25.04.09

The state got carried away with establishment of state corporations, Presidential Aide Arkady Dvorkovich said. "Overwhelming part of the national economy is so inefficient that its chances to survive another decade are nonexistent... There will be no way out of the crisis without having shed inefficient elements of economy first." On the other hand, Dvorkovich called transformation of state corporations into something else at this point "wrong and counterproductive".

"We got carried away with application of this particular model. We applied it even when something altogether different would have been better," Dvorkovich announced at the conference on economy and society development problems. "And yet, initiating a transformation now will be wrong. It will be counterproductive."

"We cannot count on a fully fledged recovery without the knowledge of what may survive in the post-crisis period and what had better be dismantled right now. We should install new efficient industries and techniques and invest in establishment of efficient niches of the national economy," Dvorkovich said. "Without that, Russia cannot hope to retain the economic development rate or participate in formulation of the new international rules of the game..."

The impression is that the Kremlin is becoming increasingly more frustrated with and critical of state corporations. Martin Shakkum of the Duma meanwhile warned that state corporations were all different and that their efficiency should be gauged individually. "It is not the form of ownership that counts, it is efficiency of management that does," he said.

"Omnivorous Russian Technologies is a wholly different matter. This state corporation directly competes with businesses," Shakkum admitted. "On the other hand, AvtoVAZ did show an improvement once it passed under Russian Technologies' control."

Ksenia Gonchar of the Center for Analysis of Enterprises and Markets agreed that individual approach was a must. "Anyway, this is not the first signal from the Kremlin revealing its doubts with regard to the future of state corporations," Gonchar said.

State Corporations To Be Made Transparent

State corporations may be stripped of their privileged status: legislation pertaining state corporations might be revised soon. The Economic Development Ministry suggests putting independent managers into their top echelons and making directors personally responsible for major projects. Anton Ivanov of the Supreme Court of Arbitration suggests making state corporations equal to joint- stock companies with regard to corporate law. Experts hope that all of it will eventually strip state corporation of their privileged status.

Future of state corporations is definitely obscure, if the roundtable conference arranged by the Federation Council yesterday is any indication. Judging by the materials compiled by Federation Council experts, "... with budgets' profits base dwindling, the federal center appears to be inclined to withdraw provisionally uncommitted funds from state corporations' bank accounts to finance current budget costs." What the parliamentarians want to know is how and when these assets are to be returned to state corporations afterwards. Continuation of the crisis and use of this particular practice may come to jeopardize the very existence of state corporations.

Even state corporations' future status is unclear. The Economic Development Ministry is convinced that they should be made considerably more transparent. It suggests putting independent directors on their boards (along with representatives of the state, that is), working out criteria of management efficiency evaluation, and introducing personal responsibility of top managers for major projects. Calls for abolition of state corporations are made. Addressing the Russian Business and Entrepreneurship Union the other day, Ivanov of the Supreme Court of Arbitration said state corporations ought to be made equal to joint-stock companies with regard to observance of corporate law.

There are seven state corporations in Russia at this point. Experts are convinced that changes in the principles of their activities are long overdue. Oleg Moskvitin of Garant Consulting Service said the special status state corporations were enjoying these days made conflict of interests essentially unavoidable.

According to Aleksei Kalinin of Business Systems Development, all this attention was being showered on state corporations these days because their special status in crisis was a liability and an obstacle preventing efficiency. "Functioning by and large like joint-stock companies, state corporations enjoy a unique legal standing. Ability of the state to interfere with state corporations or even to objectively evaluate their efficiency is quite limited," Kalinin said.

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Source: RBK Daily