Would You Buy a Used Car from Vladimir Putin?
By Paul Gregory
Exclusive to La Russophobe
The Russian government announced last week it is selling shares of eleven state-owned companies to new shareholders. The companies include the national railroad, two state banks, a state oil company (Rosneft), and the state oil pipeline company (Transneft).
Proceeds from the sale are to be applied against the state budget deficit. In all cases, the government will retain majority ownership. Although there may be strategic investors, purchasers will clearly be minority shareholders. Notably, the announcement coincided with Conoco’s withdrawal from Russia after its billion dollar investments in the Russian oil industry soured.
Although most major investors in Russia have seen their investments collapse after confrontations with tax authorities, environmental agencies, Russian courts, and Kremlin-favored oligarchs, buyers of shares in these eleven Russian companies are supposed to be protected. After all, minority shareholders now have the state on their side. Buyers should, however, beware for three reasons!