Prokhorov Criticizes Norilsk Management

Mikhail Prokhorov, a billionaire investor in Norilsk Nickel, accused management Friday of using the "company's resources" to favor Vladimir Potanin, another billionaire shareholder, escalating a dispute between the business partners.

Prokhorov wants improved shareholder rights and the appointment of a new board at the country's largest mining company, his investment company Onexim Group said in an e-mailed statement. Norilsk's management is in line with "best world practice" and will review Prokhorov's demands, Norilsk said in a statement.

The two investors have been trying to divide their business interests since January 2007 after agreeing to end their cooperation.

Potanin on Thursday accused top executives of Polyus Gold, which he and Prokhorov also control, of acting without the approval of shareholders by seeking to spin off mining licenses, a move he said will hurt the company's shares. Prokhorov has backed Polyus' plan.

"In Norilsk, the power at board level resides with Potanin, and in Polyus it's with Prokhorov," said Alexander Pukhayev, an analyst with Deutsche Bank in Moscow. "We'll now see a battle for control of the boards at the two companies."

Norilsk's Nov. 24 decision to deposit $1.5 billion with VTB represents a "conflict of interest," Alexei Ryabinkin, an Onexim spokesman, said by phone.

VTB was one of the banks that agreed to back an unsuccessful attempt by Potanin to buy out Prokhorov's stake in Norilsk.

"We don't have a great range of big lenders to choose from in Russia, but in any case, we picked VTB from a number of domestic and foreign banks simply because it offered the best rates for the deposit," said Yelena Kovalyova, a Norilsk spokeswoman.