The convention they signed Wednesday on shareholders' rights reads like an investor's wish list. They have promised to open their books, turn over shareholders' registers to independent managers, and guarantee each shareholder a vote proportional to their investment. In other words, they have promised to act like proper publicly held corporations.
This private initiative comes at a time when action on the government's part is long overdue. As fund after fly-by-night fund has sucked up Russians' savings and either collapsed or disappeared, officialdom's excuse has been that the laws required to regulate the financial industry and prosecute swindlers do not exist. Parliament is too politicized to pass effective legislation, while Kremlin decrees have limited impact.
But while good laws are desperately needed, asking the government to control the market would be rash. The State Property Committee has shown that even a relatively well-run government agency falls prey to corruption when its jurisdiction includes valuable assets. Only last month a privatization official in the Tyumen region was found guilty of accepting bribes from defense industry executives.
The government has also broken promises to investors by failing to provide information on cash auctions and investment tenders since the end of voucher privatization. Details on these opportunities can only be obtained after navigating a daunting bureaucratic maze.
Thus, the government's failure to rein in the securities market may be a blessing in disguise: It has allowed the market to show that it is one step ahead of the regulators and willing, out of pure self-interest, to police itself.
Private and privatized enterprises, after all, have much more to gain from a civilized market than the government does. Apparently, they have looked at Russia's booming stock market and realized that if they cater to investors, they can attract a lot of money.
Granted, the companies have yet to implement their promises and are far from incorruptible. The government will undoubtedly need to pass laws giving shareholders recourse should they be cheated. But the fact that major Russian companies were prepared to act first suggests that the battle to regulate Russia's securities markets can -- unlike so many other battles -- be won.
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