were invited to take part in it. Within the stay, they will hold talks about the concerted actions in extraction of hydrocarbon fuel on the Sakhalin shelf. Russian...

L.D.P.R. LEADER ZHIRINOVSKY MOVES EASTWARD

LDPR leader Vladimir Zhirinovsky is expected to visit Vladivostok in early August.

The leader of liberal democrats plans to hold meetings with the krai and city officials and media and take part in events prepared by the local LDPR branch.

After recent failures in gubernatorial elections in Belgorod and Yekaterinburg, it has come to Vladimir Volfovich's mind, at length, that Russia will grow by the Far East. Before coming to Primorye, Zhirinovsky will visit Sakhalin. - Igor NIKITIN. Russian...

L.D.P.R. ELECTORAL STRATEGY: MAIN THING IS PARTICIPATE NOT WIN

On the eve of the upcoming electoral campaign, "ZR" is trying to analyze the balance of forces on the political scene. Today, we publish an interview with Yevgeny Bolshakov, State Duma deputy from Primorye, member of the LDPR faction.

- Yevgeny Aleksandrovich, are you going to ballot for the State Duma?

- Yes, I am going to. The recent regional rally of LDPR made a decision to recommend my candidature for the inclusion in the party list for voting. But all final decisions will be made after the national rally scheduled for September 11.

- You have been elected by the LDPR party list, so, you are in charge of Primorye, aren't you? Who else in your faction is in charge of Primorye?

- Nobody. Only me.

- Will LDPR nominate a candidate for the governor's seat?

- This position requires a person with much experience in business management. I have such an experience but one should be critical of his chances. The incumbent governor is much more popular. And, then, it is difficult to speak definitely about the election at this time. We need to wait for the presidential decree, and the president likes unexpected moves. Maybe, other candidates among whom are experienced leaders of business and political circles as well as incumbent lawmakers will revise their statements...

- Then, let's speak about LDPR chances. In 1993 you won the election, in 1995 you lost to CPRF. The dynamic doesn't look to you favor, does it?

- Today, we see disunity both among the rightist and the leftist forces. Take CPRF. Zyuganov and Seleznev are, of course, trying to preserve the unity of their party, but it's difficult: some leaders such as Ilyukhin, Makashov and others feel themselves figures of great importance. In the meantime, Vladimir Zhirinovsky applies an active offensive strategy and trains his party aiming at its maximum mobility. They say why did he nominated for governor's post in Belgorod and lost? But is it a defeat to gain 17% of votes in an unfimiliar region within just two months?

- There is an opinion that LDPR is losing popularity due to the inconsistency of its duma faction. Verbally, Zhirinovsky chastises existing disorder and acting cabinets but, practically, he always follows the policy pursued by the executive power. Take the recent procedure of Yeltsin's impeachment.

- Not everything depends on a legislator. Sometimes, I return to Moscow after meetings in citizens in my constituency and see that the political situation has changed 180 degrees. Yes, I had promised to my electorate that I will vote for Yeltsin's impeachment, but the essence of this issue was to learn the true opinion of the majority of our citizens. Also, Communist began to threaten with a civil war at that moment and repelled part of duma deputies by doing so. In addition, I must, as a faction member elected by a party list, obey to the party's decisions.

- Are you sure that such compromises are not being bargained?

- There are some bargaining elements concerning this or that initiative in the duma, but the subject of bargaining is mutual concessions not money. For instance, a matter of bargain is factionary representation in duma committees and committee chairmanship. Without such agreements the duma would be incapable of action.

- The majority of our parties have been organized for one person. In particular, LDPR...

- Of couse, Vladimir Volfovich enjoys great authority. He is a founder of the party, its ideologist, and carries a huge load by working 16-17 hours each day. But we have enormous support on a regional level, among scientists and the military. We work much with young people. There is a LDPR party school in Moscow training new members. So, I don't see grounds to say that we are a one-man party.

- Let's speak about Primorye. Do you have full information about local developments?

- The situation in Primorye is characterized by foreigners' attitude to it. Today, Taiwan, South Korea, Japan are willing to do serious business with us but they are anxious about political instability. Take the Taiwanese. They purchase products manufactured in Primorye through third parties to avoid direct involvement with us. That's why the upcoming election will have effects for establishing political stability in the krai. There must be no political controversy in Primorye, because all our economic woes are a product of political confrontations. Much information is concealed from the public, whereas, say, the openness of shipping companies or published in due time financial highlights of joint-stock companies would allow to avoid public scandals. And we have to trail behind the course of events.

- Do you collaborate with other Primorye deputies?

- We meet each other in the State Duma and the Council of Federation. My activity is more oriented at the lobbying of the krai's interests. Some time ago I addressed all legislators elected from Primorsky Krai: let's put aside contradictions and work together to the benefit of Primorsky Krai. But, regretfully, there are interests and viewpoints differing too greatly. - Igor NIKITIN. Russian...

PRIMORYE COLLECTS MORE TAX REVENUE

A total of 4,812.5 million rubles, which is 82% more than a year before, was received by the budgets of all levels and specialized funds during the first half of 1999. Three-fourth of this amount is real cash, and only the remainder is settled accounts.

Industry continued to account for the bulk of the krai's tax revenue and the food processing sector (especially fishing industry) remained its leader. Receipts from building materials producers, sellers and caterers reduced, while those from the transport sector grew. 74% of tax revenue is generated the krai's three major cities: Vladivostok (over 50%), Nakhodka (13%), Ussuriisk (9%).

Considerable growth from the first half of 1998 was registered in VAT receipts, income tax from individuals, profit tax, excises. This is the result of both inflation and more efficient work of Primorye taxmen. In particular, payments enforced by tax authorities amounted to 1,414.5 million rubles.

233.5 million rubles more than planned were directed to the feredal coffers. Budgetary assignments for the federal road fund were also overfulfilled: 174 million rubles, or 40% more than a year ago, were directed to the construction and maintenance of roads. - Yury ROGOV. Russian...

SUPERBANK IS PLANNED IN PRIMORYE

According to Nikolai Sadomsky, director of SBS-Agro's Primorye regional branch, there are plans to set up in Primorye a new bank through a merger of several existing banks.

By words of Sadomsky, who has developed the project, a new financial crisis is possible in Russia before year's end after which the rouble may fall down to 35-40 rubles/$1. There are enough conditions for this: persistent stagnation of the economy, reduction of per-capita GDP, decrease in tax revenues and many other macroeconomic indicators.

In this context, a strong regional financial structure will allow to avoid many of adverse effects of the would-be crisis, to support already existing local banks and to ensure financial autonomy of Primorye.

Sadomsky said that his project has been backed by the krai administration but "much will depend on stockholders and bank managers". He did not divulge what banks will take part in the project but noted that it may be all Primorye banks. - Larisa LARINA. Russian...

SESSION OF FESCO BOARD WILL BE HOT

The first session of the FESCO supervisory council led but its new chair Aleksandr Lugovets is scheduled for August 16.

Obviously that most interesting will be two items on the agenda: audit of FESCO by international standards and the issue of selling by Fes-invest 5.2% of shares to company "Sovcomflot".

Should the first issue be resolved positively, foreign investors will most likely receive proofs of the inefficiency of FESCO policies conducted by its current management. As for the above sale of stock, 6 of 11 members have already expressed doubt about it, which is also foreboding.

By the way, upon the sudden departure from Vladivostok of Tiger Securities former employee Richard Thomas foreign shareholders are facing problems in confirming their rights for a seat in the supervisory council, because Thomas had been elected as a private individual. It is unlikely that Andrew Fox will come in Vladivostok to take part in the session. More likely, he will be represented by Peter Oppenheimer. - Oleg KLIMENKO. Russian...

DALNEGORSK CITY AUTHORITIES ARE DISCONTENTED WITH ARBITRATION COURT DECISION

Availing themselves of Russian Premier Sergei Stepashin's visit to Primorye, the municipal authorities of Dalnegorsk undertook another attempt to have influence on the situation around AO "Bor".

In a letter addressed to Primorye Governor Yevgeny Nazdratenko, Dalnegorsk mayor Gonchar requested to draw the prime minister's attention to this issue. Then he sets forth main claims to bailout manager Boris Dushanin and Bor's largest creditor, EnergoMashCorporation. "ZR" repeatedly wrote about this affair before and now we will stop only on the latest controversial issues not covered in previous publications.

As seen from the letter, Dalnegorsk municipal authorities are discontented with the krai arbitration court. In particular, at its last session held July 21 the court disregarded the fact that Dushanin had been managing the company through the latest court session although his term of bailout manager's office expired June 23. The court also did not take into account a claim by the representative of the territorial agency of the Federal Bankruptcy Agency that Dushanin lacks a license for performing functions of a bailout manager. Proceeding from these and other facts stated in the letter, Gonchar once again stresses the court's complete indifference toward the fate of the company and Dalnegorsky County as a whole.

"ZR" applied for comments to the court of arbitration but was answered that judges cannot comment on the cases being tried. If concerned partied believe that the court has made a wrong ruling, procedures exist for appealing such rulings. By words of Lyubov Kuznetsova, deputy chairman of the krai's arbitration court, during the last 2.5 years only 20 cases tried by the court were appealed before higher courts and only one case had reached the highest court of arbitration. Kuznetsova believes that this illustrates the high quality of court decisions made in this category of cases.

As for AO "Bor", says Kuznetsova, forms of influence upon the court other than set forth by law are inefficient and unlawful, even if addressed to the prime minister. They may have influence on the public opinion but not on a court decision. - Nadezhda VORONTSOVA. Russian...

"VLADINPORT" PROJECT REMAINS UNASKED-FOR

The project of the construction of new reloading complexes in Vladivostok may be put into mothballs for an indeterminate period of time. This is the result of all efforts undertaken by the Vladivostok Commercial Sea Port to raise investments required for that.

JSC "Vladivostok Industrial Port" was set up in 1993. Judging by its co-founders, a financial-industrial group was practically organized, though the company does not consider itself as such. Its co-founders are the Vladivostok Commercial Sea Port, FESCO. Vladivostok branch of Far Eastern Railways, Dalnevostochny Bank and Promstroibank. Two stock issues for a total of 1.7 million rubles had sufficed only to develop the project estimated at $273 million. To commence construction, serious investments are required.

According to the company's former management, investments might be attracted in two ways: governmental resources under the program "Revival of Russia's Merchant Fleet" and foreign sources. The government was the first to refuse from involvement in the project. As for foreigners, they showed active interest, and delegations from Japan, Korea, Greece, Taiwan, United States, England, Australia, Germany kept coming. But, ultimately, only a $400,000 grant from the U.S. government was received and spent to pay for an expert conclusion by the Export-import bank (USA). Experts provided a positive conclusion, but no investments were extended.

The project may be implemented during five years, of which phase one estimated at $150 million may be completed in the course of the first three years, after which the project would start earning profit. It will enable to create 1,700 jobs (this figure does not include associated productions). After putting into operations phases one and two the projected profit will be $40 million. - Nadezhda VORONTSOVA. Russian...

NARCOTICS FROM AFGHANISTAN INUNDATE PRIMORYE

Since mid-last year experts have been observing with anxiety the changing situation in Primorye's drugs market. While a year ago its main destabilizing factor was locally growing hemp and its derivatives, now the market is rapidly being filled by heroin and opium from Afghanistan.

In 1998, 50 cases of heroin confiscation were registered in Primorye. For July 1999 this figure was 28, of which 12 cases have taken place during the past week. More details about this situation are provided in an interview with Vladimir Skulkin, chief of the Drug Enforcement Department of Primorsky Krai.

By his words, until recently Russia was only a transshipment point on heroin and opium flows to Europe, but now drugs are brought into Russia from Tajikistan for distribution within it, including Primorye.

Drugs are trafficked, as a rule, by Tajik nationals (Tajik gypsies). Women and children are begging on the streets and men are engaged in more serious things.

In the past year, three groups of Tajik nationals were detained in Vladivostok with large shipments of drugs.

One more shipment of heroin was brought into Primorye a month ago. Media already informed that FSB officers seized heroin in a military transport aircraft arriving from Tajikistan. Drug traffickers, who were Russian servicemen, were paid $500 for $2.5 million worth of narcotic.

Only a portion, perhaps, one-hundredth, of incoming drugs is seized. The latest incident took place in Ussuriisk where drug enforcement officers confiscated 410 grams of heroin which was, however, only a fraction of the 10-kilogram shipment dissipated in the krai.