The British metal trading firm Transworld owns a 20 percent share in the Krasnoyarsk Aluminum Factory, one of the world's largest aluminum producers -- or at least company president David Reuben thought it did.


For Reuben, threatened with losing several hundred million dollars, the nightmare of every investor in Russian securities appears to be coming true.


When his representative, Sergei Mestechkin, headed out to the plant in western Siberia for a shareholders' meeting last month, he was turned away. The factory's directors had effectively crossed Transworld off the shareholders' list.


"They told me, 'You are no longer shareholders in this factory,'" Mestechkin said. "So I left, because there was nothing much left for me to do there."


Mestechkin says Transworld has spent $300 million since 1992 to acquire the shares and help supply the factory with bank credits and raw materials.


The factory's economic director, Mikhail Vasiliyev, says Transworld improperly registered its shares and never invested in the plant; stockbrokers say the incident has foreign investors on the run; one Russian official insists Transworld's shares will be returned.


Reuben says he just cannot believe any of this is happening.


"How the hell can anybody just cross your name off the register?" he asked.


Quite easily, say financial advisers familiar with the Russian market.


Regulations say that share registers of all companies with 1,000 shareholders or more must be maintained by an independent registrar. But in practice, many stockholders' lists are controlled by factory directors, who fear -- sometimes with good reason -- that independent registrars will prove corrupt, said Richard Oliver of the London-based Samuel Montagu Bank.


A listing on the register is the only legal proof of share ownership in Russia, because share certificates do not exist under Russian law -- a particular problem for investors in far-flung companies, who must travel to the hinterlands to get an extract from the register.


But there is no obvious way to guarantee that the factory director does not cross a shareholder off the company's register.


The Transworld incident comes just as the Russian government is trying to calm foreign investors's fears by creating a securities commission and touting a Western-style share issue at the Red October chocolate factory that began Monday. The Red October shares will be independently registered by the Grant Financial Center to guarantee ownership.


But word of Transworld's woes has already spread to London and influenced people against bidding for Red October shares, said Oliver of Samuel Montagu. "It's also fed through to legal advice, the people who advise investment funds and pension funds on whether or not to invest in Russia."


Peter Kizenko, a broker at the Russian Brokerage House, said he saw a downturn in foreign investments after the Transworld incident.


The government finally stepped in last Friday to mop up the mess. In a fiery statement to Itar-Tass, Alfred Kokh, a deputy chairman at the State Property Committee, said the factory had violated President Boris Yeltsin's decree on shareholders' rights in "the rudest possible way."


"We must burn out such abuses with a red hot iron," Kokh said after a trip to the factory in Krasnoyarsk. "Otherwise, faith in Russia's developing securities market will be undermined."


He said the State Property Committee would draft regulations to prevent similar incidents. The securities commission, headed by Anatoly Chubais, is also working with the British Know-How Fund and other Western advisors to improve the country's registration system.


Kokh said government checks showed Transworld's share purchase and registration had been completely legal. He could not be reached for comment Tuesday, and it was not clear whether he would have accepted the factory's unilateral action had he believed Transworld violated the rules.


Meanwhile, the register is still in Krasnoyarsk. Factory employees refused to connect a reporter with officials there after Kokh's announcement.


What happened to Transworld could theoretically happen to many foreigners who invested during voucher privatization, using Russian partners as their agents. Transworld financed the purchase of 400,000 vouchers by Russian partner Lev Chernoi and 10 Krasnoyarsk locals organized by one Yury Kolpakov, Mestechkin said.


The buyers traded the vouchers for over 20 percent of the factory, which directors say employs 30,000 people and produces 740,000 tons of aluminum yearly. They sold the shares for a nominal sum to Transworld's Russian proxy companies, Zalogbank and Russky Kapital, under a previous agreement. Kolpakov was then voted in as director with Transworld's support.


"This was a person we respected and trusted," said Mestechkin.


But the relationship soured. Transworld believed factory directors were selling aluminum too cheaply to the firm's metal-trading rivals, but, according to Reuben, Kolpakov threatened to remove them from the register if they complained.


"And he did," said Reuben.


Kolpakov got all the original buyers but Chernoi to write statements saying they believed the share sales were unfair, Mestechkin said. They then took away most of Transworld's stock and returned the symbolic purchase price, a fraction of the value.


Transworld retains the 3 percent bought by Chernoi, not enough to share in management, Mestechkin said. "If we do not own those shares, then Kolpakov's election is invalid," he said.


Factory economist Vasiliyev, reached by telephone, said the shares were "returned to the original owners" after the factory discovered the sales were improper. He said that if a court declared Transworld the rightful owner, he would give them back.