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Vasilyev: Finances Clearer, Not Perfect

Torrey Clark

They're not ready to bare all, but Russia's top companies are slowly revealing more financial information, Dmitry Vasilyev, head of the Institute of Corporate Law and Governance, said Wednesday.

Of 34 companies accounting for about 90 percent of total market capitalization, all but nine boosted their scores on the institute's corporate transparency rating for the fourth quarter of 2001. The institute is a minority shareholder in all the companies it rates.

The main improvements were fuller disclosure, an increase in the number of independent directors on companies' boards and stronger boards of directors that actually wield some control over management, most notably at natural monopolies Unified Energy Systems and Gazprom, Vasilyev said.

Only three companies, however, provided full information with explanatory notes in their financial statements, as required by the Finance Ministry. Another 13 companies left out minor details, while the rest left large gaps and omissions. Lack of disclosure hurt Mosenergo, which tied for ninth place after its score fell 3.93 percent to 57.96, and Severstal, which tied for 20th after its score fell 0.98 percent to 52.26.

Disappointments included Surgutneftegaz, which provided only two pages of accounting statements and a two-page audit opinion, Vasilyev said. The company's score fell 3.93 percent to 44.6 and 30th place. What riled the institute the most was the whopping $9 per page that Invest-Zashchita, Surgutneftegaz's authorized representative for investor relations, charged for the documents.

The institute shelled out about $300 for documents to prepare for the annual shareholders meeting, but opted not to buy the company charter for $3,000, Vasilyev said.

The institute sent a letter of protest Tuesday to the Federal Securities Commission, complaining that Invest-Zashchita's policies violate clauses in joint stock company law. The institute also sent a letter to the Anti-Monopoly Ministry, saying that Invest-Zashchita is using its monopoly position on information to charge exorbitant prices. Neither Surgutneftegaz nor Invest-Zashchita could be reached for comment.

Four additions were made to the latest rating.

Metals major Norilsk Nickel returned to the list at a higher position after a yearlong absence, placing 23rd after improving its score to 51.47 of a possible 100. In January 2001 it scored 44.2 and ranked last in 25th place.

Power company Sverdlovenergo debuted at 14th place, while telecoms company Voronezhsvyazinform joined at a less impressive 25th place.

Car giant AvtoVAZ brought up the rear, ranking 34th with only 40.1 points.

Company Score

1. Vimpelcom 83.89

2. Mobile TeleSystems 71.91

3. GUM Trading House 67.39

4. Rostovtelecom 64.83

5. Unified Energy Systems 63.85

6. Lenenergo 62.67

7. TsUM Trading House 62.28

8. North-West Telecom 59.92

9. Mosenergo 57.96

9. Rostelecom 57.96

Source: Institute of Corporate Law and Governance