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3 State Corporations To Lose Status in ?€™10

Russian Technologies, Rusnano and Vneshekonombank will likely lose their status as state corporations as early as next year, presidential aide Arkady Dvorkovich said Thursday.

The state corporations could be transformed into state-controlled joint-stock companies in 2010, Dvorkovich said at a news conference responding to President Dmitry Medvedev’s state-of-the-nation address.

Medvedev laid out the case against state corporations in his address to the Federation Council, saying some of the corporations should be wound down soon.

“As far as state corporations are concerned, I think they have no prospects in the current environment,” Medvedev said in his address.

“Those that work on commercial, competitive terms should become modern, open joint-stock companies controlled by the state. In the future, they shouldn’t be held in the public sector and should be opened to private investors.”

Medvedev and other high-ranking officials have come out against state corporations since they were created in 2007, with the critics saying they should operate under the same laws as regular joint-stock companies. State corporations are not obliged to make public any financial information, and laws on bankruptcy do not apply to them.

The seven state corporations include: the Deposit Insurance Agency, Vneshekonombank, Rusnano, Rosatom, the Housing and Utilities Reform Fund, Olimpstroi and Russian Technologies.

Rosatom and the Housing and Utilities Reform Fund will keep their status in the short term, as there “is no urgency,” Dvorkovich said. Those corporations that were created to achieve a set goal, such as Olimpstroi and the Housing and Utilities Reform Fund, will be wound up as soon as that goal is accomplished, he said.

As for the first three state corporations to be transformed, in the long term, their assets could be sold to private investors, Dvorkovich said.

“I think it first and foremost concerns the assets of Russian Technologies,” he added.

Russian Technologies, a state holding with stakes in more than 400 companies ranging from miners to defense firms, said becoming a joint-stock company would make it easier to do business.

“We are finishing up the process of transforming our defense plants into joint-stock companies, and several holdings created from these companies will have an IPO,” Russian Technologies said in a statement. It added that the corporation would welcome private investment in the defense sector, which is currently facing financing problems.

Rusnano was similarly optimistic on the prospects of a new charter.

“There’s no fundamental difference between a state corporation and a joint-stock company,” Rusnano spokeswoman Yelena Kovalyova said. She added that Rusnano’s job was investment, which the firm could do easier if it were a joint-stock company.

“For foreign investors, co-financing a project with a state corporation is not very transparent,” she said. “We understand that our financial model must be based not only on the government’s level of support but also on the level of income from project companies.”

VEB’s press service declined to comment Thursday.

Dvorkovich’s comments came two days after Prosecutor General Yury Chaika presented the results of his inspection of state corporations to Medvedev. Chaika said Tuesday that the prosecutor’s office had opened 22 criminal cases as a result of the investigation.

Rusnano, which is currently investing in 38 nanotechnology projects, has also come under direct fire in the report. Of the 130 billion rubles that Rusnano received from the state two years ago, only 10 billion rubles ($348,280) has been used. Of that, 5 billion rubles went to fulfilling its day-to-day operations.

Chubais said in September that Rusnano would pay back the 130 billion rubles that it had received from the government as early as 2015 in order to become financially independent.

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