21/10/2014 17:41
RIA Novosti

What the Russian papers say

Russian Press - Behind the Headlines, March 4

Russian Press - Behind the Headlines, March 4
15:11 04/03/2013
MOSCOW, March 4 (RIA Novosti)
Tags: Cigarettes, KPMG, IFC, Commonwealth of Independent States, VTB, Defense Ministry, Andrei Sharonov, Andrey Borodin, Valentina Melnikova, Alexander Kanshin, Dmitry Bulgakov, Sergei Shoigu, Singapore


Cigarettes To Be Dropped From Daily Rations

As part of the national anti-smoking campaign, the Defense Ministry will finally stop issuing cigarettes to conscripts before the end of the year, a source at the ministry told Izvestia. The ministry has drafted documents that will exclude cigarettes from a soldier’s daily provisions.

The idea of eliminating cigarette rations for service personnel was first discussed in 2009 and was adopted by some units. Now Defense Minister Sergei Shoigu has decided to make the decision universal. He himself stopped smoking several years ago and is now calling on his subordinates to follow suit, the source said.

To cancel the provision, Government resolution No. 946 of 2007 is to be amended. This resolution says regular service personnel, cadets and military students below officer grade are allowed ten cigarettes a day and, if necessary, three boxes of matches a month. In lieu of cigarettes, soldiers can opt for 700 grams of sugar, 600 grams of candy or 600 grams of condensed milk.

The latest amendment was drafted by the Ministry’s provisions department based on a recently adopted federal law to discourage smoking.

Deputy Defense Minister Dmitry Bulgakov, in charge of support services, promised in 2009 that the army would stop buying cigarettes for service personnel and issue candy instead. No regulations, however, were adopted to this end. Still, some unit commanders began cutting tobacco provisions on their own.

This resulted in some resentment among the ranks. Their cash allowance was only 400 to 500 rubles ($13-16.50) a month, and most of it was being spent on cigarettes.

In January 2012, service members received a raise, and the soldiers began drawing up to 1,000 rubles. In 2013, a bonus trial program was launched in the army, which provided up to 4,000 rubles a month for certain categories of conscripts. This is enough to get by without government-issued cigarettes, the source believes.

Alexander Kanshin, chairman of the Civic Chamber’s commission on national security, believes anti-nicotine measures should have been adopted a long time ago.

“Smoking has a negative effect on physical training and the health of the soldiers,” Kanshin told Izvestia. “These measures will gradually motivate the men to stop smoking. New non-smoking conscripts who find themselves among the smokers generally begin to smoke too. This is not good for anyone.”

Valentina Melnikova, executive secretary for the Union of Soldiers’ Mothers’ Committee, believes that when free cigarettes are no longer available the soldiers will not stop smoking, and that it will just create problems in units that are not close to shops or populated areas.

“Tobacco shortages will affect the psychology of the smokers. Platoon or company commanders will start collecting money from the ranks, including non-smokers. This will result in speculation, extortion, bullying and even violence. Officers in the Ministry’s morale department are creating cheap publicity for Shoigu, but in effect these minor initiatives only hurt his reputation,” Melnikova said in an Izvestia interview.

The tradition of issuing tobacco to army personnel is about 100 years old.



Moscow Woos International Investors

The Moscow government is conducting its first ever international road show to call international investor attention to the growth potential of city projects.

City hall and Bank of Moscow officials have travelled to London, Frankfurt, Singapore and Tokyo and are heading to New York and Boston later this month. According to Deputy Mayor Andrei Sharonov, the presentation is aimed at “attracting foreign investors to Moscow to see it for themselves,” rather than signing contracts.

The presentation in Singapore attracted 40 people, mainly from the local offices of large Asian companies and banks. Sharonov focused on three main points: dispelling any negative image of Moscow which has little to do with reality, positioning Moscow as one of the world’s largest cities with a vast unsatisfied demand, and making it clear that the city is doing much to improve the quality of life.

The audience remained unmoved most of the time except when they heard that Moscow’s per capita GRP was higher than Tokyo’s with roughly the same number of residents. When Sharonov said that Moscow was seeking “smart money” and not just “any money” to develop innovative infrastructure, several people walked out.

Former Singaporean ambassador to Russia Michael Tay who spoke about cooperation prospects also focused on consumer demand saying that Russia is a more attractive market than Myanmar, Vietnam or Thailand which Singaporean companies are competing for.

Sharonov proposed two specific projects, a concession to modernize a hospital and a public-private partnership to build a bypass road to one of the busiest avenues. He admitted that the exact parameters for public-private partnerships still needed to be worked out.

The Bank of Moscow, which provided 80% of last year’s financing for metro and road projects, will act as a priority local partner for investment. “We seek to increase our leverage,” said BoM President Mikhail Kuzovlyov. “Therefore, public-private partnership projects have to be attractive to foreign investors. We have seen the greatest interest in London so far.”

Investors prefer joining public-private partnership projects with an internal rate of return of no less than 20% in rubles, he added.

Officially the presentation is part of a program to promote Moscow as an International Financial Center (IFC), but neither Sharonov nor Kuzovlyov emphasized that. When KPMG partner and CIS Executive Board member, Marc van der Plas, who moderated the event, tried to revive the dying discussion by asking about this, Sharonov said it was a “federal level project” which will hopefully be aided by privatization, as was the case with the Warsaw Stock Exchange.

“The IFC project will remain a mirage unless securities transactions are left untaxed,” Kuzovlyov admitted to journalists after the meeting. “Today all M&A deals with Russian and CIS assets are concluded in Cyprus or other islands.”

On the other hand, with the central depository in place, Moscow has all the required tools to conclude any deal. “Business will flow naturally to where there is profit,” even without waiting for simpler procedures or better courts, he said.



Andrey Borodin: A Typical Russian Success Story

With every opportunity to end up without money and in prison, he instead went to London to live the highlife.

Last week, Andrey Borodin announced that he had been granted political asylum in the United Kingdom. Borodin’s story is typical of successful businessmen in Russia.

After earning a degree in finance and working for Dresdner Bank, Borodin arrived in Moscow. A mutual friend introduced him to Moscow Mayor Yury Luzhkov who soon appointed him an adviser.

Not long after joining Luzhkov’s staff, Borodin gave Luzhkov a crucial piece of financial advice that in effect said Moscow needed its own bank. Why should the city give its money to some random bank? Thus, the Bank of Moscow was established in 1995 – with Borodin as president. His business success was therefore due to government decree, a common scenario in Russia.

Borodin is a talented banking manager who led the Bank of Moscow to a top five ranking among banks within 15 years. But talent is relative, and this success might have been more elusive without Luzhkov’s support. It was, after all, a two-way street. The bank was a convenient source of finance to the city government in response to its favors. Business is closely tied to the government here.

Borodin was no philanthropist content to simply draw a salary. As his bank grew, the city’s share in it began to decline. First very quietly and then openly, Borodin and his partner Lev Alaluyev began declaring an ever increasing number of shares. Supposedly, by mid-2009, Borodin’s share was even greater than the city’s. So a controlling stake in a successful business ends up with those who manage it, again, not uncommon.

Borodin took full advantage of his open credit line with the bank to purchase several businesses: real property, insurance, wood processing, alcohol production – each of which grew stronger with the bank’s money. Nevertheless, the bank began slowly losing control over these diverse new assets, again, not uncommon. A banking rule of thumb says it’s unwise to leverage over half of a business’s assets.

In 2010, Luzhkov was asked to resign, leaving Borodin with a problem. The Bank of Moscow was no longer as dependent on the city’s money by that time, but Borodin had lost his advocate. Another government-supported bank, VTB, was prepared to take control of his business. Borodin had every opportunity to lose his assets and wind up in prison. But being a talented businessman he ended up in London – with many of his assets intact. This is indeed financial talent.

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15:11 04/03/2013 Cigarettes To Be Dropped From Daily Rations/ Moscow Woos International Investors/ Andrey Borodin: A Typical Russian Success Story>>

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